Opinion ID: 2384574
Heading Depth: 1
Heading Rank: 5

Heading: The Debt Service Charge

Text: The fourth prayer of the Board in its petition for mandamus is that the Council be required to eliminate from the then current school tax any item for debt service. In its levy resolution passed in April, 1963, the Council expressly included a charge for debt service incurred for financing of school construction in the amount of thirty-seven cents (Cf. Gantt, wherein the Court referred to the fact that the County Commissioners did not order that the cost of collecting the tax should be deducted when it passed the school levy). An item for debt service had also been included by the Council in similar levy resolutions for prior years. The debt represented by this item in the levy constituted a funding, through county loans, of items requested by the Board and approved by the Council for the construction of new schools. The Board concedes that the Council has the exclusive legal power to decide whether to fund the school needs through borrowing, but contends that it is unlawful to reflect the cost of such borrowing as a part of the school tax. There is no provision in Section 68 or any other section of Article 77 which expressly prohibits long term financing of capital improvements for the schools or the inclusion by the Council of a proper amount on the school tax to pay for the expenses thereof. Cf. Baltimore City v. Gorter, 93 Md. 1, 11, 23, 48 Atl. 445 (1901) in which we pointed out that the Baltimore City Charter expressly prohibited the creation of debt for new improvements by the language it shall not be lawful for the City    to create a floating debt for any such purpose. Absent such an express prohibition, there is a strong inference that the Legislature intended the Council to have the fiscal discretion inherent in its governmental functions to determine how to charge the cost of funding the debt. The method of handling such a charge may well have been deemed as much a matter for the financial wisdom of the Council as the determination of the number of professional and clerical assistants is a decision for the administrative expertness of the Board. The Board argues that the reflection of the cost of borrowing in the annual levy is misleading to the State and county educational authorities and to the general public. The State Board of Education contends that denial of the right of the Council to do what it has been doing as to the debt charge would, in effect, require the Council to place all capital school construction on a pay-as-you-go basis, with attendant and unfortunate fluctuations in the annual school tax levy. These arguments go to public policy. The issue before us is one of statutory construction. It is not for this Court to decide what is best for the school system and the taxpayers; our function is limited to determining how the Legislature resolved the question. We find no intendment or implication in the statute limiting the power of the Council to include the debt service charge in the levy. The inclusion of the debt service charge in the levy was over and above the forty cent charge for maintenance and support of the schools. This was proper. See Montgomery County v. Yost, supra, at 223 Md. 157. The ruling of the lower court in denying the relief prayed by the Board as to the inclusion of the debt service charge was correct. Motion to dismiss the appeal denied; order dismissing petition for the writ reversed as to the first prayer for relief and case remanded for further proceedings to ascertain the amount of the surplus withheld and for the passage of an order directing such amount with any interest earned thereon to be paid by the appellee to the appellant; costs of this appeal to be paid by appellee.