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UNIVERSITY OF ILLINOIS LIBRARY AT URBANA CHAMPAIGN
APR 2 1 978
MAY 3 '
UNIVERSITY OF ILLINOIS STUDIES
VOL. 1. NO. 3 SEPTEMBER. 1912
Municipal Revenues in Illinois
LENT DAYTON UPSON, Ph.D.
Sometime Fellow in Political Science
University of Illinois
PRICE 75 CENTS
PUBLISHED BY THE UNIVERSITY
BY THE UNIVERSITY OF ILLINOIS
TABLE OF CONTENTS
PROPERTY TAXATION 1 1
Tax Levies 12
Exemption from Taxation 15
Method of Assessment and Collection 16
Property Taxes 17
Personal Property Taxes 21
Losses in Collection 24
LICENSES AND POLICE FINES 26
License revenue 26
Liquor licenses 26
General licenses 30
Business taxes 41
Vehicle licenses 43
Foreign fire insurance tax 45
Police fines 47
GIFTS, GRANTS AND SUBVENTIONS 55
School revenue 55
State grants 55
Endowment income 56
Miscellaneous income 57
Gifts by individuals 57
REVENUE FROM SERVICES RENDERED 58
Departmental receipts 58
Public service privileges 61
Special assessments 68
MUNICIPAL INDUSTRIES AND PROPERTY 73
Water plants 73
Electric light plants 86
Libraries . . 90
City Hospitals 92
Street railways . . 93
Real estate 94
Other city property 95
Interest on city funds 96
Bonded Indebtedness 101
Tax warrants 105
Floating debt , 107
SUMMARY AND CONCLUSIONS no
MAP SHOWING LOCATION OF CITIES . . 126
1. Relation of Taxes to Total Income, Tax Rates and Per Capita
Tax Income in 24 Illinois Cities in 1909 19
2. Assessed Valuation by Classes of Property and Total Assessment
in 24 Illinois Cities for the Year 1909 20
3. Relation of the Assessments of Real and Personal Property to the
Total Assessments in City and County, and the Relation of the
City Personalty Assessment to that of City Lots, 1909 23
4. City Receipts from Town Collectors and County Treasurers, 1909 24
5. Number of Saloons, Population per Saloon, License Rates and
other data relative to the Liquor Traffic in Illinois Cities, 1909.. 28
6. Total and per capita Income from License Taxes, Illinois Cities,
7. Principal Licenses and Rates 36-37
8. Business Taxes, Rates and Total Income, 1909 42
9. Vehicle Licenses, Rates and Total Income 44
10. Total and Per capita Income from Foreign Fire Insurance Tax,
11. Disposal of Arrests in 5 Illinois Cities, 1909 50
12. Disposal of Arrests in Illinois Cities by Percentages 51
13. Statistics on Strength of Police Forces, Number of Arrests,
etc., 1909 53
14. Revenues of Specified City School Districfs 56
15. Receipts from Fees, Inspections, Departmental Receipts, Charges,
and other Miscellaneous Sources, 1909 58
16. Fee Offices and Methods of Reporting 60
17. Rates and Income from Franchises, 1909 63
18. Dates of Grant and Expiration of Franchises 65-66
19. Statistics of Municipal Water Plants and Cost per Hydrant in
Illinois Cities, 1909 79
20. Statistics Relative to Cost of Operation per Million Gallons
Pumped by Municipal Water Plants 80
21. Ratio of Operating Costs to Receipts in Private Water Plants.. 83
22. Ratio of Operating Costs to Receipts and "Total of all Costs"
in Municipal Water Plants 83
23. Statistics Relative to the Cost of Operation in Municipal Lighting
24. Charges by Private Electric Light Plants for Arc Service 88
25. Income and Cost of Operation of Municipal Burial Grounds 90
26. Statistics of Public Libraries, Illinois Cities, 1909 91
27. Receipts from City Real Estate 95
28. Balances and Receipts for General Funds, Special Assessments
and Special Funds, 1909 98
29. Statistics Relative to Municipal Indebtedness, 1909 100
30. Sources and Totals of General Revenues, 1909 117
31. Sources of General Revenue, 1909, in Percentages 118
32. Ranking of Twenty-four Illinois Cities, 1909 119
The purpose of this study is to examine the sources of
municipal revenues in the state of Illinois, as typified by
the budgets of a number of cities for the year 1909, noting
the variations in the different municipalities and the means
of revenue which are not fully utilized, so that all the
financial revenues of any city may be made more available
to the others.
As cities become larger-lhe per capita cost of adminis-
tration tends to increase. This does not necessarily mean
that there is more waste or graft in the management of
large cities than small ones ; but that as more people come
together, they find it advantageous to do in common many
things which formerly each individual undertook for him-
self. In a village, each householder must occasionally be
his own truant officer, his own sanitary inspector or his
own sidewalk layer. In cities such duties are more effec-
tively cared for by the public authorities. Kindergartens,
medical and dental inspection of school children, charities,
disease prevention, better sanitation, street and public
lighting, parks, and other social welfare work make in-
creased demands upon the local administration where
many people are concentrated in a city.
At the same time the maximum legal tax rate in Illi-
nois is the same for all cities ; and growing municipalities
find it necessary fcb seek for more sources of revenue other
than property taxation. Such potential sources of revenue
include liquor and business licenses, vehicle and insurance
taxes, increased returns from police fines, fees and de-
partmental receipts, and profits from municipal enter-
prises. In some cases enlarged expenditures are tempor-
arily met by increased municipal indebtedness.
To secure data for this study, an examination was
made of the budgets of twenty-four cities of over 8000
8 MUNICIPAL REVENUES IN ILLINOIS [368
population, located in various parts of the state. Chicago
has not been included, owing to the magnitude and special
features involved in such a task, and also to the fact that
a comprehensive study has already been made of its mu-
nicipal revenues. 1 Questionnaires were sent to municipal
officers; annual reports were received from nearly half of
the cities ; and personal visits were made to all but two,
Quincy and Joliet.
No one of these methods of inquiry proved entirely
satisfactory. It was difficult to secure replies even to
direct questions. No printed report gave a complete state-
ment for a single city. In the cities visited, the data had
to be secured from a number of officials. Nevertheless, a
complete statement was secured from all but three of the
cities examined covering the revenues for general purposes j
and the omissions in the three cases are small and unim-
The general plan followed in the arrangement of
material is that employed by the Bureau of the Census
for tabulating the statistics of cities, a general outline
of which is shown in the table of contents. Since, how-
ever, the cities included in this study are relatively small,
with simple financial systems, it has not been possible to
analyze the revenues with the same detail as the Census
The figures used as a basis of the investigation are
those of actual city incomes for the fiscal year 1909, rather
than the revenues which legally accrued during the year.
For example, delinquent taxes for this year do not appear,
though they are really an asset and will ultimately be
collected. In their place, however, appear the delinquent
taxes of previous years which were paid during the period
under consideration. Outside the field of taxes, this cer-
tainty of ultimate payment is not so great, a situation
which illustrates the error of keeping city accounts upon a
receipt and expenditure basis, rather than on a basis of
legal accruals and liabilities. In one city only |700 of
*C. E. Merriam: Report on the Municipal Revenues of Chicago.
license fees was paid within the fiscal year. Either
the $200 remaining will become an asset of the year fol-
lowing and will offset the expenditures of a year to which
it does not belong, or it may drop out of the ken of the
city treasurer and fail to be collected.
In addition to an analysis of the revenues received,
an attempt is made to explain why some sources of revenue
have not been utilized. In some cases, there has been local
opposition to a particular form of taxation. In other in-
stances, the cost of collection has been too large in pro-
portion to the revenue received. In still other cases, a
scientific and impartial collection of charges would result
in increased revenue.
Further, there is included in this study considerable
data not directly involved in city budgets, but of value
to officials seeking to increase municipal revenues and
as illustrations of facts which must be brought to the
knowledge of officials if municipal government is to be
progressively and permanently bettered. The more im-
portant data of this kind relates to the cost of operating
municipal water and light plants, the time and date of
expiration of public service franchises, the rates of license
taxes, and the relation between the number of liquor
licenses and the number of police.
A summary of the conclusions of this study of the
municipal revenue system of Illinois is to be found in the
concluding chapter of the text; but it may be of interest
to note here that:
The maximum total tax rate (of one percent on the
supposed full value of property) is inadequate to meet the
needs of the modern city.
The percent of total income received from other
sources than property taxation ranges from_60% in Joliet
to 3% in Urbana.
Personal property estimated to equal real estate in
value is paying only approximately one-third to one-fifth
of its legal burden.
10 MUNICIPAL REVENUES IN ILLINOIS [370
Cities which give a limited number of saloons the mo-
nopoly of the town's business, will lose from |5,000 to
$10,000 a year unless they advance the license fee to a point
where the cities will share in the monopoly profits.
Business taxes can be made to contribute ten per cent
of municipal income without serious opposition.
The vehicle tax has proved a financial success in all of
the cities in which it has been tried. In Evanston the re-
turn is over f 8,000 a year.
Departmental fees and charges could be made one of
the more profitable sources of revenue but require more
secure checks on the collection than exist at present.
Taxes on the franchises of public service corporations
are being imposed as rapidly as existing franchises expire,
and produce from $1,000 to $5,000 annually.
None of the cities investigated receive adequate inter-
est upon public funds.
The operation of public water plants in a number of
cities has been efficient and economical, but the rates are
too low to pay a profit, and frequently do not even meet the
cost of operation.
Street lighting could be done through municipal plants
operated in connection with the water works at about one-
half the price paid under private contract.
There is urgent need that the state authorities create
some municipal clearing house of facts which will cooper-
ate with cities in installing a gradual revision of the sys-
tem of keeping city accounts, uniform city reports, and
methods of publicity which will keep both officials and
taxpayers informed of advances in municipal adminis-
Tbe Illinois constitution of 1870 authorizes the gen-
eral assembly to vest municipalities with the power to
assess and collect taxes for corporate purposes. 1 How-
ever, this privilege is restricted by further constitutional
provisions, which require that the levies be uniform in
respect to persons and property; that privilege taxes be
uniform as regards the class on which they operate; that
the legislature must not impose taxes upon municipal cor-
porations for corporate purposes; and place restrictions
on the amount of municipal indebtedness.
The general municipal incorporation act of 1872, the
revenue clause of which was amended in 1897 to apply to
all cities incorporated in any manner, 2 gives to munici-
pal councils the following powers:
a to control the finances and property of the corpor-
b to appropriate money for corporate purposes only,
and to provide for the payment of the debts and
expenses of the corporation
c to levy and collect taxes on real and personal prop-
erty for general and special purposes
d to fix the amount, terms and manner of issuing
and revoking licenses; and
e to borrow money on the credit of the corporation
for corporate purposes 8
The revenue clauses of the incorporation act also pre-
scribe the method of assessment and collection of taxes;
provide that all municipal expenditures shall be included
'Constitution of 1870, Art. 9, par. 9.
'Kurd's Revised Statutes (1908) ch. 24, par. 283.
'Rev. Stat., ch. 24, par. 62.
12 MUNICIPAL REVENUES IN ILLINOIS [372
in an annual appropriation measure passed by the city
council, and that no further appropriation may be made
from taxes except upon a majority vote of the electorate; 4
that appropriations must precede tax lexies, as well as
contracts entered into by the city; and that the tax levy
ordinance must state both the rate or amount and the
purpose of the tax. The appropriation ordinance and the
tax levy ordinance are required to be distinct, and the
former must be passed first. 5 The levy ordinance is filed
with the county clerk who calculates the rate required to
j aise the amounts ; and if it is necessary, he is required to
scale the rate down to keep the aggregate of all tax levies
within the legal limit of three per cent of the assessed
valuation, allowing to each taxing district its legal pro-
Until 1909 the ordinary tax rate was limited to five
per cent of one-fifth of the cash value of the taxable prop-
erty. An amendment of that year raised the basis of
assessment to one-third of the actual cash value, and made
three per cent the legal tax limit. 7 This statute does not
affect the real tax rate, but raises the debt limit sixty
*Ibid, ch. 24, par. 89.
B Peo. v. Florville, 207 III. 79.
"The method of scaling as prescribed by the Juul law is as follows : a
total is found of the rates necessary to give the certified sum ; the amount
over three per cent is used as a numerator and the total percent as a
denominator, each item being reduced in this proportion. Professor
C. E. Merriam in his "Report on the Municipal Revenues of Chicago",
(City Club of Chicago, Pub. No. 2, page 86) gives this example: "the
West Town demands for tax levy (state, school building and special
sanitary district excepted) aggregated in 1903, $7.55 per $100. These
special rates were then scaled down 255-755, and the total thus reduced
to five per cent."
'Laws of 1909, p. 308.
373] PROPERTY TAXATION 13
The taxes which cities may levy unrestricted by refer-
endum are these :
For general purposes 1.2%
Interest and sinking funds. . . ."a sum sufficient"'
Educational purposes 1.5%
School buildings 1.5%
Public libraries .12%
Cyclone tax .3%
The taxes to provide interest and sinking funds are
limited by the constitutional provision that the total debt
shall not exceed five per cent of the assessed valuation.
Taxes for such purposes, however, furnish a means for
evading the statute limiting taxes for general purposes
to 1.2% of the assessed valuation. Not infrequently, cities
incur permanent indebtedness for current expenses, and
retire the bonds out of other than taxes for general pur-
poses. Nearly four per cent of the municipal debt is of
this nature. 8 An interest and sinking fund tax may also
be levied to pay such school debt as was contracted before
the passage of the general school act of 1889. In cities of
over 100,000 population the library tax is limited to .06%
of the assessed valuation; and in all cities under 1,500
population the library tax is included in the 1.2% tax
for general purposes. 9
The tax of .12% to provide for the establishment
and maintenance of parks applies to cities having a popu-
lation of less than 50,000, 10 a restriction which excludes
only the cities of Chicago, Peoria, Springfield and East St.
Louis. Within three of these municipalities park taxes
are levied by the park districts, which are distinct taxing
areas erected without particular reference to municipal
boundaries. Such special taxing areas, which may also
be created in smaller cities than those mentioned, are
See ch. VI.
'Rev. Stat. ch. 81, par. r.
"Ibid. ch. 105, par. 290.
14 MUNICIPAL REVENUES IN ILLINOIS [374
of three kinds, sanitary, park and pleasure drive dis-
tricts. They are formed by a favorable popular vote called
after a petition to the county clerk, the voting being within
the boundaries specified, for or against the proposition.
The powers of the commissioners controlling these
taxing districts have been changed frequently; and the
confusion thus created has been added to by the Juul law
of 1901 which consolidates and limits all of the tax levies
within a city. The combined tax must not exceed the legal
limit, which sometimes requires that the tax for one district
shall be scaled down below the maximum in order that the
aggregate tax for all purposes in another district fall
within the legal limit.
The taxation of property is the natural result of the
theory that all persons should be taxed according to their
ability; and ownership of property and particularly of
real estate, in communities which have not reached a high
industrial development, is considered the most concrete
expression of ability to pay and of the measure of benefit
received from governmental activities. The situs of real
property is permanent, and it is therefore possible to tax
such property when owned by non-residents, in the same
manner as that of residents.
