GITY FINANCES.

Evening Post, Volume LXXVII, Issue 137, 11 June 1909, Page 3

GITY FINANCES.

« "NO MONEY FOR LUXURIES." SPEECH BY THE MAYOR. STARTING WITH A BIG HANDICAP. The Mayor (Dr. Newman) made an important statement last evening relative to the financial position of the city. "It being one of my special duties as Mayor," he said, "to look after the city"s finance, I have prepared a brief statement so that members, before they vote on tho estimates for the year, and before they proceed to strike the rates, may know the exact position. Our finances are not in a happy position, and councillors must face the fact that they can only be put right by their persistently pursuing a policy of real economy through the whole year. Tho counci/ has no money whatever for luxuries. They must wait till next year. Wo have to face a falling revenue, and unforeseen unusual expenditure. The council cannot shut its eyes to facts, however ugly, but must work so that our finances are put on sound business lines. "This council starts with a very big handicap. On 31st March nearly £46,000 was the amount of the overdraft, made up as follows: — General account ... ... ±)27,000 Electric light 16,000 Tramways 2,800 Total £45,800 Tho general overdraft was caused by the purchase of street properties for widening to the extent of £27,000. The city overdraft is to-day xn the neighbourhoood of £64,000, on which we are paying 5 per cent. It is growing perilously near our legal limit, which is about £75,000. STRIKE THE HATES NOW. "In order to avoid exceeding this it is. necessary to strike our rates now. tl the council will vote the rates to-night, then wo shall save a considerable sum by reducing our overdraft and interest thereon. You will see how exceedingly urgent is the need for economy. The council must be economical for the whole year. DIVERTED FUNDS. "I find that last year £15,000 was raised by way of loan to build the abattoirs, which will cost that amount, ana will shortly havo to be paid for. Unforunately this money was diverted last year to another purpose — viz. to pay off an old loan, and the cost of the abattoirs roust come out of the district fund — i.e., out o£ overdraft for the present, to the extent of £10,000." Continuing, he said outstanding rates on 31st March amounted to £10,000, and on leaseholds £1700 — a state of affairs altogether unsatisfactory. "MOST UNSATISFACTORY." Dealing with the electric light department, he said he found that branch oi the council was in a most unsatisfactory position. Thero was an overdrafc of £16,000 on 31st March last. At that date liabilities incurred to be paid this year totalled £20,000. The late council ordered a turbo machine and accessories costing £13,000, and other necessary expenditure amounted to £7000. It was intended to pay for these out ot loan, but the ratepayers vetoed the proposal. When liabilities were paid for, the electric light account — after allowing for a profit this year — would owe the general account, and be in debit -to the extent of £28,000. He referred to tho profits being cut down by .the introduction of the Osram lamps. The profits would be much diminished at the end oi the present year. For two oi three years the profits would shrink. THE TRAMWAYS. The tramway department wm the only one the finances of which were in at all a satisfactory position, but, despite tins, on 31st March the overdraft was, in round figures, £2800, which would be shortly repaid out of profit. The Kilbirnie to Maranui line, to cost £4500, would have to be paid out of profits, as there was no loan money. The item for car sheds at the Manawatu station, to cost £5000, would have to wait. HEAVY 1 LOAN" EXPENDITURE. The loan expenditure for the year — out? of unexpended balances of old loans — would be heavy to complete the waterworks at Solomon's Knob and elsewhere. Also money would have to be spent on sewerage wox'ks at Brooklyn and Kilbirnie. A great deal of this money woidd have to be paid away at the end of the financial year, because the construction of those works was urgently needed and should be vigorously pro secuted. STREET WIDENING. Of the overdraft, £27,000 was due to the street widening account which had hitherto been charged to loan, and there were small liabilities to be met. It was, clear the overdraft could not possibly be reduced except by funding this debt, a process he would propose later. THE OVERBURDENED RATEPAYER. The Finance Committee proposed the rates should be the same a& last year. They could not possibly be lower. The overburdened ratepayer could not stand them higher ; anct he wished to warn them most solemnly it" depended how they voted first on the estimates. In these estimates there was no room for substantial reduction. When he first took office, the engineer showed him estimates for over £40,000 on roads, etc. He thought the amount large, and cut them to exactly £40,000. Having now a complete knowledge of the city's affairs he would ask the council, to fix this at £35,000. If they spent £35,000 out of revenue, and £2000 out of the loan for roads — and probably they would do the work for private owners, and the Harbour Board was spending £8000 on roads and drainage at the root of the wharves — this would total upwards of £40.000 this year spent in the city. Out of this money they could make necessary loads in the outlying districts, but such luxuries as large amounts for woodblocking, for cement kerbing and channelling, must wait, however much they would like them. They had money only for necessities. There was the other reason for reducing this item £5000 — to help to pay for the abattoirs ; its loan money had been spent, and £10,000 was required almost at once to finish them. POLICY IN BRIEF. They now knew the exact position. That night and every night till 31st March next, the council would have to practice the most rigid economy. If the council would not agree to these proposals, they would presently, when they came to the question of striking the rates, have to face the fact that they must strike higher rates. There was no way out of the difficulty except the one he had shown them. After concluding his speech, the Mayor moved that the estimates, as submitted, be reduced by £5000 (making them £35,000). INEVITABLE EXPENDITURE. Councillor Luke asked if he had cor rectly understood that £10,000 would have to be taken out of revenue on account of the abattoirs expenditure.

