The New York herald., 1921-12-23
Comptroller Declares That
1t Has Been Made Illegal
by Tinkerings.
HOPE in LEGISLATURE
Despised upstate Rule Seems
Only Way Out of Finan-
cial Tangle.

New York city faces the possibility
of starting the new year without
cent available to meet its current ex-
penses. The city budget apparently is
In such snarl of omissions and al
legged illegalities that no one familiar
with the facts would venture a pre-
diction last night how the tangles
could be Strengthened without an ap-
peal by the Mayor and Comptroller
Craig to the ''despised" Legislature.
The budget to become operative
must be signed by the Mayor, the
Comptroller and the City Clerk prior
to December 20. On the ground that
1t Is an illegal document tho Comp
troller will not approve the document,
it was learned. He is in Canada and
does not expect to return before jan
uary :. 1t is understood he has in
structed Henry Smith, Deputy and
Acting Comptroller, to refrain from
signing when the budget is brought
to him for that purpose this morning.
The budget as it stands is fully UP to
that taxes shall not be levied in excess
OF per cent of the assessed valuation
OF real and personal property. Yet the
city officials are faced with two reasons
why 1t must be cut. In the first place
the Appellate Division of the Supreme
Court handed down its decision yester-
Gay compelling the Board of Estimate to
restore to the budget the moneys re-
quired to meet pension requirements.
This originally amounted to something
over S4.500.000. The teachers pensions
have been restored, leaving about
s3,000,o00 still to go back.
Must Cut Another S0,OOO,OOO.
Secondly, the United States Supreme
Court has just declared unconstitutional
the law under which tax is levied on
the capital and surplus of banks. 1t
i' estimated this will take away about
$4,000, 900 upon which the city had
counted and which would have gone INTO
the general fund for the reduction of
taxation. The budget being up to the 2
per cent. limitation with the bank rev.
enue counted upon, it will be necessary
to cut an additional $1,000 900 or SO out
of the budget, according to experts In
the Finance Department.
the risk of being declared in contempt
IL the pension moneys are not restored
by December 25. Bernard S. Deutsch.
counsel for the United Real Estate
Owners, said he stands ready to apply
to the Appellate Division for such an
order. George p. Nicholson, Acting
Corporation Counsel. who has served
notice of an appeal to the Court Of
Appeals. holds it will act as stay.
This is disputed. The decision Of the
Appellate Division was unanimous it
Is understood. in which case it's per-
mission Is required for an appeal. The
Mayor and Comptroller both are liable
to O. contempt order from Justice Guy
due to earlier litigation on this same
matter.
Mr.. Deutsch said Comptroller Craig
had been served with the order on
Wednesday night before he took his train
10 Canada and that yesterday service
had been accomplished on tho Mayor.
Secretary Joseph Haag of the Board OF
Estimate, and upon every member of
the Board of Aldermen. Acting Comp
trollcr Smith also was served.
Tinkering Causes Confusion.
When the Board of Aldermen was
considering the budget the Comptroller
notified them the document exceeded the
2 per cent. limitation and suggested cut
ting S10.000,000 out of the school ap-
propriations, asking the State to make
1t ND.
The Mayor. Il is understood, had
promised to stand back of this demand
of the Comptroller. But President La
Guardia of the Board of Aldermen In
duced the Mayor 10 side with him in
patching up the budget in way they
declared would be legal. They held that
| by reducing the excess appropriations In
| the boroughs OF Richmond and The
Bronx, where the per cent. limit had
been overstepped. the law would be met
They GU. some s2TS,000 from these two
boroughs, mostly out of the county and
court appropriations. which were man
| datory The contention was that this
money would have to be provided any
way out OF special revenue bonds after
| the first of the year and that no harm
would be done.
| But Comptroller Craig holds the bud
| get was rendered Illegal by this action
| of the Board of Aldermen and cites a
section of the charter which says that
: the Aldermen may not Increase but may
reduce the several items in the budget.
except such as arc fixed by law" or In
other words are mandatory. Right then
| he decided he would not put his name
! to the budget.