Unoccupied tracts held for increment in value present
a special problem. In some jurisdictions agricultural and
unimproved property is exempted from taxation in whole
or in part, and such exemptions have been sustained ex-
cept in contravention of special constitutional provisions. 11
In Illinois no such exemptions are allowed by law, but
vacant property in the shape of lands is not an important
item in the assessed valuations except in a few cities. In
East St. Louis such property stands in the ratio of one to
three when compared with the assessment of city lots; in
several municipalities the ratio is one to ten, but in the
majority it is less than this. The assessment for lands
and lots is presented in table No. 2.
^Connecticut, Indiana, Iowa, Maryland, Michigan, (with exceptions)
Ohio, South Carolina and Tennessee.
375] PROPERTY TAXATION 15
The general rule for the taxation of personal prop-
erty in Illinois provides for its assessment at the domicile
of the owner; but some classes of tangible personalty are
taxed in situs, and goods in transitu are assessed upon the
owner at the place where the shipment originated. In-
tangible property is also subject to taxation, but credits
may be offset by certain debts; and while franchise values
are taxable no method of local assessment is prescribed.
Illinois corporations, except mercantile and manufactur-
ing, are assessed by the state upon the value of their capital
stock, less the assessed value of tangible property as made
by the local assessors. Capital stock not assessed in this
fashion by the state board of equalization should be listed
as personal property. Aside from the tax upon the capital
stock of railroads incorporated within the state, railroads,
must pay taxes upon their personal and real property,
assessed principally by the state board of equalization,
the valuation being apportioned to the counties to a large
extent in proportion to mileage. The value of side tracks
and railroad buildings is returned wholly to the district
within which they are located; and personal property other
than rolling stock is locally assessed.
EXEMPTIONS FROM TAXATION.
Exemptions from taxation in Illinois are fewer than
in most states. The constitution authorizes the exemp-
tion by the legislature of real and personal property of
states, counties and other municipal corporations, and
such other property as may be used exclusively for agri-
cultural and horticultural societies, schools, religious or-
ganizations, cemeteries, and for charitable purposes, when
the exemption is made by general law. 12 By statute the
legislature has provided for these exceptions, and also
established other specific exemptions as follows, school
lands, not leased ; fire apparatus ; public markets ; all state
property; and property used by mechanical and phil-
a Const. Art. 9, par. 3.
16 MUNICIPAL REVENUES IN ILLINOIS [376
osophical societies without profit. 13 A law exempting fra-
ternal insurance funds was held unconstitutional, 14 as
have been other acts attempting to exempt other classes of
property not embraced in the constitutional provisions.
METHOD OF ASSESSMENT AND COLLECTION.
For the assessment of taxes there is elected an as-
sessor in each town, except in those counties not under
township government. In these latter localities the county
treasurer acts as assessor, the deputies being appointed
by the county board. In the spring of the year valuation
is made of the property within each taxing district, the
owner being required to fill out a schedule of personal
property. Once in four years real property must be viewed
for assessment. The results both as to real and personal
values are certified to the county clerk, who corrects all
apparent errors. The county boards of review revise as-
sessments upon request of the owner; hear complaints of
overvaluation; and may correct any inequality among
townships, provided the grand total of assessments is not
diminished. The assessments are then certified to the
state auditor who transmits them to be passed on by the
state board of equalization. This board may equalize total
valuations among counties by increasing or reducing the
local assessments by not more than ten per cent. The
final results are certified back to the county clerks, who
estimate and spread the taxes 15 on the tax collectors books.
In counties under township government, the county
treasurer is ex officio county collector, and receives from
the town collector state and county taxes ; and also collects
delinquent city taxes and special assessments. In counties
not under township government the sheriff is ex-officio
collector of taxes. Taxes are due the first of January;
personal property taxes must be paid by March first; and
"Rev. Stat. ch. 120, par. 2.
"Modern American Fraternal Order v. Board of Review, 223 III. 54.
"Rev. Stat. ch. 120, par. 128.
377] PROPERTY TAXATION 17
all taxes on real property become delinquent on June first.
In cases of unpaid taxes, after certain notice and adver-
tisement, application is made to the county court for judg-
ment. Upon judgment being given (from which an appeal
may be taken to the Supreme Court if bond for costs is
given), the property or a necessary portion of it is adver-
tised for sale. The property is then sold to the person
bidding the delinquent taxes plus the least per cent
for penalty. Property so sold may, however, be redeemed
at the office of the county clerk within two years, upon
payment of the delinquent tax, subsequent taxes and as-
sessments, and the penalty, this last being graduated from
that bid to four times that sum during the last six months
of grace. 10
The foregoing is a meager outline of the system of
taxation as applied to municipalities in Illinois and may
make clearer a review of the workings of the property
In tables 30 and 31 is a statement of the amount of
property tax received by each of the twenty-four cities in
Illinois for which data was secured, and the relation of
such sums to the total amount of municipal income for the
year 1909. The tax rates are given in table 1, and with
them the ratios of taxes to the total city, incomes from
which all commercial revenues except those producing a
profit have been subtracted. In three instances 18 the net
profit from commercial enterprises is included in the total
income. The city which receives the least proportion of
its revenue from property taxes is Joliet, the return of
40.1% of the whole income. Streator follows with 51.25% ;
M Rev. Stat. ch. 120, par. 182-210.
"A more complete outline will be found in A Report on the Taxation
and Revenue System of Illinois, prepared for the Special Tax Commission
of Illinois by John A. Fairlie. A compilation of Tax Laws and Judicial
Decisions accompanies the report of the commission.
"See Table 19.
18 MUNICIPAL REVENUES IN ILLINOIS [378
while the maximum percentage received is 97.6% in Ur-
bana. The average is 68.1%. For comparison it is inter-
esting to separate the cities receiving saloon licenses from
those which do not. In the seven no-saloon license cities 19
the average of the total revenue received from
property taxation is 86.2% while the average for the re-
maining cities is 60.5%.
A more interesting comparison of the taxes received
by cities for general purposes is upon a per capita basis.
Though such a relationship is inaccurate inasmuch as
population is not a direct creator of taxes, yet population
does have a direct influence upon the cost of government.
The minimum per capita general tax is in Streator, the
amount being $2.33 per person. The next lowest is $2.76
in Joliet ; while the highest rate is $8.34 in East St. Louis.
In this comparison the no license cities do not hold so un-
favorable a position in the matter of taxation, the average
rate for the seven municipalities being $4.62 per capita.
The average for the remaining corporations is $4.50 not a
A third and more frequent method of considering city
finances is a comparison of the tax rates. In table 1 is
shown the general rate for each city for each $100 of as-
sessment (including administrative, library, sanitary,
park, bond and interest taxes) ; the complete school rate;
and the total rate. The highest rate for general purposes
is in Quincy, $2.37. La Salle follows with $2.15; while
the smallest is $1.25 in the "dry" city of Rockford. Cities
having no saloons stood highest in the average per capita
tax, yet with the exception of Urbana their tax rates are
quite normal. This lack of relationship between the tax
rate and the per capita tax income, coupled with the fact
that cities in which a high tax rate should be anticipated
have quite the contrary, may be due to one or both of two
causes: variation in the basis of local assessments, or in
the per capita wealth of the several cities.
"Champaign, Decatur, Evanston, Galesburg, Jacksonville, Rockford
RELATION OF PROPERTY TAXES TO TOTAL INCOME/ TAX RATES AND
PERCAPITA TAX INCOME IN 24 ILLINOIS CITIES IN 1909.
Percent of Total
Bloomington . . .
E. St. Louis
Rock Island . . .
'Excluding commercial revenue, except net profit.
*$i.83 sanitary tax extends over a limited area.
4 Larger proportion.
MUNICIPAL REVENUES IN ILLINOIS
to o\ *
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tx to vo
01 ON to
1 tX 5"
O to O
tx, vo ON
0) Tfr tx
VO tx >->
O ^ Ol
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tO fx T 3 -
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Decatur . . .
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381] PROPERTY TAXATION 21
PERSONAL PROPERTY TAXES.
It is quite possible that variable standards of real
property assessment prevail in different municipalities,
but these cannot be ascertained without a more intensive
investigation than has here been possible. It is even more
probable that there is an inequality of personal property
assessments, 20 which may be shown through a comparison
with the assessments of the cities.
Table 2 is an exhibit of the property assessment of the
cities considered giving the assessments in the classes
under which they are returned. In table 3 is the ratio of
the real and personal assessment to the total assessment
in each city, as compared with the ratios in the counties
in which these cities are located, 21 as well as the ratio of
personal property to the assessed value of city lots. That
these ratios would have a considerable range would be
anticipated, since sections of the state vary widely in the
amount and nature of their wealth. That this variation is
greatest within cities is apparent. Of the assessed valuation
in counties, the proportion of personal property to real
estate is least in Champaign county, being 16.8% of the
total, the greatest in Kane county, where it constitutes
27.87% of the total assessment. Thus the variation has a
range of 11.07% of the whole. The least proportion oT
personal property in cities is in East St. Louis, 13.5% ;
while the largest proportion, 39%, is in Ottawa. The var-
iation is 25.5% of the whole, or twice the variation as
between counties. Large manufacturing or railroad prop-
erties situated in a locality would tend to increase the real
property ratio, but cannot account for the entire difference.
That the method of assessing personal property is to a
large extent responsible for this is proven by comparing
two corporations of a homegeneous character, as the con-
tiguous cities of Champaign and Urbana. In the former,
personal property constitutes 28.9% of the total assess-
"Fairlie, supra cit, p. 41.
"Biennial Report of the Auditor of Public Accounts (1908) p. 154.
22 MUNICIPAL REVENUES IN ILLINOIS [382
ment, while in the latter it is only 19.7%. Similarly, the
Rock Island assessment has 23.5% in personalty, while in
the adjacent city of Moline 34.5% of the property is per-
sonal. Elgin and Aurora are cities of similar size and
nature, in the same county; personal property amounts to
38% of the total assessment in one, and to only 26.2% in
In order to eliminate any bias which might occur by
including vacant lands and railroads in the real property
assessment, the personal property of each city has also
been compared with the assessed value of city lots. It
was, however, impossible to separate telegraph and tele-
phone values from the personalty, as was desirable for
this comparison. By this method, Ottawa still had the
largest proportion of personal property, 41.5% of the
total; Urbana had least, 21.6%. The range of variation
was 19.9%, or several percent less than in the comparison
made with the total real property.
The variation in assessments is further emphasized
by a review of the per capita assessments of real and per-
sonal property in each city. In two cities in which the
real property assessment ranges from $202 to $203 per
person, the per capita assessment of personal property
varies from $122 to $50; and in seven cities in which the
real property assessment varies from $155 to $195 per
capita, the personalty assessment varies from $27 to $91.
These figures indicate the danger of accepting the
city tax rate as testimony of the cost of administration.
Rockford has the lowest tax rate for general purposes of
the cities considered, yet has a per capita assessment al-
most double the average for the state. Quincy with the
highest tax rate for general purposes is among those having
the smallest per capita assessment.
Though the amount of personal property varies in
each community, the facts indicate that several cities are
collecting taxes on much less than the tangible personal
property within their jurisdiction. Under such conditions
an increase of city revenues may be more or less easily
secured by action of the township assessor and the county
board of review.
RELATION OF THE ASSESSMENTS OF REAL AND PERSONAL PROPERTY TO THE
TOTAL ASSESSMENTS IN CITY AND COUNTY, AND THE RELATION OF THE
CITY PERSONALTY ASSESSMENT TO THAT OF CITY LOTS.
Madison . . .
St. Clair ...
E. St. Louis ....
24 MUNICIPAL REVENUES IN ILLINOIS [384
LOSSES IN COLLECTION.
Another cause of considerable loss to cities is that
of interest on delinquent taxes. The average term of mu-
nicipal loans made in anticipation of taxes is about five
months, or only a trifle longer than that allowed for the
collection of taxes. The township collector relinquishes
his books on the tenth of March and the duty of collection
passes to the county treasurer, thus necessitating duplica-
tion of the collection machinery. An idea of the import-
ance of this latter officer in the collection of delinquent city
taxes may be gained from the following exhibit, which
gives the sums received by a number of cities during the
fiscal year 1909 from the two collecting agents, and the
percentage of the total receipts accredited to each. It
has been suggested that one of these agents be eliminated
with a view of lessening the expenses of collection. 22
CITY RECEIPTS FROM TOWN COLLECTORS AND COUNTY TREASURERS, 1909.
City Town Coll. Per Cent County Coll. Per Cent
Evanston $73-889 53-3% $64,757 46.7%
Joliet 61,347 49.6 62,392 50.4
Ottawa 39,390 71.8 15,419 28-2
Peoria 218,022 75.2 71,538 24.8
Rockf ord 66,320 43.6 131,861 66.4
One of the fixed charges in the collection of taxes is
the percentage going to the collector for remuneration;
to which may be added the fee of the county clerk for
extension. In addition to the 2% collection fee, in Free-
port the reserve for the loss through unpaid taxes and
cost of collection of delinquent taxes was 1.1% of the
total levy, or a total of 3.1%. Evanston, in addition to the
charges of the collector, paid the county treasurer .03%
of the total for the extension of the levy, and .92% of his
collections as a commission. Based upon the amount lev-
ied, 1.46% was deducted for the cost of collection, .032%
for clerk's fees; and 4.78% was uncollectable, making the
**Fairlie, Taxation and Revenue System of Illinois, p. 17.
385] PROPERTY TAXATION 25
theoretical net income to the city 93.728% of the levy. Of
the losses the largest item of 4.78% was diminished a frac-
tion of a percent by the payment of back taxes. Through
back taxes and the extension of the levy specified in the
ordinance, the city received 94.5% of the sum requested.
The same city realized 93.4% of the library taxes levied,
4.18% of the loss being in uncollectable taxes. The amount
of back taxes received was only .01375% of the total levy.
Thus far no reference has been made to the Road and
Bridge tax which by the law of 1883 23 may be assessed in
each township. Under this provision one-half of such
receipts are returned to the cities in the township for the
building and repair of roads. By an act of 1909 24 the
statute was changed so that cities over 20,000 were to re-
ceive all such taxes levied within their boundaries, which
was deemed a more equitable distribution. There has been,
however, some question as to the legality of the change.
In Danville the city was not allowed to come into posses-
sion of the funds ; and Rockford has been sued by the town-
ship highway commissioners for $60,000, which was re-
ceived by the city. In table 30 i/6> a statement of the shares
of the Road and Bridge tax which came to the cities in
1909. Owing to the present legaKsituation, comment would
Rev. Stat. ch. 121, par. 16.
"Laws of 1909, p. 332.
LICENSES AND POLICE FINES.
License charges are legally of two kinds, those relat-
ing to occupations and industries which may be absolutely
prohibited, and those upon industries which only permit
of regulation. A more practical division, however, is made
upon the basis of financial return to the municipality,
liquor licenses being placed first, followed by general
licenses, business licenses and the vehicle tax. It is in
this order that they are discussed.
The power of the legislature to tax the traffic in intoxi-
cating liquors is enumerated in the constitution of the
state 1 and was delegated to municipalities by the general
act of 1872. 2 This act gave to city councils the right to
regulate, license and prohibit the selling of malt, mixed
or fermented liquors, any license not to extend be-
yond the municipal year in which it was granted. It is
further provided that cities must, in licensing, conform
with the general state laws in force.
There are now a number of state statutes, providing
among other things, that the minimum license for a shop
where the aforementioned liquors are sold at retail shall be
f 500 per year, which sum shall be collected in advance for
such periods as the city council may designate. Licenses
for the sale of malt liquors may not be granted for less than
$150 per year. There are no state laws concerning the
wholesale liquor trade. The imposition of a license on these
dealers lies in the discretion of the municipal councils.
