DEBT LIMITATIONS. The interests of borrower and lender combine to make necessary some limit to the amount of indebtedness which a munici pality may incur, and the purposes for which money may be borrowed. Considering the latter first, it is obvious that permanent luaus should never be made to meet current expenses, although occasionally it may be necessary or wise to fund a tloating debt. that, through bad finaneiering, has grown beyond ordinary revenues. Public loans to aid private enterprises are generally held to be against public policy. and are uncomtitutional in some States. As to the amount of indebtedness which a municipality may incur, prudence de mands that this be kept so low as not to over burden the taxpayer with interest and other capital charges, or, in the ease of productive the patrons thereof. Even where there are no constitutional. statutory, or charter limits on indebtedness and taxation, there is a practical limit to the harden of taxation which the citizen will bear. But most municipalities are subjeeted to definite limitations as to deht and taxation. Such limits vary widely in differ ent countries and !states, and even among the cities of a single State. It is generally some percentage of the assessed valuation, but as the relation of this to the actual value of the prop erty assessed varies widely, comparative debt limits are likely to be very misleading. unless supplemented by explanatory statements. In general, it may be said for the United States that the legal debt limit ranges from 3 to 10 per cent. of the total assessed valuation. although some cities are subject to no legal limitations in this respect. Where the limit is by statute in stead of constitution, appeals for its extension or for exemptions on account of certain classes are frequently made to the Legislature. Water works bonds are quite often exempted from com putations of the debt limit, and recently there have been efforts in several States to exclude from the debt limit all bonds issued for revenae works. In Great Britain some classes of loans are subject to the sanction of Parlia ment, and the control of other classes has been deputed by Parliament to the lmeal nnvernment Board. This body has a well-organized staff of
experts; it gives formal local hearings on appli eat ions for specific loans and grants or withholds its consent to the applications. On the Continent of Europe tlu•re is soon' central control of debts in at least Prussia and France. The nearest ap proach to central control of loans in the United dale is found in Alassaehusetts, but its exercise is due primarily to sanitary rather than financial s,ileguards. Legislative permission to make water-supply and sewerage improvements is sel dom if ever granted in unless the plans for the proposed work are approved by the State Board of Health.
Sr.yrisrits. Reliable comparative figures of municipal indebtedness are even more difficult to obtain than a eui11jen•atice summary of dolt limi tations. The debts of individual cities, espe cially reduced to a per capita basis, can be interpreted intelligently only when accom panied by statements regarding tax rates. the extent to which the cost of municipal improve ments is met by special assessments, and espe cially IT data as to the character and extent of the services rendered to the citizens by the munic ipality. Low per capita bonded indebtedness is not necessarily advantageous to citizens and tax payers. since it may mean that the city in ques tion is either without improvements. or that its water-works, lighting service, bridges, and even sewers, are owned by private companies.
The municipal debts of sonic of the large Euro pean eities in 1888-89 are given by Fairlic* as follows (condensed and rearranged) : :According to the English Local Government Board reports, the local debts of England and \Vales increased from /92,820,100 in 1874-75 to £252.135,571 in 1890-97, whereas in the sante period the debt of the United Kingdom decreased from /768,915.757 to 1040,773,697. In other words. the local debt increased in twenty-two years from 12.07 to 39.35 per cent. of the national debt. Fairlic (see bibliography) states that in England the municipal debt trebled from 1875 to 189S, and that in France it increased by two thirds between 1865 and 1899.