SUMMARY OF CONSTITUTIONAL PROVISIONS GOVERNING THE STATE DEBT AND THE SINKING FUNDS FOR ITS REDEMPTION 1. A debt for a specific purpose may be authorized by act of the legislature, but the law so enacted becomes effective only after having been approved by the people. 2. The law authorizing the debt must contain a provision imposing an annual direct tax, the proceeds of which shall be sufficient to provide for the payment of the annual interest and the extinguishment of the principal within fifty years of the time of contracting the debt. 3. The annual direct tax rate so imposed by the law authorizing the debt, remains in force through the life of the indebtedness incurred under it is irrepealable and must be collected or the amount it would produce must be transferred from some other fund until the proceeds procure the amount of the debt. 4. A change in the amount of the annual direct tax rate imposed by the law authorizing the debt can only be made if there is a change in the interest rate to be paid on subsequent issues of bonds or when the amount in the sinking fund, created by the collection of the tax, equals the principal of the debt. 5. The funds provided through the imposition of the annual direct tax rate can be used for no other purpose than the payment of interest and extinguishment of the debt. 6. When the sinking fund equals the amount of the principal of the debt the legislature may reduce the annual direct tax rate to a figure sufficient to provide only for the amount of the annual interest. 7. When there is in the treasury sufficient funds to provide the amounts produced through the application of the annual direct tax rates. in force for sinking fund purposes, then the annual direct tax to raise such amounts need not be imposed, but the required amount may be appropriated and transferred from funds in the treasury to the sinking funds. 8. The sinking funds must receive their annual contributions as required the amounts of which are to be ascertained through the application of the direct tax rates in force-either from funds in treaspry, by transfer, or by the imposition and collection of the tax. |