The Birmingham age-herald., 1916-07-17

l | its interest payments. | But it is suggested: Why not bor- row the money from the banks? Under l the budget bill the city cannot borrow the | money for the reason that the budget 1 bill makes it an ifnpeachabe offense for 1 any commissioner to vote for the expendi- l ture of more money in any one fiscal year than it is estimated in good faith | will be collected in the fund from which
 the appropriation is made.
 CANNOT BORROW MONEY "As to whether or not the city can bor- 1 row money at all even temporarily, in | anticipation of the collection of taxes, l is not clearly established, in view of the provisions of the budget bill, and I am l inclined to believe that it has no such power in the present instance. I am afraid that the supreme court would hold
 that the section of the code authorizing | cities to borrow money to the limit fixed by the constitution. Is, as to Birmingham, repealed by implication by the budget i bill
 l 'In addition to the necessity of paying the interest on the bonds, which creates | the necessity for all the measures here
 matter discussed, the ordinary operating
 expenses must be provided for in advance | of their actual payment
 | "Contracts for nine months, beginning September 15, 1916 had to be made with | school teachers. They are legal obliga- tions of the city and provision must be
 made for the payment of the salaries of the teachers. We cannot wiat until the | supreme court passes on the case to pro- vide the money to pay for the schools Beginning September 15, 1916, the schools 1 will require $50,000 per month to run. One-half of this amount must be supplied | by the city and the balance will come from the state. We can't ask the teach- | CTS to work and wait for their pay | Birmingham now has outstanding $,- 1 coo OO0 of bonds in addition to street 1m- l provement bonds, issued to obtain the money with which to construct street i'm provements, the cost of which, in whole l or in part was assessed against the | abutting property. The interest on these bonds must be paid unless the people
 want to repudiate the debt. cannot believe that any man. whether he be a taxpayer or not, really wants the city
 to fail to pay the interest on this pondeo l Indebtedness. -
 "Wnere is the money to come from with which to pay this interest?
 l s'This is the vital question and problem which the commission must solve as the result of the injunction in the Mcdonald case.
 however. of providing the money presents
 the real difficulty. The money must come lin the following manner
 DENIED USE OF TAX
 '1 From the special tax of 5 mills llevied under authority of the constitution | If 1901. which requires that the same shall be applied exclusively to the pay ment of interest on bonds heretofore is- l sued and those bonds now authorized py law to be issued the city derives an an
 nual income of about s47o'oo onoer 1uose 1 Sharpe's decision as to the meaning or | the constitutional provision above re- | ferred to this money can only be used TOT 1 the following purposes.
 "a. To pay interest on $224'0Oo or bonds upon which the annual interest l charge is $121,So0
 1 "(b). To pay interest on bonds issued by the towns of Wylam, Ensley, Pratt City, l Avondale and Woodawn, the annual ln- | terest on which amounts to $2915o. | "(c(. To pay interest on bonds issued to | construct the north and south side storm sewer, which issue amounts to $4ooOoo ana | the interest on which amounts to $2OOc0 ner annum. This interest is payable our | of the interest fund produced by the D. ! mill tax because of the fact that these | bonds were issued to procure the means | of paying the cost of constructing a storm | sewer the cost of which was assessed in part against the abutting property. and l the property drained by the sewer ana i the authority to issue these bonds was l expressly given by the charter of 1853.
 s'The total amount of interest payable out of this 5-mill tax, therefore. is Sl7l,55o l Hereafter all of the balance of the o-mill tax will have to be placed in the sinking fund, and cannot be used for any pur- pose except to pay the principal upon the bonds to which said 5-mill tax is
 applicable. Of course this will not be true l if the supreme court overrules Judge Sharpe's decision. Therefore. it is seen that about $300,000 per annum will here
 after be raised by taxation and must be
 placed in this sinking fund for the pur- poses above named.
 But what about the other bonds now l outstanding? What do they amount to 1 and what is the annual interest charge ! on the same?
 "Old Birmingham bonds amounting to | SS 175, GOO, with an annual interest charge of $131,25O, and bonds issued by the sub
 urban municipalities before they were an- nexed, amounting to 1,734,50O with an an | nual interest charge of $36. 730, and the two :, aggregating $197. .9S0. can no longer be paid l out of this special tax of mills above re- | ferred to, but must be paid, if it is paid l at all, out of the general fund. If the su- l preme court should hold against the city.
 this amount might be increased by $49, ,75p per annum which would bring the total
 amount up to s246,35 which would have i 70 be raised out of the general fund in
 stead of out of the special 5-mill tax.
 "The difficulty. therefore, arises out of I the fact that while the special tax of 5 mills is more than ample to pay the l interest on all outstanding bonds it can
 not be so applied, but the money must
 come from the general fund. which isl l already strained to the breaking point l by the urgent calls made on it for the
 purpose of paying the operating expenses
 of the general government.
 "The solution of the problem, therefore, | depends upon the ability of the commits
 sion to either raise the amount coming | into the general fund; or else to sub
 stantialy decrease expenditures out os i the general fund.
 REDUCE APPROPRIATIONS
 How can this be accomplished? l as
 sert confidently and without the slightest | fear of successful contradiction. that the 1 only available present means under the 1 constitutional limitations and statutory !! powers of the city are as follows:
 T. Reduce the appropriation to the pub | <,