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Austin's 1884 Financial Crisis and City Bond Sale

Wednesday, June 25, 1884 special called

Critical budget shortfall: Austin faced a severe financial crisis with nearly $95,000 in immediate debt obligations, forcing the city to drain its treasury. The council approved issuing $40,000 in bonds to pay off outstanding warrants and fund permanent improvements.

Street and bridge repairs: Mayor Robertson highlighted that Austin's streets and bridges were in terrible condition and urged the council to focus on permanent, quality improvements rather than temporary fixes that waste money.

School tax increase approved: Voters narrowly passed a measure to increase school taxes, with the community expressing strong support for expanding the city's public school system.

Tax and appraisal board delays: The council addressed administrative failures, including the failure to set tax rates on time and appoint required board members to handle property assessments—issues that needed immediate correction.

Police and utility oversight: The mayor recommended reforms to the police department's accounting systems and suggested the city maintain better supervision over the expensive water company contract and negotiate improved gas lighting service.

Full Transcript

556 Called meeting of the City Council Austin Tex June 25, 1884 Hon. J.W. Robertson Mayor Presiding On Call present Aldermen Hancock Wells Campbell Schubert Maas Driskill Crooker Odell Hill Plath Ervin Brush and Bremond absent aldermen Schneider Sutor Pillow Underhill Carrington & Robertson On motion of Alderman Bremond the marshal was sent after the absentees. Alderman Carrington came in and answered to his name. The following call of the council was read Austin Texas June 25, 1884 To the members of the City Council of the City of Austin Gentlemen I hereby call a special meet- ing of the City Council to convene this Wednesday evening June 25th 1884 at 8.30. for the purpose of taking up with reference to sale of City bonds and to provide means to meet the July interest on the bonded debt and to transact such other business as may be brought before your body Very Respectfully J.W. Robertson Mayor Aldermen Schneider and Underhill came in and answered to their names The following message was received from his Hon J.W. Robertson, Mayor Austin Texas June 25th 1884. Gentlemen of the Council In entering upon the duties of the office of Mayor of the City of Austin, it is but just to myself as well as to your honorable body, that I should present a brief resume of the condition of our city affairs and make such recommendations --- Page break --- as I may deem expedient, as to the public policy to be pursued in the administration of the City government. I find on the very threshold of these duties, that grave responsibilities are Before us, and it will require intelligence conservation and economies in the management of affairs. If we hope to secure to the people such a city government, as they have the right to demand and expect at our hands, many complications and embarrassments, which, but by faithfull adherence to principal and duty, I believe these difficulties may be easily overcome. It is well for us at this time to address ourselves to the faults as they exist, and to deal with them as best we may. In executing this trust the people expect much of us and we, as well as the people should understand the issues Before us It is impossible for me at this time to enter into a discussion of the necessities and wants of the City I can only refer to those most important matters that are demanding immediate and prompt attention, and to these I will address myself. City Finances The financial condition of the City is much embarrassed, when the present city council came into office in December 1883 there was an outstanding bonded debt of $99,400. standing interest Bearing warrants about $13,500. of the bonded debt $14,400. became due January 1 1884. This with the interest Bearing warrants, created an immediate demand on the treasury for about $95,000. Your predecessors in November 1883 authorized the sale of city bonds to the amount of $75,000. provided for under the amended charter and $15,000 for the purpose of refunding the bonds falling due January 1. The bonds were offered for sale but for some reason were not sold. A loan of $75,000 was negotiated in New York. The New York and the money was used to pay off the interest warrants and January bonds. To meet this loan and prevent a sacrifice of the City bonds this council appropriated every dollar in the City Treasury and in this way commenced --- Page break --- all the special funds in the Treasury as well as the warrant revenue for the year. This course was unavoidable and was the only means of saving the City from heavy losses. These bonds released from the Hypothecation are now in the hands of the City Treasurer. The taxes for the current year