Evening star., 1931-06-01
DISCUSSES
BUILDING FINANCE
Enormous Increase of State
Bonded Debt Meets
DiSfavor.

Asserting that the net funded debt
Of State governments has increased
240 per cent during the past 10 years,
L. A. Carrutt1ers, chairman Of the
FederationS OF Citizens Associations,
declared in o radio talk Friday that the
increase in public Indebtedness in re-
cent years on the part of States, coun-
ties and municipalities has been at such
an abnormal rate as to excite a great
deal Of unfavorable comment all over
the country.
Mr. Carruthers, who Is chief Of the
division Of the Census Bureau in charge
OF compiling annual reports Of financial
statistics Of States and cities. and a
member Of the Citizens Advisory
Council, spoke over Station WMAL.
1T Is the common practice of States,
counties and cities to meet capital out
lays from revenues derived from bond
issues" Mr.. Carruthers declared.
AT the present time the net funded
debt Of State governments is 81, SOC, ,000.-
600, or per capita State indebtedness,
OF $3.50. Ten years previously the
corresponding amounts were net funded
debt, S466.875,ooo, and a per capita
debt, $4.44.
City Debts Grow.
'The Indebtedness Of cities has In
the "a cities with population Of over
100000. we find the net debt 70 be ap-
proXimately $4,000 900 900, which Is q
per capita net debt of $164.
1T is the practice Of most States
and cities to meet maintenance and
operation charges from current reve-
nues, but 1t Is found desirable to finance
bettermentS from borrowed money.
THE proponents of this system of
financing public improvements are of
the opinion that tax rates and assessed
valuations Of taxable property should
not be subjected to radical changes.
Persons acquiring property for invest
ment must be able to forecast the
approximate amounnt of taxes to which
SUCH property will be subject in order
10 determine the purchase or rental
value of such properties This can not
Dc zone with reasonable degree Of
accuracy II the tax rate is subject to
abnormal and constant fluctuations.
Advantages Cited.
Another argument advanced in IA
vor OF financing such costs from bor-
roWed money is that improvements
WI De OF Deneflt and service to future
generations, and that it is unfair tn
ask the taxpayer Of the present tn
pear all OF the burden. more con-
Vlnclng argument is that it permits
a state or city to carry out needed
CIVIC Improvement that would be de-
layed II they had to be financed from
current revenues.
This method Of financing is not ne
cuIar 10 States and minor civil di-
naetUtS OF states, but is practiced by
HiolVioualS and corporations. Compar-
atlvely few people who own or have ae-
CURED an equity In their homes would
nave Deen able to do so if they had
Deen compelled to save from their an
LuaI earnings an amount sufficient to
acquire the home by cash payment.
Inc CITY OF Washington has not fol-
ioWeo the common rule and has no
.to noaloeo oeot Possibly as a result of
@ @lIiIS practice 1t is found necessary tn
resort TO the use Of portable buildings
Tor school purposes.
Inc building program of Washing
ION contemplates a Municipal Center fo
cost from S25 100000 to S3O. 900 600
IN order to carry out this and other
improvements one of thres things an.
pears necessary: to increase the tax
rate Sufnciently to complete the pro-
gram, allow the tax rate to remain as
~ Is Gno extend building program over
period OF possibly 2 years. or m
resort to the method followed bv nracti.
cally all other cities, which would he
20 Issue serial bonds to be retired
Wltnin period of years, making n
possible for our present tax rate to take
care OF both principal and interest
1neSe bonds could be issued with the
credit OF the Federal Government back
OF tnem, 1nsuring a rate of interest tn
tne city as advantageous as the Federal
Government secures when borrowing
| for its own uses.
Indebtedness Fixed.
In most States cities are restricted
by State laws as to the amount of in
oeotedness they may incur. based on
the assessed valuation of taxable real
property OF Washington, with an as
seSsed valuation of real property of
| 81 ,zOO OOO,0O and population of 5a6.-
QUO, could normally borrow approxi-
mately $l00,000,000 and be no more
| deeply in debt than other cities of a
like population
our city is confronted with the
necessity OF increasing revenues or cur
failing expenditures, and if this curtail-
| ment must be made at the expense of
| needed Improvements it might be better
10 follow the example of other cities and
borrow the money.
IhlS discussion of public indebted
ness is offered with the thought that IL
| may point the way to a solution of q
| financial situation that must be met bv
| those charged with the administration
of the fiscal affairs of our city.
The Federation of Citizens Assoeia-
tlons, as an organization, has not taken
any action on this subject and it is not
to be considered as having its indorse-
ment."