New-York tribune., 1909-10-24
CITY IN DIRE STRAITS.

CITY IN DIRE STRAITS.
BY this time the city was in dire
straits for money and had temporarily
to suspend payment of its current OBJ
hgations. Covenants TO pay were voided
IN hundreds Of contracts, and where con-
tractors found II profitable to abandon
their contracts they did so, and applied
10 the courts for mandamus orders COM
pelllng payment by the city of the
amounts due up TO the time of the aban-
Comment. The Legislature at Albany was
finally induced. upon the urgent repre-
sentauons Of the Controller, to amend
the charter and permit the payment of
Interest upon the city's corporate stock
and assessment bonds at a rate higher
than had previously been allowed
With the additional iuducement of an
increased earning power of one-half per
cent year for fifty years to offer the
investing public the Controller, on Sep
tember 10. took to market another lot
of S35.oo0,000 of corporate stock and
So!ocO,oo0 of assessment bonds The new
interest rate proved catching, for, even
in the midst of the panic, every bond
ofered was sold at a considerable pre-
mium over par value.
Although S79927,11 III had been realized
from the sale Of these long-term bonds
TO the public and to the sinking funds
the city was still in financial difficulties
During the last three months of the year
after the greater part of the taxes had
been received, the Controller issued and
J cold
anticipation of the collection of the cur
rent years taxes. bearing the abnormal
ly high rate OF per cent interest per
annum, and S16,0O0,OOO in anticipation
Of the collection of arrears of the tax
levies Of 1905 and 1906. That such a
huge sum OF money should be raised by
the sale Of revenue bonds after prac-
ucaily the total tax collections for the
year had been received proved one Of
two things. Either the city had been
unable tc dispose Of the usual amount Of
revenue bonds during the preceding
months. when money was required to
pay budget appropriations. or within a
| few weeks of the end of the year after
the bulk Of the taxes had been received
/ revenue bonds largely in excess of the
legal limit had been sold.
TRANSACTIONS OF CURRENT YEAR
The charter report of the Controller for
| 1907 contains a segregation OF the re-
ceipts and expenditures of budget ac-
! counts that makes it possible to ascer-
| tain accurately the moneys received and
paid out in 1907 for the budget of the
| current year and for budgets of prior
/ years. There was received on account
of the years budget S1O4, ,6SS, ,653, made
up of s73,07S, ,9O4 from taxes and re-
funds, S23,S63, ,9S9 from the. general
fund and S7,T45. T59 from the sale of
special revenue bonds, refunds and open
ing balances of the emergency budget
account The expenditures totalled S124,-
6S4,945 and included SIG, 1885, 40 for
| budget appropriations and 81 7,91S, ,SO5 for
emergency budget account, the receipts
of the latter being obtained from the
sale Of special revenue bonds.
The amount stated above as having
been paid out for budget appropriations
differs from the sum given in the char
ter report. The reason for the difference
is that the S119, 766, 40 which appears
100000 by means of which proceeds
of the sale of the current years revenue
bonds were transferred to special and
trust accounts to be used to make up
! the deficiencies in taxes heretofore
| levied which were deemed uncollectible
on January 1, 1905. In any scientific
segregation of the city's cash all rev.
enue bond transactions must properly
belong to budget accounts. The war
rant transferring this amount was,
therefore, in effect cancelled in The
! Tribune's segregation by deducting
the amount from the expenditures of
budget accounts and from the receipts
of special and trust accounts. Dealt
| with upon this basis the figures show
| that there was a deficit as between the
receipts and expenditures upon the
budget of 1907 of S19.996, ,291 which had
| to be supplied from the proceeds Of the
sale Of revenue bonds Issued in antici-
| patton Of the years taxes.
There were sold of 1907 revenue bonds
| during the twelve months S1O1, ,5S2, ,076,
! but OF this amount $3,0O0O0O, as has
| already been pointed out. was to provide
| for deficiencies in the collection of taxes
! Of previous years, and is, therefore, prop
| erly a receipt of that part Of the budget
accounts dealing with former years. The
amount received from the sale Of the
current years revenue bonds that was
| auplicable 10 the 1907 budget was, there
fore. S1O4, ,5S2,0 ,076. OF these bonds there
were redeemed SIC. 400 go, making the
net amount obtained from that source
SOS. ISL. .S26. But the deficiency which
the sale of these bonds was intended 10
supply was only SIS, 1896. .291. so that at
the end of the year there should have
been a surplus Of SIS. 1s5.535 to the credit
Of the current years budget accounts.
TRANSACTIONS OF PRIOR YEARS.
IT has been the custom also. in latter
wears to issue revenue bonds in antici-
nation of the collection Of arrears of
the tax leyies OF former years. This
nractice has arisen through lack OF any
system of funding the city's floating OBJ
LEGATIONS represented by outstanding rev.
enue bonds upon which money for bud
get purposes in excess Of the taxes col
Iected had been borrowed in previous
s These bonds are not supposed to