States as a whole. The percentage of debt to assessed valuation was also much lower than in the United States as a whole or in any of the other states. The percentage of municipal debts to valuation was highest (ten per cent) in New York. An analysis of municipal debts in the United States from 1880 to 1912 shows that a much larger part of the recent debt than the earlier debt is for productive undertakings, and a smaller proportion is for other purposes, such as war loans, railroad aid or refunding earlier loans." 10 Conclusions. The only question which seems likely to arise in connection with the provisions in the Illinois constitution relating to state debt is as to the desirability of increasing the amount of debt authorized to meet casual deficits, so as to correspond with the present scale of state financial transactions. The general prevalence of limitations on municipal debt indicates the recognized need for some method of restricting the borrowing power of local governments. Criticism is made, however, of the mechanical and rigid character of the constitutional limitations in the United States. The method of imposing an arbitrary percentage limit on valuation does not take into account the different purposes for which debt may be incurred, nor the varying needs of different classes of local authorities or different communities. The wide variations in the percentage limits show the absence of any consensus of opinion as to a satisfactory limit of this kind. In operation, the effect of these limitations is frequently altered by the extent of undervaluation in the assessment of property (which may vary from time to time, as it has in Illinois), and by the device of creating overlapping districts, each of which may borrow up to the constitutional limit. The recent provisions exempting loans for revenue producing public utilities (adopted in states with relatively high limits), place such debts on a different basis from those to be paid from taxation, and reflect a more liberal policy toward the extension of municipal functions. While some constitutional provisions on municipal debt are advisable, specific limitations on such debts in the constitution do not seem to be satisfactory. It does not appear that in states such as Michigan and Ohio, where the limitation on the amount of debt is left to legislative action, debt conditions are any worse than in states where the limits are fixed in the constitution. By statute provision could be made for a system of administrative control, based on a study of local conditions, similar to that now exercised in the case of securities for public utility corporations, and to that used in Great Britain. for the loans of municipal authorities, a plan which has also been adopted in Massachusetts for loans by the towns in that state. 10 F. E. Clark: The Purposes of the Indebtedness of American Cities, 1880-1912. APPENDIX NO. 1 REFERENCES (A) Taxation. Civic Federation of Chicago: Apace with Progress. The case for the pending amendment to the Illinois Constitution. Voted upon November 7, 1916. Taxation and Public Finance. Constitutional Convention Series, Study No. 2, (1919). Cooley, T. M. Law of Taxation (3rd ed. 1908) Vol. I, pp. 274-342. Fairlie, John A. Report on the Taxation and Revenue System of Illinois. Prepared for the Tax Commission (1910). Report on Revenue and Finance Administration. Efficiency and Economy Committee (1914). Haig, R. M. History of the General Property Tax in Illinois, (University of Illinois Studies in the Social Sciences). Judson, F. N. A Treatise on the Power of Taxation (2nd ed. 1917) pp. 769-1041. Massachusetts Constitutional Convention Bulletin No. 20: Classification of Property for taxation (1917). National Tax Association, Proceedings: I. (1907) Loeb, I. Constitutional Limitations affecting taxation: II. (1908) Campbell, R. A. History of Constitutional provisions. relating to taxation; X. (1916) Bullock, C. J. The state income tax, versus the Classified Property Tax. Report of Committee on a Model System of National and State taxation. Report (1911). Special Tax Commission (Illinois). United States Bureau of the Census. Taxation and revenue systems of State and Local Governments. A Digest of constitutional and statutory provisions relating to taxation in the different states in 1912. (1914). (B) Appropriations and budget methods. Buck, A. E. The present status of the executive budget in the State governments. National Municipal Review, VIII, 422 (August, 1919). A carfeul analysis of the executive budget system. Lowrie, S. Gale. The Budget. Wisconsin State Board of Public Affairs, Madison, 1912. A careful discussion of the budget in this country and abroad, with an analysis of the constitutional provisions of all the states. Massachusetts Constitutional Convention. Bulletin No. 2. State budget systems in the United States. Boston, 1917. A good brief analysis of budget provisions in 1917. Willoughby, W. F. Movement for budgetary reform in the states. New York, Appleton, 1918. Summaries the experience of the states. (C) Debt Limitations. Clark, Fred E. The purposes of the Indebtedness of American cities, 1880-1912. Municipal Research, No. 75, July, 1916. Massachusetts Constitutional Convention Bulletins : No. 14. Constitutional Restrictions on Municipal Indebtedness. No. 15. Constitutional Restrictions on State Debt. No. 21. Methods of Borrowing, Sinking Funds v. Serial Bonds. Secrist, Horace. An Economic Analysis of the Constitutional Restrictions upon Public Indebtedness in