GENERAL FUND. Into this fund is received all the revenue which is available for the general expenses of the State Government. From it is paid the cost. of maintaining the State Prison, care of the insane, Orphans' Home, expenses of the Legislature, special appropriations, reliefs, salaries of Supreme Judges, State officers and all current expenses of the State Government proper. The special funds created for the payment of the public debt, the school funds, etc., etc., are provided for either by a special apportionment of the tax levy, derived from the sale of public lands, or in other methods. The money thus derived is not subject to expenditure save for the particular purposes designated. It is, then, to the General Fund that your attention should be especially directed. The other funds will, so to speak, take care of themselves. On the 1st day of January, 1879, there was in the Treasury, belonging to this and its auxiliary and dependent funds $446,501 74; that is to say, there was at that date, subject to legislative control or appropriation for general purposes, the sum just named. The expenses of the last Legislature were..... Leaving on the adjournment of the Legislature and the $77,865 52 21,623 21 51,671 64 295,341 37 The receipts into the General Fund (exclusive of amount received from revenue of State Prison) in the year 1879 were as follows: Leaving a balance, January 1, 1880, of....... 239,009 06 The receipts in the year 1880 were as follows: The disbursements in the year 1880 were as follows: There are deficiencies in the amounts appropriated by the Legislature of $28,198 56, leaving $150,690 90 now on hand and applicable to the general expenses of the State Government. Besides this there is $3,538 24 in the Building Fund, which, by the passage of a law, may be transferred to the General Fund. It will be seen that the amount of receipts applicable to general disbursement for the year 1879 was $176,078 68. The disbursements were, including legislative, deficiencies and extraordinary expenditures, $383,571 36, or, without including them, $232,410 99-a sum above receipts from taxes, etc., in the first case of $207,492 68, and in the last of $56,332 31. In 1880 the receipts as above were $151,244 46; the expenditures, $211,364 06; a deficiency of $60,119 60. It will be your duty to devise means both to enlarge the revenue to meet the necessary expenses of the State Government and to reduce the cost of its support to the lowest minimum consistent with capable and effective service. In 1877 the revenue received into the General and its auxilliary funds, exclusive of receipts from State Prison, was $518,020 46. In 1878, $404,582 27. The expenses of the State Government have not materially varied, being, however, somewhat less during the past two years than those preceding. The causes which have combined to produce this remarkable diminution of the revenue can be briefly summarized as follows:^ First-The vast decrease in the bullion product of the State, amounting to a shrinkage in revenue from this alone of $436,566 31 below the receipts of the preceding two years. Second-The depreciation of property values, real and personal, consequent thereon. Third-The decrease of revenue from gaming licenses under the law passed by the last Legislature, and Finally the reduction of the tax levy from ninety cents to fifty-five cents on the $100. It The most material shrinkage of assessable values has been in the net proceeds of the mines. In the year 1877 the value of this species of property upon which taxes were levied aggregated $26,728,722 52, of which $172,400 26 in taxes belonged to the General Fund. In 1878 the valuation was $17,405,681 86, of which $112,266 64 belonged to that fund. In 1879 the valuation was $6,496,432 04; General Fund, $27,285 02. In 1880 the valuation was $3,856,707 12 (fourth quarter estimated); General Fund, $16,198 17. This enormous depreciation of the bullion product has directly affected other property valuations and other sources of revenue. There is just now no good reason to apprehend an immediate or large increase of revenue from the tax on bullion product. The revenue for the support of the State Government must, for the present, at least, be largely, if not almost entirely, derived from other sources. The Controller will submit for your consideration his estimates both of receipts and expenditures for the next two years. is clearly apparent that the tax levy must be increased. I do not, however, think it wisdom to very largely increase the rate in the present depressed condition of business. It would, in my opinion, be better to pay a small interest on the present needs of the State, and await, what we soon will have, renewed prosperity. It was the judgment of some of the ablest and most conservative members of the last Legislature that the sweeping reduction of the tax levy then made was unsafe and ill-advised. The result is before you. While the people have had the benefit for two years of a very low rate of taxation for State purposes, the consequence is, that at the end of your session the surplus which had accumulated during prior years of higher taxation and much greater valuations, together with the receipts of the past two years, will have been practically exhausted, and the Treasury be without means of paying current expenses during the present year. It will be necessary to borrow money to keep the State upon a cash basis until the revenues for 1881 are collected and paid in. The major portion of the revenue is received in December. Until that time provision should be made for current expenditures. Whether the benefits arising from a very low rate of taxation for two years have justified the result attained thereby is a question upon which there is room for difference of