'Const, of 1870, Art. 9, par. i.
'Kurd's Revised Statutes, (1908), ch. 24, par. 62, item. 46.
387] LICENSES AND POLICE FINES 27
When a license is required, the penalty for operating with-
out one is a fine of from $50 to $150, the possession of a
government permit being prima facie evidence of the sale.
Any license is subject to revocation should the owner
maintain more than one saloon, or permit disorderly con-
duct or gambling.
The holder of a dramshop license is required to pro-
vide a bond of $3,000 to cover any damages which may
be sustained by reason of his selling intoxicating liquors;
and he may be required to support a person kept in a
state of continual intoxication. The rights of an injured
person, his heir or employer, may be enforced against the
owner of the building in which the offending saloon is
Certain matters of regulation are left to the local
authorities, among which are eligibility for a license, max-
imum cost of the license, distribution of the license money,
periods of payment, limitation of the license district and
restriction of tjhe number of saloons.
Table 31, giving the percentage of total city income re-
ceived from liquor licenses, ranging (in license cities) from
20.7% ir\ Aurora to 41.3% in Streator, shows the import-
ance of such revenues to municipalities. It will be gen-
erally admitted that the presence of saloons is not an un-
mitigated benefit, yet city revenue systems have been con-
structed with a view of large incomes from this source. The
problem of saloon licensing is therefore one of securing the
maximum revenue with the least harmful results.
Table 5 states the number of saloons in each city, pop-
ulation per saloon, license rate, license income per inhab-
itant, periods of license payment, restrictions upon the
saloon district, and upon the number of saloons. It is
usually accepted as true that a high license rate reduces the
number of saloons and increases the amount of revenue.
While this is a reasonable proposition it cannot be proved
by a comparison of the per capita license income in high
and low license cities. That a city has a high license is
indicative that its population is not given to the large sup-
MUNICIPAL REVENUES IN ILLINOIS
port of saloons, and hence the number is automatically lim-
ited. Further, six of the seven cities which charge more
than $500 for a license place an arbitrary restriction upon
the number of licenses issued.
NUMBER OF SALOONS, POPULATION PER SALOON, LICENSE RATE, AND OTHER
DATA RELATIVE TO THE LIQUOR TRAFFIC IN ILLINOIS CITIES, 1909.
Aurora . . .
IOOO pop. 4
Belleville . .
Danville . . .
500 pop. 4
Decatur 1 . . .
E. St. Louis.
33 for 25,000
Freeport . . .
500 pop. 4
250 pop. 4
500 pop. 4
400 pop. 4
Rockford 1 ..
looo pop. 4
'1910 "Dry" during period studied.
'Bond given for last installment.
4 Limit will become operative only when population increases.
No saloons in residence district except those already there.
389] LICENSES AND POLICE FINES 29
Ten of eighteen cities so restrict the number of licenses
issued, eight of these limiting upon the basis of population.
In most cases, however, the number of saloons exceeds the
number the restriction would normally allow, and there
must be a large increase in population before there can be
an increase in liquor shops. In Elgin and Decatur an
arbitrary minimum of saloons was fixed, any increase to
follow an increase in population. In each instance of re-
striction of number, the licenses already issued assume a
monopoly value. Since the municipality has limited its
own income incidental to this, it appears reasonable that
such increment should be turned to the city treasury. An
example of such loss accompanying the limiting of the
number of saloons is found in LaSalle, where the number
was decreased from 66 to 57, involving a shrinkage in
license fees of $4500. A similar decrease in income was ex-
perienced in Rockford, which city actually restricted the
number of saloons to one for each 900 inhabitants; while
Decatur, a city with a similar class of citizens and a similar
attitude toward the liquor question, supports one saloon
for each 600 people. 3 On this basis the former city was los-
ing by restriction of the number of licenses the revenue of
twenty saloons, or $20,000. As the saloons established
were approximately transacting the business which might
be done by twenty more, they should bear the loss incurred
by the city by reason of the monopoly allowed. This would
raise the license rate in Rockford to $1400 per year. 4
More than one-half of the cities studied restrict the
license district to the fire limits or to the business district.
In the others the only check upon location is the usual leg-
islative provision concerning frontage signatures. Saloons
in the residence districts naturally increase the license reve-
nues, but have many objectional features in addition to
necessitating a direct increase in the police force.
'Both cities went "no license" in 1908; have since gone "wet" and
enacted stringent laws regarding the sale of liquor. Rockford in 1912
again reversed its position.
4 Similarily an equitable license rate in Elgin would be $1175; and in
30 MUNICIPAL REVENUES IN ILLINOIS [390
Of fifteen cities two require that the license fee be
paid annually; six, semi-annually ; and the remainder,
quarterly. Under a system by which cities do not receive
interest upon their funds on deposit, there is little object
in requiring that the license payment be made at the be-
ginning of the year. However, the interest upon the con-
siderable sums of license money would amount to several
hundred dollars per year for each city, were licenses paid
at the beginning of the year and interest collectable.
It has been mentioned that the law requires licenses
to be paid for in advance. In Chicago, thru neglect to
enforce this provision, losses were formerly large. 5 Sa-
loons neglected prompt payment, and if going out of busi-
ness paid only a prorata for the time open. In the smaller
cities of the state this is never the case. Of nineteen cities,
sixteen require that the fee be paid strictly in advance; two,
(Ottawa and Rock Island) allow from a few days to a
week of grace, and in only one city (Springfield) were
payments reported seriously in arrears.
Nor do refunds make any considerable inroads into the
sums collected. Five cities reported refunds of saloon
licenses: Rockford, to the amount of $478; Rock Island,
$250; and Peoria, $1083. 6 This last city refunds only in
case of unavoidable accidents, "an act of God". Spring-
field refunds for the same reason; Decatur also refunds;
but in these last two cities the refunded amounts could not
The authority to require other licenses as a means
of revenue is also derived from the constitution. The
legislature is granted the power to tax by general law,
peddlers, auctioneers, brokers, hawkers, merchants, com-
mission merchants, show men, jugglers, inn keepers, and
grocery keepers; toll bridges and ferries; insurance brok-
ers; telegraph and express interests; vendors of patent
Merriam, Municipal Revenues of Chicago, p. 115.
'Includes refunds of taxes.
391] LICENSES AND POLICE FINES 31
medicines; and persons owning and using franchises and
privileges. 7 Such taxation is definitely authorized by law
for purposes of revenue, and hence is not dependent for its
legality upon police powers.
By a series of acts, the legislature has authorized mu-
nicipal licensing of nearly every occupation which par-
takes of a public or quasi-public character, enjoys special
privileges, or requires police supervision. 8 It is imprac-
tical to make an accurate calculation of the value of a
privilege which an occupation may enjoy, but such occu-
pations are the object of an easily imposed and collected
tax. Expediency in taxation is frequently paramount to
absolute justice. In any event the incidence of license
taxes is often shifted to some extent, and in all probability
works no greater injustice than other frequent forms of
By statute cities have acquired the right to license,
regulate and suppress the following occupations and busi-
nesses, 9 wharf boats and tugs used about harbors or
within the jurisdiction of the same; hawkers, peddlers and
pawnbrokers; keepers of ordinaries, theatrical and other
exhibitions, shows and amusements, billiard and pool
tables; bowling alleys; and transient vendors of merchan-
The privilege of peddling merchandise is given to
ex-union soldiers free of charge upon demand and after
presentation of proof of army service; 11 and every farmer,
fruit and vine grower has the right to sell his own pro-
duce where such articles are usually sold without a city
'Const. Art. 9, par. i.
*"Altho a constitution grants to a legislature the power to impose
certain classes of occupational taxes which are enumerated, it may dele-
gate to municipal bodies the power to impose for municipal purposes,
taxes which are not included in the constitutional enumeration." Wiggins
v. Chicago, 6 III. 372.
*The courts have held that the legislature may delegate its power to
the local authorities by general law. See Braun v. Chicago, no III. 190.
Rei>. Stat. ch. 24, par. 62, items 35, 41 et seq.
a lbid ch. 24, par. 651.
32 MUNICIPAL REVENUES IN ILLINOIS [392
license, any ordinance to the contrary notwithstanding. 12
The streets, however, must not be obstructed nor the liquor
laws violated. The licensing of houses of prostitution or
the medical inspection of the same is expressly forbidden.
Municipalities are granted the right to license and to
regulate, but not to suppress, in the following instances,
runners for stages, cars and public houses; wagons and
other vehicles conveying loads within the city, or any par-
ticular class of such wagons and other vehicles, and to
prescribe the width of tire for the same; 13 hackmen, dray-
men, omnibus owners, carters, cabmen, porters, express-
men, and all others employed in like occupations, and to
prescribe their compensation; second-hand 14 and junk
stores, and to forbid them from purchasing and receiving
from minors; auctioneers; distillers and brewers; lumber-
yards, livery stables, public scales, blacksmith shops,
foundries, and brokerage shops. Dogs may be taxed and
restrained. Elevator operators and plumbers may also
be examined and licensed, and an additional license may
be imposed upon plumbing establishments. 15 The license
fee on vehicles when collected must be kept in a separate
fund and used only for paying the cost and expense of
street and alley improvement and repair. 16
Foreign insurance companies are required "upon de-
mand to pay into the treasuries of the cities in which they
have agents, not more than two percent of the gross re-
ceipts upon the insurance in force within the boundaries
of the municipality. 17
Not all of the license income received is turned into the
general treasury of the city collecting it. In municipalities
having more than 50,000 inhabitants the firemen's relief
fund is the recipient of one-half of the fire insurance
"Rev. Stat. ch. 5, par. 23.
"Ibid ch. 24, par. 62, items 43, 96.
"Does not include book stores. Eastman v. Chicago. 79 ///. 178.
"Rev. Stat. ch. 24, par. 62, item 42 et seq.
M For constitutionality see Harder's Fire Proof Storage and Van Co.
v. Chicago. 235 III. 58.
"Rev. Stat. ch. 24, par. 423.
393] LICENSES AND POLICE FINES 33
tax. 18 Also the police pension fund in such cities is made
up in part of three-fourths of the dog tax, three percent
of all other city licenses up to $2500, and the fines from
the violation of the police ordinances. In cities of smaller
size the police pension fund consists in part of three-
fourths of the dog tax, two percent of the saloon licenses
(upon vote of the citizens), ten percent of the city ordin-
ance fines and ten percent of all other licenses, the total
not to amount to more than $2500 in a year. 19
Table 6 is a statement of the total income from all
licenses (except wheel and insurance taxes) for the year
1909 in the cities under consideration ; of this income classi-
fied according to the more important sources; and of the
per capita income excepting that from saloons. Where the
income is not separated into its several sources the informa-
tion was not available. The division of "other licenses"
consists of scattering miscellaneous licenses and the more
important business taxes which are considered later.
The most striking feature of the table is the wide
variation in the percapita income from general licenses
which ranges from as low as four cents per person in
Ottawa, to thirty-five cents in East St. Louis.
The largest of these variations is accounted for by the
collection of business taxes in certain cities, but the vari-
ation among others is sufficient to demonstrate the desira-
bility of systematic licensing and collection.
It is evident that general licenses can be depended
upon to contribute annually from $1000 to $5000 of the
municipal income providing there is a proper system of levy
and collection. Unfortunately no plan has been advanced
to insure payment, other than that of tagging, which can
be employed only in special cases. In frequent instances
the enforcement of certain licenses has been allowed to
lapse entirely. An example of this is the tax on dogs,
which if effectively applied will produce $1000 a year in
cities of even moderate size. In Rockford the tax is author-
"Rev. Stat. ch. 24, par. 382.
"Rez>. Stat. ch. 24, par. 391.
MUNICIPAL REVENUES IN ILLINOIS
TOTAL AND PER CAPITA INCOME FROM LICENSE TAXES, ILLINOIS CITIES, 1909
Aurora . .
E. St. Lo's
'Included in wheel tax.
Absence of data does not necessarily signify that no such tax is
required, but may mean that the amount collected was so small as to be
reported under "other licenses."
395] LICENSES AND POLICE FINES 35
ized, but the ordinance is a "dead letter". Such a condi-
tion is better, however, than the unequal enforcement of
the law in Ottawa, Galesburg, Streator, and more strik-
ingly in Rock Island. Each of these cities except Streator
has a larger population than Freeport, yet no one of them
received an amount from dog taxes equal to half that
collected in the last named city.
On the other hand, an example of a license which is
almost uncollectable is that on hotel "runners" or porters.
Peoria, with its numerous hotels, received three dollars in
1909 from this source. In Rockford no attempt is made to
enforce the licensing ordinance. A license tax of this na-
ture may be classed with those frequently intricate ord-
inances taxing peddlers, hawkers and auctioneers. In
Urbana an ordinance of this kind by a complicated classi-
fication of the goods sold, method of transporting them and
the length of time the permission is to continue, invites
non-enforcement by its complexity.
Table 7 is a compilation of the principal licenses and
the rates imposed in the twenty-four cities under consider-
ation. The field is very wide ; yet from the point of view of
revenue only a few occupations furnish any considerable
income. The most important sources are baggage and ex-
press wagons, billiard and pool halls, druggists, pawn-
brokers, junk and second hand stores, and theatres of all
types. These industries have been long subject to license
taxation, and a review of the city reports shows that
licenses of this kind form the backbone of the license
income. The businesses are permanent; the burden of the
tax can be shifted in most cases only upon the well-to-do ;
and, what is more important, the taxes are easily collect-
able. The remainder of the occupations subject to licensing
are of less permanent character, or of such a nature that
a heavy license would be oppressive. Under such condi-
tions license taxation is most successful if concentrated on
a few occupations where the returns will be productive,
rather than scattered over a varietv of trades at low rates.
MUNICIPAL REVENUES IN ILLINOIS
8 8 c-~ -
8 8 c
10 O to to O to
tOlOtOtOO'OtOO OO Qto
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LICENSES AND POLICE FINES
O O fO O O lr >
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38 MUNICIPAL REVENUES IN ILLINOIS [398
Whether a heavy license should be imposed upon the
baggage and express business is questionable. The in-
dustry makes special use of the city streets, for which
payment may be expected; at the same time it serves as a
refuge for a class of broken down men who frequently earn
only a bare livelihood.
A heavy license tax on billiard and pool tables and
upon bowling alleys is a profitable source of revenue. A
number of cities charge only $5 per table, while in Danville
the tax falls as low as $2.50 per table, the annual income
being only a trifle over $300. Evanston, Joliet and Peoria
charge large sums for the privilege of conducting these
businesses, a practice, which, while it gives a monopoly to
a few places, makes collection easy. Only a quarter of the
cities charge more than $5.00 per table which sum with a
view to revenue is too small.
On bowling alleys the prevailing licenses are $10 and
$15 per alley, altho in Freeport the charge is as low as
$5 per year. Where a charge is made for the business
rather than by the alley, the rates are much lower. In
Evanston such charge is $200, but the next highest rate is
$25, which prevails in three cities. In two other munici-
palities the business rate falls as low as $10.
