A Most Surprising Discovery As To Condition Of The City Funds

A MOST SURPRISING DISCOVERY

AS TO CONDITION OF THE CITY FUNDS

An Argus Investigation Establishes Beyond Question That City Has No Overdraft

Over $30,000 Belonging to the Street Fund Hidden Away in a Paving Fund After Paving Had Been Paid For Out of Street Fund

The City's System of Keeping Accounts Needs Overhauling – Ann Street Paving Paid For Out of State Street Paving Fund

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The city of Ann Arbor has no overdraft. The bill which passed the legislature to enable Ann Arbor to bond for $40,000 to pay its debts was a libel on the fair fame and name of the city, for the city has no debt beyond its bonded indebtedness.

This discovery was made by the Argus Wednesday afternoon while trying to reconcile Mayor Copeland's figures with the city treasurer's reports. Inability to so reconcile them and the developing of a surprising state of affairs in a paving fund led to an investigation which established beyond a question of doubt the truth of the statement given above.

Mayor Copeland has been talking through his hat. He has had a bad case of stage fright, and apparently has never had a clear comprehension of the state of the city's finances. It all grows out of a question of bookkeeping. The Argus will endeavor to make the matter so plain that no one can question its conclusions.

According to the statement to the council by Cashier Walz of the State Savings bank, the city treasurer had on deposit in that bank at the close of business Dec. 31, 1902, $52,731.05. City Treasurer Newark reported that on that date he had on hand in cash, not deposited, $89.67, making a total with which he charged himself of $52,920.72. Of this amount $48,727.44 belonged to the county treasurer for state and county taxes collected and to the school treasurer for school taxes collected, leaving $4,193.28 belonging to the city of Ann Arbor.

The city treasurer makes three reports to the council, one of what he terms city funds, one of sewer funds and one of paving funds. In the city fund accounts he mixes up the school, county and state taxes collected. Making this deduction, the three classes of funds on Jan 1 stood:

On hand–

Paving funds . . . . . . . . $27,497 81

Overdrawn–

City funds . . . . . $7,514 39

Sewer funds . . . 13,790 14––  23,304 53

Balance on hand . . . . . . . . . . . $4,193 28

When one remembers that the State street paving contractors have been paid all but 5 per cent of their bill and the Ann street paving contractor all but 10 per cent, he will wonder what the city is doing with $27,497.81 in its paving funds. And here is where the Argus got the clue that led to its investigations.

The worst overdrawn city fund is the street fund, which on the city books showed an overdraft of $29,976.67. On August 1 the street fund had on hand $14,248.62, showing an expenditure in five months of $44,225.29 and yet the people of Ann Arbor continue to call for good streets. Does not the reader begin to see the light?

In December the Ann Arbor Savings bank paid the city $34,779, besides accrued interest, for paving bonds for State street, known as paving district No. 5. These bonds were issued in December and the money thus received was placed to the credit of the labor account of Paving District No. 5. Presumably these bonds were sold to pay for the State street paving had been paid for before the bonds were issued and thus previous payment accounted in large degree for the bank overdrafts which scared the taxpayers and sent the mayor into hysterics. But the State street paving had not been paid for out of the paving funds.

On Sept. 9 the council ordered an order drawn to Lennane Bros., the State street contractors for $9,483.30. On Oct. 20, another order for $11,188.03 was ordered issued and on Nov. 17, the final order, for $9,518.22, making a total paid to Lennane Bros. of $30,190.03. Not a cent of this was paid out of a paving fund, but every cent came from the much abused street fund. When the bonds were sold the money was put in what the citizens were taught to believe was a trust fund, and not a city fund proper. If this $30,190.03 is put back in the street fund from whence it came and where it belongs, the heavy overdraft of $29,976.67 will be wiped out and the small balance of $213.36 left there. But this is reinforced by the balance of $13,522.60 in the bridge, culvert and crosswalk fund. If the amount taken from the street fund for paving for which bonds were afterwards issued is returned the balance on hand in the city funds proper would have been on Jan. 1, 1903, $22,675.64.

And yet the mayor of Ann Arbor wants to bond for $40,000, to pay up Ann Arbor's debts! And wants to do it just after $31,779 bonds were put out for the State street paving and $3,404.65 for the Ann street paving, and after the taxes had been increased for two years on the strength of taking care of an overdraft.

Before any further attempt is made to bond the city, it might be well to put the city's books into shape and to understand clearly where we are at. The Argus, in making its investigations, finds one or two other surprising facts. The Ann street pavement was paid for out of the State street paving fund, and the full amount of the money received from the sale of Ann street paving bonds remains to the credit of the Ann street paving fund.