are about all collected and the balance in your Treasury for all purposes does not exceed $500 the interest on the bonded debt becomes due July 1st which amounts to $4.350 The amount due the City Water Company on its contract for first half of year 1860 is $5.075 the pay roll for June will amount to about $10,000 valid claims against the City amount to several thousand dollars more, the exact or approximate amount I have no means of stating. In addition to this the several funds are entitled to reimbursement for the amount used or borrowed or made from them, the withdrawal of $78.000 from the general revenues of the current year, to pay past due warrants and bonds, has produced the embarrassment which we find ourselves placed, it creates the necessity for the sale of a portion or all of the Bonds authorized to be issued, and while I am opposed in principal to any increase of the bonded debt yet I see no way to avoid this result under the circumstance surrounding us. The obligations of the City are sacred and must be honored and respected. This debt is not of your creation, it comes down to us by inheritance from our predecessors. But the necessity exists and the question must be solved to the best our ability. For the good of the City I am advised by bankers and financiers in whom I repose great confidence, that the bonds heretofore issued cannot be sold to the advantage they should be, on account of their have been refused on account of the form of the obligation. I believe it the better and safer policy to repeal all ordinances authorizing the issue of bonds and to pass a new comprehensive ordinance, providing for the issue and sale of such amount of the bonds of the City as may be necessary to meet the present emergencies, such bonds to run [illegible] --- Page break --- 559 years, redeemable after ten years at the pleasure of the City, and to bear interest at the rate of six per cent per annum payable semi annually. I would further recommend that the sale of these bonds be entrusted to some bank or banker of Austin, and he accorded a reasonable compensation for his services; otherwise you cannot expect the highest price obtainable for these bonds. I was determined before the present City council came into office that the amount of forty thousand dollars of bonds should be sold and the products used to pay the outstanding interest warrants, and the bonds, maturing January, 1884 and the remainder to be appropriated to necessary permanent improvements in the City, and this policy seems to have been acquiesced in by the present City Council. If the full issue as proposed be sold it would create a fund of several thousand dollars that might be profitably invested in permanent works and improvements. These matters are for your consideration, and I invite the exercise of your careful and judicious judgment. Street Improvements The streets of the City of Austin are in a most deplorable condition in portions of the City they are impassable for vehicles. A great deal of money has been expended on the streets and still they are not kept in repair much less improved. I would suggest that we adopt a policy of making all improvements with a view to permanency. Expenditures for temporary repairs are a total loss. We can only improve one street, or one block, let it be done in such manner that it will remain permanently. The bridges are so worn and dilapidated as to require special attention. To repair or replace them with temporary structure is a waste of money. To make the improvements thorough and permanent will cost more at present but will save money in the end. If money derived from the sale of bonds is to be used upon any public works of the city it must be upon those of a permanent character. --- Page break --- 560 we cannot afford to incur a debt to pay current expenses and make temporary improvements. Such a policy would be ruinous I call your special attention to this question of streets and other public improvements, and trust we may be able to adopt some policy that will result in benefit to the City. Austin is far behind her sister cities in her streets and other public works, and I am confident that her people would be pleased at an earnest effort on our part to adorn her in these public enterprises, all persons looking to this end, will receive my earnest co-operation and approval Taxes By some over sight the City Council has not fixed the percentage of advalorum taxes for the present year this should have been done on or before the first monday in May I would recommend that this matter receive your earliest attention Further, it appears that the Board of Equalization and appraisers required by law have not been appointed which retards the assess-ment in the discharge of his duties The levy of the tax also includes the tax for the support of our public schools The amount of this tax have been fixed by the people by an election held for that purpose and their verdict should be