New-York tribune., 1911-12-06
GENERAL FUND MUST PAY
Cut of Deficiency Provision from
Budget of No Avail.
DEFICIENCY STILL REMAINS
Only by Allowing Debt to Go Un-
paid Can the City's Burden
for 1912 Be Lightened.

ing by ss12,633 26 an appropriation Of slo,-
100000 in the budget for 1912 to provide for
uncolectible taxes appears to be a solemn
effort on the part Of the city's chief execu-
tive 10 lift himself by his boot straps.
Neither the action Of the Board OF Alder
men nor the Mayors solemn approval OF
that action will result in the reduction by
a single cent Of this particular 100000
budget burden upon the taxpayers during
the coming twelve months. The Mayor
says that there is no deficiency Of T.452.-
! 2s4 s. IN the collection OF special franchise
taxes and that the so-called discrepancy
between special franchise taxes levied and
the special franchise taxes collected Is a
| fgnent Of the Imagination created by the
bookkeeping system in the Controllers
office
The situation is simple one. The law
compels the Controller TO set UP as bud
get credit each year the face OF the tax
levy. The credit thus set up plus the esti-
mated revenues of the general fund con-
stitutes every dollar that can be legally
expended under budget authorization to de-
fray the cost Of city government Tor the
year. The law also conpels the Controller
TO obtain money 10 defray the years ouo-
get expenditures by borrowing in anuclpa-
ton Of the tax revenues upon revenue
bonds. The difference between the amount
50 borrowed TO defray budget expenditures
and the actual cash received on account OF
taxes due and payable represents the extent
to which the city has not received the tax
revenues required TO meet the authorized
expenditures under the budget
Validity Of the Law Assaied.
In the years from 1900 to 1910 the Con-
troler, in obedience to law, set up as a
budget credit the full amount of the special
tax levy. The validity of the state law
which created that tax was assailed in the
courts. Corpora tions assessed upon the
value Of their special franchises refused TO
pay the tax. For years the special iran
chise tax credit set up in the city's books
and upon which the Controller was COM
PEELED to borrow money on revenue bonds
10 meet budget commitments was not con-
vertible into taxes paid. because the right
of the city to collect under the law was
asssiled in the courts.
Finally II was decided that the law was
valid, but It was declared that certain fees
and special licenses collected by the city
year by year between 1900 and 1910 should
be credited as part payment Of the total
amount of special franchise tax assess
ments credited from year 10 year on the
citys books.
But these fees and special licenses, total
ling s7452, ,264 IS for the years from 1900 10
1910 had been paid when due into the city
treasury through the general fund ana
used along with the other revenues OF
that fund to pay budget expenses for the
year in which they we're received.
The Board of Estimate included in the
budget of 1912 an appropriation of S,4o2.-
264 s. to cancel the credit which, under
the law, II was compelled 10 create during
the years from 1900 TO 1910 represented by
the difference between the face OF the
special franchise levy in each of these
years and the amount which should be
deducted therefrom, being the money PAID
year by year in the shape OF fees and
special licences into the general fund and
used during the year In which they were
received to pay budget expenses.
Would Not Change Result.
The total budget Of 1912 as adopted by |
the Board of Estimate and Apportion- |
ment was SlS9,2l0,950 80. Assuming that
the amount OF general funds available tor |
the reduction OF taxes OF 1872 shouId De
s34,00O,000, there would be balance OF
sl5521O950 SO TO be raised by tax levy |
II on the other hand, the budget should
be reduced by striking therefrom a net
amount Of s6,712,633 26 for tax deficiency |
the resultant budget (not considering |
anv other reductions) would aggregate
s182,4eS,317 OF. and the general fund. In
stead Of having s34,0O0.OOO to apply tow
ard the reduction Of taxation In 1912,
would have only s27,2S7,36j "a. thus re-
ouiring s155,210,95o 80 to be raised oy
taxation, which is the same amount as
would require TO be raised provided the
entire Sl0,000000 Of tax deficiencies were
still contained in the budget
II is evident, therefore. that no matter
which course is pursued-whether the
amount OF the special franchise credit on
the citys books is wiped out by an ap-
preparation in the budget for 1912 or the
amount in actual cash is taken from the
general fund and transferred to the re-
ceiver OF taxes, 10 be applied In the liQui-
dation OF that credit-the result upon
the years tax levy will be the same. The
amount required 10 be so raised will be
no more and no less The tax rate will
be the same. The budget will be reduced
by s10.O0060o. but the revenues OF the gen.
eral fund will also be reduced in like
amount through the process OF refunding,
and the tinal result Is the same tax rate
That there is a deficit no one can doubt
That deficit can be met by leaving the
budget as it was adopted by the Board OF
Estimate, and that is the legal way. II
can also be met by transferring actual
cash in the same amount from the reve-
nues OF the general fund for the year to
the receiver CT taxes. The dehcit could be
allowed 10 continue. as like deficits have
been allowed TO continue in the past, by
making the reduction in the budget and
not refunding the amount from the gen
eral fund TO the receiver OF taxes. But
that only leaves the city to pay interest
at a high rate while waiting for oflcials
with the courage to deal properly with the