The Medina sentinel. [volume] (Medina, Ohio) 1888-1961, 1921-12-22
DEBT LIMIT ACT
EFFECTIVE JAN. |
Griswold Law, Passed Recently
By Legislature, Soon
Operative
TIGHT RESTRICTIONS
ON TAXING DISTRICTS
School Districts May Not Ex-
ceed Three Per Cent.
of the Total Tax
Duplicate

upon the borrowing capacity of thu
4,852 taxing districts of the state Jan
!, when the Griswold debt limitation
act becomes effective on that date
bringing about new era in Ohio pub.
lie finance, the result of which is ex'
pected to develop foundation for q
strong financial system.
The Griswold act, which was draft.
ed last year by the Ohio Institute fol
Public Efficiency at the request of the
conference on taxation, has five funda.
mental requirements. These are:
Ito prevent borrowing for cur.
rent expenses or deficiencies.
29To restrict the maturity of loans
so that bonds cannot be issued for a
longer period than the probable life
OF the assets required.
ITo protect sinking funds.
+To strengthen the limitations on
maximum net indebtedness.
S-To establish the serial form oi
bonds.
Borrowing to pay current operating
expenses or defic encies is prohibited
except in anticipation of the collection
of revenue or special assessments; to
defray the expenses of an extraordin-
ary epidemic; tocmeet the deficiencies
created through enjoined taxes, or to
pay judgments of non-contractual obi
cations.
The exceptions granted will not in
terfere with the general principle,
those who drafted the act say.
ANY asset, the life of which is less
than five years, is considered cur
rent expense. Maturity limits are
established for various general classes
of assets that may fall within the
bounds permitted by the act.
Assets not specifically listed are to
be given an estimated life by the fiscal
office of the taxing district
Sinking funds have been given pro-
lection to forestall the possibility of
taxing districts failing to meet bonded
obligations when due. Fiscal officers
are to be required to make preferred
levy annually for the retirement of
bonds, without further action of the
taxing authorities.
Strengthening the. limitations on
maximum net Indebtedness is accom-
plished through supplements to exist
ing statutes which maintain the pres
ent limitations of . IL per cent. on
legislative authority with an addition
al similar amount upon referendum in
municipalities and townships.
School districts may not exceed
per cent. of the total tax duplicate.
Bonds issued prior to Jan /, 1918,
may be refunded but the indebtedness
represented by the issue proposed for
refunding cannot be increased. The
interest rates may be reduced or in
creased, as the prevailing market con-
ditions require, but the rate cannot ex-
ceed 6 per cent.
The serial form of bond, which will
be required by the act, provides for
the retirement of debt through INSTALL
ment maturities in lieu of a sinking
fund.
Equal installments or annuity serial
issues are permitted. Certain proper
tions of these bonds, however, become
due annually, beginning not later than
one year from date of issue.
Provision was also made to permit
taxing districts, upon consent of so
per cent. of those voting at general
election, to lift all limitations for
period ending Sept. Is, 1923, through
the enactments of the Taft bill.
This would give the districts an
to go on pay-as-you-go
basis, without becoming embarrassed.