Denison, 102731 PAAGO, AGO 29

• Case Date: October 27, 1931
• Court: Pennsylvania

Honorable W. M. Denison AGO 29 Opinion No. 29 Pennsylvania Attorney General Opinions Opinion of the Attorney General October 27, 1931          School Districts—Indebtedness—Temporary Loans for Current Expenses--School Code Section 508          School districts may borrow money in anticipation of current revenues 'to meet current expenses, without regard to existing Indebtedness or their general borrowing capacity. Under Sec. 508 of the School Code as amended, school districts may borrow for current expenses in anticipation of revenues for two- years, subject to the limitations stated in that section. School districts may not borrow money for current expenses for a longer period than two years.          Honorable W. M. Denison,          Deputy Superintendent of Public Instruction,          Harrisburg, Pennsylvania.          Sir: You have asked us to advise you concerning a question submitted to you by the school board of Latrobe Borough. The board states that collection of school taxes in the borough during this and the coming year is likely to be very difficult, and asks what power it has to borrow money on notes in anticipation of the collection of the taxes. Specifically, the board inquires whether it may issue notes payable in one, two and three years, the aggregate amount of the notes not to exceed two per centum of the assessed valuation of the taxable property of the borough.          We assume that the purpose of the proposed loans will be to meet current expenses of the school district, and not to make permanent improvements. Therefore, our discussion will be confined to a consideration of the extent of the authority of the district to borrow for current needs.          The Supreme Court has said:

"Money borrowed for current expenses must be a sum within the current revenues. Current revenues include taxes for the ensuing year and all liquid assets, such as delinquent taxes, licenses, fines and other revenues which, in the judgment of the authorities, are collectible. * * *" Georges Township v. Union Trust Company, 293 Pa. 364, 369.

         Loans for a year or less, to meet current expenses, which, together with other operating expenses, can be paid out of current revenues "due or created within the year," do not constitute increases of indebtedness under the Constitution: Georges Township v. Union Trust Company, supra, page 369; Jackson v. Conneautville Borough, 280 Pa. 601, 607; Shamokin Banking, Etc., Company v. Coal...