The druggist license is usually a small fee for permis-
sion to sell liquor, presumably for medicinal purposes, al-
tho this restriction is notoriously violated. The predom-
inating license rates are $15 and $25 dollars per year. In
two instances, however, it is $5.00 and in one case only one
dollar. In Bloomington there is an occupational tax of
FOOTNOTES TO TABLE 7.
f Sale forbidden, but 'Circus bill posters $5.00 per day.
ordinance not enforced. *not now enforced,
n no data. T Fee only.
x taxed under other classification. 'Occupational tax on all pharmacists.
a larger sum for first table, 'Not enforced.
smaller for each add. 10 Any place where milk is sold,
y year. "$2.50 per 100 scale tickets, which
d day. sell for $10.
w week. M Per wagon,
m month. M An initial franchise tax.
J A blank means not taxed. "Grade one.
2 By other than auctioneer. "On city property.
Total business. "$10.00 per wagon additional.
4 Per table unless otherwise designated.
399] LICENSES AND POLICE FINES 39
flO.OO per year upon all pharmacists. On the whole the
drug license is widely used and generally collected, but is
not as large as the nature of the drug business justifies.
Pawn shops, junk and second hand stores form a class
by themselves, the licensing of which is largely a police
measure. Pawn shops require an amount of police super-
vision and the rate of taxation is necessarily high in order
to limit the number. Junk shops are licensed with a
view to police regulation, but the object would perhaps be
better secured by extending the licensing to the wagons
used in collection rather than upon the warehouses, and
there would result an increase of revenue.
Theatres are perhaps the most unevenly taxed busi-
ness of the group, the license rate in cities of the same size
ranging from $25 to $150. The predominant rate is from
$50 to $100, altho six cities charge more than this latter
figure. The moving picture show is highly taxed in most
localities, the business being supposedly profitable and re-
quiring increased fire protection.
Brewers, brewery agents and wholesale liquor dealers
are not as extensively or as heavily levied upon as the
nature of their business would seem to justify. Since
retail liquor dealers are taxed from $500 to $1200, it ap-
pears but reasonable that wholesale dealers should con-
tribute more than $25, as" is the case in Rock Island and
Quincy. Also if a business is of such a nature that it is
taxed $300 per year in one city, it is questionable if it
should be exempt from taxation in others.
Itinerant merchants, licensed, in some cities, from $25
to $100 per month, are in other cities escaping with less
than a reasonable charge. It cannot be said that their
presence promotes a healthy growth of home industries; or
is entirely lacking in the need of police supervision; nor
are they subject to the general property tax. Perhaps in
this instance a much higher license than that which the
municipalities are assessing would be expedient upon the
grounds both of revenue and of public policy.
Milk wagons in all but seven of the cities pay a nom-
40 MUNICIPAL REVENUES IN ILLINOIS [400
inal fee to facilitate inspection. In two instances, Peoria
and Rock Island, the licenses apply to all places where
milk is sold. The usual rate is $5 per year, tho it is as high
as $15 in Alton, and falls to $1 in Freeport and Rockford.
The total revenue is not large, but should be sufficient to
cover the costs of inspections and testing.
The high cigarette license tax is normally imposed with
a view to decreasing the sales. It usually results in giving
a single merchant a cigarette monopoly, as was originally
true in Rockford ; or for several dealers to take out licenses
at a loss, in which case the tax is really one upon the
retail tobacco business. Or a large tax may prevent any
dealer taking a license, in which case the ordinance is
widely violated. This situation was found in both Ottawa
and Rockford. A more reasonable license than that now
imposed in the five cities licensing the sale of cigarettes,
possibly $50 per year, would prevent the indiscriminate
sale by small dealers and grocers, and would materially re-
duce or eliminate evasions of the law by tobacco dealers.
The result would be a $50 tax on the retail tobacco business,
tho it would have the appearance of an optional payment.
In addition to the licenses enumerated in table 7 there
are numerous others which are operative in only a few
cities. A complete list would include striking machines
at $1 and $10 a day in Aurora and Urbana respectively;
ice cream wagons, $5 in Belleville; street cars in several
cities; 20 solicitors for merchants, at $50 in East St. Louis;
mechanical clocks at $2.50 in Aurora ; distilled water deal-
ers, $5 in Evanston; awning manufacturers, $25 in Joliet
and Peoria, or at $10 when more than one person shall be
engaged in the business; keepers of gunpowder, $3 in
Galesburg; and the penny arcades in several municipalities,
either by specific designation or under the classification of
Cities are also permitted to examine and license
plumbers, the fee being $50 for master plumbers, and $1
"See Public Service Privileges, ch. IV.
401] LICENSES AND POLICE FINES 41
for journeymen; and to renew the same annually for $10
and $2 respectively. 21 In Rockford examination and re-
newals returned $481, or $449 net, which "as has always
been the custom was divided equally among the three
members of the board". 22 Electricians pay an annual
license of $5 in Peoria, the total income from this tax being
$501. Aside from these mentioned, and single instances
of a tax on bakers and pharmacists, occupational licensing
has made little progress in the cities of Illinois.
The business of plumbing pays $10 license in Decatur,
Ottawa, LaSalle, Bloornington, and $20 in Moline. Drain
layers are licensed at $10 in Kockford and Peoria.
It is not always easy to distinguish between the ob-
jects of business taxation and general licensing tho it is
desirable to discuss them separately. Certain trades, as
druggists, pawnbrokers, second hand dealers, junk shops,
etc., have been long subject to licensing and by nature
seem to invite public supervision. On the other
hand, other businesses have no special characteristics
which justify licensing and taxation unless such taxes are
imposed on all. Licensing within this group is justified
only by the requirement of revenue, and the desirability
of an easily assessed and collected tax.
The statutes are sufficiently broad to permit the licens-
ing of almost any business which the city authorities may
think necessary, 23 yet the practice of business taxation
has been extended in only a limited radius from East St.
Louis. This city apparently borrowed the practice from
its Missouri namesake. Table 8 is an exhibit of the rates
of business taxes and the total amounts received by each
city from this source for the year 1909. East St. Louis,
Springfield, Belleville, and Alton are the only municipali-
ties receiving a considerable revenue from this source,
"Laws of 1909, p. 132.
"Annual Report of Rockford, 1909, p. 88.
*Rev. Stat. ch. 24, par. 62, item 95 el seg.
MUNICIPAL SEVENTIES IN ILLINOIS
although several other cities license an occasional trade.
The most productive license is that on butcher shops, which
in Alton paid $1988 during 1909. In the same city, livery
stables and lumber yards contributed $125 for each class,
and restaurants $282.
In Belleville the most important of the business taxes
was that upon vendors of provisions, the return being $720.
Vendors of bread, fruit, etc., paid $355 ; real estate brokers
paid $337; and livery stables, $100. In East St. Louis
BUSINESS TAXES, RATES AND TOTAL INCOME, 1909.
Brokers, real estate . .
Fire works, retail....
Fire works, wholesale
Hay and grain
4 Now $25.
403] LICENSES AND POLICE FINES 43
butcher shops paid $5100 ; grocery stores, $4408 ; "vendors
of store goods", $1387; coal and ice dealers, $895; real
estate brokers, $719 ; and hay and grain dealers, $268. The
remaining business licenses in the city produce less than
$250 each. Meat dealers are the most important contrib-
utors to the business tax fund in Springfield, retail dealers
paying $1417, and wholesale dealers $908. Lumber yards
are next in rank, contributing $305 ; restaurants pay $250 ;
lunch rooms, $248; and real estate brokers, $168. The re-
maining businesses pay less than $100 each.
The other cities enumerated in Table 8 cannot be said
to practice business licensing for revenue purposes. In
Evanston only lumber yards are taxed sufficiently to pro-
duce a reasonable revenue, the other business taxes ap-
pearing to be of a regulatory nature. The license of awn-
ing manufacturers in Joliet and Peoria is unimportant,
and the tax on ice wagons is apparently regulatory.
In this connection attention may be called to the $2
tax on restaurants in Evanston ; and a similar license pro-
posed in Urbana. Both of these cities forbid the licensing
of saloons and consequently have found it necessary to
extend police supervision to restaurants to prevent the
illicit sale of liquor.
The four cities which have extensively adopted busi-
ness taxation find it a profitable source of revenue. Its
general introduction, however, would probably meet with
such opposition as to make wide adoption impossible.
A recent amendment to the general incorporation act
for cities provides that municipalities may "direct, license
and control all wagons and other vehicles conveying loads
within the city, or any particular class of such wagons and
other vehicles, and prescribe the width of tires of the same,
the license fee when collected to be kept in a separate fund
and used only for paying the costs and expense of street and
alley repair". 24
"Rev. Stat. (1908), ch. 24, par. 62, item 96.
MUNICIPAL REVENUES IN ILLINOIS
Eight out of the twenty-four cities under discussion
have placed upon vehicle owners part of the cost of repair-
ing streets which are built entirely by the property owners.
Ordinances establishing vehicle licenses meet with con-
siderable opposition and have been considered unfavorably
in at least three cities, Decatur, Rockford and Springfield.
VEHICLE LICENSES, RATES AND TOTAL INCOME, 1909.
* J .n
E. St. Louis'
Evanston . .
1 Driver also licensed.
2 Based upon number of horses and weight of wagon.
"Delivery wagons, $7.50.
4 Six or more passengers.
"Furniture, baggage, and express wagons, $25.
The ordinances which have been passed indicate no uniform-
ity as to what is regarded as a reasonable tax on vehicles.
The minimum is in Moline where the charges are $1 per
horse, with a uniform charge of $7.50 for delivery wagons.
In East St. Louis the minimum charge is $7.50 for one
horse vehicles with an increase of $2.50 for each additional
horse. In Jacksonville the tax is based upon a combina-
tion of the number of horses and weight of the vehicle.
The intention was to charge light delivery wagons $4, and
the maximum weight of vehicles at $3 a year was placed at
405] LICENSES AND POLICE FINES 45
750 pounds. The result was to place most delivery wagons
in the three dollar class. Perhaps such a scheme of gradu-
ating the tax by the weight of the vehicle is commendable
if proportionate depreciation on pavements is to be con-
sidered, but it lacks much in simplicity of collection.
It has been impossible to separate the revenue returns
from the licensing of automobiles from that of other ve-
hicles, tho doubtless the former contribute the larger
share. It is conceded that automobiles cause a considerable
destruction of streets and they have been taxed accord-
ingly. The minimum charge is $5 per car, and the tendency
is to increase the rate to ten dollars for other than runa-
bouts, and one city adds the class of six-passenger cars.
The result of the high charges in Evanston is seen in the
large amount of revenue derived from the vehicle tax.
Perhaps $20 per car would be considered large in the aver-
age city, but it should be remembered that the ownership
of an automobile is, or should be, indicative of an ability to
bear taxation. In addition to the charge on machines,
Evanston examines and licenses automobile drivers, the
examination being made by the commissioner of public
works. The initial charge is $3, the license being renew-
able annually for $1.
The motorcycle license has been adopted by four cities
and is more of a police than a revenue measure, justified
by the large increase in the number of machines and the
public danger arising from their use.
FOREIGN FIRE INSURANCE TAX.
Fire insurance companies which are not incorporated
under the laws of the state of Illinois are required to pay
into the treasuries of the municipalities in which they
operate, not to exceed two percent of the gross receipts
from insurance in force within the city limits. The disposal
of this fund has already been mentioned, and comment
concerning it will be confined to the manner of collection.
46 MUNICIPAL REVENUES IN ILLINOIS [406
Table 10 is a statement of the income of each city
from this source. In this instance, where one would antici-
pate almost uniformity in the percapita collections, there
is a large variation in the income, the lowest being $.017
per person in East St. Louis, and the highest $.11 or six
times that amount, in Peoria.
TOTAL AND PER CAPITA INCOME FROM THE FOREIGN FIRE INSURANCE
City Total Per City Total Per
Amt. Cap. Amt. Cap.
Alton $1488 $.085 Jacksonville ... $1348 $.088
Aurora 1636 .055 Joliet 1984 .057
Belleville 662 .025 LaSalle 739 .064
Bloomington . . 1093 .041 Moline 1415 .58
Champaign 1124 .09 Ottawa 912 .095
Danville 1672 .06 Peoria 7369 .11
Decatur 3102 .10 Quincy 1
E. St. Louis . . . 1200 .017 Rockford 2248 .049
Elgin 1 1 21 .043 Rock Island . . . 1838 .074
Evanston ..... 1472 .059 Springfield 1729 .034
Freeport 1061 .06 Streator 1 159 .081
Galesburg 1579 .069 Urbana 327 .04
*Annual reports for 1907 and 1909 make no mention of this tax. May
be included in "general licenses".
In some instances, as in East St. Louis, city officials
frankly admitted that the collection of the tax had not
been pressed. By special action of the city council in Ot-
tawa in 1909 suit was commenced in the justice court
against fifty-six delinquent companies, resulting in a pay-
ment of $863. Rockford, to facilitate the collection of this
tax, requires that each insurance broker take out an annual
license, the charge being $1. At the time of issuing this
license, an affidavit may be required of the foreign insur-
ance business which the firm has written during the past
From the figures it appears that the normal collection
in each city should fall between four and eight cents per
person, and nearer the latter figure than the former. Yet
407] LICENSES AND POLICE FINES 47
five cities fall below the minimum figure suggested and
seventeen below the maximum. The insurance tax will
furnish one of the largest incidental revenues to which the
cities have access, if means are found to compel its pay-
The police and local courts are not important for their
contribution to city revenues since the maximum in any
city amounts to only 4,12% of the whole, while the average
is about 1%. ( See Table 31) . In Freeport the contribution
of the police department is 4.72% of the whole city income,
while in Moline it falls to .236%. It is rather for its wide
variation of return that this branch of the municipal reve-
nue deserves attention. The public safety is the one de-
partment of city activity where administration is fashioned
after that of a quarter of a century ago and is still beset
with fees, charges, perquisites, and not infrequently ignor-
A prisoner from the moment of his arrest is in the
grasp of a system of charges, a fee for the officer who
makes the detention, a fee for the prosecuting attorney,
costs for the judge and jury, and a fine for the city. And
the more important of these charges are dependent upon
the option of those whose function it is to assess them. In
one municipality a city warrant cannot be secured after
nine o'clock in the morning, if the case is one in which
either a state or city warrant may be issued. A city war-
rant would give the fine to the city ; a state warrant gives
nothing to the city and permits a larger fee to the magis-
trate. If there have been a series of state cases where no
cash fines have accrued, these will be made up by means
of a heavy fine assessed against the next offender who can
pay. 25 The minimum charge assessed in a city case would
"State cases may suffer by the State's attorney receiving fines in the
cases he prosecutes. For example the statutes provide that game wardens
shall receive one-half of the fines in cases apprehended by them. One
State's attorney refused to sanction such a loss to his income with the
result that game law enforcement was at a stand still.
48 MUNICIPAL REVENUES IN ILLINOIS [408
be a $1.00 fine, plus f 1.80 costs. In a state case this would
be $3.05 plus in many cases a minimum attorney's fee of
$5.00. In simpler words, in one city of the state the penalty
of a crime may be magnified four times if the arrest is
made after nine o'clock in the morning. Under such a
system the possibilities of connivance between the magis-
trate and the prosecuting attorney is apparent.
