RATE TO MEET DEFICIT

Press, Volume LXX, Issue 21148, 26 April 1934, Page 12

RATE TO MEET DEFICIT

♦ TRAMWAY BOARD'S INTENTIONS FIGURE OF ABOUT id IX POUND j SUGGESTED [ It now seems inevitable that the ; Christchurch Tramway Board will be. compelled to levy a rate to meet the j i deficiency in its finances for the year j ■< ended March 31, 1934, and one well-j . informed authority has suggested that • ] it will be necessary to strike a rate | j of about ]d in the £. If the boardj t takes action along the lines recom- t mended by the two independent ac- i countants who this week Presented t their report on the finances ot the tramway undertaking it will be necessary to strike a rate, based on the capital value of the whole tramway y area to produce a total return of ap- j proximately £31,000. and such a rate j is likely to be recurrent lor soine ( < 3C As ! "thc total rateable value of theN tramway area is approximately! £38,000.000. a rate of '.dm, the £; levied on this amount would return a; sum of roughly £38,500, so that it ap-; ' pears probable that the rate could be, c fixed at a little less than Id lo re-; turn an amount of £31,000 it would; be necessary for the owner of a pro-: J perty of a capital value of £IOOO to ( - pav an addition of about £1 to the | sum of between £lO and £l2 which; he already pavs in rates, according to whether he lives in the city or the £ suburbs. £ Building Up Reserves 1 It is stated that the board would t U=e most of the revenue secured from j the rate to make the necessary de- : posits to the reserve fund;-'. These; fund- the investigating accountants ' indicated, had sunk to too low a level, t Their report said that the board was J faced wtih a large deficit for 1934, as - well as a large prospective deficit for 1935. with no reserves in hand except _ £2550, which it was not recommended ' should be used. "It is certainly trusted '■ that the board will resist the tempta- c tion to deplete further the remaining -j special reserves represented by investmerits," the report added. Position of Special Areas , ' The whole question of the necessity' , for a rate to meet the board's de- . liciency is affected by the peculiar l , position which has arisen over the ; special rating areas in the tramway , district. Ratepayers in these areas— j St. Martins may be mentioned as an , example—desiring an extension of the j tram services into their districts, , agreed by vote that they would be . constituted special rating areas. This:, involved an undertaking to meet anyh deficiency which might arise in the operation of the services in those dis- j , tricts. But it was established in a:, law suit which was decided m another . centre that special rates could not be levied against these areas to meet the . | deficiencies which arose. The result I was that the ratepayers concerned ; were not legally able to redeem their i promises. Suggested Legislation It has now beta suggested that th.2 ' Christchurch Tramway Board should j contemplate having legislation intro-j duced into Parliament to legalise the' position, aiid compel the ratepayers of; these special areas 'of which there art-: several in the city) to meet their; j obligations arising out of losses in j their respective services. If such legis-1 Ilation could be secured -and it seems; | beyond doubt that it could be-—the: |boaid's financial position would be! i considerably relieved. The burden of; j meeting the deliciencic.-: m the special: • areas would then be removed from j; lie ratepayers in the gi neral rating ; area. i But it is learned on good authority 'that while the board could perhaps' j secure the introduction oi such Ictus-j iation for the coming cession of Par-j I liamtnt. the success or failure of the: j move could not. influence the present; position. The issue of whether a rate! is necessary lias to be faced inline- ■ diatcly. It is considered that, if the board j could compel the ratepayers in the' special areas to meet their respective! deficiencies, the relief which that i would give tlie board's financial posi-i tion might influence the question of the recurrence of the proposed rate. ! or its amount in future years; but at . present the board cannot afford to j wait until that particular problem is j cleared up. > j Altered Opinions? ' There are peculiar complications in | ] the matter of these special areas, in i any case, which would delay the board i in any action it tool;. One is the! probable attitude of the affected rate-j payers as they stand 1 3-day. While | the decision to create the special areas i was the result of a vote by the rate-' payers, there is no certainty that the' popular opinion on the question has; not changed. It is certain that there i ; are many new ratepayers in every■ special area who were not ratepayers | when the decisions were made, and j who perhaps are not willing to 1 shoulder the responsibilities of the; majority of the former ratepayers. ! AH these special areas arc paying i operating costs, so that any decision i to discontinue the services to them | would leave the board no belter off'. Commitments of interest and sinking funds would still have to be met in each case. But it is anil- within the bounds of possibility that the board may take seme action about the areas in the near future. JUJRGESSES' VIEWS , i EFFECT OX PROPERTY VALUES; A desire for information about Ihej • proposal that the Tramway Board should strike a rate was expressed by ■ members of the council of the United . Burgesses' Association at a meeting on Tuesday evening. Although the idea of a rate was opposed by most members', it received some support from a minority. Mr A. E. Peverill I presided. ! Raising the question of tramway' 1 finance.-, Mr A. H. Campbell asked whether it would not be possible for the council to be addressed by an official of the Tramway Board, such as the general manager. A member remarked that the general manager could not speak without the authority of the board. Mr Campbell: Why should there be any restriction on anybody? We represent the ratepayers, and we are entitled to information. Mr Prouting said he did not think it would be fair to ask the general manager, as he was a servant of the board. ! The chairman said that the only " thing the association could do was to t protest against any rate. Mr Campbell remarked that the ; board already had authority to strike - a rate it it wished, though if it wished t to raise a loan it had to obtain the I authority of the Local Government '. Loans Board, i "My position is this," s;nd Mr - Campbell. "I warn, to know why funds • set aside for certain purposes have - been raided for other purposes, to cover up deficits in other accounts. I don't know anything about accountancy, but I wouldn't run my own affairs like that." "It is hardly fair to ask the prel sent board why this has been done," , said Mr Prouting. "Whatever has ,-1 bsen done was the action of the pre- ] I vious board." j Mr Campbell said he wondered

