1846. No. 8. Report of the Committee on Finance. The undersigned, one of the committee on finance, to whom were referred that part of the Governors's message which relates to the finances of the state, including the sale of the public works, togeth er with the annual reports of the Auditor General and State Treasurer, respectfully report: That they have examined the financial condition of the State, as set forth in the documents referred to them, and have endeavored to determine 1. What is the present amount of the indebtedness of the State, for the payment of which it will be necessary to provide? 2. Can that payment be otherwise provided for than by a sale of the public works? * 3. Whether the public works are, or ever can be, while in the hands of the State, a source of revenue? 4. Whether, all things considered, a sale of the public works is advisable ? 5. What measures would be best calculated to conduce to a fair and equitable sale? For an answer to the first proposition, as to the indebtedness of the State, we need only to refer to the annual report of the Auditor General for an explicit statement of the State liabilities. It will be found that a general view of the finances of the State is there given under several heads. 1. The general fund From the exhibit made of the liabilities and resources of this fund, your committee are led to believe that no legislation is at present needed with regard to it, but that by an economical administration of the affairs of the State, all its liabilities will be met at maturity. The resources of this fund consist of tax lands, lands unredeemed, sold at tax sales, unpaid taxes, due from several counties, &c., amounting to $135,726 98, being this resources of the fund aside from the annual state tax: Also, $286,751 49 of surplus revenue of the U. S. not on interest, and the time when it will be called for is uncertain. The above statement is given at large in the Auditor General's report, but is here inserted, not as a matter needing investigation or action, but as important to refer to in a subsequent portion of this report, and as disclosing sufficint to warrant the conclusion that no resort can be had to this fund to supply the deficiency of another, without the imposition upon the people of a higher state tax than is at present imposed upon them, Under another head of the report of the Auditor General, will be found The Trust Fund. This fund will more appropriately be referred to in any estimation which may hereafter be made as to the resources of the University, and its liabilities, and has no proper indebtedness except it be about $43,000, yet to be received in warrants on the internal improvement fund, in liquidation of the balance of $100,000 loan to the University. Upon this, your committee believe there is no need of legislative action. Also, The Contingent Liabitittes of the State. These liabilities are the balance of $100,000 loaned to the University, which the University fund is able to meet when it falls due, and which, therefore, need not be considered as a probable debt of the state. And the $100,000 stock issued to the Detroit and Pontiac Railroad Company, which we are assured will probably be paid by Alfred Williams or the company; or if not paid, we are informed by the Auditor General, the state has the means of reimbursing herself. These liabilities may then, for the purposes of this report, be disregarded. And now, having cursorily glanced at such financial matters as are the subject of legislation in all representative governments, and are necessary to their maintenance and prosperity, we approach with reluctance, but from the position in which we are placed, are compelled by a sense of duty, to go into a detailed examination of the liabilities and resources of another fund, which had its inception in the chimerical projects of an era of speculation, when the allurements of hope, and the pride of an infant state led the people of Michigan to adopt measures, whose ultimate tendency has been to clog their action, cripple their energies, and drive the immigrant from their borders.But we leave argument or inference until we have presented you with a statement of the internal improvement debt. Pincipal due on five million loan-bonds acknowledged-due January 1863, Do (on $3,813,000 00 bonds delivered to Bank of Amount received on above bonds as appears from Auditor's report, is Interest bonds, under the act approved March 8, 1843-due in 1850, This amount due in 1850 and 1863, as above, Interest on above bonds due $1,387,000 00 1,232,450 72 367,036 80 $2,986,487 52 July 1, 1845, } $2,625 122 372,517 28 Brought forward, Add interest to January 1, 1846 as per estimate of Auditor General, ($240,000 per annum,) One years interest to January 1, 1847, which is as soon as any interest can be paid by direct tax, $4,121,720 79 120,000 00 240,000 00 $4,481,720 79 Your committee then find that the debt of the state for which it will be necessary to provide the means of payment, is The next question which arises, is in reference to the payment of the debt-and first, what are the Internal Improvement Resources. Total cost Central Railroad to Dec. 1 1845, including 10 per cent interest, during construction, iron, furniture of road, shops, &c., is, Total cost Southern R. R., Locomotives, &c., Total cost roads and furniture, To which may be added for instruments, books, maps and furniture in the office of the Chief Engineer, Internal improvement and other lands (as estimated,) $2,238,289 72 1,125,590 65 $3,363,880 37 1,000 00 $3,364,880 37 585,417 69 $3,950,298 06 Aside then from the Railroads, there is an amount of land which is estimated at some $585,000, this is the only means except taxation within the reach of the state. Taking the Auditor General's estimate as the basis, there is some $240,000 intere t annually to be paid on our acknowledged debt. How is this to be raised? No one will for a moment be disposed to believe that the lands above mentioned will be available as a resource to pay our interest-they may be taken up in the course of time by actual settlers, and thereby to a small degree gradually decrease our debt-and such your committee believe should be the disposition of them. What then is the next alternative offered us ?-taxation. By reference to the report of the Auditor General it will be seen that the amount of taxes raised for previous years has been sufficient to defray the expenses of the government, and to reduce the amount of the general fu nd indebtedness-this is still large, and will require all that can be raised at the present rate of 2 mills, to pay the state expensess annually, and provide for the gradual liquidation of the debt of the general fund. To increase that rate to an amount sufficient to meet the interest of our debt ($240,000) will be to levy a state tax (in addition to the present tax of 2 mills) of nearly 8 mills according to our present valuation, or upon an average valuation agreeable to a bill already introduced, it may vary the amount per cent to 7 mills.. By schedule D, of the auditor general's report, it will be seen that the valuation of the property of this state for the year 1845, was, $28,922,097 50. The bill introduced, should it become a law, may increase the nominal valuation to over $30,000. As a measure tending to relieve the state from embarrassments other than those arising from her internal improvement debt, its operation will be salutary, as well as in equalizing more systematically the assessments. But in any event, in order to pay the interest on our internal improvement debt, together with the ordinary expenses of the government, a state tax of 1 per cent. will be requisite. This your committee believe is the only resource aside from a sale of the public works, within the control of the state, for the liquidation of the interest upon her debt. If then, the people of this state had the ability to pay, the policy' of levying such a tax may well be questioned. Besides, your committee believe that a tax of this magnitude would indeed be a "burden too grievous to be borne." But, that the whole question may be properly considered |