ADVISERS BAR 60 FUND PLAN; APPROVE OF 77
Forget Politics and Adopt an Honest Budget, City Rulers Told
COLLECT TAXES, REPORT Urges
Commissions Also Urged to County Affairs

By W. OLIVER KINCANNON 

Disregard Chapter 60. 

Refinance under Chapter 77. 

Reinforce that with what security you can give by resolution or ordinance, but Disregard Chapter 60.

Use a business rather than a political basis.

Take an active Interest In the management of Camden County as well as Camden city, acting as a committee of inquiry on county management.

These are some of the points of advice given to the City Commission yesterday, at a special meeting of the Commission, by its Citizens' Advisory Committee.  

In trip-hammer style, James W. Burnison, chairman of the advisory group, read a report that followed with these recommendations: 

Forget politics and work as a unit.

Cut expenses and stay within your budgets.

Prepare a complete and honest budget.

Let the taxpayers decide when an emergency exists that requires an addition to the budget. Fight shy of gamblers' Interest rates.

Don't default; it's too costly.

Get on a cash basis and stay there.

Make every taxpayer in the city realize and live up to his tax responsibility.

Think about Camden city and county in a patriotic rather than a political sense. 

Vote to Act Quickly 

The commission voted to take quick action by passing a motion introduced by Commissioner Harold W. Bennett, director of revenue and finance.

This motion empowers Bennett to call, as quickly as possible, a meeting of the commission, representatives of its advisory committee, the finance committee of the board of freeholders, representatives of the city's bonding attorneys, Hawkins, Delafield and Longfellow, representatives of Lehman Brothers and other bond houses to determine what arrangement can be effected to solve the city's financial problems. Setting forth that it is not our intent or desire to criticize the performances of past or present city officers, " the report nevertheless, contained frank condemnation of emergency deficiency appropriations for items that are and were left off budgets. 

Hits Past Budgets 

It contained also implied condemnation of all the city budgets since 1930 and pointed out: "That Camden City receipts have been running behind expenditures approximately $1,000,000 a year since 1930."

"Our yearly budgets do not at present, and did not in the past, in the opinion of your committee, give a frank clear picture of anticipated income and expenditures.  

“The job of contacting bondholders to procure interest reductions, "your 'committee finds, has not been handled as frankly as it deserves. We can find no evidence of a sincere effort to layout a program and attack this problem logically. No more than 30 cents can be lopped off the tax' rate if the contacting program were completely successful. The committee has failed to receive a requested report of efforts to contact bondholders.

The committee was convinced that it is futile to expect any large-scale interest cuts from bondholders. 

 Hopeful of Rate Cut 

It believes the majority of high interest-bearing bonds can be refunded at substantially lower interest rates if constructive action is taken immediately. The committee has been informed that the state has refused to accept "reasonable rates" on the city's bonds held by the State.

Furthermore, "the present difference of opinion on this subject among members of our present city commission would in itself effectively block any real work along this line, " and "We feel that real results along this line require a united front on the part of our commission and the county freeholders." "Our sinking fund, we are informed, is stuffed with our own frozen paper. Such financing, in our estimation, kills the purpose of such funds."

"The present plan of singling out a few wards in our city and call for sporadic tax sales is neither fair to the delinquent taxpayers in these wards nor is it fair to the taxpayers throughout the city." 

Has Detail Report 

After concluding his reading of the summarized report, Burnison informed the commissioners the committee has completed a detailed report of "40 to 42 pages of homework for you" and said that will be submitted today.

"That will contain detailed recommendations, including some errors in figures and in judgment, but we ask that you disregard the errors and use the good in it," Burnison said.

He explained that when he mentioned 30 cents as the maximum figure to be lopped from the tax rate of the city were completely successful in obtaining interest reductions, he figured that would be the result if the city got 2% to 3 percent rates on all its bonds..

"There’s a large number of these bonds you can't hope to refund at lower interest rates, as the rates already are low. You couldn't get under 4 or 4% percent on your first refunding under Chapter 77 and almost all of the bonds not immediately refundable are around those figures, " he said.

