Jasper County Democrat, Volume 7, Number 29, Rensselaer, Jasper County, 22 October 1904 — STATE FINANCES [ARTICLE]

STATE FINANCES

An Impartial Statement of the Finances of Indiana For a Period of Forty Years. statistics relating to the state debt are to be found in the reports of the auditors of state, but bre not collected at any one place. It has been customary for the auditor to publish tables, showing the comparative total assessments of state property, by years, for a number of years back, together with the state tax levies. The last of these tables appeared in 1901, and the auditor now prints only the tax levies, presumably on the theory that these make a better showing for the administration when taken aloae. In the report for 1903 tlfe table of tax levies will be found at page 120, but it contains so many errors that none of its statements can safely be taken without verification. For example, it shows no state school levy prior to 1805. though in reality there was a state school levy of 10 cents a year from 1853 to 1864 inclusive. Aside from the waste of public money in the publication of erroneous statistics. this particular error is not so material as some others, for present purposes, for the state finances before and during the civil war have no connection with the present questions, though they are sometimes dragged into the discussion. The ante-bellum debt of the state was created chiefly by the Whig party in the effort to develop a state system of internal improvements, bqt the Democrats did not show any especial hostility to this until it had proven a failure. As a matter of fact the internal improvement scheme was right in theory, and was generally approved. The difficulty was that the state undertook to do too much at one time, and had the misfortune to encounter a financial depression before it got throhgh. After the civil war “times were good” for several years, and The people were accustomed to high taxes. There was no serious objection when the state sinking fund was increased from 5 cents to 10 cents in 1865. and to- 20 cents in 1867. It was dropped to 10 cents in 1869. and discintinued in 1872, the state debt being practically extinguished. It may be observed in this connection that there is seldom any way of paying public debts except by taxation. From the attitude of some of our state officials, one might imagine that they had been paying the state debt out of their own pockets. Thts is a delusion. It has been paid by the people through taxation, and the state officials have merely collected and paid out the money, as required by law.

The old state debt had scarcely been extinguished when we came into an era of “hard times.” The panic and industrial depression following the demonetization of silver and preparation for • the resumption of specie payments in 1873 turned attention to the reduction of local burdens. The state levy for the general fund was reduced from If) cents to 13 cents in 1875 (not 12 cents as stated in the auditor’s report for 1903). and to 12 cents in 1877. (Acts of 1873. p. 208; acts of 1875. p. 80: acts of 1877. p. 140.) At the same time there began a reduction of assessments, the valuation of property in the state dropping from $954,857,475 in 1874 to $728,944,231 in 1880. In consequence of these reductions the state did not collect enough taxes to meet current expenses, and began going in debt. There was also a growing need for state institutions, and these were built with borrowed money, the more notable ones being the new insane ■hospitals at Evansville, Logansport and Richmond, and the one for women at Indianapolis, and the Soldiers’ orphans home at Knightstown. There were also extensive additions to the older institutions. This necessarily meant an Increased charge for maintenance, the state’s expenditure for benevolent and reformatoiy institutions increasing from $440,000 in 1878 (auditor’s report, p. 13) to $1,111,400 In 1890 (auditor's report, pp. 11-12.) This debt-making process went on under the administrations of Governors Williams. Porter. Gray and Hnvey, until there came a general real ization that the danger point had been reached*. In his message to the legislature of 1891 Governor Hovey said: ‘‘Since 1877 a sufficient revenm* has not been raised to pay the expenses of the state, and every year has added to our indebtedness, until today the state debt has reached the enormous sum of $8,540,615.12, with a atill increasing Indebtedness, until some re lief can be obtained by legislation. With the same system that has here tofore prevailed, we will still have to borrow money to sustain our institutions and expenses of the state, with an annual deficit of about $500,000. Surely the day of borrowing for such purposes should cease. We have no right to mortgage our future revenues to be paid by those who may come after us.” The legislature of 1891 gave careful consideration to the financial problem and met the emergency by adopting the new tax law. refunding the school debt, making A- special levy of 6 cents for the benevolent institutions and other remedial measures. The sinking fund tax was not levied in 1891 and 1892, as erroneously stated In the auditor's report for 1903. It was established by the legislature of 1893, and the first proceed! of the tax were

received In 1894 —the first or spring Installment of the tax being paid within the state’s fiscal year, which ended on Oct. 31, 1894. The practical results of this legislation are shown in the accompanying table.