In Quincy, state cases amount to only 7.5% of those
tried; in Rockford they are 20% ; Bloomington 27% ; Rock
Island 37.5% and Moline 45%. It is impossible to believe
that serious crime is six times more prevalent in this latter
city than in Quincy. In one municipality the chief of po-
lice in his attempt to obtain equity for the city by having
as many prisoners as possible fined in the municipal court,
brought upon himself the wrath of the politicians in such
a measure that he gave up the task. To quote his own
words, "I had to come off second best". There are at least
several solutions for this problem, the most practical being
to place the prosecuting attorney upon a salary basis. 26
Tho the fines under this system are still lost to the city,
the surplus over the salary will be turned in to the county
school fund. In Rock Island, in 1908, over $2,000 was se-
cured for education in this fashion. Another remedy in-
volves the more difficult task of taking the police out of
Justices of the peace have long been notorious as
dispensers of justice of a sort which in Chicago brought
upon them the approbrium of "justice shops". These of-
ficers in that city have now been abolished in favor of the
municipal court. The evils of political justices need no
recital, yet one city, East St. Louis, with over ten thousand
arrests per year, retains the system. Each morning the
culprits of the last twenty-four hours are religiously di-
vided among the city magistrate and a half a dozen jus-
tices of the peace. In other cities the city cases tried be-
fore the justices of the peace are almost none, 15 of 1019
in Quincy, 1 of 1507 in Rockford.
"Rev. Stat. Ch. 53, par. 8a.
409] LICENSES AND POLICE FINES 49
A reference to Table 31 in the chapter on Conclusions
will show the proportion of each city's revenues which is
contributed by the police department. This, however, is
scarcely a just method of comparison, since the importance
of smaller sums is lost in the larger ones arising from other
sources. Also, both the opportunities for, and the policy
of, arresting is different in each locality. In "dry" com-
munities persons intoxicated are usually apprehended on
sight, while in others, not until they become decidedly
That the number of saloons directly influences the
number of arrests, and hence the police income, is shown
both by the size of the police forces and the population per
arrest in the different cities. In the five no-license
cities the average number of persons per police officer is
1566 ; for the remaining cities there is an average popula-
tion of 1168 for each officer. Table 13 also indicates that
there is some correlation between the population per sa-
loon and the population per police officer. This relation
holds true in all but a few instances.
While the presence or absence of saloons affects de-
cidedly the number of men required to maintain order, and
may increase the number of arrests in an individual city,
on the whole the influence of the liquor traffic is not as
marked as might be expected, for the reasons already
stated. In cities having one annual arrest to twenty or
more inhabitants, there is a saloon for an average of 413
persons; while in cities making one arrest for less than
twenty inhabitants, there is a saloon for each 350 persons.
While the former group contains five no-license cities, it
also includes LaSalle, which has the largest pro rata of
saloons of any city studied. Frequency of arrest is hardly
a mark of good order in a city, or a criterion of an efficient
police force. A large income from police sources may indi-
cate that undesirable and unlawful businesses are allowed
to play their trades thru the payment of fines as tribute.
Perhaps a more satisfactory method of judging police
revenue would be a comparison of the income per arrest
50 MUNICIPAL REVENUES IN ILLINOIS [410
in the several cities. This sum ranges from nothing in
Joliet and twelve cents in East St. Louis, to $5.51 in Free-
port. The method of collection in East St. Louis has been
commented upon, and furnishes some explanation for so
small a return. On the other hand, Alton, Aurora and
Jacksonville must be excluded for purposes of actual com-
parison since their magistrates are recompensed by salaries
rather than by fees.
Aside from the factors of number of arrests, and pay-
ment of police judges, there remain two others which influ-
ence municipal incomes from police departments, the dis-
position of the cases presented to the magistrates and of
the fees and fines assessed. Owing to the meagerness of
city reports and the lack of accessible records in the police
departments there is a limited amount of information upon
both of these subjects. It has been impossible to obtain
even the number of arrests in LaSalle and Springfield, and
in this latter city the desk sergeant professed complete
ignorance of the number of merchant's police, with whom
his department presumably co-operates.
The disposal of persons arrested as reported in five
cities may be sufficient to show the general tendency and is
as follows :
DISPOSAL OF ARRESTS IN FIVE ILLINOIS CITIES, 1909.
Evanston. Ottawa. Peoria. Quincy. Rockford.
Total No. arrests 734 425 4383 1019 1507
Fines paid in court 410 64 1218 399 338
Cases continued 8 9 1218 9 135
Held to other courts or
grand jury 28 1 1 277 92 106
Settled out of court 22 40 3 155
Discharged on payment of
costs 79 25
Served in jail 22 66 531 173 266
Discharged 158 273 2103 145 542
Otherwise disposed of 7 2 109 173 5
Expressed in relation to the total number of arrests
this table becomes:
411] LICENSES AND POLICE FINES 51
DISPOSAL OF ARRESTS IN ILLINOIS CITIES, BY PERCENTAGES.
Evanston. Ottawa. Peoria. Quincy. Rockford.
City Income per arrest $4.84 $1.40 $1.36 $4.03 $ .82
Total no. of arrests 100% 100% 100% 100% 100%
Fines paid in court 55. 15. 27.8 39.2 22.2
Cases continued .09 2.1 .018 .884 8.95
Held to other courts or
grand jury 3.87 2.6 6.34 9.1 6.7
Settled out of court 3.8 ... .92 .294 10.25
Discharged on payment of
costs 10.8 ... ... 2.45
Served in jail 3.8 15.5 12.1 17. 17.2
Discharged 21. 64.4 48. 14.2 35.8
Otherwise disposed of 955 .02 2.5 17. .035
In Evanston and Quincy the income per arrest is af-
fected in one instance by the presence of a salaried judge
and in the other by heavy automobile speeding fines; but
from the remaining cases it appears that there is no causal
relation between the disposal of cases and income. Ottawa,
which fines only 15% of those arrested receives a per
arrest income of $1.40, while Peoria with almost double
the percentage of fines receives a few cents less.
The most striking feature of the table is the small per-
centage of the cases which yield a return to the municipali-
ties. On an average less than one-third of the arrests are
fined in court, while considerably more than this are dis-
charged, dismissed, have fines suspended, or are disposed
of in a fashion which would indicate that the charges are
not serious or are unsubstantiated. Yet another third
remains within the grasp of the law, but the prosecution
does not bring an income to the city.
Concerning the relation of costs to fines imposed, only
five cities report other than the final amount turned into
the city treasury. No two of these municipalities report
in a fashion sufficiently similar that their reports may
In Aurora the total amount of fines and costs assessed
was |3,732.70 for the year 1909. Of this sum, |288 or 6%
52 MUNICIPAL REVENUES IN ILLINOIS [412
was paid out as witness fees; $1251 or 33% was accounted
for by labor, confinement, suspension of fines, etc., leaving
$2273.30 or 61% to be paid to the city attorney. Reports
of both clerk and treasurer, however, show that only
$1976.45 was received by the city during the year, or 53%
of the amount assessed. Against this the city appropriated
$1124.50 to the police magistrate and $1250 as salary to the
judge of the city court, which sums are about $400 in
excess of the income from police sources.
The amount of fines assessed in Bloomington, for the
year 1909 was $7214.20, of which $3538.50 or 49% was
fines, $2766.70 or 38% was magistrates' costs, and $913 or
13% was police costs. Of the total amount asssessed,
$2805.83 or 39% was not collected or was offset by con-
finement ; $2762.70 or 38% went to the magistrate as fees,
leaving $1645.67 or 23% to the city treasury.
The Eockford report is for a period of six months
only, and shows $3907.30 assessed, of which $2859.50 or
73% was as fines and $1047.80 or 27% was as costs. This
may be compared with 49% and 51% for these respective
items in Bloomington. Of the total amount assessed in
Rockford, $2713.85 or 69.5% went uncollected; $410.40
or 10.5% was collected as costs, while the share of the city
was $783.05 or 20%.
The total amount of fines and costs in Peoria for the
year 1909 was $19,545.40, of which $10,933 or 57% was
accounted for by imprisonment, appeals, outstanding or
suspended fines. The magistrate collected $8612.40 of
which he turned $5052.10 or 26% of the total amount im-
posed into the city treasury. In Streator $2,580.94 was
imposed as fines, of which $1258.46 or 48% was served,
worked out, or dismissed; while $1280.94, or 52% was
It is of interest to note, that with the exception of
the last named city and Aurora, the share of the munici-
palities in the amount imposed did not have a variation of
more than 6% of the total, being 20% in Rockford, 23%
in Bloomington and 26% in Peoria. Yet the sum which
413] . LICENSES AND POLICE FINES 53
was uncollected was extremely variable, 33% in Aurora,
39% in Bloomington, 48% in Streator, 57% in Peoria, and
70% in Rockford.
Thus to the causes already given for the smallness
of city returns from fines, may be added those of laxity
in fining and in the collection of fines by magistrates; in
some cases the rather large stipends which go to the
magistrates in the form of fees; and finally the large
amount of arrests which fail to come within the jurisdic-
tion of the city courts. While the police are for
protection and not for revenue, at the same time cities are
entitled to intelligent annual reports from chiefs of police
and magistrates which will show the disposal of cases, and
the amount of fines and costs, assessed and collected.
MUNICIPAL REVENUES IN ILLINOIS
STATISTICS ON STRENGTH OF POLICE FORCE, NUMBER OF ARRESTS, ETC., 1909.
No. of Arrests
% of Force re-
quired by law
E St. Louis
'$1832 of this is auto fines. Average return from these $22.58.
2 So stated by the Clerk in answer to direct question. No such item
in report of clerk or treasurer. No explanation offered.
8 Salary to Judge.
'See Text, p. 50.
"Estimated from trial cases.
'Salary limited to $600.
GIFTS, GRANTS AND SUBVENTIONS.
The most important item of revenue within the group
of gifts, grants and subventions is the state grants to
schools. For purposes of convenience the data in relation
to school revenues will be considered together. Table 14
is an exhibit of the sums received by the school district or
districts in which the cities named are located. The cities
and the school districts are seldom exactly coextensive;
but the consequent lack of correspondence in the statistics
is neither large nor important.
Each county is paid its proportionate share of the
state school tax, upon the basis of inhabitants under
twenty-one years of age. To this is added a share of the in-
come from the sale of public lands within the state, plus
a portion of the interest on the surplus of national revenue
distributed to the states in 1837. Warrants for the share
of each county in this fund are issued to the county super-
intendents of schools who present them to the county treas-
urers for payment. These warrants are turned over to the
state and apply as cash on the county share of the state
school taxes. The county superintendents distribute the
funds to the superintendents of the school districts.
It is quite possible that the amounts returned to the
cities are not as large as the sums collected in state taxes
for these purposes; but the exact situation could only be
shown by a detailed comparison of city and country wealth
MUNICIPAL REVENUES IN ILLINOIS
REVENUES OF SPECIFIED CITY SCHOOL DISTRICTS.*
$ 82,27 5
$ 87, =503
E. St. Louis
3I3 5 ;
*No data for Danville, Decatur, Evanston, LaSalle, Quincy, and
2 Amount extended.
Income from endowments are found in only four of the
cities considered, and is an inconsiderable sum in all but
one of these. Peoria has such an income of nearly $7000.
The source of these endowments are funds distributed by
the state to the local districts. Only in exceptional in-
stances are these monies preserved intact, the income to be
paid annually to the district entitled to it.
Tuition is in its nature a commercial revenue but is
mentioned here since it is desirable to consider school reve-
417] GIFTS, GRANTS AND SUBVENTIONS 57
niies as an entity. The sums received from this source
range from almost nothing to over $3000 per year, in Rock-
ford. Several school districts receive more than $1000 a
year. The returns are naturally influenced by the presence
or absence of a township high school, altho the tuition re-
ceived from the grammar schools is not unimportant.
The miscellaneous fund of the school districts needs no
comment since it consists of practically the same revenues
as does the similar fund in municipal budgets, rebated
insurance premiums, receipts in error, etc. In addition,
the school districts receive the fines imposed in the county
for violations of other than city ordinances.
GIFTS BY INDIVIDUALS.
Nearly every city receives occasional donations of
money or property of considerable value, usually for some
designated purpose. The gifts for libraries and the reve-
nue from library endowments are noted in chapter V.
During the fiscal year 1909 several municipalities received
gifts for other purposes, or the revenues from gifts of an
earlier date. To Evanston was donated property for park
purposes valued at $20,000, and a play ground valued at
$12,000. Prior to this the city had received a park and
museum valued at $40,000. Jacksonville was given $100
as a special memorial fund; while Aurora received the
income on $6500, to be used towards the establishment of
REVENUES FOB SERVICES RENDERED.
Table 15 is an exhibit of the collections of the several
cities in 1909 from miscellaneous sources. The first col-
umns state the receipts from fees and inspections, tho
the returns lack absolute accuracy owing to frequent con-
RECEIPTS FROM FEES, INSPECTIONS, DEPARTMENT RECEIPTS, CHARGES AND
OTHER MISCELLANEOUS SOURCES, 1909.
Sale of Public
E. St. Louis
3 : >7 c ;
Peoria . . . ,
1 37 1
'Partially included in licenses.
"Services other than for water
rendered by water work dept.
419] REVENUES FROM SERVICES RENDERED 59
fusion with departmental receipts, or inclusion in the mis-
cellaneous fund. The table will, however, indicate the rela-
tively large amounts which may be secured by a systematic
collection of fees, impositions which incur small com-
plaint, yet materially assist in the adequate enforcement
of building ordinances, water charges, etc.
Bloomington, East St. Louis, Evanston, Peoria and
Springfield derive an income from fees which very nearly
equals in amount that secured from general licenses. On
the other hand seven cities fail to avail themselves of this
means of income. 1
Of the cities using fees extensively, Evanston may be
cited as presenting the most effective system. 2
'Some revenue from this source may be included in "miscellaneous
returns" but if so it is of small amount.
'Sewer permits $5.00
Reconstruction and alterations 50
One-half inch taps 5.00
Five-eighths inch tap 6.00
Three-fourths inch tap 8.00
One inch taps 10.00
Alterations $1.00 to 4.00
Electrical construction permits
Sheds and barns
House movers permits
One and one-half story frame 10.00
Two story frame 20.00
Moving in same block 2.00
60 MUNICIPAL REVENUES IN ILLINOIS [420
There is a tendency to make the stipend of certain
offices the amount of fees collected. In such cases, the
total amounts collected are seldom included in the financial
statements of the cities; and these are to that extent in-
Usually in compliance with an ordinance, the holders
of fee offices render an annual report to the city clerk, stat-
ing the amount of the collections, and surplus over the
amount retained as remuneration. Barely, however, do
these reports comply with the constitutional requirement
that they be made semi-annually, and state the amounts
received. 3 Table 16 is a partial list of the fee offices in
some of the larger cities, indicating the extent to which
fees are employed in the payment of officers, and the man-
ner in which reports are made.
FEE OFFICES AND METHOD OF REPORTING.
City. Office Income. Payments. Salary.
Aurora Boiler Inspector No report for these officers in the
Plumbing Inspector annual report. Statement of in-
Oil Inspector spections but not of cash received.
Bloomington . . . Oil Inspector
Weigher No report for these officers in the
Poundmaster annual report of the city.
Ottawa Plumbing Board No report of cash taken in.
Peoria City Collector No report published.
Oil Inspector No report published.
Boiler Inspector $1039 $103 $935
Weights and Measures
Inspector No report published.
Exam. Electrician $ 501 $410 $ 90
Operators $ 117 $ 51 $ 66
Quincy Weights and Measures
Inspector No report.
Joliet City Collector } Extensive report published but no re-
Oil Inspector fport of income.
Rockford Plumbing Board $481 $ 39 $449
'Const, of 1870. Art. 10, par. 13.