Commissioner Bennett immediately opened up argument concerning what the committee thinks will replace his favored refunding plan- Chapter 60 combined with Chapter 77. 

Tells Objection to 60 Plan 

"Sixty seems to give the other fellow more advantages than us; that's our objection to it," Burnison said.

"Apparently you have been assured from some source that we can avoid an increase in the tax rate without adopting Chapter 60," Bennett said and continued:

"I see no way of keeping down this year's budget without 60. Politics is out in my argument, but I honestly believe 60 and 77 combined make the only plan for us. Under the present plan the rate will go up this year. Won't you tell us your source of assurance that it will not?"

Burnison did not answer the question immediately and Bennett said: "We would have to pass resolutions committing us to procedure similar to that under Chapter 60, wouldn't we?"

"Yes," Burnison answered, "but not binding you to as close supervision. You can't continue to exceed receipts and improve conditions anyway."

"Well," Bennett said, "give us the advantage of your sources assurance.” 

Tells Sources 

"We have two such sources," Burnison said. "Mr. Middleton is one.

(Melbourne F. Middleton, Jr., former city director of revenue and finance and now a bond dealer interested in the city's refunding issues.)

"Lehman Brothers (New York bankers who have handled many of the city's bonds in the past and were interviewed last Friday by the advisory committee) also said if we showed a sincere frank idea of economizing and staying within our budget, the bondholders would accept our bonds without necessity of recourse to Chapter 60.

"They said 60 'meant no more to the bondholder than resolutions and ordinances, if you get together and go on record to give security and then do it.

"I don't think the city commission should have any compunction in binding itself not to exceed the budget. Then, if you find it is impossible for you to operate on what you are taking in under the present tax rate, call in a group of taxpayers say 200 of them-and explain the situation and raise the tax rate.

"Any reasonable man or group will see the necessity and logic of that. They will go along with you.

"But under Chapter 60 you put yourself under a rigorous unbending set of restrictions." 

Mrs. Kobus Urges Action 

"Let's quit arguing and do it," Commissioner Mary W. Kobus suggested, and Mayor Frederick von Nieda asked: "If we take an average of the income for the past three years would you not consider that average for this year?"

"Yes", said Burnison.

At that point Bennett made his motion for power to call a special meeting of the freeholders, commissioners, citizens' group, bond attorneys and bond dealers, and it was passed unanimously after Commissioner George E. Brunner seconded it.

"I reserve the right own discretion about dealers will be asked” Bennett remarked.

"It may be that Lehman Brothers are the only ones who will trust us," Burnison said. "They know the lines we are working along. They work with other houses, and there may be other sources of credit we can tap."

"Well, 42 of the largest cities in New Jersey with 62 percent of all at the ratables of the state are under Chapter 60 now," Bennett said.  

"Sixty-two percent could be wrong," Burnison answered and laughed, adding: "In my opinion, those cities going under 60 haven't looked very far ahead."

"That's what we have done," Bennett replied. "My department has done that and that is why we are advocating 60.” 

Burnison Disagrees 

"Well there are members on our committee who know a good bit about that sort of thing and they say the city is justified in not going under 60," Burnison said.

"The Legislature is going to pass a new budget law that will act just the same as Chapter 60, though it will not be passed in time to effect this year's budget," Bennett said.

"Well," said Burnison, "I'd think the commission would prefer to adopt a safe course voluntarily than to be forced into it."

"We have no assurance that those who will have charge of the city's affairs for the next 15 or 18 years will follow the course we lay down for them," Bennett said and added: "Past political experience shows that they won't."

This brought the argument to a close and Burnison, questioned by a reporter, said:

"We are not unalterably opposed to Chapter 60. We oppose it, yes. We believe under 77 a better job for us can be worked out." 

Members of the committee, in addition to Burnison, who attended the session are James V. Moran, Harry A. Kelleher, Carl R. Evered, Dr. Ulysses S. Wiggins, A. Lincoln Michener and Eugene E. Wales.

