Debt limited is the maximum amount of debt that a municipality can either issue or have outstanding at any given time. These limits are often put in place via statutes or constitutions on a state or municipal level in order to avoid taking on excessive risks of any kind.
For example, a municipality may be debt limited at $50 billion of issued or outstanding general obligation bonds. The municipality is therefore unable to issue any new general obligation bonds after it hits this limit and may be forced to issue revenue bonds or raise taxes to make up for it.