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CARSON CITY, February 23, 1912. To the Honorable, the Senate and the Assembly:

Pursuant to Section 9 of Article 5 of the Constitution, I have convened your honorable bodies in extraordinary session, the purpose of which is to enact suitable legislation to relieve the following condition in the fiscal affairs of the State, namely: That the General Fund in the State Treasury is exhausted and that, to enable the State to transact its business on a cash basis, provision must be made by the Legislature to borrow a sum sufficient to meet the emergency until such time as the state revenues can be adjusted to balance expenditures.

The borrowing power of the State, in time of peace, is limited, under the Constitution, to $300,000. At the beginning of the present fiscal year our outstanding indebtedness, under this limitation, was $83,000, with cash in the State Treasury applicable to the reduction thereof to a net indebtedness of $51,151.27. On such date there was available for investment in the State School Fund, $255,220.52, so that the State in effect will be able to borrow from itself.

The fact that the State, in 1903, 1905 and 1907, to go back no farther in our history, exercised its borrowing power to cover, in advance, deficits in state revenue over authorized expenditures, leaves the present emergency by no means anomalous in our fiscal affairs, save that it was not provided for in advance.

The failure to make advance provision for this depletion of the General Fund is not properly chargeable against the Legislature or myself, owing to the extreme difficulty of arriving at any clear understanding of the financial affairs of the State from the time-honored system of bookkeeping that has obtained in our State Government since its beginning. Nor is any state official justly blamable for not introducing innovations in a system that has always prevailed. Nevertheless, I am convinced that the financial condition of the State should not be left a mystery which must be worked out on the principle of the solution of a puzzle.

The following table shows the net cash balances in the State Treasury at the beginning of each of the last four fiscal years: January 1, 1909.

$749,645.77 January 1, 1910

534,542.11 January 1, 1911

590,035.97 January 1, 1912

491,922.73 The total receipts of the State Treasury during each of the past three years were as follows: 1909.

$1,082,254.74 1910.

998,557.47 1911.

994,882.25 The total expenditures as shown by the public accounts are as follows: 1909.

$1,297,358.40 1910.

1,048,132.26 1911.

1,092,995.49 The total expenditures, as above given, include bond purchases, which are not properly an expense but an investment; and bond redemptions, which have a status quite distinct from the expenses of the State Government during any given year, in the ordinary sense, since it amounts to the liquidation of an indebtedness contracted in previous years. The expense of the State Government, the odd-numbered years, is markedly increased over that of the alternate years by the cost of the legislative session and the fact that an excess portion of the expenditures arising from special appro

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