In other words the Ann street paving fund labor account has in it today $3,404.65. There is still due the Ann street contractors $304.46. When this amount is paid at the end of the year this account should balance and disappear from the reports. The amount already paid, $3,064.19, should be put over into the State street paving fund from which it was taken. Then all that is in the State street paving fund in excess of $1,588.95 still due Lennane Bros. should be transferred over into the street fund from which it was taken. There are undoubtedly a number of other funds which do not state the exact facts. These funds have not got in this condition all at once, and it will take considerable work to put them into the shape to tell the exact truth, as one must go back to the starting of each paving and sewer fund and trace each transaction. The finance committee's attention is called to the existing conditions and it is suggested that some competent person be asked to put the sewer and paving funds in shape.

To more clearly understand the sewer funds, which are charged with the responsibility of the claimed city overdraft as well as the paving funds, it may be said that with every sewer district and every paving district two accounts are kept. One is called the labor account and the other the tax account. The work is paid out of the labor account. The taxes received go into the tax account. The money received from the sale of sewer or paving bonds is put to the credit of the sewer or paving district labor account, for which the bonds are sold. As the bonds are not usually sold until the exact amount of the cost of the sewer or pavement is determined, the credit of the labor account of any particular district should exactly equal what the sewer or paving costs, so that when full payment is made this account should balance and disappear from the reports. A glance at the treasurer's reports will show that their has not been the case, in spite of the fact that the life of this account ought not to be much over a year. The sewer or paving is paid for in four annual installments if the property owners so elect. When sewer or paving taxes are paid they are put to the credit of the tax account of the particular district. When the bonds are paid they should be charged against this tax account. So that when all the taxes in any particular district are paid, the bonds on that district should be all taken up and the tax account balanced and disappear. As a matter of fact every sewer and paving district in the city has a balance on one side or the other in both accounts. As full payment of taxes has been made in several of these districts as well as full payment for work it can clearly be seen that these accounts need straightening out.

There is one account which is placed in the sewer accounts, which should be included in the reports in the regular city funds account. It is labeled the Main Sewer account. It belongs to the whole city to take care of and not to a particular district and the fact that it has gotten out of its proper place has added much to the confusion existing as to the state of the city's finances. In the last treasurer's report the overdraft in this fund is given as $21,070.80. It has increased in the past year, just as it originally got the city into trouble by having storm sewers charged up to it without any provision having been made by any appropriation to pay for the storm sewers. The mayor in his figures he gave out showing why Ann Arbor should bond paid no attention to this so-called Main Sewer fund, for which today no provision has been made looking towards its being balanced. this merely indicates the confusion existing as to the exact condition of city finances.

There is in the lateral sewer funds, both labor and tax accounts taken together, a balance on hand of $5,280.66. Whether or not this really belong there we cannot say. Judging from appearances we should say that these accounts are not correct. They should be put into shape and as fast as a sewer is paid for the labor account should be closed and as fast as the taxes are all paid in the tax account should be closed. The balances in the meantime should be kept as trust accounts are kept.

Until these accounts are intelligently overhauled by the finance committee of the council and proper action taken no man can tell to the cent just how much the city has in the city funds proper.

But certain it is the city of Ann Arbor today is not in debt further than its bonded indebtedness.

A city ought not to bond unless it is necessary. A city with money in the treasury would be foolish to bond for $40,000 to pay overdrafts that do not exist.

To bond Ann Arbor today for $40,000 is a preposterous idea, unworthy the intelligence of the mayor and proceeding not from any ulterior motives, but because he has not taken the time to post himself as to city finances.

The following is the last city treasurer's report, from which the correctness of our figuring can be seen:

CITY FUND

TREASURER'S REPORT

For month ending Dec. 31. 1902.

Money Received

UNCOLLECTED CITY TAX

Tax collected during December . . . . . $9,010 26

STATE TAX ACCOUNT

Tax collected during December . . . . . 10,938 93

COUNTY TAX

Tax collected during December . . . . . 7,880 33

SCHOOL TAX

Tax collected during December . . . . . 29,908 18

POLICE FUND.

Justice Doty fees . . . . . . . . . . . . . . . 15 00

SIDEWALK TAX ACCOUNT

Collected during December . . . . . . . . 43 93

POOR FUND.

Sale of wood, Sipley . . . . . . . . . . . . . . . 3 75

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 57,800 38

On-hand last report . . . . . . . . . . . . . . 1,950 76

                                                             59 751 14

DISBURSED, WARRANTS PAID.

