The Hokitika Guardian THURSDAY, SEPTEMBER 7th, 1922. LOCAL BODIES FINANCE.

Hokitika Guardian, 7 September 1922, Page 2

The Hokitika Guardian THURSDAY, SEPTEMBER 7th, 1922. LOCAL BODIES FINANCE.

The restrictive legislation embraood in the Local Bodies Finance Act, 19212, is having a disturbing effect in many quarters. The law which was passed very hurriedly as a result chiefly of municipal banking in the form of boroughs taking deposits at call, now regulates the financial arrangements of all public bodies, and it may produce certain serious and unexpected effects. The Act is intended to check local extravagance by preventing the traditional practice of charging miscellaneous 1 expenditure to “hank overdraft” and it therefore declares that the amount of overdraft at the end >f each financial year shall be ranged as an “antecedent liability,” which is to be liquidated either by raising a loan or by paying off the amount in sewn yearly instal-'

merits. To facilitate tlie end in view, the Act provides that the. local body shall- not allow any of its hanking accounts' to be overdrawn by an amount in excess of three-quarters of revenue properly payable into that account in the preceding year, while at the cel of the financial year the overdraft is to be reduced to ait amount represented by the outstandings on the day in , question.” The penalty for a breach of this enactment is a personal one Oil the Councillors themselves. The law is proving-irksome already and the Xo.v Zealand Counties Association is asking for an amendment whereby some reasonable latitude may still be allowed in respect to bank overdraft at the close of tile financial year. If, however, the law is administered strictly at the end of March next the responsibility of providing for the full yearly requirements out of income must be to in advance. For extraordinary expenditure suddenly arising tlie local bodies may raise loans but these have to be sanctioned by the ratepayers. It is not unlikely that considerable confusion will arise at intervals in the endeavour to keep within income and at the same time perform pressing works. Local bodies when making up their estimates and levying the animal rate must provide for a strong finance to ensure the Council keeping within the four cornels of the act. Where the Council fails to do so thu responsibility rests iilltividually on the members of the local body. The law as it stands "ill not work out satisfactorily. That there is a demand for some amendment afford- j ing more elasticity , is evidenced by the alarm felt in some quarters. A considerable onus rests already on those who take up public duties and the new provision incieases the personal responsib- ; jlity considerably. In regard to county government the new law will lead quickly to more direct district responsibility in regard to rating. Kach district will he expected to fairy oh within its own available means. This " ill lend up to a system of differential rating, , so that each sub-divisioh of :1 coiinti-V I district, that is each riding, will he ex. j pected to keep within its local income. I The measure of the rates will then he j governed by the demand for works. At the commencement of each financial year the members will require to consider carefully what their expenditure is going to lie, and after allowing for general income, and providing for a proportionate shilro of the. host of administration. strike a balance, which will equal the amount to he raised within the riding by local rating. In each case provision, at least to some extent will require to l>e made for extraordinary expenditure which might arise. The local bodies for the future may not borrow against the next year’s revenue. Each financial period has to balance itself, and on the balance day, mostly the 31st. March, the overdraft must not exceed outstanding it ml uncollected revenue at that date. Fol‘ all tlie largo local hollies workTng oil this

principle there* is going to he considerable difficulty at certain times nud an amendment of the law mdre or less elastic "ill come to be absolutely necessary.