Overlapping Debt is the portion of another taxing authority’s debt that a municipality is responsible for.
Applying "Overlapping Debt" to Securities Exams:
When a town resides within a county, the county may issues a general obligation bond for which the town is required to repay a portion of the outstanding debt. This is known a overlapping debt. Overlapping debt may also be issued by a neighboring town when both towns receive the benefit of the project such, as a water authority.