Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1916-02-09
CITY CONFRONTED
BY IT'S GREATEST
DEFICIT SINCE '79
Municipal Financiers See
S Shortag ge Between
$4,000,000 and $6,O00,000
INFRINGEMENT OR TAX?
One of Two Methods Needed
to Solve Vexing
Problem

Problem
The city of Philadelphia is beginning the
year 1915 with an operating deficit in its
system OF finances greater than any which
city flnanciers have had to face sine >
1879 when the municipality, with out
standing obligations OF nearly Sll0Oo.0ro
was forced to appeal to tho Legislature
with the result that the far-reaChing
'pay-as-you-BU'' act. designed to curb
municipal eXtravaganCe, was passed.
The causes of the present deficit, accord
Ing to officials In city Hall, are many
and cumulative, but the Immediate results
and the solution of the problem for the
future are concrete matters which the
Mayor the City Controller. the Finance
Committee OF Councils and others who
control the city's budget are seeking to
meet In a series of conferences and com
mlttee meetings which are being held
almost daily
In plain figures. as shown in the Com
troller's annual report. the current eX-
penses OF the city for 1915 were consider
ably more than s2.OOOOoO greater than the
total of the various revenues for tho
same year. Compared with the previous
year, the operating expenses of the
municipal machinery Increased by Sl.63g.
eO6.2O. while the revenues increased only
SAL, ,296.O6. The estimates of the city's
revenue for the present year, as COM
pared with the needs Of the various de-
partments. show that the discrepancy for
1916 between the bedt and the credit
columns will be far greater
The difficulty last year was bridged in
part and temporarily by a loan on the
revenue yet to be>realized in 1916. Coun-
cilinen admit that this was In direct con-
travention to the spirit of the act of
1879, but they add there was no alter
native. But mortgaging the future in
come has even a greater disadvantage
for this year the city nnanciers must
add the heritage from 1915 to the operat-
ing deficit for the present year.
TWO METHODS POSSIBLE
1t Is estimated by members of Councils
Finance Committee that the expenses of
running the machinery of thcs municipal
government for 1916 will exceed the
known revenue by an amount variously
judged from 100000 to S6OOO,OOO this
including the 1915 deficit.
The problem therefore is, How
shall the cIty'S books he made to
balance: There are only two soIu-
tioBs offered.
The hrst IN to prune snInrlcs. re-
trench In NIL inciden ntnI expenses of
the city and county departments.
This In theory, II IL admitted. could
cut the debit column to meet the
credit But I'm practice II In impOs-
sibIe. the city authorities nII agree.
The other solution IL then to in
crense the city's source of revenue
20 meet the expenses. And the
problem before the city officials and
Councils IN how to do this fairly
and with the burden of the increase
eqmitabIy distributed.
klthough the 1915 Legislature passed
enabling legislation to permit an increase
In the eity's borrowing capacity from !
70 10 per cent. on taxable property which
translated in terms of dollars means
about So. .0OG0OO this additions, borrowing
capacity is available only for permanent
public improvements, and for the present
II Is limited to transit and port i'm
provements.
Further, 1t has been the policy of the
city officials to meet current EXPENSES |
from current revenues. In other words, |
the various city departments must be self
supporting and loans shall be fioated only |
for permanent public improvements. The |
hrst important departure from this rule |
was in 1879. when, faced with outstanding
obligations of 100000 and per capita
debt OF above 800, the Legislature per
mitted the city to float $lOOOO,OOO bond !
issiie for contingent expenses.
The law was then fixed so that debts |
must be paid as contracted For years
there was no difficulty In doing this The |
eity's income met the cty's expenses |
and there was a balance to be applied to /
nve years ending with 1911 there was a /
balance sufficient to permit 81 $50 963 81 |
from current revenue moneys to be used |
Tor permanent public improvements,
BIG DEBT ACCUMULATED
But from January ], 1912. to September
%, 1915, when the Controller made his /
annual budget statement instead of a |
balance for public improvements. loan
moneys TO the amount of S4,3lS B37. % had
n
Of the departments. !
With this amount likely TO increase each /
year the city authorities at the begin
ming OF the new Administration deter
mined that a halt must be called and
new policy adopted
In addition TO facing an annual oper-
ating deficit the city fnanciers at the
beginning OF the Smith regime found
themselves facing unexpected obligations
OF upwards OF 81. 100000. due to a decision
OF the State Supreme Court. The Court
m Pittsburgh case held that all the
lands taken for city purposes at once
become bedt upon the city in so far
as their purchase price Is concerned This
decision makes It possible for the Courts
70 issue mandamuses against the city for
the amounts involved in the respective
transactions.
Under recent order OF Controller Wal
ton no mandamuses are being paid But |
they are entered against the city and are
bearing Interest at s per cent, which is
generally satisfactory TO the holders of
the mandamuses
No mandamuses will be paid until a
mandamua fund is provided in council
manic loan, which will not be autborizad
until the exact amount OF the eitv's
borrowing capacity is ascertained and the
financial problems Aeing the city's finan-
ciefs nave been solved at least in part.