Jasper County Democrat, Volume 16, Number 91, Rensselaer, Jasper County, 14 February 1914 — A TRUE LIGHT ON STATE FINANCES [ARTICLE]

A TRUE LIGHT ON STATE FINANCES

Auditor of State O’Brien Gives the Facts. REPUBLICANS WERE WASTERS It Is Pointed Out Conclusively How For Sixteen Years the Republican State Administration Had Conducted the Affairs of the State on the Theory That You Could Spend More Money Than Your Income Without Creating a Deficiency. In his recent notable address before the Indiana Democratio Editorial Association Mr. William H. O'Brien, auditor of state, presented the first fully comprehensive statement given to the public in years in relation to state finances, serving completely to refute the oft repeated declarations of the Republican press of the state that the Republican administration never had been under the necessity of calling on the county treasurers for advance settlements. Mr. O’Brien said: The tax rate is always an interesting question to the man who pays, and just now we are hearing much talk about the increase in state taxes. The opposition press charge the Democratic administration with increasing state taxes, then romance on increased salaries, and then stop. The reason for the increase in the tax rate is that the Republicans, who controlled the finances of the state for sixteen years, were not only wasteful in their appropriations but they did not have the moral courage to cope with the condition they had created.

When the Democratic party came into full possession of the state administration, after the 1910 election, they were confronted with both a theory and a condition. For sixteen years the Republican state administration had conducted the affairs of the state upon the theory that you could spend more money than your income, without creating a deficiency. The condition was a treasury empty and as dry as a Dead Sea apple, as outlined in the inaugural message of Governor Hanly to the legislature on January 8, 1905, when he said that “Revenues for the present year have been anticipated to the extent of $529,C 59.03,” and said further: “This condition of the finances will become an actual embarrassment to the treasury before the end of the current year. It can be met only by borrowing outright, or by anticipating the revenues for the next fiscal year.’’ At that time Mr. Hanly was pretty good Republican authority.

Marshall’s Note of Warning. Before the end of the fiscal year of 1905, the state had received advance payments from the counties aggregating $994,449.03. After four more years of Republican extravagance the same condition existed when Governor Marshall was inaugurated, and he sounded a note of warning to the General Assembly in 1909. tn May, 1908, in the closing year of Governor Hanly’s administration, the state was begging advance payments from the counties in order to meet its current obligations. In that month, when the Republicans were in full control, the Indianapolis News said, with reference to a demand by the state upon Marion County for SIOO,OOO and threatened legal proceedings to get it: “The state is sorely in need of money and this is the reason drastic efforts are to be made to collect the SIOO,OOO. It is declared that the state will not have enough to take care of this month’s pay roll unless the advance payment is made.” The state tax levies from 1895 to 1909, inclusive, amounted to seventeen cents annually on each one hundred dollars of valuation of taxables for the state general fund, benevolent Institutions’ fund and the state sinking fund. In 1910 the sinking fund, on the recommendation of Governor Marshall, was reduced 1 5-10 cents, making the net annual tax levies up to 1914, for the three funds named, 15 5-10 cents. The sinking fund of three cents, established by the Democratic legislature of 1893, was used for the payment of the state debt up to the year 1904; In fact, every dollar of the state bonded debt paid in the last twenty years was paid under a Democratic law, and the only years in that period passed without any payment on the debt was when the Republican law with its transfer attachment was la force, and which was not enacted for purposes. In 1905, and during the succeeding two years of the Ranly administration, the sinking fund of three cents was transferred, in its entirety, to the state general fund, thus providing one million and a half dollars for the payment of the current expenses of the extravagant Republican administration. In 1908 the sinking fund of three cents was restored, but the law making the levy authorized the transfer of the sinking fund for the years 1908, 1909, 1910 and part of 1911 to the state general fund for the payment of current expenses, and by reason of the provisions of this law the state house Republicans, In the expiring hours of their administration in 1910, transferred $789,660.61 to the general fund for the payment of current expenses of the state, In order to conceal a deficiency in the general fund of $690,000. The legislature of 1911, in fixing the sinking fund levy, provided that it' should be held sacred for the payment of the state debt, and this provision in the law has always been the policy of the Democratic party. The money collected for the sinking fund in 1912

and 191? was used for the payment of the state debt, and not a dollar of the sinking fund, since the Democratic debt-paying law was enacted, has been transferred to the general‘fund for the payment of current expenses. Democrats Adopt Business Method*. If the system inaugurated by the state house Republicans had been followed by the present*administration, the sinking fund would have been spent for general expenses; no part of the state debt would have been paid; and there would have been no need for temporary loans to be made by the Democratic Administration. But the Democratic administration preferred to transact the affairs of the state in a business-like manner. The reduction of the tax rate in the year 1910 of 1 5/10 cents made a total saving for the years 1910, 1911, 1912, and 1913 of six cents on every one hundred dollars of taxable property in the state, and one cent upon the present valuation of taxables will yield revenue of 1185,000.00, so that in the last four years the Democratic state administration has saved six cents on every one hundred dollars of taxables, which would amount to $1,110,000; that is, the taxpayers have retained In their pockets $1,110,000 instead of paying that amount into the state treasury. The all-Democratlc administration has paid off $520,000 of the bonded indebtedness of the state, and $103,000 of the state board of agriculture’s Colosseum indebtedness, making in all a total reduction in the state debt of $623,000. It does not take a skilled mathematician, who figures with an honest pencil, long to learn that the taxpayers have been benefited by the present administration in the improvement of the finances of the state by the reductipn in taxes, and the payments on the state debt of more than $1,733,000. The total foreign bonded debt of the state is now $280,000, and the Ralston administration will pay all of this debt before January 1, 1915, so that the only debt remaining after the first day of January, 1915, will be the domestic debt established for the investment of the permanent endowment funds of the educational institutions, and the Vincennes University bonds due in 1917.

