1846. No. 2. ANNUAL REPORT of the Auditor General. AUDITOR GENERAL'S OFFICE, Detroit, Dec. 1, 1845. To the Legislature of the State of Michigan: } The undersigned, in obedience to the requirements of law, has the honor to submit the following REPORT: The several funds, or branches of the public revenue and expenditure, with which accounts are kept on the books of this office, are all properly resolvable, and in any general view of the finances of the State may perhaps be most properly embraced under three general hends, viz: 1st. The general fund; 2d. The internal improvement fund; 3d. The trust funds; being the principal and interest accounts of the University and the primary school funds; and as there are one or two loans guaranteed by the state, for unpaid interest, on one of which the state has become liable to some extent, and may hereafter become liable for the principal of one or both, (although this is hardly to be anticipated,) yet at present these items can only be properly embraced as 4h. Contingent liabilities of the state. In submitting, on the present occasion, a somewhat full view of the debt and resources of the state, which it is always important that the legislature should be possessed of, but especially at the present time, when there appears to be every prospect of either allowing the interest on our internal improvement debt to continue to remain unpaid for some time to come, or else of having to resort to heavy direct taxation to meet it, unless some mode is adopted for an immediate extinguishment of the principal of the debt, or at least of the larger portion of it, I will endeavor to submit such an exhibit as briefly and concisely as possible, under the above general heads, beginning first with the debt and resources of the general fund. Interest past due on general fund bonds held by U. S., 11,520 00 1,500 00 Estimated interest past due on above tax bonds and warrants, Total indebtedness of general fund Dec. Ist, 1845, 11,084 50 71,827 20 $272,789 37 In addition to the above, the three instalments of surplus revenue. of the United States, deposited with this state, amounting to $286,751 49, may be considered a debt of the general fund. These instalments were originally passed to the credit of the internal improvement fund, but for what reason I do not know; the amount of them and of the money received from the United States, under the act of Sept. 1841, having, however, been transferred to the general fund from the internal improvement fund, at various times, less $15.31963, I caused a transfer of that amount to be made, which leaves these deposits as they should be, a debt of the general fund, but as they are not on interest, and the period when they will be called for is indefinite and uncertain, they need not be taken into account in an exhibit of the state debt, made with a view to determine the present or prospective liabilities of the state to be provided for by taxation or otherwise. The debt due the School Fund, should properly have been a debt of the Internal Improvement Fund, having been produced by receiving the Treasury notes issued for work done on the Central and Southern Rail Roads, &c., in payment of school lands; but the last legislature, taking into view the embarrassed condition of that fund, provided for the payment of interest on the amount so received, from the general fund, thus making it a debt of the latter. Besides the debt thus thrown upon the general fund, which properly belonged to the Internal Improvement fund, the latter also owes the former over $80,000, being the amount of overdraft on the Internal Improvement fund, caused by warrants on that fund having been paid to that extent from the resources of the other, which otherwise would have remained as so many additional outstanding warrants on the Internal Improvement fund, and added so much more of course to its indebtness. Of the $258,120 Treasury notes also, issued in 1841, there have been cancelled and burned $188,120, and there is now on hand! in the State Treasury in said notes $17,640, making altogether the sum of $205,760 absorbed; of these the School fund has taken up, as above, about $70,000; the University fund about $10,000 includded in the amount of University bonds assumed by the Internal Im-} provement fund, the Internal Improvement fund itself as yet only about $20,000, the General fund, the balance being about $105,000, which should also strictly be considered a debt of the Internal Improvement Fund to the general fund. As the prospect, however, would seem to be that instead of ever paying these items, that the Internal Improvement fund will have to draw still farther on the general fund, or in other words, require more aid by direct tax, these have not been included amongst the debts of the former fund, nor amongst the resources of the latter. General Fund Resources. To meet the arrearges of interest due the United States on the general fund bonds held by them, the State has a claim as set forth in Joint Resolution No. 13, 1840, against the United States, for the money advanced or expended by the state towards the construction of the Sault St. Marie canal, amounting to $8,050 86 and interest since 1837 and '38. The annual interest on the general fund and penitentiary stock, amounting to $9,600, and the interest on the amount due the school fund, being at present about $5,000 a year, will no doubt be met by the surplus of the present annual state tax of two and a half mills beyond the amount necessary for the ordinary current expenses of the state government; and as the state has now on hand fully as much land bid off for taxes, and for which she has paid up the several counties, as she will probably have at any time hereafter, it may be safely estimated that the whole amount of the state tax for any one year will hereafter be realized during the ensuing fiscal year. As available, therefore, towards paying, off the principal and interest of outstanding general fund warrants and tax bonds, as well as to meet the principal of the general fund and penitentiary stock, on or before maturity, the state has the following resources: Unsold State Tax Lands, (see statement A) nominally, $11,251 64, say Lands unredeemed, sold state at tax sales of 1844 and '45, (B,) $4,000 00 68,561 04 Unpaid taxes of 1844, above balances due certain counties, on account of the same, (C) 18,000 00 Due from sundry counties, besides 1844 taxes returned and credited to them, 30,165 94 Interest past due on unredeemed lands, and unpaid taxes belonging to state, Resources of general fund in addition to annual state tax, &c. 15,000.00 $135,726 98 As the amount due the school fund, may be considered a permanent loan to the state, so long as the interest is punctually paid, of which I trust there can be no doubt; and if so, it may certainly be considered equally as safe an investment on behalf of that fund, as if loaned to the counties, and much more safe (as far as past experience is any guide,) than if loaned to individuals on bond and mortgage; and as the principal of the general fund and penitentiary stock does not begin to fall due until 1856, I can see no prospect at present, of any necessity of increasing the state tax on account of the liabilities of the gen eral fund. And all that is necessary probably to provide for the payment of the principal of the above stocks, at or near maturity, will be to limit the annual expenditures as much as possible within the annual revenue; the proceeds of previous years' state taxes having proved suffi. cient not only for the current expenses, but also to pay off, within the last four years, nearly $150,000 of tax bonds to counties, and $31,000 state tax stock, besides absorbing over $100,000 of the treasury notes cancelled and destroyed during the same period. Five million loan bonds paid in full, due Jan. 1863, $1,387,000 00. Interest bonds issued on $1,370,000 of above due Jan. do 1850, bonds issuable on $14,000, do* do do, Amount of principal received up to July 1841, on the 363,324 00 3,712 80 $3,813,000 bonds, delivered to U. S. Bank, † 1,208,615 22 Interest on above to July 1st, 1841, $82,449 63 Interest on above from receipt to July 1st 1845, 2,625 12 Palmyra and Jacksonburgh Railroad Stock, 20,000 00 Interest past due on the same, July 1st, 1845, 5,600 00 Due State Building fund, for warrrnts rec'd for state Total int. imp. debt including interest to July 1, 1845, $4,121,720 79. Internal Improvement Resources. Cost Central Railroad, as per Auditor's books, Dec. 1, 1845, Ten per cent. for interest, &c. during construction, $1,837,046 29 183,704 63 49,669 82 43,401 71 $2,113,822 45 *The remaining $3,000 of the $1,387,000 are held by the U. States; and the interest since July 1841, has been partly paid on them, and there is more than enough due the state on the 5 per cent fund on account of sales of lands in this state since June 30th, 1843, to pay the balance. This is the amount received without any deduction for damages on unpaid instalments, |