New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1898-04-02
THE UEBT LIMIT.

n CORPORATION Counsel Whalcns opinion Is
good law the city II New-York has actually
reached its constitutional limit Of indebtedness
According 10 the Mayors last mcssage-assum-
ing that all obligations Of the consolidated cities
counties and villages are valid, and that tho
county debts assumed are 20 be counted IN de-
.crmlning the limit OF debt. though they are
specially exempt from account by the Consn-
tuition in case Of n city and county becoming
coeItcnsive--the total outstanding debt IS S22i,-
1890 II. Ten per cent of the assessed valua-
ton % real estate would bc S2564I6319 20, SO
that the margin OF debt is n little over Sl9-
100000. not counting the cash IN the sinking
fund. ard including in the bonded debt about
q million and half OF revenue bonds which
the Mayor put in his statement as a reducer
OF the limit.
This margin, as well as an addition Of the
revenue-bond amount, which. contrary TO Mt
Van Wyck's views. arc held by the plain man
date OF the Constitution TO be exempted from
account. thus bringing the margin mp 70 S2l,-
4S4. 391 10. is wiped out by Mr.. Whalen. He
holds that all contracts legally entered into FOR
future payment are part Of the city debt. and
must be included In determining its borrowing
capacity. Az contracts for Just about s2l 600
600 have been made for which bonds are not
yet issued, !. Is evident that the debt limit II
reached II Mr.. Whalen is right, and there are
no offsets discovered We think there are I'M
portant offsets which be does not consider. He
makes a strong case on the matter OF contracts,
and has the plain support OF the Appellate ID
vision in his view. When a contract Is entered
into an obligation Is created binding on the tax
payers and the purpose OF the Constitution Is
10 prevent mortgagng the future beyond
1.-THE Of the resources OF the present Mr..
Whalen adheres to the logic OF his own posi-
ton. and holding that bond issues already au-
thorlzed and contracts already made are debts
to be considered, also holds that no matter
what the present condition OF the finances the
bonds may properly he issued and the contracts
carried out provided the limit had not been
reached at the time the obligations were in
Cured.
For present purposes the opinion these
points covers the largest ground. but, answer
ing another question. Mr. Whalen takes a view
which. II correct. may in the future greatly af-
feet the city's borrowing power He says that
the cash in the sinking fund may not be Offset
against the gross bonded debt He refers 10
a Pennsylvania decision on this point. but seems
TO have overlooked the broad principle laid
down by our own Court Of Appeals. When ihe
constitutional limit was first imposed Corpora
ton Counscl-now Judge-Lacombe held that
the bonds in tho sinking fund could not DO
deducted from the gross debt. The Tribune
then controverted that view though Il was up
held by the Court Of Common Pleas and it was
| finally justified by the Court of Appeals when.
| in the case Of the Bank OF Servings against
| William X. Grace, II reversed the lower courts
and decided that the bonds In the sinking fund
were an offset TO the gross bond issue. The
| opinion OF Judge Danforth. In which all con
Cured laid down the doctrine that the con-
shtutionn prohibition was aimed at an actual.
mot theoretical, indcbicdness-at substan-
"tal liability which can DO discharged only by
| 1.-THE enforcement OF a tax" Cash in the sink
| ing fund can be used for no other purpose than
| extinction Of debt. and hence so much Of the
| bond Issue rs will be extinguished by II can
| never become burden of taxation. The citys
| financial standing Is as much n matter Of bal
ances az an individuals. The question of debt
| limit is not one Of bookkeeping but Of actual
| liability to taxation.
| Should the courts uphold all Of Mr. Whalens
| opinions the city would have TO make future
improvements by increasing assessments This
may rightly be done. for the undervaluation
has been enormous: but the power to make the
increase will be In Tammany hands. and, II
resorted to. will probably be used to make pos
siblc on n narrow margin expenditures which
It favors, while stopping all enterprises with
which It does not sympathlze. But Mr. Whalcn
| does not cover the whole subject, nor Is his
| opinion final