Evening star. [volume] (Washington, D.C.) 1854-1972, 1959-04-29


Gates 10 States are deeply in |
debt or in imminent danger |
of going into the red. And l6
States, Iowa among them. have
some measure of financial Diff
ficulties that could become
awkward.
Many got into trouble by
spending more money than they
received, making up the diff
ference by dipping into surplus
monies and by borrowing.
Others are recession victims.
Last years business decline cut
their income below their ex-
penditures. In some cases,
political inf1ghting has added
complications.
Fat SURPRISES accumulated
during the war years when
construction was curtailed have
proved a mixed blessing. Some
States have used them to
bridge the gap between rev.
enues and expenditures, avoid
ing tax increases, and found
themselves with a hole to plug
as the extra money runs out.
Michigan in Trouble
Michigan, among the most
troubled States, was brou!ht
to its current crisis by multiple
factors. Generally, over-spend-
ing and the recession. compli-
Gated by political pickering, has
been held responsible.
For three years Michigan
spent more than it took in.
When a modest, $25-million
surplus evaporated, deficit A.
nancing followed. The deficit
could reach $110 million by
June 80. And the State also
has nearly 1913 million in
general obligation bonds out
standing.
The economic decline, which
brought a high rate of I'M
employment to major indus
trial centers such as Detroit,
cut into State revenue at a
time when it was already in
sufficient.
Exchange Accusations
The Republican-d dominated
Legislature blameS Democratic
Gov. G. Mennen Williams for
the fiscal impasse. The Gov
ernor always comes in with a
budget increasing servicesI
everywhere complains State
Senator Charles Prescott. IF
he's signed a tax bill, / don't
recall it,
Gov. Williams accuses the
lawmakers of dawdling about
levying taxes to pay the bills.
He also cites population growth
as a cause of treasury strains.
1t rose 81 per cent from 1850
to 1857, with the number of
persons under 20-"tax users
rather than tax payers" as the
Governor calls them-increaS-
ing AZ per cent.
Gov. Williams and the Leg
iSlature were deadlocked on a
tax program. He wants a per-
sonal income tax and an in
come tax on business. The
Republicans insist on an in
crease in the sales tax.
Meanwhile, the Governor
used money appropriated for
colleges and universities to
meet the State payroll, direct
ing these institutions to bor-
row money. Then the banks
cut off credit to the universe
ties.
The Governor next appealed
tn business and industry, which
paid May and June taxes ahead
of time.
New Services Demanded
Demands for new services,
coupled with escalator clauses
that automatically increase the
expense of other services, has
Ohio in a financial hole. In the
last IL years, the State has run
through a $2l3 million surplus
while going 81 billion into debt.
The reasons: Two veterans
bonuses. a $500 million highway
bond issue, and $3.50 million
worth of construction for edu-
cation, mental hospitals and
State Office space.
Over-spending income, while
balancing the budget from re-
serve funds has created finan-
cial difficulties in California
New York, Washington, Mas
sachusetts and Rhode Island.
The recession had a marked
effect on the income of many
States In Pennsylvania, tax
income declined $l13 million.
In Connecticut the decline was
SGT million.
Unemployment brought on by
the recession affected the nor
NAL growth of government serv-