LOCAL GOVERNMENT AND TAXATION 41 



ticipation of taxes, in annual payments, so that the amount of the 

 annual payment in any year shall not be less than the amount of the 

 principal payment in any subsequent year. The entire debt for which 

 the notes are issued must be liquidated in not more than twenty 

 years. The annual principal payment and the interest are required 

 to be assessed and collected annually. Demand notes are not per- 

 mitted. The purposes for which bonds and notes may be issued are 

 limited to the construction and purchase of buildings and public im- 

 provements of a permanent nature, the acquisition of land, purchase 

 of equipment of a lasting character, and the payment of judgments. 

 The debt limit of municipalities and counties is also provided for 

 in the Municipal Bonds Statute. The limits, based on che percent 

 of the last assessed valuation of taxable property, follow : 



Counties 3 percent 



Cities and towns 3 percent 



School districts 2 percent 



Village districts 1 percent 



Loans in anticipation of taxes and debts for water supply may be 

 incurred outside the debt limit. Furthermore, local units of govern- 

 ment, upon approval of the tax commission, may make application to 

 the governor and council for authority to exceed existing debt limita- 

 tions for the purpose of taking advantage of such grants or aid as 

 may be offered them by the United States Government.'''^ The issue 

 of county bonds is authorized by the county convention ; of city 

 bonds, by the city coimcil ; and of town or district bonds, by popvilar 

 vote at the respective meetings. 



The financial condition of local units of government is reported 

 by each unit in its annual report to the state tax commission. The 

 prescribed blank for making this report is in the form of a balance 

 sheet. On the asset side are listed cash, receivables, and net debt, 

 and on the equity side are listed the short and long-time liabilities and 

 surplus. Net debt, or surplus, is always the difference between total 

 assets and total liabilities. 



The financial condition of local units of government as reported 

 by the state tax commission is shown in Table 6. AVith the excep- 

 tion of a small amount of current accounts receivable, assets are made 

 up of approximately equal amounts of cash on hand and uncollected 

 taxes. Only towns and cities show uncollected taxes as such. Coun- 

 ties, however, occasionally have a comparatively small amount out- 

 standing at the end of the fiscal year which represents taxes not yet 

 turned over by the towns and cities. It will be recalled that towns 

 and cities assume the responsibility for delinquent taxes and that 

 other units of local government receive the full amount of their 

 levies. 



The combined liabilities of all local units totaled nearly 25 mil- 

 lion at the end of the fiscal year 1940, whereas assets equaled only a 

 little more than eight million, thus leaving a net debt of about 16 

 million. School districts, village districts, and counties do not bor- 



^ Session Laws, 1933, Chapter 162. 



