Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1904-06-15
Did Legislature Exceed Its
Authority In Permitting
Cities to Increase Debt?
\ CONSTITUTIONAL QUESTION
Bond Companies 'nquirins Into the
Legality of Bond Issues in Iowa
Towns Have Raised important Cues
ton That Courts May be Called Up
on to Decide.

Des Moines, June lis the consti-
tutlonal limit of indebtedness of mu-
nicipal corporations in Iowa per cent
of the actual value or of the taxable
value of their property?
And did the recent legislature enact
law within it's power to pass when
Indebtedness of school districts and
towns in Iowa to 2la per cent of the
actual value of their taxable property
Or did it merely try to repeal a sec
ton in the constitution?
These are inquiries which have been
put to State Superintendent Riggs by
bond companies which have been con-
sdering the legality " bonds issued
by certain school districts under this
new law of the recent Legislature.
The companies also have gone to
their attorneys about it, and the super
intendent thinks it is question for
the courts and got for his office to de-
termine.
A consideration of these questions
by the courts would be watched with
great interest by every municipality
in Iowa for the reason that If 1t were
held that the constitutional inhibition
applied to the actual and not the taxa
bic value of property. instant prepara-
ton would be made to secure the re-
peal of the statute now limiting debt
to less than the constitutional limit
would be determined to be by such de-
cision.
Des Moines' debt limit, for instance,
now is about $S50,000. Minus statutory
limitation it's limit would be s3.400,000.
The constitution, section 3, article IL.
provides that mo county or other polft-
ical or municipal corporation shall be
allowed to become indebted in any
manner or for any purpose to an
amount in the aggregate exceeding B
percentum on the value of the taxable
property within such county or corpor-
alton" At that time property was
valued for taxation at it's actual value,
in theory.
When the state adopted the system
of fixing the taxable value at twenty
five per cent of the actual value Of the
",
part Of section 1905 of the code, declar-
ing that the percentage limitation of
indebtedness shall be so reduced that
such Indebtedness shall not exceed the
amount which by law might have been
incurred on the assessed valuation for
the year 1897"
Under this statute, the limit of in
debtedness of all municipal corpora
tons. including towns and school dis
tricts. became one and one-fourth per
cent of the actual value of the taxable
property; that is. five per cent of the
taxable value, which it had BEEN prior
to the establishment of the new rev.
enue system.
The recent legislature raised the
limit as to towns and school districts
of certain condition, to two and one
half per cent.
If the constitution is construed by
the courts to mean that not to exceed
five per cent of the taxable value of
the property may be subjected to debt,
then the recent legislature has passed
an act in conflict with the constitu-
ton, having doubled the limit fixed by
the constitution under such construc-
ton.
But If the courts construe the con-
stitution to mean that debts UP to five
per cent of the actual value of prop
erty--that is, twenty per cent of the
taxable vaiue-may be incurred, then
probably the municipalities of the state
will at once begin scramble for the
repeal of section 1905.
For, without reference to the relation
of section 1906 to the constitution, OF
the lack of power of municipality to
borrow to exceed five per cent of the
taxable value of it's property there has
been no doubt, heretofore, altho 1t never
has been adjudicated formally by any
court In Iowa. The bond companies In
the case of ordinary debts have held
that the inhibition applied to taxable
value and not actual value. and since
this state taxes on one-fourth OF the
actual vaulation the inhibition is
against more than one and one-fourth
per cent of the actual or five per cent
of the taxable value and not five per
cent of the actual or twenty per cent
of the taxable value.
BOARDING HOUSE BURNS.