City Comptroller Sidney P. McCord, with an aide, attended, and a stenographer from Commissioner Bennett's office took a complete report of the proceedings.

Report Given By Advisers to City Officials

Following is the text of the report of the Citizens) Advisory Committee to the City Commission yesterday as read by James W. Burnison) chairman of the citizens group: 

"Your Advisory Committee have prepared a report covering their activities in detail. The committee feel, however, that there are some points that should be emphasized and with your kind indulgence I shall endeavor to cover some of these points at this time. 

"It is our purpose to present unvarnished facts and offer unbiased recommendations. It is not our intent or desire to criticize the performance of past or present city officers. The situation is serious from a taxpayer's point of view. We urge that you, as the elected responsible custodians of our city welfare, work as a unit in applying proper effective remedies. 

"First, let me point out a few of the facts of the situation as found by your committee. Our examination of audits, surveys and budgets have shown us that Camden City receipts have been running behind expenditures approximately one million dollars per year since 1930. This fact was available and we can only believe must have been known to every responsible public officer during that period. Our yearly budgets do not at present, and did not in the past, in the opinion of your committee, give a frank, clear picture of our anticipated income and expenditures. The amounts referred to are not minor items. These are facts which your committee will endeavor to substantiate in our detail report to you. 

Cites Budget Increases  

"The detail budgets, as presented by each commissioner, show in some cases increases over last year's budgets. Your committee can't cut down expenditures- that is your job and responsibility. 

"When we continue to spend beyond our income we are looked on with suspicion. As we become gamblers, so do those who loan us money and, accordingly, we will be required to pay gamblers' interest rates which we, and we alone, are responsible for. To keep our paper in the investment class, we must cut out politics and speak frankly to ourselves and to our creditors. 

"Your committee wishes to condemn the use of the so-called "Emergency Deficiency Appropriations" for items that are and were left off our budgets. A complete frank budget is needed to build taxpayer and creditor confidence. We seek lower interest rates, let us indicate that we deserve them. This matter is covered in detail in our complete report. 

"Great publicity has been given the idea of contacting bond holders and in that way cutting down our heavy service charges. This job has, your committee finds, not been handled as frankly as it deserves. We can find no evidence of a sincere effort to lay out a program and attack this problem logically. Assuming the complete success of this plan, we could only cut our tax rate down approximately $.30. Anyone who has looked in the situation over knows that the best we could hope for would only reduce our tax rate a few cents. We have requested a report on the resuits of contacting local bond holders. We have no report on this request to date. We have also requested that the state be asked to accept reasonable rates on our bonds held by them. This request, we understand, was refused. The present be difference of opinion on this subject among the members of our present city commission would in itself effectively block any real work along this line. We feel that real results along this line require a united front on the part of our commission and county freeholders.  

Tells of N. Y. Trip  

"At the invitation of a bond brokerage house that have sold and are interested in selling Camden city and county bonds, representatives of your committee went to New York City last Friday. After that interview we were convinced that it is futile to expect any large scale interest reduction from our bondholders. It is easy to understand this situation after we look the facts in the face.  

"First- the principal and interest of all of these bonds are guaranteed by Camden property, therefore, our 54 bonds are well secured.  

"Second- any precedence set in dealing with the Camden situation could be used by hundreds of communities that are in either as bad or worse financial condition than Camden. 

"Present laws giving tax exempt privileges to taxpayers obligations that pay 3 to 6 percent are not equitable, in my estimation, because they offer unreasonable advantages to the investor at the expense of the property of the taxpayer. The only hope of reform in this direction is thru general public interest in problems of this kind. I feel sure that these conditions can be readily changed if there is enough demand for public welfare legislation of this kind in the state and in the nation.  

"As far as we can determine there is no way that we in Camden can alter present laws and facts. We can throw light on these facts and indicate an orderly method of attack that will help to ultimately bring about remedial legislation. Fortunately, however, our investigation indicates that a major part of our high interest can, if constructive action is taken at this time, be refunded at substantially lower interest rates. 

