The Mayor To The Public

Wants to Get Rid of All Overdrafts

An Informal Message

In Which He Approaches Much Nearer the Argus Position Than He Has Heretofore Done

Ann Arbor, Mich., Mar. 9, 1903.

To the Editors:

Dear Sirs - In response to repeated requests I desire to make a statement concerning the city's financial condition. I have no doubt yon will give me space for this purpose.

Taxation at as low a rate as is consistent with good government, ample fire protection and well lighted and decently kept streets ought to be the aim of every official, citizen, and especially every taxpayer of our city.  The assessed valuation, ten million dollars, at the tax limit, makes our annual income $50,000. That amount, economically administered, should be and is sufficient to properly care for the affairs of this municipality.

Under our charter the revenues raised by general tax are divided into seven funds. The practice of the past, however, has given rise to an eighth fund not contemplated by the authors of the municipal code. This eighth fund is the abundant wealth of the bank at the particular moment in charge of the city's money. The tax limit and the budget of the year have borne no relation to, or placed any restraint upon, the free, and unlimited issuance of warrants upon the credit of our city. The result of this unlawful practice has been the annual deficit or overdraft lately so much discussed.

Regarding this matter I contend, first, that the possibility of an overdraft is pernicious in its effect. It permits the officials of the city to rush into expenditures reckless and extravagant. That this freedom has not been more abused is the good fortune of the city. I have myself listened to the public and official statements of aldermen to the effect that "the banks have plenty of money, we don't care what the expense is."

I contend, next, that the overdraft is illegal. This is the verdict of the best legal talent of our state and, so far as I know, not a member of the bar of Ann Arbor, irrespective of political affiliation, has said my advisers are wrong. Certainly, no law-abiding citizen, knowing this, can expect me to willfully violate the law by signing warrants on an empty treasury.

For taking this stand I have been criticized, among other reasons, because my present practice is not in harmony with my record of last year. I frankly admit a changed and what I believe to be a more advanced view of this question. I was new at the business a year ago and I hope know more of municipal affairs and responsibilities than I did when inaugurated. If this were not true I should be ashamed of myself and certainly my constituents would be ashamed of me.

It is well known that from the first I have contended for a more businesslike administration of the public finances. But it was not until the bank presidents served notice on me that no more overdrafts would be honored that I came to study this question more deeply and to take legal advice as to the law in the matter. I am fully persuaded now of my own duty and, if I may say it modestly, of the duty of our citizens.

It should lie our common aim to establish the principle that an overdraft is illegal and not to be tolerated. Why? Because, that done, all future officials of the city will know exactly how much money can be spent for public purposes. When the tax levy is made it will cover every penny which is to be spent in that year. Expenditures will be closely guarded and the tax limit never exceeded. The garment will be fashioned to suit the cloth and the budget cannot and will not exceed the one-half of one per cent. Low taxation will prevail, bills will be promptly met and every public interest will be abundantly served. If this is not a consummation devoutly to be wished I am no judge of human nature or the wishes of our citizens.

So far as I am concerned I care not how the present situation is bridged over, whether by special election and and an extra levy, whether by bonding or by some other plan. I have no hobby and no desire beyond serving our citizens and establishing a principle which for all time will curb and restrain the reckless expenditure of money. I am frank to say I believe the bonding plan the most feasible. The measure adopted by the common council provides for issuing $25,000 in bonds, payable $2,500 a year for ten years. This is only about twice as much as the amount necessary to pay the city's share of the Liberty street pavement.  No one seems to be very critical about that bonding scheme and certainly the council's plan to care for the present need can be only twice as dangerous

One argument used against bonding is that it is bad business practice to pay interest the whole year for money needed for but four months. The fact has been entirely overlooked that under our recent practice there were but three or four months in the year when the city account was not overdrawn So mach of an overdraft has accumulated each year that the summer collection has sufficed simply to care for that and left no funds to carry the city until the winter collection was in hand. Therefore, interest has been paid for eight or nine months at from five to six per pent, when bonds could be readily gold at four per cent or less. The actual interest account would be practically the same as now. Instead of an overdraft nine months in the year there would be a balance in the bank each month.  Deducting from tho interest account the amount on dally balances and it will be seen at once that the cry of "mortgaging the homes" is mere sentiment and that the bonding plan is a business proposition, bound to save money to the taxpayers. However, I do not care what plan is adopted so long as the principle of "no overdraft and low taxation" is established.

I have hoped that a friendly suit might be instituted to gain a ruling of the court on this question of the overdraft. Then it will be settled for all time. But whether this is done or not I trust our people will come to realize that the present administration has no axe to grind, no hobbies to ride, no old scores to pay, no enemies to punish, no friends to reward, but has honestly and conscientiously endeavored to well and truly serve the people in a time of special trial.

Our tribulations were many before the flood carne, but with that added the city officials have spent many sleepless hours planning for the public good. We are not infallible, but at least we have done the best we could and believe that will be the verdict of the public when once the situation is understood.

Respectfully,

R. S. Copeland.