Yes spending is forced to 0% if you are in debt by more than 500.
You will also get the No Resource warning if:
a) You put the Military or Social spending slider to 0%
b) You put the Military or Social spending slider VERY LOW on a small planet (so that it doesn't even yield 1 production point in that category at that spending level)
c) You put your Spending slider so low that some (or all) planets don't even yield 1 production point in Military and/or Social