Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1916-01-07
Must Revise Taxation Plan.


people Of Maryland as the first step to be
taken in placing the financial affairs of
the State upon a safe and understandable
basis for the future, in the opinion of Har-
vey S. Chase. is complete rearrangement
of the scheme of taxatien.
While former Senator Germans PROPOSE
ton to sell the Northern Central Railway
mortgage and pay off the State deficit, is
regarded by Mr.. Chase as 1.-THE natural at
titude of any sensible business man" in
looking at the deficit, it does not in his
opinion. afford solution of the real fiscal
situation.
Mr. Chase. former commissioner on econ
omy and efficiency of the National Gov
eminent, whose recent report to Governor
elect Harrington of the results of his ex-
pert examination of the accounts of the
Comptroller and State Treasurer, first made
known to the taxpayers the exact condi-
ton of the public funds, declares that
before the State ofMaryland can be placed
upon sound financial basis this reor-
ganization Of the taxing scheme must be
accomplished. the general and special funds
kept distinct and accounting methods
adopted and enforced that will produce
regularly and accurately statements of
current assets and current liabilities in
each of the funds"
Far-reaching constitutional amendments
will be needed. and one of them, he points
out, should seek a radical change in the
management of the two fiscal departments
Areporter of The News called on Mr.. Chase
at the Hotel Emerson and brought his at
tention to the views of Arthur P. German
of the State Tax Commission concerning
the deficit in the State finances and sug-
gestion that the mortgage which the State
holds on the Northern Central Railway
should be sold and the proceeds used to
pay off the deficit, the remainder of the
proceeds being used to reduce the State
bonded debt.
Mr.. Chase, after reading the article,
said:
"Mr. Germans attitude is the natural at
titude of any capable business man who
looks at this proposition Of taking care of
the State deficit in a sensible way. The
only trouble with Mr.. Germans exposition
of the matter is the same trouble which
has been evident in much editorial COM
ment on the financial situation in the
State since the publication of the report
which made to the Governor-elect and to
the Goodnow commission on December is.
This trouble is that it has not yet been
realized by the business men of Maryland
that the deficiency of $l.50O,O0O has only
a slight relation to the funds of the State
which are provided for by taxation. such
as the sinking funds, the school funds, the
road funds, etc. The deficit has occurred
almost wholly in those funds which are
not provided from taxation. That is to
say, the deficit is in those funds which are
provided for only by the so-called 'ordi-
nary revenue of the State-namely, the
licenses. the franchises, the fines, fees and
collections of all general sorts the deficit
being in these general funds and not in the
special funds provided by taxation. 1t
will do no good whatever, so far as the
deficit is concerned, to reduce the amount
called for by taxation in the special funds,
| particularly as at the same time, as Mr..
German would nave it, the general fund of
the State would lose $4,000 year which
it now receives from the interest paid on
the Northern Central mortgage.
Mr.. German is looking at it. naturally
from the point of view of a taxpayer in
the State who desires taxation to be reduced
This. is a point of view with which every
one who pays taxes is in sympathy but
in the present case it would be disastrous
unless complete rearrangement of the
scheme of taxation of the State Maryland
is provided for.
This can only be done. as see it. by
an amendment to the Constitution of the
State and this. while very serious I'M
dertaking, is one that, in my opinion, must
be accomplished before the State of Mary
land can be placed upon a sound financial
basis. The necessity for reorganization of
the taxing scheme of the State has not yet
received the attention which II must have.
1t is equally important as the proposal for
State budget in fact, these two essential
features Of sound financial condition for
the State of Maryland must be developed
together.
ITO make this distinction perfectly clear
will 60 into it more in detail, AS con-
ditions now are. the State of Maryland re-
ceives from the Northern Central Railway
each year 500, 1000 in money. This money
goes into the general fund and is avail
able for general purposes of the State for
which appropriations may be made by the
Legislature. II the mortgage were disposed
of the general fund would lose this $780,
900 per annum and the deficit in the
general fund per annum would be cores
pondingly increased.
ION the other hand. If Mr.. Germans
suggestions were carried out and the mort
gage on the Northern Central disposed of
and the money used for reduction of debt,
the general fund of the State would be no
better of. 1t would, as ! have already
shown, be worse off by the amount Of
100000 per annum.
Further, it is a question whether under
the Constitution and laws Of Maryland any
portion Of the proceeds from the sale of
this mortgage could be used to provide for
the deficiency in the general funds The
intention Of the Constitution is apparently
to prevent the use Of capital funds for