Bridge, Culvert and Crosswalk fund . . . $ 76 81

Contingent fund . . . . . . . . . . . . . . . . . .  2,237 37

City Cemetery fund . . . . . . . . . . . . . . . . . 4 50

Dog License . . . . . . . . . . . . . . . . . . . . . . . 2 00

Fire . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,247 74

Poor fund . . . . . . . . . . . . . . . . . . . . . . .  511 88

Police fund . . . . . . . . . . . . . . . . . . . . . . 652 35

Street . . . . . . . . . . . . . . . . . . . . . . . . . 13,805 94

Total . . . . . . . . . . . . . . . . . . . . . . . . . . 18,538 09

Balance on hand . . . . . . . . . . . . . . . . 41,213 05

                                                             59,751 14

CONDITION OF CITY FUNDS ON JAN. 1, 1903.

                                             On Hand

                                                                Overdrawn

Bridge, Culvert and Cross-

walk fund . . . . . . . . . . . . . . .$13,522 60

Contingent fund . . . . . . . . . . 3,285 58

City cemetery fund . . . . . . . . 444 90

Dog License fund . . . . . . . . .                         312 50

State Dog Tax . . . . . . . . . . . . 100 00

Delinquent Tax fund . . . . . . .                     2,139 92

Fire fund . . . . . . . . . . . . . . . . 2,974 98

Poor fund . . . . . . . . . . . . . . . 149 43

Police fund . . . . . . . . . . . . . . 1,732 65

Street fund . . . . . . . . . . . . . .                    29,976 67

School District No. 1 . . . . . . . 29,908 18

Uncollected city tax fund . . . .                     6,749 53

Water fund . . . . . . . . . . . . . . 6,020 52

Uncollected Sidewalk tax . . . . 271 18

Rejected tax . . . . . . . . . . . . . .                       742 57

Tax Acc't Pav. Dist. No. 3 . . . 1,250 00

Tax Acc't Pav. Dist. No. 4 . . . 1,500 00

Street opening fund . . . . . . . 1,122 00

Alley opening . . . . . . . . . . . . 1 00

Excess of Rolls . . . . . . . . . . . 31 96

County Treasurer . . . . . . . . . 18,819 26

Total . . . . . . . . . . . . . . . . .  81,134 24    $39,921 19

Balance on hand . . . . . . . . . . 41,213 05

SEWER FUND.

TREASURER'S REPORT

For month ending Dec. 31, 1902.

Tax Acct. Lateral Sewer No. 8 . . . .$ 35 13

Tax Acct. Lateral Sewer No. 9 . . . . 49 84

Tax Acct. Lateral Sewer No. 10 . . . 16 14

Total . . . . . . . . . . . . . . . . . . . . . . . . $ 101 11

Overdraft last Report . . . . . . . . . . . 13,291 25

CONDITION OF SEWER FUNDS ON JAN. 1, 1903.

Orders paid by clerk . . . . . . . . . . . .$ 2,000 00

Int. paid by clerk, coupons  . . . . . . . 600 00

Total . . . . . . . . . . . . . . . . . . . . . . . . 2,600 00

                                                        13,190 14

                                                        15,790 14

                                                  Dr.                  Cr.

Main Sewer Fund . . . . .$ 21,070 80

Lab. Ac. Lateral Sewer No. 1    39 9

Tax Ac. Lateral Sewer No. 1    159 80

Lab. Ac. Lateral Sewer No. 2                      $27 28

Tax Ac. Lateral Sewer No. 2                         29 59

Lab Ac. Lateral Sewer No. 3    5,805 82

Tax Ac. Lateral Sewer No. 3                     5, 61 72

Lab Ac. Lateral Sewer No. 4     836 21

Tax Ac. Lateral Sewer No. 4                        988 44

Lab. Ac. Lateral Sewer No. 5   1,375 24

Tax Ac. Lateral Sewer No. 5                      3,292 57

Lab. Ac. Lateral Sewer No. 6                     2,4 1  5

Tax Ac. Lateral Sewer No. 6     156 63

Lab. Ac. Lateral Sewer No. 7                           57  3

Tax Ac. Lateral Sewer No. 7    3   2

Delinquent Sewer Tax . . . . . . . . . . . . .  . . . . 181 48

Lab. Ac. Lateral Sewer No. 8     8 96

Tax Ac. Lateral Sewer No. 8                            97 99

Lab. Ac. Lateral Sewer No. 9    458 47

Tax Ac. Lateral Sewer No. 9                            63 34

Labor Ac. Lat. Sewer No. 10                         223 19

Tax Ac. Lat. Sewer No. 10                             587 36

Main Sewer Tax fund appro                           100 00

Total . . . . . . . . . . . . . . . . . .  29,942 45    14, 5  31

Overdraft . . . . . . . . . . . . . . . . . . . . . . . .$15,790 14

PAVING FUND.

TREASURER'S REPORT

For month ending Dec.. 31, 1902.