whet.ner, m face of this, any good , purpose would bo served bv having a meeting addressed by members of the board. ' Need for Agitation Mr Prouting: The general public ' should not have to suffer a rate merely because the board says one is necessary. Mr S. W. Richardson: I think a rate is the fairest way out of the board's difficulties. [ Mr R. B. Dalley disagreed with the ; proposal that members of the board | should address the association. The j members of the new board would put i the blame on the old board, and if , representatives of both the present j i and the former board attended, a I j referee would be necessary. A mem- j ; ber of the present board would say j the present position was the result i of mismanagement in the past, and | that the former board had raided | funds, and had done all sorts of things 1 that it should not have done. Such a I j procedure would do no good. j ! "The position is this," said Mi | Richardson. "The board has got into j a hole. There is only one way out, [ and that is by rating." Most persons, even those who did not use the trams, but rode in cars and on bicycles, would have some advantage. Everybody's property was enhanced in value by having a tram-route near it. In the centre of the city property owners had a similar advantage in that the trams brought people into the city. "A rate is the most equitable way | out, and I have been in favour of j it for a long while," he continued. "If j the board squares tip its position and j a fair rate is struck, then after a ] time it may be able to reduce fares, j so that those persons who are rated ! and who use the trams may get part | of their rates back in that way. They I may perhaps save 6s or 7s by lower fares." In this way a rate would benefit all who used the trams, but all, including those who did not use them, should bo included in the rate. "What would happen if (he lines were taken up in pome of the outer areas?" he asked. "Properties would i depreciate in value, just as it has happened in the Northcote area. If you I tell a prospective buyer that a tram I route runs a mile away from the | property, what sort of a deal can you i make?'' Mr G. E. Franklin said that people living in the outer suburbs already had enough to pay. At North Brighton, for example, it cost them about £9 10s a year for tramfare to and from the city. Would it be fair for them to have to pay a tramway rate as well? If the board struck a rate it would become extravagant. A voice: Can't you depend on the board and its management? Mr Dalley said that he agreed with Mr Franklin in this. In the past there had been some incentive to make the tramway service pay, but with revenue coming from a rate this incentive would be gone. He did not think that any reduction in fares ! would result. ! On the motion of Mr Campbell it ! was decided to invite the chairman j of the Tramway Board, or members ! or officers of the board to address a | meeting of the Burgesses' Association ! about tramway finances with special reference to the most equitable way of striking a rate. It was decided to call a special meeting should the invitation be accepted.