respected. The public schools are under an able and intelligent management and are daily growing in popular favor. They are the pride of the city and should receive at our hands the fullest support provided by law, These matters should not be postponed. Police Department Any measure looking to a better and more efficient organization of the police department will receive my cordial support. I believe that the City Marshal should have full control and command of his police force and that he should be held responsible to the city council for the peace and good order of the community --- Page break --- and for the discharge of all other duties devolving upon his department. The police force should be employed for police duties as the law contemplates and not as clerks and assistants to other salaried officers. If the number employed are greater than are necessary for police duties reduce the number, and save useless expense. A better system of accounts should be provided and the marshal should stand charged with the full amount of all fines and costs assessed in the recorder court. He should be allowed as credits the amount paid in cash and for amount worked out, and should be required to render daily reports to the assessor and collector accompanied by vouchers. The books of the Recorder, the marshal and the assessor and collector should be a check each upon the other, a daily register of prisoners should also be kept so that by its inspection the exact condition of prison matters would be manifest. By these suggestions I do not mean to intimate that there are any positive abuses in this department. I do not think there are. I merely desire to point out some of the defects of the system as it exists and to suggest some reforms that occur to me as beneficial. Water and Gas Contracts The present water contract was made by our predecessors. We are in no way responsible for any of its conditions. We find it a subsisting contract costing the City over $11,000 per annum. I venture no opinion as to the validity or equity of this contract, nor as to the defaults as to whether the water Company has complied with its obligations. These matters are before a committee of your body and will be reported on in due time. I will however suggest that the obligation of the water company to furnish the people of this city with pure water and at specific rates, is a matter of public concern over which the city council can and should exercise supervisory control. --- Page break --- 562 There is at present no permanent contract with the gas company for lighting the streets I would suggest that in any contract to be made with that company that provision be made for extending the mains and enlarging the advantages of gas light. The company is now confined to very narrow limits and I doubt not could be induced to enlarge its system in view of a long contract with the City. The effect would be to distribute the advantage of the system to a much greater number of people. Public Health. The sanitary condition of the City demands careful attention. a system of sewerage is badly needed; and I trust that this subject will receive the attention its importance merits I do not believe that an extensive improvement of this character can be inaugurated and put in operation at once, but a beginning can be made we can at least inform ourselves at what is necessary I would recommend the immediate enforcement of such needful sanitary measures as will secure the cleanliness of the City and promote the health of our people. There are many other matters of a general character of which I might speak. But this communication has already attained too great a length. I shall take occasion to advert to them on other matters in our official intercourse, and I trust and believe that we shall act harmoniously, having in view only the welfare of Austin and the promotion of wealth prosperity and happiness. Very Respectfully J. W. Robertson Mayor The Finance Committee submitted an ordinance entitled an Ordinance providing for and authorizing the issuance and sale of (80 bonds) eighty bonds, of the City of Austin of the denomination of five hundred dollars each Section 1 Authorizes the Mayor of the City to issue eighty coupon bonds of the City Austin in the denomination of five hun- dred dollars each amounting to $40.000. --- Page break --- 563 To run no years but subject to be called in at expiration of 10 years to bear interest at the rate of 6% per annum interest to be pay able semi annual. Section 2. That the bonds shall be issued for the purpose of taking up paying and funding all out standing warrants, debts, and claims against the City not already covered by the bond act. That the proceeds shall after paying all claims due be applied to public improvements under the direction of the City Council. Section 3. Provided that the City Treasurer shall set apart on May 1 and Sept 1st of each year the amount due semi annual upon the bonds, and that a sinking fund of 2 per cent of the amount of the bonds shall be set apart each year Section 4 that the face of the bonds shall state the purpose for which the bonds are issued Section 5. That the Mayor and finance committee shall have the bonds engraved and offer them for sale in the City of Austin. if not sold then to sell them through any bank or Banking house in this City in New York or elsewhere Section 6. appropriate the sum of $300. to pay for engraving the bonds Section 7. Repeals a bond ordinance approved april 1st 1887 an ordinance providing for the sale of $25,000. 