An Approach to Measuring the Affordability of State Debt

Abstract

Affordability is one important and widely accepted element of state and local debt policy. However, there is no well‐established measure of affordability and no clear standard for making normative judgments about what amount of debt is affordable for a specific jurisdiction. This article suggests a six‐step method for measuring affordability of state debt that provides a useful guideline for determining when a state may be entering a “danger zone” by having debt that exceeds norms of affordability.