The Mayor replied that it would, but he added that £6400 (or £6500) would be met out of debentures. Councillor Luke, continuing, said that the speech of the Mayor had imposed on councillors the duty of showing how some items of expenditure had been necessitated, and he wished to say that it was to build up certain important industries upon which the council had entered ; expenditures that were absolutely necessary to prevent depreciation of values and to increase earning capacities. His Worship had spoken of probable losses being^ made on the electric lighting undertaking, but there was another side to consider, and that was that the citizens had been saved a lot of money through the introduction of filament lamps, quite apart from the fact that they would build up a greatly extended business in time to come. Speaking personally, he could say that he was now getting the use of a 32-candle power light (filament) at no more cost than he used to be put to for an eightcandle power. On the general question as to the estimates, he also was of the opinion that they should be remodelled to some extent. He advocated more liberal treatment of Kilbirnie and a little more economy with regard to estimated works at Northland and Wadestown. The council had also to consider the contribution to the water account, charitable aid rate, and other obligations. He pledged himself to support the Mayor in his financial policy. NO STINKING FISH. Cotmcillor Dovine deprecated crying stinking fish, and was opposed to the undertaking of any works which could wait. The council had been extremely generous in some things, and he referred in particular to retaining walls ; but they could not be considered in the present state of the city's finances. He regretted that the finances were such as the Mayor had disclosed. The overdraft appeared to him to be the biggest the council ever had. Street widening should never have been undertaken at a cost of £20,000, costing £900 a year. It was a most extravagant undertaking, and he saw no return for the money in the shape of increased lents for the properties affected. It was poor finance indeed to nay over £2000 for interest on overdraft alone. BEEN" NO "PLUNGING." Councillor Shirtcliffe said councillors would greatly appreciate the very clear statement put before the council by the Mayor. Old councillors as well as new were fully impressed with the necessity for strict economy, but he could not allow any rtatement which charged the old council with " plunging " to go uncontradieted The members of the old council were prudent, businesslike men. He was not prepared to agree with Councillor Devine that there had been reckless expenditure. Out of the district fund the council had expended upon public utilities to which they were committed £122,iuu. WITHOUT LOAN MONEY. ' Councillor Shirtcliffe explained that the capital expenditure, for which there was no loan money provided, was as follows : — Tramways, £55,071 ; electric lighting, £24,413 ; recreation grounds, £5211 ; street-widening, £19,550 ; abattoirs, £4814 ; new destructor, £4549 ; library additions, £6062; Fire Brigade, £2430— in all, £122,100. The council had to do those works, notwithstanding that they were' not provided for, because the citizens refused to grant the loans last year. Had they done so then, the overdraft would not have been incurred. He did not think the electric light venture was going to be a losing one to the extent of 40 or 50 per cent, by use of Osram lamps. The cheaper the light became, the gi eater would be the increase of its use and the revenue resulting from it. He was glad to see that there was to be a saving effected in working the tramways, as he had held all along that economy could be effected on that undertaking. He suggested moderation of the estimates. He agreed with the Mayor to cut down street works by £5000. CPvEDIT TO THE OLD COUNCIL. Councillor Smith thought the old councillors deserved every credit for their work ; but when ratepayers were asked to sanction loans that would nave obviated the Mayor's statement, they rcfnsed to do so. Nevertheless, works to which the council were committed were bound to go on. The old councillors could not help themselves in this rtspect; but the citizens would derive the benefit. There were, he granted, several things that could wait which would mean a reduction in expenditure. NOT TO BE BLOCKED. Councillor Hmdmarsh contended that as only about 1200 ratepayers out oi about SOOO voted on the loan proposals, that was a proof that the great majority of the citizens approved of the connttii's policy. The expenditure on the corporation undertakings had been necessary to safeguard the interests of the corporation. A few ratepayers, who had not understood the position, had gone to the polls and voted against the proposals, but ha was glad to no able to say that the council had ■nai&ge'i lo raise the money in another wav, and :n this manner to prove that these people could not block the city's busmoss altogether. THE CUTTING-DOWN PROCESS. Councillor Frost commented that it was not the City Engineer's department that had done the plunging ; it was the other departments, and, therefore. 3b was unfair to be penalising the City Engineer. That should be n.ade iincwn. As to cutting his estimates dov.-n. if that was to be dono the City Emjine.er himself should be asked to do it. A WOOD-BLOCKING QUESTION. ! Councillor M'Laren said, as a member i of the old council, he was not at all ashamed of the undertakings they had entered into and the way in which they had proceeded. They fulfilled their duties when they informed the ratepayers of the position, and asked them for the loans. These were refused, and the City Council was obliged to go in for the overdrafts. The whole position had j arisen through the regrettable apathy of tho ratepayers in failing to go to the poll, and thus allowing a malcontent minority to upset the city's finance. If the city, in the years to come, was to continue to make the progress it should make, it would be necessary to incur further expenditures. The speaker regretted very much the necessity for cutting down expenditure on streets. To cut out the whole of the vote for woodblocking would be a great mistake — (Councillor Cohen : Hear, hear !) — and he would like to see that suggestion very carefully considered by the council, with a view to modification. MAYOR'S ACTION ENDORSED. Councillor Trevor said there was naturally a disposition on the part of ratepayers to believe that the council was going too fast, and they put a check on ! by not passing the loans. It was strange to him that money raised for the abattoirs was diverted to other purposes. He warmly eiidor&ed the Mayor's policy of cutting down expenditure. CRITICISM RESENTED. Councillor Fletcher strongly resented the criticism passed on the administration of the old council. The ratepayers put no upon the council at alt, as Councillor Trevor suggested. They did not understand the position, and the matter was not put properly before them. Otherwise they would have passed the loans. OTHER VIEWS. Councillor Ballinger had no doubt

