How is net overall debt of a municipality calculated?

The net overall debt of a municipality is calculated by combining both net direct debt and overlapping debt. Net direct debt refers to the debt that is directly incurred by the municipality itself and consists of obligations like bonds and notes for which it is directly liable. Overlapping debt includes the debts of other government entities, such as school districts and local governments, that also impose taxing authority on the same property within the municipality.

By adding net direct debt to overlapping debt, you obtain a comprehensive view of the total debt burden that affects the residents and taxpayers of the municipality. This is important for assessing creditworthiness, as it provides insight into the total obligations that may influence the municipality's financial health and ability to manage those debts effectively.

Other methods of calculating debt, such as those involving subtracting assets (as mentioned in another option), do not provide a complete or applicable picture of the municipal debt landscape, as it is critical to consider all liabilities and not just the assets.