421] REVENUES FROM SERVICES RENDERED 61
Income from departmental charges and the sale of
public property is offset by the cost of the services rendered
or by the value of the property disposed of, and does not
directly increase the spending power of the city. Among
the most important charges made are those for openings
in pavements, sale of crushed stone, meters, etc., altering
water and sewer pipes, caring for prisoners of other dis-
tricts; and the sale of junk and obsolete machinery.
Miscellaneous receipts include in some instances fees,
charges, and income from the sale of property, or portions
of these funds. The major proportion of the receipts,
however, consists of the odds and ends of city revenues,
refunded insurance premiums, over-charges returned, cor-
rected errors in the pay rolls, etc. None of these funds are
open to increase except that which might arise from a more
thoro reckoning of accounts receivable.
Fourteen of the twenty-four cities here discussed re-
ceive remuneration in some measure for public service
franchises granted. No municipality taxes all of the fran-
chises in force within it; and in all, only twenty-six fran-
chises out of over one hundred and fifty, or about seventeen
percent, yield payments to the grantors. Of this number,
five are street railway privileges on which the tax is only
from $5.00 to $25.00 per car in continuous operation,
amounting with one exception to only a few hundred dol-
lars per year. East St. Louis, however, receives $1600
from this source.
Nine of the franchise payments are based upon a per-
centage of income, the lowest being one percent of the net
city telephone receipts in Quincy, and the highest, five per-
cent of the gross interurban receipts in Belleville. The
predominant figure, which prevails in seven cases, is two
percent of the gross receipts. In two of these instances it
will become four percent after ten years of operation. Sim-
ilarily, two of the telephone franchises pay on a revenue
62 MUNICIPAL REVENUES IN ILLINOIS [422
basis, that is, one dollar per telephone, which amounts
roughly to five per cent of the gross income.
Some of the utility companies pay a fixed sum ranging
from $500 to $2000 per year. Such payments do not allow
for the growth in value of the franchise and probably are
not as large as would be realized by a percentage tax.
For example, Bloomington (26,000 pop.) receives by a two
percent tax upon the gross receipts of the street railway,
$3400 ; Joliet (35,000 pop.) receives a cash payment of only
$1000. Peoria (67,000 pop.), the largest city of the group,
receives a fixed amount of $500 a year from the telephone
company, a sum which is exceeded in all other cases except
in one city, Alton.
Three municipalities, Aurora, Joliet, and Rockford,
have recognized the importance of franchises as a source of
revenue by each assessing three or more utilities, with a
resulting income of over $3000 to each city. Springfield
receives a similar sum as two percent of the street railway
receipts. The remaining cities have provided for fran-
chise payments in a desultory fashion. Having no
knowledge of what constitutes a reasonable rate and guided
by a desire to increase property values and build up the
city, the greater part of the franchises have been given
away for long terms and almost without payment.
A marked exception to the above statement is Aurora,
which in addition to the annual charges noted in table 17
made the following initial charges for franchises granted :
street railway $30,000 plus $3641 as damages and attor-
ney's fees; gas and electric, $25,000 to a fund for the erec-
tion of a new bridge; and interurban, $25,000. That pub-
lic service corporations can afford to pay as large sums
as these in addition to a proportion of their annual receipts,
for the privilege of operation, is evidence of the reason-
ableness of any franchise payments noted in the following
Under an effective system of legislative regulation, by
which the price of a public utility commodity would be
such as to pay only the cost of production and a reasonable
REVENUES FROM SERVICES RENDERED
RATES, AND INCOME FROM FRANCHISES, 1909.
Basis of Payment
Telephone . . .
St. Railway . .
Telephone . . .
Interurban . . .
St. Railway . .
Interurban . . .
St. Railway . .
St Railway ..
St Railway . .
Telephone . . .
St. Railway ..
Telephone . . .
Gas . ...
i% net city receipts
$1000 per year
$1000 per year
$i per phone
$500 per year
$=; per car. .
Bloomington . .
5% gross receipts
2% gross receipts for 10
years, minimum amount to
be next ten years at 4% . .
$10 per car
E. St. Louis . .
$25 per car
$i per phone
$10 per car
$i per phone
$1000 per year
St. Railway . .
St. Railway . .
Telephone . . .
Interurban . . .
Telephone . . .
St. Railway ..
$1000 per year
$2000 per year
Peoria ... .
$500 per year
Five cents per car entering
2% gross receipts
$20 per car
2% gross receipts 1
2% gross receipts
[$2OOO per year
\2% cross receints
'Not enforced in 1009.
MUNICIPAL REVENUES IN ILLINOIS
TABLE 17. Continued.
RATES, AND INCOME FROM FRANCHISES.
Basis of Payment
St. Railway . .
$10 per car...
2% gross receipts for ten
years ; 4% for second ten
years ; for sewers and
return upon the actual capital invested, any payment for
the privilege of operation would only increase prices to the
consumer. Under the present system in Illinois, except for
a very limited and unscientific control by city councils, the
price of a utility commodity is "all that traffic will bear" :
that is, where the units consumed multiplied by the
margin of profit will give the greatest return; and if the
price is lowered it is because an increased consumption will
more than offset the lower price. Under such methods of
price fixing, anypayment required fojLlhe franchise will
be upon the profits of the company and cannot cause an
In addition to the payments mentioned, some public
service corporations are required to furnish limited free
service to the cities in which they operate. Electric light
companies usually give free light to the city hall, and oc-
casionally to the fire stations. Telephone companies fur-
nish from six to eighteen free instruments and charge for
any number over that stipulated in the franchise. In
addition to paving within their tracks and sprinkling the
right of way, street car companies usually extend free
transportation to numerous city officials. It is difficult to
estimate the value of such services, but they exist in every
municipality, and are perhaps worth from flOO to $500
per year, but have a much greater apparent value.
REVENUES FROM SERVICES RENDERED
Table 18 is a statement of the dates of grant and ex-
piration of the larger proportion of the franchises in force
in the cities under consideration, and from it may be
estimated the possibilities of franchise revenue being se-
cured. Cities renewing franchises are likely to give more
attention to this than when making the original grants.
The inclination to encourage new enterprises by liberal
DATES OF GRANT AND EXPIRATION OF FRANCHISES.
Bloomington . .
Champaign . . .
E. St. Louis
Jacksonville . . .
Rock Island . . .
'Price regulated every 5 years.
'Price regulated every ten years.
'Cancelled franchises for 25 years (1902).
MUNICIPAL REVENUES IN ILLINOIS
TABLE 18. Continued.
DATES OF GRANT AND EXPIRATION OF FRANCHISES.
Bloomington . .
E. St. Louis
Jacksonville . . .
Rock Island . .
terms is instanced by the large number of interurban fran-
chises which have been issued in the last few years, the
majority of which extend for fifty years and are not sub-
ject to any special franchise payment.
Of 178 public utilities operating in 24 cities, data was
secured on the length of franchise in 111 cases. In addi-
tion, 14 plants were municipal ; seven were operating with-
out a franchise, either normally, or pending settlement with
the city; and in five cases only, the date of expiration was
427] REVENUES FROM SERVICES RENDERED 67
not ascertained. Of the 111 franchises, 19 are perpetual,
one is for ninety-nine years; 15 are for fifty years; three,
for forty years ; two are for thirty-five years ; 16 for thirty
years ; 19, for twenty-five years ; one for twenty-three years ;
and 35 are for twenty years.
The statement that nineteen of a possible 111 fran-
chises are perpetual must not go unqualified. In several
instances the franchises do not state the date of termina-
tion and will probably sooner or later be brought into the
courts for interpretation. In at least one instance a gas
franchise granted in perpetuity by the state legislature,
has been challenged by the city in which the plant is oper-
ating. The legal department of the municipality maintains
that the state grant applied only to gas for lighting pur-
poses, and that its transmission for heating is without
legal authority. In consequence an ordinance was passed
regulating the sale of all gas, giving the company the choice
of acceptance or of ceasing to sell for the purpose of heat-
ing and for power. The decision of the case will have an
important bearing upon the remaining legislative fran-
It is in relation to gas franchises that the interests of
the municipalities have suffered most. Of 24 cases, eight
franchises are perpetual ; one is for 99 years, four for fifty
years, and two others are for forty years. Five franchises
are for a reasonable term, and in four instances data is
missing. The telephone industry is a close second in this
way, for out of fifteen "trust" franchises, five are perpetual.
Also, in certain cities there is an inclination to grant
franchises for long terms. In Joliet, five out of six utilities
may operate for fifty years, for which permission is paid
$2000 annually, plus a percentage of receipts, which last
year amounted to $1317. Aurora has two fifty year fran-
chises granted as recently as 1908. Several cities have
fifty year franchises granted since 1904, one of them (in
Ottawa) cancelling a franchise for a shorter term to give
the longer one.
68 MUNICIPAL REVENUES IN ILLINOIS [428
The cities which have not qualified their franchises
with provisions for payments will have an opportunity to
do so within the reasonably near future. Out of 96 fran-
chises to expire, 24 will end before 1921; during the next
decade 38 of the remainder will terminate; from 1930 to
1940, 15 will be terminated; from 1940 to 1950, six. The
13 remaining franchises in operation, extend beyond the
middle of the century. This number, considered with the
nineteen perpetual franchises, places fifteen percent be-
yond the reasonable control of the municipalities.
Items of revenue from minor public privileges, bay-
windows, sub-sidewalks, etc., are absent from the budgets
of the smaller cities. The revenue from the use of city
streets and alleys has been spoken of in the consideration
of the income from the use of public property.
Special assessments are not in the usual sense city
revenues since they are raised for a specific purpose and are
kept separate from the general fund in the city treasury.
They do, however, form an important part of the aggre-
gate financial transactions of the municipalities ; and their
extent and significance should be noted.
A thoro consideration of special assessments would
require an extensive study both of amounts expended and
purchases, as well as the amounts delinquent, methods of
assessment, interest, cost of collection, etc., matters which
can only be mentioned here.
Pursuant to the constitution 4 the assembly has passed
a series of acts permitting improvements by special assess-
ment or special taxation to comprehend the following sub-
jects: bridges, viaducts, water reservoirs and works,
hydrants, water mains, drains, pumping stations, parks,
boulevards, streets, alleys, and other public places. All
or part of the cost is assessed upon the property benefitted
in proportion to the benefit received, the residue of the cost
*Const. of 1870. Art. 9, par. 9.
429] REVENUES PROM SERVICES RENDERED 69
being raised by uniform taxation. 5 The further restric-
tions are that the purpose be public; that the apportion-
ment be in accordance with some general rule; and that
no assessment be levied for repairs, since they contain no
element of permanency, with the exception that repair
assessments are permitted on drains, ditches, and levees. 6
The determination of the basis for apportioning the
cost of such improvements is left to the city, and the courts
are reluctant to inquire into the equity of the decision.
The more usual schemes of assessment are based upon
superficial area, actual value of the property, and frontage,
the preference being with the latter method. In street pav-
ing if the corner lots face the paved street the narrow
way, no assessments is made upon the lots fronting upon
the side streets; otherwise the first three lots on the side
street usually are assessed sixty percent, forty percent,
and twenty percent of what would be the normal cost of
paving in front of them. These percentages vary slightly
in different localities.
The proportion of the cost borne by the municipality I
differs widely in the construction of sewers and other I
works, the determination of the public benefit being left tolf
the boards of local improvement. In the building of streets*
it is customary for the city to assume the cost of the inter-
sections. The percentages of the total cost borne in sev-
eral cities ranges from 11.3% to 20%, depending upon
the nature of the improvements. The intersection rule re-
garding streets places about 14.3% of the cost upon the city
In the process of local assessment the most prominent
part is played by the board of local improvement, a board
whose technical officers are always the superintendent of
streets and the city engineer. The ordinances to improve
by special assessment or taxation originate in this body,
either by petition or upon their own initiative. Public
'Chicago v. Larried, 34 111. 203, 282.
'Crane v. West Chicago Park Commissioners, 153 III. 348.
70 MUNICIPAL REVENUES IN ILLINOIS [430
hearings are held upon any contemplated action, except
the laying of house drains, sewer service pipes and side-
walks, which hearings consider the necessity, character,
and cost of the improvement. Except in cities of over
100,000 population remonstrance petitions may be filed
within thirty days suspending action for one year. The
ordinance of improvement with estimated cost is then
passed. Apportionment of the cost is made and the as-
sessment roll drawn up, the latter being open to court re-
views and revision. Supplementary assessments may be
levied if the original sum is insufficient, provided that if
the increase is more than ten percent the entire process of
assessment must be repeated.
The collection of assessments is in the hands of the
city collector until March 10th. He has no power to en-
force payment; and the collection of delinquent sums is
assumed by the county treasurer. After preliminary no-
tices, these delinquencies are collected in substantially the
same manner as delinquent property taxes, already de-
Contrary to what might be anticipated with taxes of
this nature, the amount returned to County Collector for
collection is considerably less proportionately than is the
case with property taxes. For example in LaSalle only
12.4% of the total was returned to the county collector;
in Peoria, 19.6%; Bloomington, 28.8%; and in Evanston,
The difficulties met in correlating the assessment to
the actual cost of the improvement is apparent, and in con-
sequence in practically every instance rebates are paid or
new assessments are levied. The matter of rebating is of
easy solution since the actual cost of the construction is
known before even a few installments are paid, and any
rebate may be prorated on future installments. 7 This
naturally involves increased clerical cost. Deficits in the
'In Evanston the rebates on thirteen assessment funds were 3.5% ;
2.8%; 6%; 11%; 11.5%; 10% ; 25%; 30%; 14%; 14%; 24% and
20%. The largest percentages were upon sewer constructions.
431] REVENUES FROM SERVICES RENDERED 71
fund are more serious and may be either the result of
underestimates or of uncollected payments. In Freeport
the liabilities are $38,552 in excess of the special assess-
ment assets, or 13.3% of the total. The Mayor of Peoria
in an annual address to the city council 8 remarked that the
"amount of improvement bonds outstanding is many
thousands of dollars in excess of special assessments re-
The extensive precautions taken to protect the rights
of the property owner have been mentioned, and these safe-
guards add a considerable cost to the assessment work. In
Urbana, newspaper advertisements costs $75 for each job,
in addition to the printed notices sent to each person con-
cerned. By statute the preliminary expense is limited to
six percent of the total, and this allowance is entirely con-
sumed in the smaller constructions. In cases involving
larger amounts these preliminary expenses fall to three or
four percent. An example of the costs involved in extend-
ing assessments may be taken from the collection returns in
Evanston. Of $126,144 expended, bonds, coupons, war-
rants, and miscellaneous funds took $122,446, or 97%. Re-
bates amounted to $1,061, or .08%, while the expenses in-
cidental to collection, etc., took $2,618, or 2.2%.
The surest criteria of the extent to which special as-
sessments are used would be the amounts of improved
streets, sewers and other public constructions in each city.
Unfortunately not all city engineers are familiar with the
total amounts of these works in their municipalities so a
complete comparison is impossible. Of eight cities, how-
ever, the largest proportion of paved streets was in Free-
port, being 45.3% of the total; Springfield followed with
45% ; and Rockford with 44%. The smallest percent is
in Galesburg which has only 21.4% improved; the next
lowest being Decatur with 28.7% improved.
Regarding sewer construction, Danville has one mile
for every 490 inhabitants, Bloomington and Freeport fol-
"E. N. Woodruff, in the City Comptroller's Report, 1909.
