1.2.4.6 Obligations Imposed by Law Exception

1.2.4.6 Obligations Imposed by Law Exception

PREMISE – The constitutional debt limit is designed to address only discretionary actions and is not applicable to a public agency’s legal obligations. That is, voter approval is not required for actions that a public agency is required by law to take.

LEGAL REQUIREMENTS – For this exception to apply, a payment of a liability must be imposed or mandated by law. Examples that courts found to fall within the exception include an obligation to pay the salary of a public officer whose office was created and whose salary was fixed by state statute48 and the obligation to pay a tort judgment.49 

CAVEATS AND QUALIFICATIONS – Because the case law is not well developed, this exception generally requires a validation proceeding.

COMMON APPLICATIONS IN THE PUBLIC FINANCE CONTEXT – The Obligations Imposed by Law Exception is commonly applied to judgment bonds and pension obligation bonds. See Section 3.3.2.2, Pension Obligation Bonds.