What does overlapping debt refer to in the context of municipal financing?

Overlapping debt specifically refers to the portion of a municipality's debt that is attributed to shared tax bases among multiple municipalities or governmental entities within a particular area. This means that when one municipality takes on debt, it may impact the taxpayers of surrounding municipalities that also rely on the same tax base for financing.

For instance, if multiple municipalities benefit from the same economic resource or tax revenue, any debt incurred by one of those entities can affect the fiscal condition of the others. This creates a scenario where the financial obligations of one municipality can influence the borrowing capacity and creditworthiness of neighboring jurisdictions. Thus, overlapping debt highlights the interconnected nature of municipal financing and the potential implications on local taxpayers across different jurisdictions.