LOCAL BODIES’ FINANCE.

Taranaki Daily News, 24 October 1921, Page 7

LOCAL BODIES’ FINANCE.

RESTRICTIONS TO BE IMPOSED. (From Our Own Correspondent). Wellington, Oct. 20. The obligations to set about liquidating outstanding liabilities by way of overdraft or money held upon deposit is cast upon local bodies by the Local Bodies Finance Bill. Within the scope of the Bill are included city, borough and county councils, harbor and road boards, town, native township and drainage boards, water supply boards, river boards, railway boards and electric power boards.

The existing provisions allowing these bodies to borrow on overdraft are to be ewept away. In their place considerably limited power to do this is to be instituted. With certain eaving provisions which are explained later in the Bill, no local body is to be permitted to borrow on overdraft to such an extent that

(a) There shall be owing by the local authority to its bankers at any time a aura exceeding two-thirds of the total revenue for the preceding year. (b) There shall be owing by the local authority to its bankers at any time upon its general account or upon any aeparate account a sum exceeding twothirds of its revenue for the preceding year properly payable into that account. (c) It shall owe to its bankers upon the thirty-first day of March of any year on its general account or in any separate account any sum greater than such part of the revenue of the year then ended as remains outstanding and unpaid, and properly payable into that account.

So long as the first of these three provisos is observed the bankers of the local authorities are not to be held responsible for failure to comply with the remaining two, and nothing in the two provisions is to affect the right of the bankers to be repaid money advanced by the bankers to the corporation. In the eaae of a local body constituted after the passing of the measure the limit of its borrowing capacity under these terms for the first year of its existence is to be set by the Minister for Internal Affairs. Local bodies are to be permitted to borrow money, on deposit or otherwise only under the authority of (1) a special Act, (2) the Local Bodies’ Loan? Act, 1913, (3) the Act under which that local body itself ie constituted, or (4) the present Bill when passed into law. With respect to the liabilities of local bodies as on March 31, 1921, either to their bankers on overdraft or to persons who have lent money on deposit, every such body is required, before the end of January next, to render to the Minister for Internal Affairs a written statement showing the sums so owing on overdraft and on deposit and the amount of its revenue for the year then ended outstanding and uncollected, together with the name of ite bankers. The difference between the sum of these two liabilities and the amount of outstanding revenue is to be ascertained and to be known officially for the purposes of the measure as the “antecedent liability.” Failure to render the return makes every member of the local body liable to a fine not exceeding one hundred pounds, while the Controller and Auditor-General is to obtain the neceeeary information for the Minister. The Minister is to inform the banker of the loeal body of the amount of this antecedent liability. Every local body having an antecedent liability is empowered to borrow to that amount without taking a poll of the ratepayers, for the purpose of extinguishing the liability. Any body which does not exercise this borrowing power, or raises a sum equal to only part of its liability, may settle its debt, or the part of it outstanding by seven equal payments out of revenue, one to be made at the beginning of each financial year beginning with next year. The amount which the earlier sections of the measure empower a local body to borrow on overdraft is to be computed in addition to the amount of the antecedent liability. Where a local body elects to extinguish its antecedent liability by the seven instalments, it will be permitted to levy a special rate for the purpose of meeting any annual instalment. This power may’ be exercised from time to time, or the rate may recur annually. until the antecedent liability ie extin- , guished. Subject to the provisions of the Bill each local authority is required to meet its ordinary obligations and engagements .-for the year out of revenue. Where contracts extending over a term of years have been entered into, the local body is required to estimate each year the amount payable under the contract for that year and to make provission accordingly.