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City Does Not Need $25,000 To Pay Warrants Due July 1

City Does Not Need $25,000 To Pay Warrants Due July 1 image
Parent Issue
Day
6
Month
February
Year
1903
Copyright
Public Domain
OCR Text

Warrants for Work Done in June Are Not Issued Until After July 6

Mr. Seyler's Reports Confirms Every One of Argus Contentions -- His Estimates As to July 1 Include Warrants Not Payable Until a Later Date.

The Argus was deprived by what looks to it as a prearranged plan from the privilege of printing Tuesday Mr. Sayler's report on city finances which so fully sustained everything that the Argus has claimed. In the light of the use which has been made of this report it is probable that it was desired to have 24 hours start in an effort to create the impression that the report meant something it does not mean. There has also been a laborious effort to drag politics into a discussion of city finances, when there is absolutely no policies in such a discussion. Mr. Seyler's report is given by the Argus today in full. 

THE ARGUS CORRECT.

It will be noticed by comparing it with the Argus of east Thursday that it follows closely along the lines of that article. Mr. Seyler says the treasurer makes three reports to the common council under the heads of city funds, sewer funds and pavement funds and each report has its balance. He gives the same figures as the Argus did and shows how $30,189.55 for the State Street paving was paid for out of the "city funds" and the money realized from the sale of bonds was put to the credit of the paving fund, thus making a shortage in the city funds of over $30,000. While this money was safe in the bank, the official reports showed an apparent big overdraft in the city funds which was being used as a basis to secure a big issue of bonds to run against the city of Ann Arbor.

Mr. Seyler next found it was true, as stated in the Argus, that the Ann street paving had been paid for out of the State street paving fund.

He next finds, as the Argus stated, that the Main sewer fund belonged to the whole city to pay, which practically means that it should be classed as a city fund and not put in with the district sewer funds which do not belong to the whole city to pay. He then finds, as the Argus intimated might be found on investigation, that $4,494.73 of the aggregated $5,280.66 in the sewer district funds belongs to the city and not to the districts and should be transferred. He finds, as did the Argus, that the sewer funds in seven districts should be closed. So far Mr. Seyler has closely followed and entirely corroborated the Argus article. Read the article and the report together and see for yourself. Then Mr. Seyler goes into a discussion of two paving accounts into which the Argus did not delve and finds a bad condition of affairs there which we shall deal with later on. 

DISTINCTION BETWEEN FUNDS.

It may as well be stated here so that no amount of pettifogging can befog the issue, that the charter makes an overdraft on Feb. 1 illegal. At the end of the fiscal year the city funds must be sufficient to pay all warrants drawn during that year. The city charter has nothing to say about sewer funds or paving funds. These were created later and under local acts of the legislature passed for the purpose of permitting sewers to be built and paving to be done. The sewer act, for instance, provides for the creation of a sewer fund to pay sewer bonds. It is perfectly proper then that the city treasurer should do as he does, report separately upon sewer funds and paving funds and it is perfectly proper when discussing the February overdraft to refer only to the city funds, the funds concerning which the charter makes provisions, the only funds which belong to the whole city to pay, as distinguished from the funds which belong to the sewer or paving districts to pay. 

WHY SHOULD PAVING FUNDS BE INCLUDED?

This being granted and it being remembered that the local act of the legislature provided the way in which the bonds in paving districts No. 1 and 2 should be paid, is it not proper to throw out from a discussion of the overdraft in the city funds, for which the city is asked to bond, the $8,281.97 and the $2,044.99 which Mr. Seyler has included in the city fund liabilities for these two paving districts. If this were done, in the city funds proper, according to Mr. Seyler's estimate, on March 1 there would be on hand the sum of $3,619.36.

If the reader cannot draw the distinction between city funds and district funds and so is not inclined to deduct these district paving funds from Mr. Seyler's list of city funds, perhaps he can give some good reason why the $2,162.14 cash in paving district No. 1 and $897.55 cash in paving district No. 2 should not be added to the city's resources and so cut down the estimate March 1 overdraft to $3,647.01.

If these two paving districts are to be eliminated from the city funds then Mr. Seyler's estimated overdraft on July 1, 1903, dwindles to $12,959.64.

