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the Laws of 1831, and the residue, about five acres, has been sold for the sum before stated; and the proceeds will be applied to the uses of the General Fund. One-fourth of the purchase money, $38,657, has been paid into the treasury, and bonds given for the residue, amounting to the sum of $115,878. These bonds will be transferred to the School Fund, and the moneys paid into the treasury, on account of that fund, applied to meet the drafts upon the General Fund. The resources for the supply of the demands upon the treasury, for the current year, may therefore be recapi tulated as follows, viz:
Receipts from auction and salt duties,
$200,000 Bonds for Oswego lands,
115,878 Sundry items of revenue as given in the preceding esti
mate, page 5, (which includes first payments on Oswego lands,)..
The deficit of the year ending 30th September, 1835, of $98,589.95, as before stated, will be provided for by a loan from the Bank Fund.
There is annually advanced to the counties, from the State treasury, about $50,000 for the taxes which are retured to the Comptroller's office on account of the non-payment of the taxes in the several towns. The sums thus advanced, are reimbursed to the treasury, with interest at the rate of ten per cent; it is not necessary, therefore, to make any other provision to meet this demand upon the treasury. The operation of the tax law for the present year, has drawn out of the treasury $52,579.97, and brought into it $43,980.96; but the balance against the treasury in this instance, will be more than made up in subsequent years, as the time for selling the lands for the taxes approaches. In the vear preceding the one for which this report is made, the sum of $80,000 more was received into the treasury for this object, than was advanced to the county treasurers. The excess in this case was produced mainly by the Comptroller's sale in 1834.
If the sum of $52,579.97, paid out of the treasury for the year ending 30th September, be deducted from the total payments from
the treasury during the same time, $433,772.74, it will leave for the actual expenses of the State government, the sum of
8381,192 77 From which deduct the amount for deficiencies of the lateral canals,...
And it leaves for the ordinary support of the go
vernment, the sum of......
This sum is not greater than the probable receipts annually from auction and salt duties, which by an amendment to the Constitution, are soon to be restored to the General Fund. If, therefore, provision is now made to relieve the General Fund from the annual drasts upon it to make up deficiencies in the revenues of the lateral canals, the restoration of the auction and salt duties to this fund, will enable it hereafter to sustain the ordinary expenses of the government. But if the treasury is to be burthened, not only with the debts and deficiencies of the canals already in operation, but also with those of the Chenango canal, the revenues of the General Fund will be inadequate to meet the demands upon it and a resort must be had either to taxation or to borrowing.
The course of legislation relative to the lateral canals, has been in direct opposition to the principle established in the act of 1817, of providing auxiliary resources to pay interest on the loans; a principle which has been so advantageous to our canal system, and which lies at the very foundation of public credit.
In 1825, an act was passed for the construction of the Oswego canal, under which a debt was contracted of $427,347. In 1830, five years after, an act was passed charging all deficiencies in the revenues to pay interest and keep the canal in repair, upon the treasury.
In 1825, also, an act was passed for the construction of the Cayuga and Seneca canal, under which a debt of $237,000 was contracted. Five years after, the interest on this debt and the deficiencies in the revenues of the canal to kecp it in repair, were charged upon the treasury.
In 1829, an act was passed for the construction of the Chemung canal, under which a debt of $316,000 was created; and in
1833, four years thereafter, this debt and the repairs of the canal were thrown upon the General Fund.
In 1829, an act was passed for the construction of the Crooked Lake canal, under which a debt of $120,000 was contracted; and in 1834, five years thereafter, this debt and the maintenance of the canal, were put upon the treasury.
These burthens have been accumulating upon the General Fund, from year to year, without the adoption of any measures to collect, by tax, the revenues necessary to meet the demands thus made upon the treasury. This course of legislation has devolved upon the Comptroller, the necessity of devising the necessary means to sustain the lateral canals and preserve the credit of the stock issued for their construction,
By the Revised Statutes, it is made his duty to exhibit to the Legislature "a detailed estimate of the expenditures to be defrayed from the treasury for the ensuing year, specifying each object of expenditure, and distinguishing between such as are provided for by permanent or temporary appropriations and such as require to be provided for by law: and shewing the means from which such expenditures are to be defrayed:” also, “to suggest plans for the improvement and management of the public revenues.”
The policy adopted in 1825, and which has been followed to the present time, of borrowing money without making provision for the payment of interest; and the suspension of the State tax the very next year after this mode of borrowing commenced, has contributed essentially to the annihilation of the General Fund. Its extinction presents the necessity of providing other means to sustain the treasury.
