Evening star., 1933-05-21
Special Dispatch to The Star.


NEW YORK, May 2o.-what II
charactsrizes as "a program OF con-
structive economy" is outlined by the
Investment Bankers Association of
America for the benefit of municipal
ties. 1t attempts to set out a number
of policies the adoption of which. it
believes, would correct some of the
main faults of city financing to whicn
the present low state of municipal
credit may be charged.
The first recommendation Is that
overlapping governments should be COLI
solidated. Local taxing and admin
istrative units are now too numerous
for efficient operation and have be-
come burdensome to the taxpayer. In
many instances they are too small to
render any satisfactory service; they
cannot support the cost which their
separate entity requires. There has al
ready been some progress made in this
direction. Much remains to be done.
Tax Strikes.
The Bankers Committee takes the
position that, at whatever cost neces-
sary. municipal governments. being in
dispensable, must be maintained. The
remedy for their present credit status
taxes are imposed and collected. The
increasing rate of taxation has led TO
many tax strikes. These must be
avoided by bringing the tax ratio down
to a reasonable figure. 1t is suggested
that instead Of continuing the present
method Of collecting revenues six
months or a year after expenditures
are made, the tax bills should be sent
out at least quarterly; in some instances
monthly statements should be issued.
This would avoid the expensive habit
of short-term borrowing and effect
savings of considerable size through
avoidance Of tax anticipation financ-
ing. 1t would also bring expenditures
under better control. The effect of it
would be for a municipality to estab-
lish itself on approximately a cash
basis.
Where defaults occur 1t is expedient
for the State to assume some super
visory control of municipal financing.
"Since municipal corporations are crea-
lures Of the State, 1t is the duty OF the
State to administer the finances OF its
subdivisions in the event of break
down in a con1munity's credit" says
the committee. It points out that the
States of New Jersey and Massachu-
sets have made provision for receiver
ship commissions to administer local
finances, while Ohio, Michigan and
North Carolina have State agencies to
supervise and assist in debt refunding.
In Canada the provinces of Ontario and
Quebec have permanent commissions
which, on petition by a Municipality or
its creditors, take complete charge of
the community's financial activities,
either before or after default.
One of the most difficult problems
for city administrations to deal with
at the present time is that OF tax de-
linquencies. The committee. remarks
that 'ft is mandatory upon our States
and municipalities to find some method
Of catching up with themselves on tax
delinquencies." The frequency Of munic-
ipal defaults, due to inability to collect
past due taxes, makes this phase Of the
municipal credit situation the most i'm
portant as well as the most trouble
some Of the. many that present them
selves to city governments. There Is q
reluctance ON the part of municipal
authorities to press delinquents for pay
ment In view of the general unem-
ployment and loss of income.
On the other hand, the experience
Of nearly every community Is that tax
deltnQuents are not always impover-
ished. Many are refusing to pay their
taxes because of the rate imposed.
while others are taking advantage OF
various kinds Of nnoratoria TO defer
payments that they could readily make.
There has I'm q tenderness snoMn