Inheritance of Embarrassment. The Ralston administration inherited the embarrassed financial condition of the state, and did not create it. Governor Ralston did not sidestep or hesitate when the financial crisis of the state confronted him, but “went to it” and had the honesty and courage to grapple with the situation, and the policy of “will pay tomorrow” will soon be no more. The legislature of 1913, upon the recommendation of Governor Ralston, had the courage to meet the condition and provide a remedy, and make a tax levy sufficient to meet the obligations of the state in a business-like way. The fact is that for twenty years every political sub-division in the state, to the smallest unit, hag been managed with more business concern and judgment than the finances of the state-due to the lack of backbone to provide revenue to meet the expenses of the state government. The educational institutions fund was established in 1897, and the tax rate was 1.66% cents. In 1903 the rate was increased to 2.75 cents, and this rate remained until 1914, when the rate was fixed at seven (7) cents, and out of the money provided by this law the educational Institutions in the future must pay all their maintenance charges; the cost of new buildings and new equipments of every kind. Under the old system the tax rate would yield about one-half the necessary funds for the institutions, and the balance was taken from* the general fund which made it necessary to draw continuously upon future revenues. The Benevolent Institutions’ Fund was established In 1891. and during all these years since that date has stood still until 1913, when the rate was fixed at 10 cents. The institutions have Increased in number; the population of each institution has increased in great numbers; the cost of living has increased, but there has never been any provision made for these new conditions. The old tax rate of five (5) cents yields $957,000 annually, and the expenses of the maintenance of the benevolent Institutions total $1,829.000 —the deficiency of about $900,000 was taken out of the general fund. And the result of it all was that when the Democrats came into power they found the state’s income mortgaged far in advance. The Legislature of 1913 in increas Ing the rate of taxes for the educational institutions and benevolent institutions was prompted by an earnest desire to provide an ample Income to put these institutions upon a business basis, and not upon the guessing plan of levying a tax which would be only one-half of their demands for support A few months ago, the Republican organs, in scare headlines were calling attention to the calls made by the present state administration for advance payments from county treasurers and the transfer of the benevolent institution fund. You will observe that they have quit saying anything about advance calls and transfer of funds. The reason for quitting is quite plain.

Result of Financial Profligacy. The Republican party was in complete control of the state administration from 1895 to 1910; and during that period of sixteen years, the state house Republicans called for advance payments from the counties to the general fund to meet current expenses •f the state, the sum of $15,408,840.02. During the same period when they were in full and complete control, they transferred from the benevolent institution tax fund to the general fund, the sum of $11,574,984.30. Thus ths state house Republicans were forever postponing the day of settlement and now they cry “Democratic deficiency” in order to detract attention from their wilful neglect to remedy the conditions their profligacy created. The State Board of Finance borrowed in September, $460,000 for the purpose of meeting the deficiency on

account of the obligations of the ben> evolent and educational institutions at the close of the .fiscal year, $60,000 of this loan was paid in a short time and the balance was paid on the 31st of December, 1913, and on the 2d day of January the sum of $400,000 was borrowed to be paid June 30, 1914, for the purpose of paying the maintenance obligations of the benevolent and educational institutions, as the tax for their support made by the Legislature of 1913 will not become available in full until the semi-annual settlement in June, 1914, and it will be necessary to borrow further sums to meet the monthly maintenance obligations of these institutions for the reason that from January to June, 1914, no money will be paid into the state treasury for their support, except the small and insufficient monthly remittances from the counties. Do not be unnecessarily alarmed if you hear of another temporary loan being made to take care of the inherited Republican deficiency. It is believed that after the next semi-annual settlement there will be no further embarrassment in taking care of the unfortunate wards of the state housed in the benevolent institutions, and the ambitious boys and girls of Indiana who attend the State Educational Institutions, as the revenue derived from this new tax will be sufficient to meet all the demands of these institutions. The authority for making this temporary loan was given the State Board of Finance by the Legislature of 1913, as it was known long in advance that there would be a deficiency at the close of the fiscal year in 1913. In fact for years past, immediately upon the adjournment of the Legislature, it was known two years in advance when the deficiency would occur, and it always arrived on schedule time. The tax levy for the payment of the general expenses of the State was reduced from nine (9) cents to seven (7) cents, or a saving of $370,000 per year, by the 1913 legislature. The statement of this fact alone without any further comment should set at rest forever the charge that the last legislature is responsible for the shortage in revenue on account of increase in salaries. The truth of the whole matter is that the increase in official salaries was a mere bagatelle amounting to about $15,000. Our great common school system owes its existence to Democratic legislation. Practical education of the children of the State has always been the policy of the Democratic party. The last legislature, nearly solidly Democratic, enacted the Vocational Education tax, and levied a tax of one (1) cent to put the law into operation. A member of President Wilson’s cabinet has declared the Indiana law to be the best in the United States on the subject of Vocational Education. The Democratic party of Indiana by the enactment of this real progressive law quickly responded to the needs of the people. There is no denying the fact that the increase in the cost of government in Indiana and in every county and city of the state is due to the increased functions of government. The people everywhere, in the Nation and the State, are demanding that the State shall undertake to do everything that is good for the people without counting the cost