In the report from this office in 1834, it was proposed to charge the Erie and Champlain Canal Fund with the amount it had received from auction and salt duties, and, by this means, replenish the General Fund as soon as it could be constitutionally done. In the opinion of the Comptroller, there should be paid from the Canal Fund to the General Fund, about five millions of dollars as a fair equivalent for the revenues derived from auction and salt duties, and which, when the Canal Fund was established, were transferred to it from the General Fund. If this transfer had not been made, the General Fund, at this time, would have had a capital of
five millions of dollars; and the Erie and Champlain canal debt, instead of being nearly paid off, would have amounted to more than ten millions of dollars.
It has become necessary to enlarge the Erie canal, and the expenditures, for this purpose, will require all the surplus revenues, after providing a sum sufficient to pay the debt, for the next ten or twelve years. The revenue to be derived hereafter from auction and salt duties, is, therefore, all the aid which the General Fund will receive fron the Canal Fund, for at least twelve years to come. The expectation which has heretofore been cherished that the treasury would be furnished from the Canal Fund, with ample means for the payment of interest on debts created for lateral canals and other works of internal improvement, can not be realized, at least for many years. The debt due from the Canal to the General Fund is thus postponed; but the interest on the debts created, and to be created, can not be postponed, even for ninety days, without impairing the credit of the State. For the preservation of this, money must be had; and the question to be determined, is, shall the people be taxed, or shall money be borrowed on their credit, to pay interest on the State debt ?
It may be said that a general tax ought not to be levied for a local improvement; but if this is a sound position, it is equally objectionable to create a debt chargeable upon the whole people of the State, when the money is to have a local application.
If, in attempting to balance advantages and disadvantages between different sections of the State, the proper means of replenishing the treasury are neglected, and it becomes embarrassed, this result will be alike injurious to all.
It is necessary to look, not only at the present, but at the prospective condition of the treasury, in reference to the claims which will continue to be pressed upon it.
The General Fund debt, on the first of February, 1836, will amount to about one million of dollars. In 1832, only four years since, there was no debt charged upon the General Fund, and it had a capital of nearly a million of dollars. It should be observed, however, that more than half of the debt against this fund is in consequence of the stock issued to John Jacob Astor, by virtue of Chap. 86, of the laws of 1831. [Assem. No. 5.)
The debt against the State, on account of the lateral canals, already amounts to $2,094,304, and there will be added to this debt, during the current year, the sum of $860,000. Add to this the debt of the General Fund, $868,979.02, and it makes a total debt of $3,823,283.02; for the payment of which, no adequate provision has been made.
In relation to a portion of this amount, (the sums authorized to be borrowed for the construction of the Chenango canal,) no provision has been made for the payment of the interest, and it can not legally be paid, even if there was money in the treasury, after the moneys borrowed for the construction of the canal are drawn out of the hands of the Commissioners. This fact was communicated to the last Legislature, in a report from this office, being Document No. 381, of the Assembly, to which the Legislature is respectfully referred.
The stock authorized to be issued for the construction of the Chenango canal, is to be reimbursed, after the year 1845, out of the revenues of the Erie and Champlain canals. But in addition to the constitutional barrier against applying the revenues of those canals to defray the expenses of the lateral canals, it is now quite certain that the enlargement of the Erie canal will consume the surplus revenues of the Canal Fund for the next ten or twelve years. In the mean time, how is the interest on the Chenango stock to be paid? If it is made a charge upon the treasury, and this must be done, or the stock will be dishonored, and the credit of the State seriously impaired; and if money is to be borrowed, to enable the treasury to meet the demand, the debt on account of the Chenango canal, at the close of 1845, instead of being $1,860,000, the stock issued, will amount to $2,891,995.20. In the paper marked H, a calculation is made, to show the accumulation of interest on the million already loaned, assuming that money will be borrowed quarterly, at 5 per cent to pay the interest, and commencing January 1, 1836. The accumulation, by this process, to meet the interest on the million of dollars, will amount, on the first of Oct. 1845, to the sum of $643,619.20. Admitting that the premium on the $860,000, authorized to be loaned, will pay the interest on the stock for two years, and that money is borrowed in the manner before described, to pay the interest thereafter, there will be an accumulation on this account, on the first of October, 1845, of $388,376. Thus showing that if money is borrowed to pay the in