C STATE TAXES COLLECTED. Y«»r End’g. Total State Railroad General Benevolent Sinking State Annual Am’t. Debt # Oct. 31. Assessment. Assessment. Fund Inst. Fund. Fund. Debt. Interest. Paid. 1890.. 857.673,038 $ 69,762,676 $1,087,700.44 $8,540,615.12 $273,825 1891.. 1,255,256,038 160,809,575 1,096,839.07 8,826,145.13 284,325 S 1892.. 1,267,438,065 160,595,802 1893.. 1,302,310,250 159,248.873 1,554,404.50 716,638.81 8,490,615.12 275,825 $ 340,000 1894.. 1.295,106,415 157,743,026 1.442,411.18 662,319.54 $195,169.80 7,920,615.12 257,725 570,000 1895.. 1,286.050,531 156,199,465 1,482,998.99 689,937.12 385,211.69 7,520,615.12 243,725 400,000 1896.. 1,292,641,237 155.597,930 1,322,352.98 636,841.06 379.629.07 6,920,615.12 224,225 600,000 1897.. 1.295,965,056 15'4.841,971 1,241,220.54 040.138.76 383,750.60 6,200,615.12 200,925 720,000 1898.. 1,311.508,008 154.382,174 1.272,561.45 645.678.24 387.638.09 5,700,615.12 185,925 500,000 1899.. 1.335.746, C9S 153,693,506 1,293,333.21 655,423.85 393,229.32 5,187,615.12 170.565 513,000 1900.. 1,360.445.139 154,275.131 1.303.513.79 660,337.26 396,878.67 4,704,615.12 156,075 483,000 1901.. 1,397.981,497 156.973,151 1,309,444.16 660,145.80 390,043.29 4,204,015.12 141,075 500,000 1902.. 1,416,161,873 162,797.978 1,342,748.13 670,000.37 405,413.35 2,887,615.12 101,565 1,317,000 1903.. 1,347,784,612 164,835,091 1,363,110.61 690,796.23 414,498.27 2,437,G15.12 87,865 450.000

It will be noted from the table, first, that the total assessment of property increased a little less than 50 per cent in 1891 under the new tax law (while the assessment of railroad property increased 135 per cent. This illustrates one of the effects of the new law —equalizing assessment by making large property owners pay their fair share. This effect was general. The escape of large property owners is the universal defect of the general property tax system, and it has not been wholly avoided under our law. It will be noted that the assessment of railroads decreased steadily until 1899. and that now it is less than 3 per cent more than in 1891. yet we have had an increase in this state in this period as shown by the reports of the State Hoard of Tax Commissioners of 11 per cent in miles of main track. 255 per cent in miles of second main. 74 per cent in side track and 15 per cent in rolling stock. It is safe to say that no railroad property in this state is assessed at over twothirds of its actual value at present, notwithstanding the provisions of -the law. But that is the fault of the officials, who are charged with enforcing the law, and not of the law itself. The figures for the amount of railroad property in the two years, as shown by thf> reports of the board, are as follows: 1891 1903 Main track (miles). .6,015.58 6,697.60 Second main ....... 159.37 518.94 Side track 1,490.96 2,598.85 Rolling stock 5,873.83 6.784.64 Prior to 1892 all state expenses now paid from the general fund, the benevolent institution fund and the sinking fund were paid from the general fund, j and the reason of the payment of the | state debt is seen in the receipts to | these funds. For example, the total receipts to these funds in 1963. from taxation, were $2,468,405.11. as against $1,096,839.07 in 1891. This is an increase of $1,371,565.04. Of this amount the sinking fund receipts of $414 498.27 are expressly required by law to be paid on the s'ate debt, and the amount paid on the state debt in 1903 was only $35,501.73 In excess of the sinking fund receipts. In 1893. when there was no sinking fund, there was $340,000 paid on the debt, and in 1894 there was $374,830 paid on the debt in excess of the sinking fund receipts. Of course the receipts to the general fund and benevolent institution fund were $217,136.47 larger in 1893. and $50,823.88 larger In 1894 than they were In 1903. but on the other hand the state administration had to pay $187,960 more of interest in 1593. and $169,860 more of interest in 1894 than was paid in 1903. so that the showing is largely in favor of the earlier years. It will’be seen from the table that the payment of debt and interest in 1903 was much smaller than in any preced-' ing year under the new laws. The payment in 1902 was the largest, but that was due to the fact that in 1902 the state received from the national government $635,859.20 in payment of its old war claim and. under the provisions of the sinking fund law of 1893, this was applied to the payment of the state debt. The sum of the whole matter is that all that can be claimed by any state officials as to tbe qpyment of the state debt, is that they have carried out the provisions of the laws of 1891 and 1893, and as to this the present state officials do not make as good a showiac as their predecessors.

J. P. DUNN.