CHAPTER II
STATE AND LOCAL INDEBTEDNESS

(Gros oa i policies in respect to public borrowing
 vary widely. Some governments take the
stand that the pay-as-you-go policy should be adhered
 to strictly except in extreme emergencies. Others take
the opposite view that borrowing is justified, provided that
the credit of the government does not become unduly impaired
 and that the purposes for which the borrowed funds
are to be used warrant recourse to this method of financing.
Continued financing on the latter basis frequently results
In an embarrassing situation, unless full provision is made
for the funds required to meet interest and redemption payments
 at the time the indebtedness is incurred. If such provision
 is not made, the result in some cases may be an
eventual impairment of credit, for few governmental units
are so fortunately situated as to be able to finance any considerable
 volume of indebtedness without providing additional
 sources of revenue or augmenting the amounts obtained
 from existing sources. On the other hand, extreme
adherence to the pay-as-you-go policy may restrict the development
 of governmental activities to such an extent that
government may be charged with failing to make adequate
provision for the well-being of its constituents. This is
particularly true in a period of rapid social and economic
changes.
As will be seen, government in Missouri has not followed
either extreme. The state government throughout its history
 has at times been almost on a pay-as-you-go basis. At
other times borrowing has been resorted to freely, and even
constitutional limitations on the borrowing power have been
modified when circumstances seemed to warrant such a
change. Similarly, the borrowing policies of local governments
 have undergone a series of changes, although the
changes cannot be traced so readily as in the case of the
state government.