Urges "Honest" Budget 

"You have expressed your intention of not raising tax costs to our already overburdened taxpayers. You have indicated that you will arrange affairs so that these taxes will not be materially raised in 1936. You have given definite consideration to future years and that any plan accepted by you will not at some later date shift a high tax burden on the people of Camden. Generally speaking, however, your economy moves to date have not been as definite as your promises. It is apparent to your committee that there is only one way out of this situation and that way is a comparatively simple one. You must prepare a complete honest budget of income and expenditure immediately and solemnly and sincerely accept the job of staying within that budget. No fancy financing can overcome spending more than you receive. It just delays the crack-up.  

"Our sinking fund, we are informed is stuffed with our own frozen paper. Such financing, in our estimation, kills the purposes of such funds.  

"A few high points in our recommendations are- that immediate positive action be taken to lay down a tax responsibility position so that every property owner in the community can understand his responsibility. In addition, that we take immediate steps to list every property in every ward that does not meet our requirements.  

"To plead that this is too much of a job is not an acceptable argument to your committee. The cost of additional help to do this job would, we believe, pay for itself a thousand fold. The present plan of singling out a few wards in our city and call for sporadic tax sales is neither fair to the delinquent taxpayer in these wards nor is it fair to the taxpayers throughout the city who do keep their tax payments up to date and shoulder the burden of our city's financial responsibility. It is the plan of our committee that politics be forgotten in this matter and that there be no exceptions that can be pointed to in settling tax claims.  

Recommends 77 Plan 

"We recommend that your commission take immediate action to either follow the plan of refinancing under by Chapter 77, necessarily backing such action with resolutions which will guarantee our taxpayers and creditors a complete honest budget and a supervised cash basis of operation that cannot be violated without public hearings where the taxpayer can have some say of what really constitutes an emergency in city operation, or any other method that will achieve the same results. We are assured on good authority that this job can be accomplished without recourse to Chapter 60. 

"You are faced with an unpleasant reality. As far as your committee can determine there can be no logical reason or benefit in refusing to unite and take constructive action at this time. Your committee does not recommend default. Our investigation indicates that such moves cause far-reaching harm to the future interest of the taxpayers. Under such plans taxpayers are forced to pay the cost of high priced legal talent and committees that would hang on like leeches to our city government for years to come. Your committee is assured that under the plan outlined, a major part of our outstanding high interest rate bonds can be refunded at substantially lower rates and that tax costs the will not increase materially in future years. Such costs, of course, can only be kept down by economy in government. As responsibility for such moves are, of course, yours, your committee would urge that you substantiate any statements of this kind given you by the committee.  

"The responsibility is yours not only for this but for any other ideas such as contacting bondholders for lower interest rates after you have put your house in order. 

Cites County Situation 

"Any consideration of Camden City's financial situation that did not take into account the conditions in Camden County would not be complete. When we consider that 47 percent of our county's population and 54 percent of the taxable wealth of the county are in the City of Camden, you must appreciate as a City Commission that you have a very serious county responsibility, to face. This condition is made more serious by the fact that Camden City at the present time is in reality carrying a far greater percentage of the county than we should be called upon to carry in normal times. 

"Let us consider a few of the facts. Camden County is composed of 36 political sub-divisions. Three towns in the county are being operated under the direction of the State Finance Commission. Fifteen other towns are in financial difficulty. Twelve, I believe of these towns are actually in default at this time. This means, that of the 36 districts in the county, 18 are to some extent in default, at least to the county. Camden city has religiously kept its obligations with the county, so you see any errors in handling the Camden situation will be immediately reflected in the county's financial position. The fact that this commission represents the group of taxpayers in Camden county, who are really supporting the county, you should take an active inquiring interest into just how the county is being managed and if all possible economies are being effected by county officers. It is evident that we need an immediate co-operative action in our city and county if we are to financially survive. The county freeholders have also appointed an advisory committee. In my opinion, what is needed is the will to co-operate and not more committees. The situation can be made hopeful and we believe within a short time put on a satisfactory financial basis if the problem is handled from a business rather than a political standpoint. Small time politics and bickering will surely spell failure and the people who may be responsible for such action should be held up the public light and forced to accept the responsibility of such actions at a time such as this. 

"Your committee, during this investigation, have come across a number of details that they believe could be improved. We do not wish, however, to complicate the main issue at this time by offering such recommendations in my remarks to you. Our detail report does, however, cover many of these details. A few other ideas are being worked on by the committee and will be submitted to you before they complete their work. 

"In closing, let me urge that you take immediate action to put Camden City's finances on a sound basis. I would also sincerely request, on behalf of the committee, that all citizens, regardless of 'political affiliation, get sincerely behind the combined efforts of our city commission and county freeholders and think of Camden, city and county, in a patriotic rather than a political sense.'

CAMDEN VOTES TO PAY EXPERT ON REFUNDING OF CITY DEBTS
Applicants With Programs to Be Considered by Board Today
COMMISSIONERS AGREE ON KOBUS SUGGESTION
Chapter 60 and 77 Author Overruled in Plea to Disregard Proposal

Camden's city commissioners yesterday agreed to select a paid financial adviser to guide the city out of its financial morass.

. They said they expect to make the selection today.

A special gathering of the commis­sioners in Mayor Frederick von Nieda's offices at noon today was arranged to hear applications of candidates for the job.

No candidate will be considered un­less he has a plan to submit that looks attractive to the commissioners they said.

Decision to select the paid adviser came near the end of a hectic two and one-half hour conference of the commissioners with their citizens' advisory committee, members of the Freeholders budget committee, various bond brokers, and bankers and attorneys for the city and the bond dealers.

Proposed by Mrs. Kobus

The commissioners decided to en­gage the adviser against the recommendation and despite an eloquent plea of their bond attorney-L. Arnold Frye, of Hawkins, Delafield and Longfellow, New York attorneys.

It was at the suggestion of Commissioner Mary W. Kobus that the decision to bring in paid help was taken.

The action was taken under such a. way as to leave at least one bond house's representatives under the impression the commission is actually, though not legally, committed to accepting whatever plan their paid counselor may suggest.

His questions on this line, however, brought no definite answer.

"Oh. we'll agree," Mrs. Kobus said. "I think by the time we select the man we will select the plan," Commissioner Harold W. Bennett, director of revenue and finance, said.

Beyond that, the commissioners did not commit themselves.

Bennett, however, announced that the adviser's tenure will be "for whatever period we decide to engage him."

Names Confidential

Commissioner George E. Brunner suggested that the advisory committee submit the names of three prospects for the adviser's job and that committee's sub-committee on finance withdrew and returned to offer two names. They explained they could not suggest more than two.

The names were held confidential and no one knowing them would reveal their identity ..

There was some speculation as to whether they were Melbourne F. Middleton, Jr., Philadelphia bond broker and former city director of revenue and finance, and Norman S. Tabor, noted New York adviser on municipal fiscal affairs.

Fall to Make Pick

The commissioners, as soon as they received the two names in secret, withdrew into the mayor's private office for ten minutes to discuss the suggested helpers, but returned to announce that all applicants for the job will be heard at noon today.

This was accepted as tacit admission that no final agreement was reached on either name suggested.

Bennett announced:

"We are going to pick the man on a basis of his helpfulness to Camden, I want to say now 'that we will not necessarily select the man who offers to help us at the lowest cost.

"We want those applicants for the position who appear tomorrow to have a definite idea of what plan they expect the city to follow if they are engaged.

"Of course, we do not expect any minute detailed plan from any man not already acquainted with the situation, but we want it to be definite enough to enable us to know whether we will follow it.

"We want to keep the cost as low as possible, and we advise now that the cost of this help or advice must be low, but we will not pick the adviser on a cost basis purely.

'No Private Talks'

"We will make no commitments in advance. We will talk to no applicant until the time comes tomorrow. My conception of how we will select the adviser is this:

"Ability will come first. Then contacts, experience, the cost to the city and, of course, the acceptability of the plan offered."

The conference was called to discuss proposed refunding plans for Camden city, with most of the talk centering on the controversy over Chapter 60 as a refinancing basis.

Mrs. Kobus suggested appointment of the financial adviser at a meeting of the city commission to be held immediately.

"I have thought similarly during the last few days," said Bennett. "I realize it would be a big expense, but the City is reaching a crisis and it might be money well spent."

Brunner asked the advisory committee to submit three names for appointment as an adviser. The committee suggested two names which were not revealed.

Frye, in requesting the commission not to employ an adviser, revealed himself the principal author of New Jersey's two refunding or bond issuing acts around which the commissions' difference of opinion as to method has revolved-Chapters 60 and 77.

"You can finance your indebtedness entire, Frye said, "under Chapter 77, or partly under Chapter 60 and partly under 77. I personally have no preference, as the principal author of both.

Frye Plan Refused

"As to your tax rate, set what you can set and what the taxpayers can stand. Don't you think you could get together and settled this among yourselves? Don't you think that        would be better?"             

Bennett passed off Fry's suggestion thus:

"No, Mr. Frye, I think it can best be settled by use of an adviser. I am anxious to settle it quickly. We have been unable to agree thus far and I am on the uneasy seat for Camden faces a crisis and I want to get it past."

Frye's suggestion carne after all of the bond brokers present, except Middleton, had advised the city to use the stringent budget, making restrictions of Chapter 60.

James W. Burnison, chairman of the citizens' advisory committee, reiterated that group's objections to Chapter 50, saying the same guarantees can be provided for bondholders under 77, without putting the city under such rigid state supervision for so long a period.

Every person present was invited to speak. Most of the freeholders viewed the matter as a city and not a county problem, but promised cooperation.

Burnison, Carl R. Evered, A. Lincoln Michener and James V. Moran form the sub-committee which selected the two names submitted to the commissioners for consideration as fiscal adviser.

The meeting started as a closed session, but after 25 minutes behind closed doors in the mayor's' office, Evered came to the door and admitted reporters.

The reporters, however, were given to understand that the only statements they were to use were those from Burnison, chairman of the committee; James V. Moran, a member, or Evered, and from other speakers only with their permission.

Attending were the five city commissioners, William H. Heiser, chairman of the Board of Freeholders' budget committee; Freeholders James S. Caskey, Maurice Bart, William Myers, and James W. Wood; George D. Rothermel, assistant county solicitor; City Comptroller Sidney P. McCord; Meyer Sakin and John R. Di Mona, assistant city solicitors; Burnison, Evered, Moran, and Michener, of the Citizens' Advisory Committee; E. Howard Broome, deputy director of finance; Middleton, John T. Trimble, counsel for Middleton; three representatives of Hawkins, Delafield & Longfellow, New York including Frye, Henry Russell and Alfred Gregory; Walter Shuman, representing Rollins & Sons, of Philadelphia and New York; C. C. Collings, of the C. C. Collings Company, Philadelphia; Russell McInes, representing Lehman Brothers, New York; J. M. G. Brown and Samuel S. Blackman, representing Analyses, Inc., Philadelphia, and Leon C. Guest and Herbert Glucksman, Camden bond brokers. 

CHAPTER 77 FAVORED J. W. BURNISON DECLARES

James W. Burnison, chairman of! the Advisory Committee to the city commissioners, was speaker last night at a meeting of the Civic Association of South Camden held in Parish Hall, Tenth and Liberty streets.

Burnison outlined the work of the advisory committee and said the group was in favor of adopting Chapter 77 to correct the city's financial difficulties.

Chapter 60, Burnison said, would effect a heavy increase in the tax bill while Chapter 77 would give a longer term of payment in the money borrowed.

John Dziekanski, president, was chairman of the meeting. More than 200 were present..  

Camden Courier-Post - February 19, 1938