6 per cent bonds" "approved Nov 8 1883 so much of an ordinance as provides for the sale of austin City bonds No 26. 27. 28. 29 and 30 approved Nov 20th 1883 "and an ordinance concerning an ordinance passed Nov 7th 1883 and approved Nov 8th 1883" approved Dec 8th 1883 The ordinance was read first time. alderman Hancock moved that the rules be suspended and the ordinance be read a second time. motion to suspend the rules was carried by the following two thirds vote yeas alderman Schneider --- Page break --- 564 Hancock Wells Campbell Schuber Underhill Maas Driskill Crooker Odell Carrington Hill Ervin Bruch & Bremnen 15 nays alder man Platt. The Ordinance was read by sections Alderman Hancock moved to amend Section one by inserting after the words "said Bonds and before the words" shall be added" the word shall be numbered from one to Eighty inclusive the amendment was adopted. No further amendment being made to any of the sections Alderman Crooker moved that rules be suspended and that the ordinance be read third time, which carried by the following vote yeas aldermen Schneider Hancock Wells Campbell Schuber Underhill Maas. Driskill Crooker Odell Carrington Hill Ervin Bruch and Bremnen 15 Nays Alderman Platt. The ordinance was read third time and on motion of alderman Bruch passed by the following two thirds vote yeas Aldermen Schneider Hancock Wells Campbell Schuber Underhill Maas Driskill Crooker Odell Carring ton Hill Ervin Bruch & Bremnen 15 Nays Alderman Platt 1. His Honor the mayor called the attention of the council to the fact that the vote cast for or against levying an additional school tax had not been canvassed. Alderman Platt moved that the matter be referred to the City attorney Alderman Maas as a substitute for alderman Platt's motion moved that the council proceed to canvass the returns at this meeting motion to canvass the returns adopted. His Honor appointed as the committee to can vass the returns Aldermen Crooker Schneider and Bruch. The committee reported that there was canvassed for an increase of school tax 597 vote against an increase of school tax & 700 votes His honor declared that the school tax increase vote carried by a two thirds vote. --- Page break --- Alderman Brush introduced an ordinance amending article 605 section 62 of the revised ordinances of the City of Austin in regard to the mayor, appointing a board of appraisers and equalization. The amendment provides that the Mayor shall appoint, the Board at the first meeting of the City Council in April or at any subsequent regular meeting thereafter. The ordinance was read first, second and third times under a suspension of the rules and passed by the following vote yeas aldermen Schneider Hancock Wells Campbell Schuber Underhill Maas Driskill Crooker Odell Carrington Hull Heath Ervin Brush and Brichton. An ordinance levying the school tax for 1884 and an ordinance levying the ad Valorem tax for 1884. An Ordinance levying the ad valorem and school tax for 1884 was referred to the finance committee. Under authority of article 605 section 62 of the ordinances of the City of Austin. The mayor appointed as the Board of Appraisers and Equalization for the year 1884, Aldermen Odell, Campbell and Ervin. T. E. Shelby, and G. W. Doorn, on motion of Alderman Crooker the nominations were confirmed. Alderman Crooker introduced an ord- inance appropriating the sum of $84.50. to pay the insurance on the city Hospital the ordinance was read first time. And the went over. The special committee appointed to confer with Mr. Driskell, in regard to the purchase by him of the west half of lots 7 & 8. in block 69. submitted a report recommending the sale of said lots, according to Mr. Driskell's proposition submitted with the report of the Committee, for --- Page break --- 566 $75.00. Alderman Brennan moved to adopt the report of the Committee Alderman Hancock offered a resolution in lieu of Alderman Brennan's motion, authorizing the mayor to convey to Mr District lotes according to the proposition approved by the Committee Alderman Hancock moved that the report of the Committee the proposition and the resolution be referred back to the special committee, with instructions to confer with the Fire Department in regard to the matter motion to recommit adopted. On motion the Council adjourned Read and adopted July 7th 1884 J S Gurnell City Clerk