SEYLER'S ESTIMATE NOT ALL PAYABLE BY JULY 1.

The Argus does not agree with Mr. Seyler's estimate as to the necessary overdraft July 1, and thinks it can clearly show how the estimate is too large. In the first place, Mr. Seyler estimates the liquor tax received in May to be $7,500. The liquor tax received by the city last May was $9,366.21. Why should it be nearly $2,000 less this year? That estimate must have been the mayor's own estimate. In the second place, Mr. Seyler estimates the warrants until July as the same as the corresponding months last year, but what he calls his April orders were not allowed by the council last year until May, and his June orders were not allowed until July 7. Mr. Seyler calls the warrants ordered drawn July 7 last year June orders and thus puts one of the biggest months in the year in for the estimated expenses before July. It includes the big water bill for 6 months, which last year was $3,475, in before July 1, when as a matter of fact it will not be allowed until July 6 this year. Fixing up Mr. Seyler's estimate in these two particulars and the overdraft would stand July 1 as follows:  

Seyler estimates overdraft Feb. 28....................................$6,607.70 ...Bonds, March 1....................................$4,000.00

Warrants allowed March, April, May and June, if the same as allowed in these months last year............14,446.16

$25,152.86

Less-

Liquor tax....$9,366.21

Delinquent tax. 500 00 - 9,966.21 

$15,186 65

This would leave the overdraft July 1, $15,186.55 - nearly $10,000 less than the city attorney and the mayor want to borrow. They have dropped from $40,000 to $25,000 in their claim as to the overdraft and it ought not to be difficult for them to drop another $10,000. Does the mayor want to spend $10,000 more between now and July 1 than he did last year, so as to have a $25,000 overdraft on that date?

These figures are not to be accepted as Argus figures. They take Mr. Seyler's finding as to an overdraft on March 1. As a matter of fact the warrants allowed in January were put down as $3,321.28 when they were $7,610.15, and on the other hand there was in the neighborhood of $3,000 cash which should have been counted as resources. We simply take the figures on which the mayor relies and show that they will not give the July 1 overdraft.

NO DIFFERENCE AS TO THE FIGURES. 

The Argus has shown its figures to Mr. Seyler and discussed the matter with him and thinks it can clearly state the difference between these two sets of figures. Mr. Seyler calls June warrants, warrants for work done in June. He admits that these are never allowed until July but correctly states that the work has already been done by July 1. The Argus looks at it from a different standpoint. These warrants which are allowed July 6 for work done in June and for six months water, are not paid after July 6 and from the Argus point of view do not enter into a discussion of an overdraft on July 1, because they do not become a claim against the city until after that date.

Mr. Seyler in conversation this morning stated that there is $2,162.14 cash in labor account paving district No. 1 and $897.55 in district No. 2, which does not belong there, as these pavements have been fully paid for, and these accounts should be closed. He had not taken this into account in his report as he was not sure where it belonged. Why not use it to pay part of the deficiency in the tax account of these districts, and so reduce the amount which Mr. Seyler says the city will have to make good?

There is no difference between Mr. Seyler and the Argus as to figures, as clearly came out in this morning's discussion with the books in hand. Mr. Seyler explained the amount he had estimated for the liquor tax as being the amount he had received while treasurer and the amount for some time after that. He found that on last year in May the city treasurer had received from the county treasurer $9,366.21, just as the Argus states. Mr. Seyler admits that the city treasurer will not show the same over draftJuly 1 as his estimate does, but simply states that the city will owe that much, although many of the orders will not come up for payment until after July 6, and that is true. But no one wants to borrow money to pay when it comes due. 

In all contention the fact must not be lost sight of that the city has, with the possible exception of one year, always had an overdraft on July 1, and that it is not against the city charter providing they raise enough money in July to fully settle it. 

Mr. Seyler's report was as follows:

To the Honorable Common Council, City of Ann Arbor:

The mayor and finance committee, composed of Alderman F. M. Hamilton, Coon and Douglas, have requested me to make a statement of the condition of the funds of the city of Ann Arbor at the present time. I shall endeavor to my best ability, in the short time, to make clear to your honorable body the state of finances as I find them.

