The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1877-10-18
LIMITATION OF THE STATE DEBT

4
liquidation for all valid outstanding bonds o.
the State and all valid warrants drawn pre-
vious to the passage Of this act by the
Auditor of Public Accounts on the Treasu.
rer. except warrants issued by the Audi
tor in payment of the constitutional officers
of the State, at the rate of sixty cents In
consolidated bonds for every dollar in out
standing bonds and valid warrants Then,
| 1t is provided that the exchange Of the bonds
or warrants authorized by this act shall
be effected by a board of liquidation in the
cities of New Orleans and New York.
The said bonds shall only be used and ex-
changed as indicated in the foregoing man.
ner, and for such evidence OF debt as are
| therein enumerated, and severe penalties are
| prescribed against any public officials who
| may divert or apply them In any other man.
| ner and for any other purposes than those
directed in said statute.
| Provision is then made for the collection
and setting aside of tax OF 81 mills to meet
| the interest on the consolidated bonds thus
| issued. Severe provisions are made against
| the application of this interest to any other
object The courts even are prohibited from
issuing any processes that may tend to
divert such interest.
This Is the original funding act. To render
it more binding and effective, the constitution
in 1874 was amended so as to make the con-
solidated bonds issued under this act valid
contracts between the State and each and
every holder Of said bonds, which the State
shall by no means and in no wise impair.
And the tax required for the payment Of the
principal and interest of said bonds shall be
assessed and collected every year, until the
bonds shall be paid, principal and interest;
and the proceeds shall be paid by the Treas
urer of the State to the holders of said bonds
as the principal of the same shall fall due, and
no further legislation or appropriation shall
be requisite for the said assessment and col
lection and for such payment from the
treasury.
Then, in amendment No. Q, it is provided
that whenever the debt of the State shall have
been reduced below $25,Ooo,oOO, the constitu-
tional limit shall remain at the lowest point
reached, beyond which the public debt shall
not thereafter be.increased; and this ruleshall
continue in operation until the debt is reduced
to $4,000. 600, beyond which it shall not be in
creased. Nor shall taxation for all State pur-
poses, excepting the support of the public
schools, ever exceed 1915 mills on the dollar
of the assessed valuation of the real and per-
sonal property of the State, except in case of
war or invasion.
Under these stringent and exact provisions
the funding act has been administered by a
board, composed of the principal State Off
GERS, and after the most careful sitting and
Of the various evidences of debt. |
claiming to be fundable and abiding the judy
ments of the highest courts upon all doubtful
or disputed claims, the conclusion Of the la
bors of the board has been reached by the |
issue of twelve millions of consols In exchange
for all the fundable indebtedness of the State |
The board has finished its task. It has |
reached the flndable ultima thule of the |
Statess debt and yet the constitutional limit |
Is not attained. It could have extended the |
issue to fifteen millions If there had been |
bonds and warrants which came within the |
scope Of the provisions of the funding act |
But none are offered or known to exist And
the consolidated debt Of the State Is now linn |
tied by the constitution and law to the amount |
Of twelve millions, to which alone the tax
If five and half mills is applicable, and
which cannot be increased except by bringing
n obligations of the State of the class and
character of those described in the funding |
net as exchangeable for consols.
1t is very great error to assume that the
surplus Of consolidated bonds can be applied |
70 any other use. Those which remain af-
jer the exchange for fundable securities cam
1ot be used for any other purpose. They |
must be destroyed, obliterated. Their only |
value consists in their issue and exchange for |
he obligations which are declared to be |
'undable. Ii only twelve millions have
been issued in exchange the three millions,
which might have been issued SO as to reach
stand for nothing. Hence the proposition of |
The Times, that the three millions of
,verplus after the funding of all fundable
,blig ations of the State, might be issued
n aid of the New Orleans Pacific rail-
'oad and the Houston railroad, Is utter
y impracticable and contrary to the law and
,onsti tuition. No portion of the consolidated
onds can be used for any other purpose than
hat of exchange for obligations of the State,
described in the act which we have quoted.
t is highly penal act to use or apply
hem to any other purpose. The debt of
he State is represented by this issue of con-
olidated bonds. To them alone can the five
md one-half mills tax be applied in payment
II interest and principal; and without an
amendment of the constitution we see no
node by which the State can increase the
ebt fixed by the constitutional amendments
mbodying the provisions of the funding
ct.
These provisions are SO securely and care
ully fixed and determined that we confess
ur inability to conceive of any method by
which the State can give constitutional va
idity to any other obligation the Legislature
nay desire to assume, how important and
desirable soever may be the object for which
uch obligation may be required and the
,reat interests that may be thereby pro-
ected.