72 MUNICIPAL REVENUES IN ILLINOIS [432
lowing with 500 and 515 persons per mile. The largest
population per mile is in East St. Louis, which city has
1310 persons for each mile of sewer. In the larger cities,
however, there is a tendency to have fewer sewers in pro-
portion to the population, as the per mile population in
Springfield is 850, in Rockford is 835, and in Gales-
The contractor for special assessment work receives
as payment bonds payable in five or ten annual install-
ments (thirty in the case of water works), bearing interest
at 5%. Such bonds are not a lien upon the city, but upon
the property of the individual, altho the municipality
undertakes and guarantees the collection. The amount of
bonds outstanding in the cities, would, however, fail to
indicate the extent to which assessments are used since
the amount is decreased by one-tenth each year, and the
constructions doubtless have a longer life than this period.
This statements is supported by a comparison of the per
capita special assessment bond indebtedness in a few cities.
Aurora has such per capita indebtedness of $5.35 ; Decatur
of $3.00; Elgin, $6.40; Freeport, $14.70; LaSalle, $4.00;
and Peoria, $6.30, a considerable variation compared
with the paved streets to total streets, which range from
20% to 40%.
For the same reason the amount of cash collected each
year to retire bonds, or the amount of bonds issued, is a
false indication of the importance of assessments in mu-
nicipal finance, the latter sum even more so than the
former, since the amount of construction work fluctuates,
widely from season to season.
MUNICIPAL INDUSTRIES AND PROPERTY.
Judged by the gross revenue received, municipal in-
dustries rank third in importance as sources of municipal
income. But the gross income from such sources is largely
if not wholly absorbed by the expenses, and in most of the
cities under review municipal industries are conducted at
a loss. The net income from such sources and its per-
centage of the total revenue for general purposes, as shown
in the concluding chapter, is of small importance.
By municipal industries are meant those undertak-
ings which involve the distribution of economic goods
for a price, thus excluding such functions as police, fire
protection, and schools, all of which are contemplated if
not distinctly recognized in the present state constitution.
There is no distinct constitutional provision authorizing
municipal industries; and most undertakings are of later
origin than the present state constitution, resting on legis-
lative grants under the residual powers of government.
The municipal industries conducted by the cities
studied are of three main classes: water works, electric
light plants and cemeteries. Water works and cemeteries
may produce a net revenue. Electric light plants in the
cities studied have no income, as they are used only for
public lighting. But they are considered here because of
their close relation with the operation of municipal water
works, of which they are usually a part.
Some incidental income is also derived from libraries,
hospitals, sewers, real estate and other property.
Legislative enactments of 1873 and 1879 1 authorized
the establishment of municipal sewers and water works,
tho both of these might have been constructed under the
Curd's Revised Statutes (1908), ch. 24, pars. 254 and 323.
74 MUNICIPAL REVENUES IN ILLINOIS [434
police powers of the cities. 2 Earlier legislation relative to
waterworks provided for the lease of plants, and for mak-
ing contracts for a supply of water from private firms for
a period of not more than thirty years. In case of leasing
any surplus over the cost of operation might be applied to
the erection and extension of a municipal plant. An
act of 1905 3 provides that plants may be bought or erected
upon a favorable three-fourths vote of the citizens, a
direct tax of not more than one percent defraying the cost.
Bonds may be issued against these taxes bearing interest at
six percent. The water rates must be sufficient to provide
for payment of the bonds, interest, maintenance and opera-
tion of the works, extensions and repairs. Thus Illinois has
gone far in the protection of the taxpayer from impositions
in the interest of the water consumer. There are no good
reasons for, and many against paying for extensions from
the water rates. These should be charged to capital ac-
count, and made neither a burden upon the tax payer, nor
upon the present consumer.
Should the preceding provisions prove inadequate to
public need, there are other provisions which authorize a
one mill tax for the extension of mains, maintenance of
plant, or for refunding debt. 4 By a two-thirds vote, this
tax may be advanced to three mills. Cities when buying
plants may also pledge the revenues as security for the
bonds issued, and may execute a mortgage or trust deed for
the property. 5 In case of reversion to the original owner,
any franchise rights pre-existing become operative.
Of the twenty-four cities which were investigated,
fourteen have availed themselves of the privilege of estab-
lishing water plants; and data concerning the operation
has been secured from thirteen of these.
In table 22 is shown the amount of money derived an-
nually from water rents in the several cities; but such
*Goodnow, "City Government in the United States", p. 165.
*Rev. Stat. ch. 24, par. 27oh-q.
*Ibid. ch. 24, par. 281.
'Ibid. ch. 24, par. 2;od.
435] MUNICIPAL INDUSTRIES AND PROPERTY 75
revenue should be offset by the operating expenses, interest
on the value of the plant and depreciation allowances.
When this has been done the revenue usually becomes a
deficit, which sooner or later, must be made up from the
general fund of the city, by the,issue of bonds or by taxes.
This deficit may be considered the amount which the
municipality contributes in payment for the water pumped
for public buildings, and as rental for fire hydrants. Such
accounting contemplates the city water plant operated as
a separate and distinct institution, earning its own way in-
dependently of the city treasury, charging the water con-
sumer for his benefits, and the tax payer for the benefits
rendered to the city at large.
It is sometimes assumed that the water consumer and
the taxpayer are identical, and that the separation of the
two for a study of water revenues is unnecessary. Such
is not the case, nor can a practice followed uniformly by
public utility commissions be renounced by such argument.
There is ample evidence that not all urban inhabitants are
direct water consumers. Not only are there sparsely set-
tled sections which are not reached by the water mains,
but limited sections of the more densely parts are not
served. If we may estimate that five persons ( the ordinary
family) are served by each water service, then in Rockford,
35,000 out of a population of 42,000 are water consumers;
in Bloomington, 10,000 of 26,000, etc. Roughly, twenty
percent of the people receive benefit from water works,
who do not contribute to their support by domestic con-
sumption. But should it appear that the tax payer and
the water consumer become largely the same persons, this
fact does not justify an unbusiness like management of
The Wisconsin Railroad Commission has a system for
the separation of the cost of the public from the domestic
service which is preferable to one based on the above men-
tioned distinction. 6 Each water plant has an investment
'Wisconsin Railroad Commission. Pub. U. 52. (City of Ashland v.
Ashland Water Company.) 295.
76 ' MUNICIPAL REVENUES IN ILLINOIS [436
above that required for domestic purposes, which is occas-
ioned by the necessity of fire protection and other public
needs. The commission therefore divides the investment
for these two purposes, and upon this basis estimates the
cost of depreciation, interest and maintenance chargeable
to each. While this is of course the correct method its
use is only possible by means of a detailed engineering valu-
ation. However, it is not here the purpose to determine
the equitable charges for the taxpayers and water con-
sumers of Illinois cities, but rather to compare the different-
costs of operation, and to point out in certain cases mat-
ters which are worthy of explanation or investigation by
the individual superintendents.
It may be necessary to defend the view that a munici-
pal water plant should earn a reasonable rate of interest
upon the amount invested. If, however, we are willing to
divorce the personality of the water consumer from the
taxpayer, the justice of such a demand is apparent. While
the value of the plant is represented by bonds, the necessity
of the plant earning interest upon these bonds will hardly
be questioned. When such bonds have been refunded, or
have been retired through the exercise of the taxing power,
it would seem that a sum equal to the original interest
should still be turned into the city treasury, in one case
to pay the interest on the new bonds ; in the other to recom-
pense the tax payers for the use of the funds. It may be
argued that the state law already mentioned requires that
the erection bonds be retired from the earnings of the
plant. One looks in vain, how r ever, either for any author-
ity to put such a requirement into effect, or for evidence
of its enforcement, as exhibited by a statement of municipal
The major proportion of municipal bonds are out-
standing at from four percent to four and one-half percent
interest. 7 Four percent has been taken as reasonable for
a plant to earn, without regard to the rate in any particular
T See Table 29.
437] MUNICIPAL INDUSTRIES AND PROPERTY 77
city. Such a rate is conservative, and makes some allow-
ance for the uniformly excessive valuation of the proper-
The necessity of charging depreciation against a plant
is more apparent, and only one instance will be presented
as evidence. Springfield found itself at the beginning of
1909 with a badly delapidated plant, capable of maintain-
ing at times only twenty pounds of pressure. Repairs and
renewals were badly needed, but since the city had reached
the debt limit no bonds could be issued; and since no de-
preciation fund had been maintained the money must first
be earned by the plant itself. The results of such methods
are wasteful operation, high charges and poor service. The
estimated life of four municipal water plants in Wisconsin
was 65.25 years or a depreciation of something less than
two percent per year. 8 This latter rate might be assumed
*The calculations of the lives of the various units of utility equipment,
upon which this estimate was based, were kindly furnished by Mr. Edwin
F. Gruhl, Statistician for the Railroad Commission of Wisconsin, and are
as follows :
Wells, driven or drilled roo years.
Wells, large open, stone or brick walled 50-100 "
Suction pipes and intakes 50-100 "
Stand pipes 50- 75 "
Reservoirs 75-100 "
Filter beds 100
Cast iron mains, fittings, valves 100 "
Hydrants 50 "
Wrought iron mains, services
galvanized 50 "
black 35-40 "
Services, lead 100 "
Fittings and valves in service given a life as in pipe lines in which
Meters 25 "
Using lives similar to these, the average rates of depreciation for
entire waterworks systems were computed as follows :
Antigo Water Works 60.03 years.
Manitowoc Water Works 66.16 "
Superior Water, Light and Power Co 67.29 "
Chippewa Falls Water Works and Light Co 67.60 "
Average 65.25 "
78 MUNICIPAL REVENUES IN ILLINOIS [438
were the depreciation fund to lie idle and earn no interest.
In private plants depreciation funds may be reckoned as
earning 4% compound interest. In the case of public
plants the funds will possibly be idle, or even more prob-
ably spent. In this latter case we may assume that the
fund becomes a debt of the city and is worth at least four
percent simple interest. The rate of depreciation may then
be said to lie between one-half percent and two percent of
the depreciable value, and by depreciable value is meant
the cash value, less real estate, paving, services where paid
for by the consumer, and extensions made during the cur-
rent year. The mean figure of one percent is usually al-
lowed by engineers as a reasonable depreciation upon this
value. Tho this latter amount cannot be known for the
plants here in question, we will assume that this depre-
ciation applies to the total value.
In the following table is shown for thirteen cities, the
estimated value of the plant, interest, depreciation and
cost of operation, making a total of all costs; and the ex-
cess of this sum over the revenue received, which may be
taken as the amount paid by the city for the public service
of the plant. In the last column this deficit is shown as
cost per hydrant. In the second table is presented the
average daily pumpage of each city ; the total cost (interest,
depreciation and operation) for pumping each million
gallons; the actual cash income from water rents for each
million gallons ; and the actual cost of operation per million
These tables are self-explantory and carry in some de-
gree their own criticism. While it is unfair to criticise the
administration of any particular city because of high cost
of operation, since the conditions of operation in different
cities are decidedly different, yet taken as a whole the
tables may indicate the general tendencies of municipal
It will be noticed that three of the thirteen cities,
Decatur, Evanston and Springfield, are operating water
works with a distinct surplus above a liberal estimate for
MUNICIPAL INDUSTRIES AND PROPERTY
all expenses. In such instances the consumer is not only
paying for his own water, and for the service to the city,
but is turning considerable profit into the city treasury.
In Springfield the conditions make such results necessary,
for reasons already stated; but in the two other munici-
palities, it appears that the water rates might reasonably
On the other hand, two cities, Joliet and LaSalle, are
evidently operating their plants at a loss. The public
STATISTICS OF MUNICIPAL WATER PLANTS AND COST PER HYDRANT IN
ILLINOIS CITIES, 1909.
Cost per Hydrant
Decatur . . .
Evanston . . .
Galesburg . .
I I,OO2 4
Rock ford . .
'Actually used by water plant.
*It is estimated that $850,000 of the banded debt of the city is
chargeable to the water works. The interest is at 3 l /2%.
4 8 mo. -f- pay roll for 4 mo.
To be accurate an estimate of the taxes should be included in this
cost. Owing to the different rates of assessment and taxation, the item
of taxes is omitted.
"Surplus of income over all costs.
MUNICIPAL REVENUES IN ILLINOIS
STATISTICS RELATIVE TO COST OF OPERATION PER MILLION GALLONS PUMPED
BY MUNICIPAL WATER PLANTS.
Total Cost per
Cost of Operation
per Million Gals.
Average per Cap.
Rock Island ....
*Of the water revenue is from metered services.
2 Of the services are metered.
3 Supplies a suburb at a flat rate.
cost of maintaining hydrants in these corporations is esti-
mated at $96.73 and $115.26 respectively, which based upon
the rates charged by private plants is excessive. The aver-
age rate charged by water companies in seven cities of the
state (without reference to the number of hydrants in each
city) is $47.66, 9 the range being from $25 in Peoria to
"Alton 276 hydrants @ $50.00
Champaign 172 @ 40.00
Danville 440 " @ 40.00
Freeport 190 " @ 50.00
E. St. Louis 125 " @ 80.00
150 " @ 70.00
Peoria 1000 " @ 41.60
113 " @ 25.00
Streator 1 12 " @ 45.00
161 @ 50.00
441] MUNICIPAL INDUSTRIES AND PROPERTY 81
in East St. Louis. The normal rate is between
and $50 per hydrant. The unweighted average cost per
hydrant in the ten municipal plants not operating at a
profit is $44.97, while in most of the cities the cost is
between $15 and $33. A more exact statement would be to
say that the whole public service, cost this much per
hydrant, since no allowance has been made for water con-
sumed for other public purposes.
If two cities are operating municipal plants to their
direct financial detriment, to what causes may this loss be
ascribed? In both Joliet and LaSalle the amount of water
pumped is large for the amount of capital invested, so ex-
cessive interest and depreciation charges may not be ad-
vanced as reasons. The two remaining factors which
influence the charge to the municipality are the cost of
operation and amount of income from water rents. In
both cases under consideration the former charges are low,
being $21.12 per million gallons in Joliet, and $16.80 per
million gallons in LaSalle. At the same time, the amounts
received for water in these cities are relatively small com-
pared with the sums received in neighboring municipalities,
being under $20.00 per million gallons in both instances.
Since the loss can neither be ascribed to the fixed charges
nor extravagant operation, it follows that the rates charged
in these cities are too small for successful operation of the
plants. In these two instances the water consumer is
profiting decidedly at the expense of the tax payer.
In other instances the reverse is true. For example,
Aurora receives $69.00 per million gallons pumped; De-
catur, $92.00; Ottawa, $65.00; an Springfield, $72.00;
while the incomes of several other cities ranges above $50.00
per million gallons. In all of the above mentioned cities
except one (Ottawa), the cities are receiving fire protection
free, or at a cost of less than $17.00 per hydrant ; and this
in spite of the fact that two of the municipalities (Aurora
and Bloomington) have high operating costs. Under such
conditions the taxpayer profits at the expense of the water
82 MUNICIPAL REVENUES IN ILLINOIS [442
It has been mentioned that in two cities the cost of
operation was high compared with the other plants of the
state. Conditions of operation vary widely in different
localities, and it is unfair to make a hurried judgment
concerning the efficiency of management in any particular
city. We may, however, compare the cost of operation in
the municipal plants of the state with similar items of
typical private plants. The operating expenses per mil-
lion gallons for nine private plants in Wisconsin, were
during recent years, as follows : Appleton, $36.73 ; Beloit,
$23.35; Eau Claire, $18.24; Fond du Lac, $20.31; Green
Bay, $48.79; and Sheboygan, $24.74. An average for the
nine plants is $29.78 or allowing for pump slip (which
was done in the figures for municipal plants) is $33.08. 10
The average cost of operation per million gallons for
thirteen municipal plants in Illinois is $27.38 per million,
and eight of the number fall considerably below this figure.