For the benefit of the public, I will explain in brief the mode of paying money out of the city treasury:

A report of all bills to be paid during any one month is made out by the city clerk and submitted to the committee on finance the Friday before the first Monday of each month for approval, after which they are passed upon by the common council as its next regular meeting, and if again approved, the clerk is ordered to draw warrants for same. These are issued, drawn upon the various funds as per finance report. At the end of the month, they are taken from the bank by the city treasurer, who chargers same to funds upon which they were drawn, and in no case whatever has he authority to debit any account not designated upon face of warrant. 

There are three reports sent by the treasurer to the common council monthly, under the heads of "city fund," "sewer fund" and "pavement fund," and each report has its balance, whether on hand or overdrawn.

The balances, as they appear upon the city treasurer's reports ending December 31, 1902, are as follows: 

Pavement fund - on hand...$27,497.81

Sewer fund - overdrawn...15,790.14

City funds - on hand .... 41,213.05

PAVEMENT FUND.

When any contract is let for paving, bonds are not usually issued until the final estimate is received from the city engineer, who gives the entire cost of such improvement. The contractors are allowed from time to time, as the work progresses, an amount of money up to a certain percentage of the work done. There exists no actual account with said pavement district until the bonds are sold, at which time the amount received from sale is placed to the credit of labor account, paving district No. 5, State street, as in this case.

The following amounts were paid to Lanane Bros., contractors for State street, during the progress of the work and amounted to $30,189.55, taken from the street fund temporarily and can be returned to said account only by resolution of the council upon completion of the job and sale of bonds.

Sept. 9, 1902. Warrant No. 21811, Lanane Bros....$9,483.30

Oct. 21, 1902. Warrant No. 21915, Lanane Bros...$11,188.03

Nov. 18, 1902. Warrant No. 22012, Lanane Bros...$9,518.22

Total.......................................................................$30,189.55

The amount received from sale of bonds was $31,779.00 and accrued interest $36.56 ($31,779.00 face of bonds), passed to credit of labor account, paving district No. 5, and $63.56 to tax account, district No. 5.

In the matter of Ann street pavement, being district No. 6, I find the following:

Warrant No. 21914 issued Oct. 6 to Clarken & Schneider, contractors, for $3,064.19 against district 5 (intended for No. 6) and warrant No. 22005, Nov. 5 for $162.11 to same parties; total $3,226.30.

The bonds sold realized $3,404.65 and was passed to credit of labor account, paving district No. 6, and accrued interest and premium $27.97 to tax account, district No. 6. 

When the council transfers by resolution the amount paid to Lanane Bros. from labor account, paving district No. 5, to street fund, it will leave a balance on hand in this district (pavement), $1,589.45; and also from labor account, paving district No. 6, the amount advanced to Clarken & Schneider amounting to $3,226.30, there will then be a credit balance of $169.85 in this district, These balances, which are retained for one year, are 5 per cent of the total cost of the pavements. 

SEWER FUNDS.

The most important item in the city finances to demand attention (Main sewer fund), there was a credit to this account May 1, 1897, of $9,420.41. and the treasurer's report of Jan. 1, 1903, shows an overdraft of $21,070.80, the total amount charged to this account during these years is $30,756.21, and receipts were $265.00.

This account largely embodies the cost of the storm sewers, amounting to over $29,000.00, all of which was charged to this fund.

It appears, from the account, that no provision was ever made for paying for the work by appropriation, assessment against property benefited, or be issuing bonds. This overdraft would appear to most people to be a charge to street fund, being a debt contracted by the city for public improvement, and must sooner or later be included in the city tax.

In making a hasty review of the sewer funds in districts No. 1, 2, 3, 4, 5, 6, 7, some dating back ten years, a total balance of $4,494.73 due the city, which is classified as resources. The taxes in these districts are all paid and the closing up the accounts has been recommended for several years. 

The next important items of interest are the tax accounts of paving districts 1 and 2. 

The bonds for district No. 1 were sold Nov. 30, 1898, and amounted to $21,256.60, $10,127.04 was assessed against the property in district, leaving a balance of $11,129.56 as the city's portion to pay, exclusive of interest. The bonds ran for four years, one-quarter due yearly. During the four years, I find but $5,000.00 appropriated to meet $11,129.56, and deducting the taxes outstanding Jan. 1 of $244.53 would make an overdraft for the city to meet of $8,281.97.

