Decatur Daily Democrat, Volume 57, Number 166, Decatur, Adams County, 16 July 1959 — Page 10

PAGE TWO-A

Port Authority Bond Issue In State Likely United Press International INDIANAPOLIS <UPI» - State officials who boast of Indiana’s unique “debt free" status will have to do some verbal gymnastics to justify a bond issue to finance a Lake Michigan seaport. The deep water port in the Burns Ditch area of Porter Coun-

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ty is no longer an unattainable dream. Army engineers are surveying the site and are expected to make a favorable report to Congress shortly. A congressional appropriation of about 10 million dollars to build breakwaters and deepen the harbor would follow. The rest is up to Indiana. The Indiana Constitution expressly forbids the state to go into debt for the "30 or 40 million dollars" Governor Handley said is needed to build dock facilities and buy the land. But the Constitution is only a technical roadblock easily bypassed. The intent of the Constitution can. and undoubtedly will, be circumvented by creation of a "Port Authority" with power to float the'bond issue.

It’s been done before, the ci»cumventing of the Constituion. Office Building Site When the state was blocked by the Constitution from going into debt to finance a 30 million dollar state office building, the 1957 Legislature came up with a plan. It created a State Office Building Commission and invested in it the authority to sell bonds to finance the 13-story structure now being constfuced across from the present Statehouse. The Indiana Supreme Court upheld the legality* of the act, eveii though it admitted that its main purpose was to get around the Consitution. "It is never an illegal evasion of a constitutional provision or prohibition to accomplish a de-

THE DECATUR DAILY DEMOCRAT, DECATUR, RiDtANA

sired result, which is lawful itself, by discovering or fallowing a legal way to do it,” the high court said in a decision upholding the Office Building Act of 1957. “If the Legislature has discovered a lawful, method 6f avoiding the debt limitation on the Constitution of Indiana whereby it can obtain for the state, after a periexi of years a state office building, instead of g stack of rent receipts, that is a matter of policy for its determination.” The court said it “would not question the wisdom of a statute or the motive which led to its enactment." It held that the commission was “a separate corporate body” and as such was valid. Repay From Rents The commission was empower-

ed either to issue bonds for the 1 building or buy it from a private builder under a lease-rental plan. 1 The only limitation by the Gen- 1 eral Assembly was that the in- 1 tcrest rate could not exceed five i per cent and bonds had to be re- ’ tired in 40 years. ] Repayment would be made from rental fees paid by state agencies ’ using the building. The Port Authority, when and if ! created by the 1961 Legislature, i would be operated in much the < same manner. The courts probab- < ly would gb along with the 1958 Indiana Supreme Court decision ; and declare the authority a “separate corporate, body*’ with power to issue bonds to finance the port. Whether this constitutes a “debt” on the taxpayer is a mat-

ter of heated debate. Actually, the Port Authority 1 probaby will be two million dol- : lars in “debt” before It is authorized. It will owe that much to the state for money advanced by the 1957 Legislature to be used to purchase land for the port. The money, which has not been used, was authorized to establish 1 the state's ‘‘good faith” to steel firms which own the port land and have agreed to sell it to Indiana at 25 per cent below original cost. "It’s ironic that the creation of a Port Auhtority should be the method used to get around the Constitutional provision agaipst state debt, because another dream in which Indiana was a focal point for shipping led to inclusion of

the debt limitation provision when 1 the Constitution was rewritten in 1151. < Canal Broke State In the 1820 s, the nation caught canal fever. -Indiana was no exception. State officials dreamed of > a vast network of canals, eventually connecting Lake Eire at Toledo, Ohio, with the Ohio River at Evansville. Tp turn this dream into reality, then Gov. Noah Noble put the state 20 million dollars in debt to finance a canal-building program. At that time, 20 million dollars was one-sixth of the state,s total worth. But the program failed under the crushing burden of money problems followed by competition from other means of transportation,

THURSDAY, JULY 16, 1953

particularly the railroads. Noble’s optimism bankrupted the state. Could the port do the same? No, the experts say. Very likely, as Handley pointed out, the bonds could be repaid from profits made by rental of facilities, taxes, fees, etc. Should port revenues fall below the estimates and the cost of the port somphow revert to the taxpayers, the money could be repaid without draining the state treasury. The taxpayer would feel the pinch, but 30 or 40 million dollars would pot be very noticeable in this day of billion dollar biennial budgets. Trade li a good town — Decatur.