New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-10-22
CITY FINANCE


| trenely simple one. nc O"Hi W So
that "the Controller is authorized 10
borrow such sums as may be necessary
IN meet the expenditures under the APP
propriations for each current year
This money the charter continues. is
IN he borrowed upon the credit OF the
corporation in anticipation of it's reve-
nues. and not to exceed in amount the
amount of such revenues, by the issue
of revenue bonds, (which shall be re-
deemed out of the proceeds of the tax
levy in anticipation of the collection of
which such bonds were issued" There
Is another equally simple means en-
ployed sof providing for appropriations
the necessity for Which cannot be fore
seen when the years budget is made up
Money required for this supplementary.
or emergency, budget account Is raised
by the issue of another kind of tenn
pOrary certificate known as special
revenue bond. and the charter provides
that the money necessary TO redeem
these special revenue bonds shall be
provided by an appropriation in the next
succeeding years budget. These bonds
are thus redeemed out of tax revenues
provided for paying the cost of city
government the year after the money
has been obtained from the sale of the
bonds for emergency purposes.
THE CAUSE OF THE TROUBLE.
A more absolutely simple and easily
workable system could not have been
devised to raise tax moneys In advance
of their collection. and yet II has been the
fragrant misuse of the powers conferred
by this apparently simple enactment that
has been the primary cause Of the dis
graceful chaos into which the city's
finances have drifted. The trouble is
that a great many more millions or dol
lars have been obtained from the sale
of revenue bonds and expended upon
the annual budgets for the cost of city
government than there have been taxes
collected TO redeem them. 1t is true that
the charter contained a provision up 10
1906, when that part of the law was
amended, that the Board OF Estimate
should each year include an amount, not
exceeding per cent of the tax levy, 10
provide for losses in the collection Of the
taxes imposed. With the exception Df
levy has always been authorized TO be
expended. In no year, however. has the
full amount Of budget appropriations
been spent At the end OF 1908, while
the unexpended budget appropriations
of all years tOtalled only ST., 617 .0S2. the
amount of taxes of all levies that re-
manned unpaid at the date was sos. 295.-
30. Consequently there should have
been outstanding at the end of 1908
$S7.67S, 127 OF revenue bonds upon which
money had been raised and expended
upon budget appropriations in excess of
the taxes collected. According to the
records there were outstanding upon
that date only S74.OO6 900 of these bonds.
DIFFERENT METHODS USED.
Every Controller since consolidation
has resorted to his own method of taking
up these revenue bonds There was in
1903 500 467. 800 of revenue bonds upon
which money had been borrowed in the
two preceding years in excess of the
taxes collected to redeem them. This
money had been expended for current
expenses of city government during the
years In which the bonds were issued.
In order to take up these bonds Con-
troller Grout instituted the questionable
practice Of issuing new bonds in antici-
patton of the collection of arrears of
taxes out of which these outstanding
revenue bonds were redeemable, and
with the money thus obtained the reve-
nue. bonds that were outstanding from
1902 were refunded. But recourse to
this expedient only disposed of the bonds
for one year, at the end OF which they
bad again to be refunded by the issue of
another lot of new bonds.
All this time Controller Grout knew
well that he would never be able to get
enough from the collection of arrears OF
1902 taxes finally to pay off the revenue
bonds outstanding against that year
when they matured. He knew that a
large part of the uncOllected taxes of the
levy were personal taxes that never
could be collected; and yet, with this
knowledge. he resOrted to another and
still more unbusinesslike method in 1908
of clearing up old revenue bonds In
October of that year ne issued $6,1OO.OOO
Of these bonds against the uncollected
taxes OF the three previous years. These
bonds were not due to be redeemed until
1908. The folly, to say nothing of the
illegality, of this method was absolutely
proved by the result When the bonds
came due in 1908 there was not anything
like enough taxes collected of the years
against which they had been issued to
redeem them.
ACTION BY LEGISLATURE.
This was one of the conditions which
existed when the present Controller came
into office in 1906 The constitution of
the state determines that all revenue
bonds issued in anticipation of the col
lection OF taxes that have been outstaud-
ing for a longer period than five years
shall he regarded as part of the city's
funded, or constitutional. debt. An act
of the Legislature passed in 1906 gave
the Controller the necessary means OF
rescuing the city's finances from the
state of chaos into which they had fallen
by authorizing the issue of corporate