Evening star., 1949-03-15
Tax RaiseSeen
In Montgomery
|fDebt Rises
Council Hits Failure
Of County to Pay OFF
Bonds Before 1947

county taxes WILL DC increased II
proportion to new bond issue.
authorized for school building ane
other capital improvements.
At the same time, the council
indicated that any sizable pro-
gram depends on the Marylans
General Assembly's approval O
a bill to raise the legal bondes
debt limit from Z to 10 per cen
Of the county tax base.
In a 2.000-word statement mad,
public at its weekly meeting /,
Rockville. the council also pledged
to continue the practice estab
lished two years ago by the Re
publican commissioners OF no
refunding maturing bonds.
The council expressed determin.
alton to maintain and improve
the county's credit" but said this
can be done while authorizing new
capital improvements of prime
necessity" Such a program would
include some school construction
for which the Montgomery Board
Of Education wants $4,000, 900
over four-year period.
Statement Quoted.
The detailed statement, pre-
pared after consultation with
bankers and other fiscal authori-
ties. said:
The present picture of Mont
gomery County's debt situation is
not alarming, but further deterio-
ration of its credit would be ex-
tremely serious. Caution, econ
omy and sound financing prac-
tices are clearly indicated"
The council was critical of fiscal
practices before 1947, mentioning
specifically the failure of former
boards to pay of bonded indebted
ness as it came due.
"The financial difficulties which
face the county are attributable
to several causes" it said. Among
them are the necessity for
furnishing enlarged public serv-
ices and facilities for a continu-
ally rapidly increasing popula-
ton: past failures to pay of
bonded debt as it became due;
increasingly large principal and
interest payments on past deb,
coming due in the next severa
years. and the country's lack oi
control over functions and finan.
cial opertions of overlapping BIZ
county agencies"
The latter reference was to the
Washington Suburban Sanitary
Commission and the Maryland
National Capital Park and Plan
ming Commission. Montgomery
and Prince Georges County,
jointly, are responsible for COM
mission bonds in addition to their
respective county obligations.
Difficulties Explained.
The council said an increase In
Montgomery's taxable base will
at present tax rates-produce only
enough revenue to support the
county's growing budget and not
enough to support debt service
incident to substantial additional
bond issues. The statement con-
tinued:
THE serious difficulty of the
county's debt situation flows not
from its size but from other
sources. From 1888 to 1947 the
county established a reputation
Of not paying of its debt as il
became due. AS old bonds issuee
in previous years for various i'm.
provements fall due. the usual ane
sound practice Of counties is tt
pay them of from current ia,
collections.
Montgomery County was un
able to follow that practic,
during the 14-year period be-
cause of the unwillingness of tn,
then county commissioners t,
raise the county tax rate abov'
$1.50 per 500 of assessed valu,
in order to provide for deb
service. Bonds were no
paid of out of tax collection
but by creating new debts, with
the result that the county's deb
today is much larger than i
should be. In one year none,
was borrowed to pay interest a.
well as principal"
Heavy Load Cited.
From 1850 until 1860, the state
ment said. Montgomery will have
to meet a heavy load in bono
payments. That item in 1850 viii
be $1.380.000 and it will rise Il
$l.442,000 by 1852. even if NJ
bonds are authorized. The 1866
payment on existing obligation
will still be over $1.000.000.
This means that at present tas
rates and on the basis of thi.
years budget, 26 cents out of each
81 expended by the county govern.
nent will go for payment o1
debt for past improvements ane
refunding bonds rather than fol
services to the people," the state
ment declared.
The council said Montgomery
taxpayers are liable for approx
mately 100000 Of Sanitar!
Commission bonds, the guarantee
of which is required by law.
This overlapping debt and con
tingent liability affects Montgom
. cry County's credit" the repor
stated.
Average Debt Computed.
The citizens were informed tina
the county debt averages $l45 pc
person and the overall debt, in
cluding that Of the "overlappinI
agencies" is about $305 per person
This is high when compares
with the corresponding averag
per capita figures Of Sill and 81
for IS other comparable countie
of over 100000 population, tn
council said. Then the statemen
made a brighter observation:
"On the favorable side o