The same condition is met with in paving district No. 2.

Bonds sold Nov. 30, 1898, amounted to $8,982.93, $5,000.00 of which was assessed to district, the balance , $3,983.93 the city assumed. During the four years but $2,200.00 was appropriated to pay $3,982.93, not including interest, and allowing for the payment of outstanding taxes, we are agains confronted with an overdraft of $2,044.09.

The following is a recapitulation of all city funds showing condition at the present time:

RESOURCES.

Jan. 1, 1903. Cash on hand, city treasurer's report...$41,213.05

Jan. 1, '03, uncollected........$5,427.29

City tax delinquent (estimated) ........ 1,500.00 - 3,927.29

Excess of rolls...............................145.03

Sidewalk tax, walks built by city................. 761.96

Street fund, from paving district No 5........... 30,189.55

Sewer fund, district No. 1, 2, 3, 4, 5, 6, 7.............4,494.73

Delinquent tax, due from county treasurer (estimated)...............300.00

Total............................................................$81,031.61

LIABILITIES 

School district No. 1, tax collected during Dec....$29,908.18

State tax, tax collected during Dec...........10,938.93 

County tax, tax collected during Dec............7,880.33

The Main sewer fund overdraft..................21,070.80

Tax Acc't Pay. Dis. No. 1 overdraft...............8,281.97

Tax Acc't Ran. Dis. No. 2 overdraft................2,044.09

Warrants for Jan., 1903 (estimated).............3,000.00

Outstanding warrants Jan. 1, 1903, per clerk's report 1,292.73

Total.......................................$87,738.31

Overdraft of $6,706.70 Mach 1, 1903

To ascertain the overdraft for Feb. 1st deduct $3,000.00 from this amount ($6,706.70), which is an estimate of the finance report for that month. 

The treasurer's report to the council for February and March will show a balance on hand for the simple reason that he has in his possessions most of the school, state and county money which will not be paid to county, treasurer and school treasurer until the 1st of March of later, and if the city will pay over to the sewer and pavement funds the overdrafts it has created there, and bring back the amount due from sewer districts No. 1 to 7, heretofore explained, it will find itself financially in about the above condition.

All of which is respectfully submitted. 

EDW. L. SEYLER.

Edward L. Seyler, being first duly sworn, deposes and says:

I prepared the above and forgoing statement of the standing of the finances of the city of Ann Arbor, and that the same is true to the best of my knowledge and belief.

EDW. L. SEYLER. 

Subscribed and sworn to before me this 2nd day of February, 1903. 

CHAS. E. HISCOCK,

Notary Public, Washtenaw County, Michigan.

As a supplementary report, which I was not asked to give, I will outline, in estimates only, the probably condition of the finances July 1, 1903. 

On March 1st, bonds, with interest, to the amount of $12,330.92 are due and must be paid by the city treasurer as follows:

Paving Dis. No. 3..................... $3,412.50

Paving Dis. No. 4..................... $3,676.20

Paving Dis. No. 5..................... $3,556.11

Paving Dis. No. 6..................... $398.61

Sewer Dis. No. 8..................... $137.50

Sewer Dis. No. 9..................... $575.00

Sewer Dis. No. 10................... $575.00

----------------------------------- $12,330.92

The city, out of its own funds, must pay its portion of paving districts No. 3 and 4, which is about $4,000.00.

Overdraft Feb. 28, 1903....$6,706.70

Bonds and interest paid March 1, 1903 ... 4,000.00

Warrants, based on corresponding month in 1902 5,736.00

April warrants, based on corresponding month in 1902  $5,736.00

May warrants, based on corresponding month in 1902  $3,346.00.

June warrants, based on corresponding month in 1902 $8,762.00

----------------------------------------------- $31,285.70

 

Liquor money received in May (estimated) ..... $7,500

Delinquent tax from county treasurer (estimated) ........ 500 - 8,000.00

Estimated overdraft July 1, 1903........... $23,285.70

By All. Hamilton: