LOCAL BODIES' FINANCE.

Press, Volume LVIII, Issue 17419, 1 April 1922, Page 11

LOCAL BODIES' FINANCE.

the new act. some drastic provisions. Thoso local bodies of which the Christehurch City Council is one, whose .financial year ended yesterday, March ; 31s t w ill forthwith, in the matter of ;their financial affairs, come under the i operation of the innovatory clauses of UL Local Bodies Finance Act, passed 'during the last session of Parliament, ' Broadly the intention of the Act is to comwl local authorities to live within their income and to make each %ar's aocounts balance, and to abolish F-omplotcly the practice that has grown imof oasfc years of creating a standing liability, which tended to increase, and Z diminish and which in the annual ivL-mts was represented by the amount 7JS dne to the Bank. For the future the borrowing capacity of a & authority, apart from the raising ,17bans sanctioned by the ratepayers, ■till ha limited and the outstanding Knbilit? « "antecedent liability" as it £&* *> Act . • '"f T yean nave to be completely extinguishlocal authority may now, in anticiMtion of its revenue, borrow by way of orndraft or otherwise, not more than tWonrtha of the total revenue repaired during the preceding year. A ' sinikr limitation is imposed m respect M g general account or any special account. Even if these borrowing powers ere exorcised, as undoubtedly they will harq io be until the collection of the rate revenue is complete, the amount owing on the general account, or on any special account at tho end of the fiwtnwal year must not exoeed the unpaid revenue due to such amount. In other words, the extent of the liability at the end of the year's operations must be balanced by revenue duo but not collected. For the enforcement of these provisions the penal clauses of the Local Bftdies loans Act atraiy. Bio Act also prohibits a local tody fiCB borrowing from any person, exunder the authority of a special ; Act, the Local Bodies Loans 'AW.'the Act under which tho local nimierity was constituted, or the 1921 jiet- Tbis in effect imposes a check .oniht-iystem of financing by means of Q\&ptrary loans repayable on demand or otherwise. A bank advancing by wey of overdraft up to not more than 75 per cent, of the previous year's rate revenue of a local authority, i& protected to the extent of ihab advance lrresjfctive of what other advances such local authority may have secured elsewhere. I "The Antecedent Liability."

An important feature of tho Act is tiitfb relating to the extinction of the accrued liabilities due by a local author* UJr. Within three months of the end of the financial year a statement has to be delivered to the Minister of Internal Affairs, showing the amount ownig on <rttt9raft, and the amount owing on deposit, and the aggregate of all such -*UMowing is termed the "antecedent That amount has also to bo u&liiija to the bankers. | ?«,$«; extinguishing of that antecetaaifitllihty, two methods of procedure ihtybe followed. A local authorSfimy ruse a for the purpose of ftffafliijkmg the' liability wholly or in pet, * may pay off the amount by not Bon than seven equal annual payQOtroot of revenue or may proceed loan and partly by irstalafeil. if the instilment method is sSopted then such instalments themNtljei may be provided by means «E.Jk r apecial rate. "Whether a fej# 'i» raised to pay off ft n wttbdeot liability, or a ratci struck to pwifle fpf the instalments, the consent «M 8» ratepayers is not required. ' The OghtbQ itself' gives the necessary auth- - Jt will therefore be for any Council as to the principle it will jwur ia extinguishing the antecedent x If the amount is repaid by ntnat instalments, then an addition „ «ul We to ]» made to the general Itfajdtttraisa required, in order to pro- *!?* for the oxtra expenditure, or econwill hare to be practised in the wsduot of the general pperations of we war in order to the deada past debt without increasordinary rate revenue. Should •Council proceed by way of loan : ||*fl W additional burden, from which "wy W mav not be relieved, ao:jj|i®ag. to whether a Council applies jjj| saving in former overdraft charges fSPjeting the annual charges on such iISPy Utcluding sinking fund charges for S- 1 Position of Oity OounciL fjgfa far as the Christchurch City MPCw » concerned, the amount of its jjjgjffident liability is not at present asIWsMliable, Neither the City Treas-1 rmL;i or City Accountant could say §lK y y oSt « rda y what the amount Mjw w,and not being able to say dc|§lW preferred to say notning. rKi estimates, i were adopted by tho BWwJit a special meeting called for |^®® r POSO, the amount owing on averffl" 081 March 31st, 1922, was put £71,205. The actual amount, |ijW#.taaUy ascertained, may be groat- ' « t ' lnn this total. Assuming k® £70,000, then, if the in--«?S» P" is adopted, the CounM&w to £IO,OOO annually, of revenue or by special rate, |g|Bjj?w with the new Act, that, in°f that special rating being io what is at present levied, levied for ordinary xequirepresent unimproved valuation MS&? excluding Woolston, thei required to produce £IO,OOO woolq be 281-lOOOd in the £l, oT€r a farthing. That spewould only be required for assuming the antecedent £Egj|«round to be £70,000. Should (SjJficiaed, " owev e r i to raise one big whole of the ante- ||™% still assumed at the fflXgsM#, the rat« required to pro.and sinking fund for a "" would be not. more larato' on eity area, 00 ' 8^< ®' The position of part of the city, in reliability would HkJ and if the "Wool.brought into share the the rate to be levied on lirfirSi are * be reduced acutum valuation of Deluded m tho old |ffiS«%ote County Council's S|K&^ r J . clo , S6d The ■'SiMKKrt. 0868 that the credit general fund is £2130. outstanding total