Tax Acct. Paving Dist. No. 1 . . . . . . . . .$ 150 65

Tax Acct. Paving Dist. No. 2 . . . . . . . . .   133 46

Tax Acct. Paving Dist. No. 3 . . . . . . . . .     61 20

Tax Acct. Paving Dist. No. 5 entire issue of bonds to A   A.    av. Bank . . . . . . . . . . . . . . . 31,779 0

Accrued interest on same . . . . . . . . . . .    63 56

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,268 07

Overdraft in Nov . . . . . . . . . . . . . . . . .     4 770 26

                                                              27,497 81

CONDITION OF PAVING FUNDS ON DEC. 1, 1902

                                                  Dr.                    Cr.

Lab. Acct. Paving Dist. No. 1                      $2,162 1

Tax Acct. Paving Dist. No. 1  $8,526 50

Lab. Acct. Paving Dist. No. 2                         897 55

Tax Acct. Paving Dist. No. 2   2,205 66

Lab. Acct. Paving Dist. No. 3                         518 65

Tax Acct. Paving Dist. No. 3    504 99

Lab. Acct. Paving Dist. No. 4     85 06

Tax Acct. Paving Dist. No. 4                       3,192 80

Lab. Acct. Paving Dist. No. 5                    28,552 70

Tax Acct. Paving Dist. No. 5                            63 56

Lab. Acct. Paving Dist. No. 6                      3,4 4 65

Tax Acct. Paving Dist. No. 6                            27 97

Total . . . . . . . . . . . . . . . . . . 11,322 21     38,820 62

On hand . . . . . . . . . . . . . . . . . . . . . . . . 27,497 81

City on Hand . . . . . . . . . . . . . . . . . . . $41,21  05

Paving on hand . . . . . . . . . . . . . . . . . 27,497 81

                                                            68,710 86

Sewer Overdraft . . . . . . . . . . . . . . . . . 15,790 14

                                                            52,920 72

Bank Bal. . . . . . . . . . . . . . . . . . . . . . . 52, 731 05

Cash on hand . . . . . . . . . . . . . . . . . . .    8  67

                                                            52,920 72

Respectfully submitted.

H. WIRT NEWKIRK, Treasurer.

Ann Arbor, Mich., Jan. 19, 1903

This is to certify that the treasurer of the city of Ann Arbor had on deposit in this bank to his credit at the close of business D c.   31st. 1902. fifty two thousand seven hundred thirty one dollars and five cents ($52,731.05).

J. WALZ,

Asst. Cashier

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GOVERNOR MAY VETO BILL

To Bond Ann Arbor for Sum of $40,000

OPPOSITION TO IT

Mayor Copeland Gives Out Figures Showing Overdraft Next July of $30,000

Governor Bliss will veto the bill for bonding the city of Ann Arbor for $40,000 Unless he can be shown that the bill is all right and that the amount, $40,000, is absolutely necessary to make up the overdrafts.

This in effect is what the governor told City Attorney Sawyer over the telephone Tuesday. He said that opposition to bonding the city had developed form citizens of Ann Arbor.

Mayor Copeland, when seen by an Argus reporter, gave out some figures showing, he claimed, that the overdraft on July 1st next would be about as follows:

On Jan. 1 the city owed the school treasurer $29,908 and the county treasurer $18,819, and had in the bank $41,213, leaving an overdraft of $7,514. The December bills allowed and unpaid were $7,610, making the overdraft $15,124. The expenses from Jan. 1, 1902, to July 1, 1902, were $26,078. Estimating the expenses at the same figure, this would make $41,202. From this should be deducted an estimate of $4,000 city taxes collected and $7,000 liquor taxes, leaving, according to the mayor's estimate, $30,202 overdraft on July 1, 1903. The mayor gives the overdrafts in various years on July 1 as follows:

1898 On hand . . . . . . . . . . . $ 9,818

1899 Overdraft . . . . . . . . . . . 14,082

1900       "         . . . . . . . . . . . 26,779

1901       "        . . . . . . . . . . . 28,336

1902       "        . . . . . . . . . . . 23,794

1903       "     (estimated) . . . 30,202

The mayor seemed to labor under a misapprehension as to the Argus' purpose in calling attention to the bonding bill and the condition of the city's finances. In fact he expressed a doubt as to the Argus using his figures. The Argus has absolutely no desire in the premises except to lay before its readers the exact truth and, as always, welcomes statements from all city officials. The city of Ann Arbor is a corporation in which every taxpayer is a stockholder and is entitled to the fullest information as to the condition of the books.

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For Rent – I have concluded to quit farming and move to town so want to rent my farm on shares for a term of years, on sections 9 and 10. Scio. Postoffice, Dexter. 'Phone 541, two rings, Ann Arbor. G. A. PETERS.

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