opinion. In my judgment, they fall far short of equaling the disadvantages resulting. It should be remembered that, to keep the State Government upon an actual cash basis, there must always be nearly one year's revenue in advance in the Treasury; that is to say, as the larger portion of the revenue is not received until December, there should be a surplus on the 1st of January of each year sufficient to meet the liabilities of the State until the revenues for that year are collected and paid into the Treasury. There can be no question as to the economy of cash payments, even if money must be borrowed. The credit of the State is such that its bonds can be sold at par, while bearing much less than the rates of interest current in the State. With the scrip of the State afloat, and at a discount, all supplies required for the State Prison, Orphans' Home, etc., must be obtained at higher prices. Merchants cannot afford to sell goods and wait months for their pay, unless compensated for the delay. The ruling rate of interest will at least be added, which, as I have said, is much more than the State need pay upon its credit. There is now in the State School Fund, subject to investment, about $100,000. This money can, under the Constitution, be invested in but two ways-either in United States, bonds, or in securities of this State. The only Government bonds obtainable bear four per cent. interest, and are now at a premium of over eleven per cent. in market. It would therefore be a beneficial investment for the School Fund to take $100,000 of our State bonds, bearing four per cent. interest, at par. The issuance, in addition, of $100,000 six per cent. bonds, which I am sure can be negotiated at par, will carry the State through the year upon a cash basis. These last bonds need not be issued or negotiated until six months hence. It is for you, as I have said, to devise means for such an increase of revenue as will provide for the support of the State Government thereafter. REFUNDING OF TERRITORIAL DEBT. An Act was passed by the last Legislature providing for the purchase or redemption of the outstanding Territorial bonds for the benefit of the State School Fund. The Act provided for the purchase of all outstanding Territorial bonds at such a rate of premium as would guarantee to the purchaser four and a half per cent. per annum interest upon the amount paid, during the life of the bonds so purchased. The bonds surrendered were to be retired and canceled, and in their stead an irredeemable bond for $380,000, bearing interest at five per cent. per annum, was authorized to be issued for the benefit and as an asset of the State School Fund. The provisions of the law have been carried out by the Commission thereby created. Under its authority all the outstanding Territorial bonds have been redeemed and canceled, and there is in the State School Fund the $380,000 irredeemable five per cent. bond authorized to be issued in lieu thereof. For a detailed statement of the transactions involved, you are respectfully referred to the report of the Commission. STATE BONDS. Under provisions of an Act passed by the last Legislature $104,000 of our State bonds held by the State School Fund have been redeemed and canceled. For particulars of the transaction, I refer you to the report of the Commission created by the Act. The total amount of State bonds now outstanding is $56,400, with accruing interest for six months at ten per cent. per annum, payable, by the terms of the Act authorizing their issue, April 1, 1881. To provide for the payment of these bonds there is now in the Treasury, to the credit of the State Interest and Sinking Fund, $50,000 in bonds of the State of California, with accrued interest thereon amounting to $2,250, and $207 60 in money. It will be necessary for you to appropriate the sum needed to pay the balance due upon these bonds. Their surrender and cancellation will obliterate all outstanding liabilities of the State, except what it owes to its own School Fund. RAILROADS. The great need of Nevada is cheap and facile transportation. Our State is rich in resources, mineral and agricultural, but its valleys are hedged in by mountain ranges, and distance from market renders both the products of mountains and valleys, in many localities, practically valueless. Cheap and ample transportation will remedy this drawback to the development of our resources. Railroads, particularly narrow-gauge railroads, will solve the problem, and enable the farmers, stock-raisers and miners of the State to put in market their productions. Local railroad building should be encouraged. Capital should be invited to investment therein and guaranteed protection. No sentiment of opposition to the extension of such roads should be harbored or encouraged. The State has absolute control over its public domain. It controls its highways. It is empowered to protect its people against any and all forms of extortion by companies to whom it grants charters, and its Legislature can at any time reduce or limit fares and freights to a just and equitable basis. It can provide against and prevent unjust discrimination by carriers, and, in short, stand as arbiter between the natural aggressiveness of corporations upon the one hand and the unjust demands of communistic influences upon the other. Every facility should be given and all proper encouragement extended to the extension and enlargement of transportation facilities. I am not in favor of railroad subsidies. It is my judgment that the field open to railroad building in Nevada offers ample security for profitable investment. Such reasonable profits should be guaranteed-that is to say, there should be stimulated and encouraged a feeling among our citizens that, as in other investments, the investor is entitled to |