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GOVERNOR JOSEPH F. JOHNSTON.
GENTLEMEN OF THE SENATE AND HOUSB:
You are again assembled to consider the welfare of the commonwealth and to enact such laws as may seem necessary to you. No mistakes will be made if every member will seek only the public good. I shall submit very briefly to you the condition of the several departments of the State government, and respectfully urge each one to carefully read and consider the full and accurate reports made by the heads of these departments :
In November, 1896, and before I was inaugurated as governor, the two houses of the General Assembly appointed a joint committee to investigate the financial condition of the State. This committee was composed of Senators Moody and Smith, and Representatives Merrill, Smith and Mitchell, two bankers, one an accomplished accountant, since elected chancellor, another the former treasurer of the State, since reelected, and the other a gentleman who has since been the capable chairman of the committee on ways and means of the house. It would seem that it would be difficult to find five gentlemen in the State whose education and training rendered them more capable of reaching a correct conclusion or whose high character more entitled them to the confidence of the people. On the 17th of November this committee reported, that after conferring with the governor, Hon. Wm. C. Oates, acd the auditor and the treasurer, they found that co the first of January next thereafter (1897) there would be a deficit of $568,065.84.
This report was. unanimously accepted by both houses, not a single member of either questioning itsfidelity or accuracy.
Subsequently some question was made as to the accuracy of this report by one or two newspapers, and Auditor White, one of the most capable and faithful, as well as courageous, officials the State has ever had, after a thorough examination made a report to me on May 1st, 1897, showing what the actual condition of the treasury was on the 1st of January (1897), preceding. This report showed that the apparent deficit was $621,480:55, but it included in that statement the balances then to the credit of the convict and agricultural departments and the pension fund that had accumulated, which three amounts aggregated $47,831.65, and, being deducted from the $621,480.65; left an actual deficit of $573,449.00. The joint com: mittee doubtless did not consider these balances stand. ing to the credit of the convict and agricultural de+ partments and pension fund as constituting an actual or present charge against the treasury, and the auditor's report shows that the committee were singularly accurate in their estimate, coming within $5,381 of the correct amount in an estimate that involved many hundred thousand dollars.
In order that you might have before you the prob-able condition of the treasury vn January 1st, 1901, I asked the auditor to investigate and report to me.
I transmit that report to you. It shows that there will be an apparent deficit on that day of $209,278.72. but from this, as he properly says, should be deducted the balances standing to the credit of the convict department ($75,000) and the agricultural department ($50,000), which would leave an apparent deficit of $84,000. You can by the passage of a bill covering these two balances into the treasury dispose of them as liabilities. They represent nothing more than the net l'eceipts of these departments over and above expenses. and charges, and belong to the people as much as:any? monies in the general fund.
In addition to this there is, in the auditor's estimate, $55,000 standing to the credit of the pension fund which cannot be called for or paid out for about ten months; it is not a present demand ; so that practically there will be no deficit on January 1st, 1901.
It must be noted, too, that since the report of the joint committee in November, 186, there has been paid from the treasury $274,960 more for interest on our public debt, by reason of the increase on January ist, 1897, in the interest rate on our bonds, than in any proceding four years and $200,000 more has been paid from the general fund for public schools than in any previous four years.
I think these reports demonstrate two facts-First, that the actual, not technical, deficit on January 1st, 1897, was $573,449.00, and, second, that the treasury will bave the cash on the 1st of January, 1901, to meet every legitimate demand that can be made upon it. It also shows that had not the increased amounts noted above for interest on the public debt ($274,960), an increased appropriation to public schools ($ 200,000), been paid out we would have a surplus on the 1st of January, 1901, of about $500,000, instead of a deficit of $573,449, and that the net gain in four years has been over a million dollars. These results are largely due to better assessments that have been secured of our real and personal property, amounting since 1896 in the aggregate to about twenty-five million dollars ; to the recovery of balances found due upon checking up the accounts of public officials, to the rigid economy in the administration of your affairs; to the admirable results obtained by our convict department--this alone contributing more than $150,000 net gain during this time and to the faithful and efficient services of your auditor and treasurer and other public servants.
In the light of these figures it is apparent that there can be a decided reduction of taxation upon our people I am confident that you can with safety reduce the general tax rate of the State nearly or quite onefourth without in any manner crippling the efficient administration of the law or affecting the high credit of our State, and I earnestly recommend this to be done. The reduction will tend to increase the assessed value of our property and bring out much that is now escaping its just share of taxation. Methods can always be found to get money out of a full treasury. It invites the cupidity of many and appeals to the generosity of the law-makers. But a few months since a great clamor was raised by some because we had over a million dollars in cash in the treasury. There was no cause for it then, and we should avoid any just cause for such a complaint. If our present tax rate is continued and assessments maintained it will provide largely more money than is needed for the economical administration of our government. much wiser and more patriotic and democratic to leave this surplus in the pockets of the people, rather than piie it up in the treasury, there to become a prolific source of temptation and to probably disappear in unnecessary and unwise appropriations.
Under the several acts of the General Assembly authorizing the governor to refund the public debt, I have made some negotiations looking to that end.
I had propositions made that would have enabled me to refund the debt at less than three and one-half per cent. interest, but the parties insisted that the bonds should be converted from currency into gold bonds and this I refused to do. The main trouble was that our bonds had some six years to run and command a large premium. I do not think there will be any trouble, under existing law, to provide for the refunding of these bonds about the time they mature into new bonds bearing a little over 3% interest and thus save to the State a large sum annually.
I am gratified to state that the amount paid to our pensioners this year is largely in excess of any heretofore received by them, although the number of pensioners has risen from 7,105 in 1896, to 11,224 this year, thus reducing the per capita distribution.