whatever but that the ratepayers refused to pass the loans because of the inclusion of the workmen's homes project. 'Money allocated to Kilbirnie for reserves was actually spent at Thorndon. It was £2000, and was spent on Anderson Park. Councillor Cohen charged the Finance Committee with doing things that the council as a whole knew nothing about. He- counselled expedition in striking the rates. It was absurd that there ehould be outstanding rates of £10,000. This required explanation. The Mayor : It will not occur next year. Councillor Cohen : I hope not. ' The corporation had valuable properties to represent the expenditure. He knew that there were several things in the loans that' the public would not vote for. He would not have voted for them, and did not do so ; but had there been a plain statement of the real needs and the exclusion of some of the objects for which loans were asked, then he had no doubt that the ratepayers would have passed the loans. A QUESTION. In answer to Councillor Morrah, the Mayor said that £15,000 of debentures due to an insurance company was paid out of the £15,000 raised for construction of abattoirs. . Councillor Morrah remarked that he, as a member of the Finance Committee, had no knowledge of the transaction. As to the broad question of the estimates, he was against the proposal to cut down the wood-blocking vote. The Mayor : How do yoit propose to avoid it? Councillor Morrah : It seems to me we will have to raiee a loan. Councillor Fitzgerald congratulated the members of the old council upon the very hearty manner in which they congratulated themselves ! He was surprised at the apathy displayed by the old council in not investigating the financial affairs sincerely hoped that the new councillors, at the end of their term^ would not be in the samo position. THE RATES. The Mayor moved: "That the rates in the city be the bame as last year so far as the city is concerned, with 2-5 of Id in the £1 additional for Melrose sewerage drainage." This was carried unanimously.