The rapid increase in public expenditures, especially on the part of cities, has been viewed with alarm by the taxpaying citizenship. Charges of graft, recklessness, inefficiency, and general lack of economical methods have been frequent. The rapidly increasing tax burden, because of this enormous growth in expenditures, has led to many demands that something be done to curb the power of the assessing and taxing officials. In some states attempts have been made to curb this supposed extravagance of municipal and even of state officials. The most common method of procedure is to place some constitutional or statutory limitation upon the amount of revenue a city may secure. The amount of a city's indebtedness, also, has been closely guarded, and provision has been made to limit the fiscal activities of some state legislatures.

The most used limitations upon the fiscal powers of municipal authorities is to impose a fixed or limited tax rate with provisions for securing increased funds to meet emergencies. Not only has it been thought that this sort of restriction would curb wasteful expenditure, but that a limited rate of taxation would be an incentive for listing a larger amount of the intangible personal property. Experience has shown, however, that no very startling results have been obtained in bringing this class of property from hiding.

Methods of Tax Limitation. - The use of a fixed tax rate for municipalities has not proved satisfactory since there is no definite relation between a city's property and its necessary activities. Besides, some cities may be undertaking more legitimate enterprises than others, which will necessarily entail greater expenditures. If the fixed rate is higher than is necessary it will lead to extravagance, waste, and graft, while if it proves to be too small it will result in the restriction of necessary activities, an increase of borrowing where this is possible, or the extension of the revenue system to include unproductive or undesirable sources.

As a substitute for the fixed rate, a limited tax rate has sometimes been used. This plan allows an increase in the rate, but not to exceed a certain percentage of the rate for the preceding year. This, however, is only more satisfactory than the fixed rate, for if the limitation is the same for all cities in a state, it is attempting to place a uniform standard upon needs which vary greatly. In neither case is there any guarantee that the burdens upon property will be kept down because authorities can resort to increased assessments to swell the revenue. A more effective method of real limitation is to allow only a certain increase in expenditure over a preceding year, or the average of several preceding years. Neither the tax rate nor property valuations can be juggled to offset the intended restrictions.

The limitation on indebtedness usually takes the form of allowing bond issues to only a definite percentage of the property valuation, and this, frequently, only upon popular vote. In any system of limitation some provision for flexibility should be made to allow for emergencies, or for various forms of capital investments which, of course, should be put into a different category from current expenses.

Many municipalities are finding themselves pressed for funds because of the limitations which have been placed upon them. The increased costs of labor and materials have more than outstripped the possible revenue increases from the existing sources, while the decrease caused by canceled liquor licenses has often been keenly felt. Indebtedness has frequently been increased to the limit, and the only recourse has been to seek new sources for funds. The course most generally pursued has been to increase the use of license taxes, as upon vehicles, and professions.

Ohio Plan of Limitation. - Ohio furnishes one of the best examples of state tax limitation. According to the law a maximum of fifteen mills is placed for the aggregate of all levies, while a limitation of ten mills applies to all levies, except to those authorized by a vote of the people, and those necessary to provide interest and a sinking fund for indebtedness. The limitation extends to the minor political divisions in that the maximum levies of the county, municipality, township, and school district are placed, respectively, at three, five, five, and two mills. These levies, however, are exclusive of any special levies which the citizens may vote. Little satisfaction and much criticism have been expressed concerning the working of the plan.