Which of the following is NOT a reason the Local Finance Board can take over the supervision of a municipality?

The correct answer highlights that a high tax collection rate is not a reason for the Local Finance Board to take over supervision of a municipality. A high tax collection rate generally indicates effective financial management and is a sign of fiscal health, suggesting that the municipality is successfully collecting its revenues.

In contrast, the other scenarios outlined involve situations where a municipality is exhibiting financial distress or failing to meet certain legal standards. For instance, when a municipality's debt exceeds 3.5% of the equalized value, this raises red flags about its financial stability. Similarly, a judge determining a lack of compliance with local laws signals potential legal issues that could impact financial governance. Defaulting on payment of bonds and notes directly indicates a severe financial crisis, warranting intervention.

Therefore, while the Local Finance Board likely aims to intervene in situations indicating poor financial management or legal compliance issues, a high tax collection rate does not present such a concern and would not trigger a takeover of supervision.