Gaithersburg: A Debt Free Island

When Mayor Sidney Katz says that Gaithersburg is the greatest city in the world, part of what he's talking about is the city's pay as you go philosophy.

At a time when cities like Harrisburg, Penn. are filing for bankruptcy because they can't handle their debt and revenues are across the board, Gaithersburg has managed to remain entirely, 100 percent debt free, the Washington Post reports.

The practice took hold in the early 1970s and city officials only rarely have took on one-time debts in order to pay for large purchases, such as the 57-acre Summit Hall Turf Farm in 1982.

That farm is now , the , Course, and .

The city paid off that debt in a few years—ahead of schedule.

Other municipalities in the area carry varying amounts of debt, like Rockville, Takoma Park and Greenbelt.

But Gaithersburg not only has no financial anchors, it has a $33 million rainy day fund.

Factors like a non-unionized workforce and public-employee equivalent of a 401(k) retirement plan have helped keep the city's operating costs down. Gaithersbug's operating budget, $49 million, is less than half of Rockville's $107 million spending plan, despite the two cities having nearly identical populations.

Maintaining this philosophy hasn't come without a price. In fiscal 2011, the city raised property tax rates for the first time in four decades and slashed its operating budget by several million dollars.

Do you think Gaithersburg's approach is a good one? Should other municipalities strive to operate under similar rules? Take our poll and let us know.