the United States. Bulletin of the University of Wisconsin, (1914). United States Bureau of the Census: Financial Statistics of States, (1918). APPENDIX NO. 2. ILLINOIS CONSTITUTION, Section 1. The general assembly shall provide such revenuè as may be needful by levying a tax, by valuation, so that every person and corporation shall pay a tax in proportion to the value of his, her or its property-such value to be ascertained by some person or persons to be elected or appointed in such manner as the general assembly shall direct, and not otherwise; but the general assembly shall have power to tax peddlers, auctioneers, brokers, hawkers, merchants, commission merchants, showmen, jugglers, inn-keepers, grocery-keepers, liquor dealers, toll-bridges, ferries, insurance, telegraph and express interests or business, venders of patents and persons or corporations owning or using franchises and privileges, in such manner as it shall from time to time direct by general law, uniform as to the class upon which it operates. Sec. 2. The specification of the objects and subjects of taxation shall not deprive the general assembly of the power to require other subjects or objects to be taxed, in such manner as may be consistent with the principles of taxation fixed in this constitution. Sec. 3. The property of the state, counties, and other municipal corporations, both real and personal, and such other property as may be used exclusively for agricultural and horticultural societies, for school, religious, cemetery and charitable purposes, may be exempted from taxation; but such exemption shall be only by general law. In the assessment of real estate incumbered by public easement, any depreciation occasioned by such easement may be deducted in the valuation of such property. Sec. 4. The general assembly shall provide, in all cases where it may be necessary to sell real estate for the non-payment of taxes or special assessments for State, county, municipal or other purposes, that a return of such unpaid taxes or assessments shall be made to some general officer of the county having authority to receive state and county taxes; and there shall be no sale of said property for any of said taxes or assessments but by said officer, upon the order of judgment of some court of record. Sec. 5. The right of redemption from all sales of real estate for the non-payment of taxes or special assessments of any character whatever, shall exist in favor of owners and persons interested in such real estate for a period of not less than two years from such sales thereof. And the general assembly shall provide, by law, for reason able notice to be given to the owners or parties interested, by publication or otherwise, of the fact of the sale of the property for such taxes or assessments, and when the time of redemption shall expire: Provided, that occupants shall in all cases be served with personal notice before the time of redemption expires. Sec. 6. The general assembly shall have no power to release or discharge any county, city, township, town or district whatever, or the inhabitants thereof, or the property therein, from their or its proportionate share of taxes to be levied for State purposes, nor shall commutation for such taxes be authorized in any form whatsoever. Sec. 7. All taxes levied for state purposes shall be paid into the state treasury. Sec. 8. County authorities shall never assess taxes the aggregate of which shall exceed seventy-five cents per one hundred dollars valuation except for the payment of indebtedness existing at the adoption of this constitution, unless authorized by a vote of the people of the county. Sec. 9. The general assembly may vest the corporate authorities of cities, towns and villages with power to make local improvements by special assessment or by special taxation of contiguous property or otherwise. For all other corporate purposes, all municipal corporations may be vested with authority to assess and collect taxes; but such taxes shall be uniform in respect to persons and property within the jurisdiction of the body imposing the same. Sec. 10. The general assembly shall not impose taxes upon municipal corporations, or the inhabitants or property thereof, for corporate purposes, but shall require that all the taxable property within the limits of municipal corporations shall be taxed for the payment of debts contracted under authority of law, such taxes to be uniform in respect to persons and property within the jurisdiction of the body imposing the same. Private property shall not be liable to be taken or sold for the payment of the corporate debts of a municipal corporation. Sec. 11. No person who is in default, as collector or custodian of money or property belonging to a municipal corporation, shall be eligible to any office in or under such corporation. The fees, salary or compensation of no municipal officer who is elected or appointed for a definite term of office shall be increased or diminished during such term. Sec. 12. No county, city, township, school district or other municipal corporation shall be allowed to become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness. Any county, city, school district or other municipal corporation incurring any indebtedness as aforesaid, shall before or at the time of doing so, provide for the collection of a direct annual tax sufficient to pay the interest of such debt as it falls due, and also to pay and discharge the principal thereof within twenty years from the time of contracting |