This would seem to indicate that municipally operated
plants compare successfully with those in private hands.
It must be remembered, however, that municipal plants
pump large quantities of free water, and frequently have
unmetered service, in which events the favorable showing
of public plants might be accounted for by the law of
decreasing costs, with cheapened increased production,
rather than thru any retrenchment or economical adminis-
tration by public officials. Caution would commend this
The situation may be further analyzed by comparing
the ratio of operating expenses to revenues in public and
private plants. In Wisconsin private plants are allowed to
earn operating expenses, plus a reasonable profit, and
depreciation. The "total of all costs" shown in table 21
represents the same earnings for municipal plants. For
ten private plants the percentages in 1908 were: 11
M R. R. Com. of Wis., supra cit., 283.
"Supra cit. p. 282.
443] MUNICIPAL INDUSTRIES AND PROPERTY 83
RATIO OF OPERATING COSTS TO RECEIPTS IN PRIVATE WATER PLANTS.
Appleton Water Works Co 63.04%
Beloit Water, Gas & Electric Co 41.01
Eau Claire Water Co 38.04
Fond du Lac Water Co 33.69
Green Bay Water Co 42.73
Janesville Water Co 47.40
Manitowoc Water Co 46.99
Marinette City Water Co 34.57
Sheboygan City Water Co 27.34
For thirteen municipal plants in Illinois the ratio of
operating costs to revenue and to "total of all costs" is :
RATIO OF OPERATING COSTS TO RECEIPTS AND "TOTAL OF ALL COSTS"
IN MUNICIPAL WATER PLANTS.
City. Revenue "Total of all Costs."
Aurora 57-8% 52.1%
Bloomington 740 59.2
Decatur 46.7 55.4
Elgin 46.4 40.0
Evanston 29.7 48.3
Galesburg 79.1 58.0
Jacksonville 66.5 49.4
Joliet 109.2 54.0
LaSalle 97.5 53.0
Ottawa 56.0 40.5
Rockford 49.5 43.0
Rock Island 41.7 38.4
Springfield 44,1 59.6
Average 61.3 50.2
From these two tables it appears that one city is
operating its water works at a net loss, another within
2.5% of its income, and seven spend more than one-half
of their income for operating expenses. Either the oper-
ating expenses of municipal plants are too high or the
charges for water are too low. The second column of the
second table shows operating expenses in relation to the
"total of all costs". A liberal allowance has been made
84 MUNICIPAL REVENUES IN ILLINOIS [444
for interest and depreciation, yet the percent for operation,
with one exception, is higher than the average for private
plants. On the average the ratio is ten percent higher.
While these figures are not favorable to, they are not an
arraignment of municipal ownership. As counter argument
it may be advanced that low rates are accompanied by lib-
eral use of water, which is a matter of city policy and not
of plant management.
Meter or fixture rates have a decided influence upon
the net revenues of a water plant. A metered plant may
operate at a loss thru extravagance or low rates; a fix-
ture plant has the handicap of wasted water in every case.
In table 20 is stated the per capita daily water consump-
tion of the cities under consideration. The metered plants
have an average daily consumption of 69 gallons per per-
son, while the average for the remainder is almost double
or 132 gallons. The purpose of the meter is not to require
excessive payment, but to regulate the consumption of
water. In fact, in Springfield, the consumer saved from
25% to 50% by the adoption of meters. 12 The sudden
adoption of meters, because of the large decrease in con-
sumption means a temporary dimunition of the city in-
come until the saved water is purchased by new users. The
saving in the cost of operation, however, is noticeable from
the beginning. In Elgin with only one-half of the taps
metered, the saving in one year (1907-08) was $6,000, the
annual pumpage being reduced 50,000,000 gallons. The
wasted water is paid for, not in proportion to what is
wasted by the individual, but in proportion to what is
wasted on the average. It is only equitable that each con-
sumer should pay upon a graduated scale for the water
which he consumes, plus a fixed charge for booking, re-
pairing, cost of meters, meter reading, and other inci-
"Springfield, 111. Annual Report of Water Works, 1910, p. 7. In
this excellent report upon a rather inadequate plant, Mr. Willis J. Spauld-
ing presents some very reasonable arguments for metered service and for
the payment of extensions by the property frontage owner.
445] MUNICIPAL INDUSTRIES AND PROPERTY 85
A further immense loss to commercial revenues is due
to the loss of water by leakage. An investigation of the
municipal plant at Madison, Wis., showed that only
45 % of the water pumped reached the consumer. A very
conservative estimate for the city of Springfield was that
22% of the pumpage was being lost. The estimated life of
water pipes is one hundred years. In heavy soils mains
may last longer than this; but in light or stony ground, or
where there is action by electrolysis, the duration cannot
be estimated. Perhaps several municipalities which are
contemplating new wells and enlarged plants to supply the
demand for water, might find it cheaper to rent a pitometer
and investigate the conditions of mains lying parallel to
street car tracks, or which have been long in the ground.
In connection with water mains a word may be added
concerning the extension of the distributing system. It
has been urged that the cost of laying new pipes be charged
to frontage by special assessment rather than paying it
from the water fund or from general taxes. Nearly one-
half the cities mentioned here have adopted this method in
whole or in part, altho many miles of mains have been pre-
viously laid out of the water fund.
Under the water fund plan of extensions there is a con-
stant rivalry of different sections of the city to secure
water services. Since the funds are limited, favoritism
and ill feeling may be expected, combined with an absolute
restriction upon the growth of the city. Moreover, when
pipes are laid in sparsely settled districts, there is a distinct
rise in property values to which the owner has contributed
nothing, the water consumer bearing the cost. Under the
old system the consumer, in the end, not only paid for his
own frontage, but also for the frontage of the vacant
property owner. The change to the special assessment
method would mean that the consumer would pay for his
own frontage in a lump sum, and be relieved from paying
the cost of his neighbor's improvement.
MUNICIPAL REVENUES IN ILLINOIS
Municipal lighting plants in Illinois yield no direct
revenue to the city treasury, since they are not permitted
to undertake commercial lighting; yet they should be con-
sidered owing to their close relation to municipal water
plants. In all the cases of public lighting systems con-
sidered the lighting plants are a part of the water works,
and are charged a fixed proportion of the costs of operation.
An act of the legislature of 1883 13 permits cities to
levy a three mill tax to be used exclusively for the purpose
of lighting streets. Under this act, six cities do their
own public lighting, a statement of their costs being pre-
sented in table 23.
STATISTICS RELATIVE TO COST OF OPERATION IN MUNICIPAL LIGHTING
+ J C
T- > *"*
v > ^
T 7 " ^^
*fO^-" v 'J
* / >**;#*
* - *T>*';y *
TO.! 1 !
jj x '
/ <J V
'$5842 for seven months.
2 Is rapidly increasing number to a maximum of 700.
The matter of interest on the value of public plants
has been previously discussed, the rate taken being four
percent. The rate of depreciation is much higher in elec-
tric plants than in water works. From data furnished by
the Railroad Commission of Wisconsin the average life of
"Rev. Stat. (1908), ch. 24, par. 281.
447] MUNICIPAL INDUSTRIES AND PROPERTY 87
a complete electric light plant has been estimated at 17.46
years. 14 In municipal plants, maintaining only an arc
system, the average life would be a trifle longer. The Wis-
consin Commission estimate, in the case of the Menominee
and Marinette Light and Water Co., was 19.72 years. This
would require a simple depreciation charge of five per
cent per annum ; or allowing four percent compound inter-
est upon the depreciation fund, the necessary rate would
be 2.42%. At three percent interest, the rate would be
2.85%. Between these limits three percent may be con-
sidered as a fair rate of depreciation.
In Table 23 is shown the estimated value of the public
lighting plants; the interest on these sums at four percent;
depreciation at three percent; cost of operation for the
"The unit lives involved in municipal lighting are :
Generators and rotaries 20 years
Static transformers 20 "
Steam turbo-generators 20 "
Switchboard and wiring complete 20 "
Lightning arresters 10 "
Weather proof copper wire installation 16 "
Underground cable 25 "
Aerial cables 15 "
Manholes 50 "
Conduits 12-18 "
Cedar poles in earth 20 "
Cedar poles in concrete 40 "
Pole anchors and guys 12-15 "
Service transformers 15 "
Arc lamps and span equipment 15 "
With unit lives similar to these, the composite life of complete electric
systems was computed as follows :
Madison Gas & Electric Co 17.2 years
Ripon Light and Water Co 18.24 "
Superior Light & Power Plant 17.91 "
Chippewa Falls Water Works & Light Co 15.60 "
Green Bay Traction Co 16.73 "
Ashland Light, Power & Traction Co 17.04 "
Wisconsin Traction, Light and Power Co 20.59 "
Menominee Light & Traction Co 17.54 "
Average 17.46 "
MUNICIPAL EEVENUES IN ILLINOIS
last fiscal year ; "total of all costs" ; number of lamps and
the estimated cost per lamp.
The figures for the total cost per lamp may be com-
pared with the prices paid to private plants in the cities
not having municipal plants. In table 24 these are given
with the number of lights and the schedule upon which they
CHARGES BY PRIVATE ELECTRIC LIGHT PLANTS FOR ARC SERVICE.
No. of Lights
*New schedule now in force, $62.50 for overhead service; $72.50 for-
conduit services, all complete.
2 City owns the means of distribution.
Such a comparison is, however, of limited value. In the
first place municipal plants do not adopt a steady schedule,
but burn their lights as the circumstances require.
Further, no great dependence can be placed upon the valu-
ation of the plants or upon the costs of operation which are
given. In most cases the estimated values are percentages
of the total figures for the municipal water plants. The
lighting plants could probably be duplicated in every case
for the amount stated; but the operating costs cannot be
accurately checked against them since these are frequently
given as one-third of the combined costs of operating the
light and water plants.
449] MUNICIPAL INDUSTRIES AND PROPERTY 89
Remembering these limitations upon the accuracy of
our figures, it appears that three cities, Aurora, Gales-
burg and Jacksonville, are securing light at a less cost
than could be done by private contract. In the other three
cities the cost of municipal lighting appears to be more than
the lowest charge made by private plants, but in two cities
the circumstances point to an actual cost which is lower
than that shown here. Galesburg is rapidly extending to
a 700 light system; while the figures from Bloomington
appear to be purely guess work rather than a careful esti-
mate. When lighting plants are operated in combination
with municipal water works, using boilers which otherwise
would stand idle at night, the result should be lighting at
a small cost. Some superintendents complain that since
they are not allowed to sell commercial power and light,
the plants are at a disadvantage. Such permission would
put into usefulness valuable machinery which is now idle
during the day time. In small cities where municipal light-
ing is the principal item of light, the erection of a private
plant in addition to a municipal plant is a useless duplica-
tion of works ; or the introduction of modern lighting is de-
layed until the private industry can be supported without
the public contracts.
Public cemeteries are authorized by an act of the
legislature of 1874, which permits cities and villages to
acquire property, sell lots, and provide a board of control
for burial grounds. 15 Burial grounds are owned by seven
of the municipalities visited and in an eighth (Moline)
they become public in 1912. These undertakings, however,
are of small importance, as sources of revenue. The
charges are not such that public operation can be compared
with that of privately owned grounds. From the point
of revenue the possession of these grounds is a decided loss.
Omitting from consideration, both the interest on the
"Rev. Stat. (1908) ch. 21, par. 5.
MUNICIPAL REVENUES IN ILLINOIS
original investment, and the constant depreciation from the
sale of lots, the cost of operation and maintenance exceeds
the income in three of the five cases in which the costs
were obtainable. The sums involved, however, are incon-
siderable. The following table shows the revenues as well
as the cost of operation where this item could be secured.
INCOME AND COST OF OPERATION OF MUNICIPAL BURIAL GROUNDS.
Aurora . .
The income accruing to libraries might be tabulated
with other city revenues, according to its source, as fines,
rents, etc. For purposes of comparison, however, and since
these sums seldom reach the city treasury, it is preferable
to treat library revenues as distinct from those of the city.
In Table 26 is shown the miscellaneous income from
twenty-two public libraries. The latter part of this table
refers to book circulation which more or less influences the
amount of income.
Two libraries, in Alton and Ottawa, are dependent
upon endowment for practically their entire support, the
latter receiving a city appropriation of only $500 per year;
Champaign is partially independent of municipal support.
Evanston has two small funds, the interest of which is ap-
plied to the purchase of books upon medicine and music.
MUNICIPAL INDUSTRIES AND PROPERTY
Quincy has for general purposes the income on a very small
amount of money. Even aside from the gift of library
buildings by one individual, public libraries are the most
favored of city institutions by private benefactors. In
Alton, Champaign and Ottawa, the libraries are housed in
buildings furnished by the donor of an endowment; while
in Alton and Ottawa, the endowment is sufficient to place
the management independent of city control.
STATISTICS OF PUBLIC LIBRARIES. ILLINOIS CITIES, 1909.
Champaign . . .
E. St. Louis .
Springfield . . .
Fines, which are first in importance of the incidental
revenues, bear some rough relation to the number of books
in circulation. This relationship is, however, far from
exact, indicating probably, not a difference in the prompt-
92 MUNICIPAL REVENUES IN ILLINOIS [452
ness of book borrowers, but rather a variation in the en-
forcement of library regulations.
Six libraries rent portions of their buildings, gaining
in two instances a considerable income by this means.
Carnegie-built libraries are frequently larger than is now
needed for library purposes, affording space which may be
rental to clubs, or occasionally is occupied by the per-
manent offices of the school board.
It is somewhat surprising to find that only six libraries
have introduced the "renting collection". 16 While this field
is limited to the newest and most popular fiction, the books
are put in circulation as soon as paid for by the rent se-
cured, permitting the general revenues to be applied in a
more profitable direction. The figures on the relation of
circulation to population indicate the wide range of library
effectiveness in the several cities. This may be due in part
to the variation of types of population; but the library
management cannot be entirely exonerated.
Public hospitals may be established upon a majority
vote of the citizens, on a proposal initiated by one hundred
petitioners. Except for paupers reasonable compensation
must be exacted for services rendered. 17 An examination
of the city reports shows no returns from this source paid
directly to the city treasury, altho in Ottawa the sum
of the collections was reported to the city council. The
public hospitals in Illinois are quasi-private institutions,
to which appropriations are made by the city, or financial
provision is made for the care of cases for which the city
Recent legislation has also provided for the establish-
ment of tuberculosis sanitariums and legalized a four mill
tax for their support. 18 Services are to be free except for
"Books rented at norninal charges.
"Laws of 1909, p. 308.
"Rev. Stat. ch. 24, par. 685.
453] MUNICIPAL INDUSTRIES AND PROPERTY 93
medical attendance and similar charges. Several cities
have authorized such institutions but their erection is de-
layed until financial difficulties can be cleared up.
There are no municipal traction systems in operation
within the state, tho such are authorized under certain
conditions. 19 Cities may organize and own street railways
upon approval by a majority of the voters voting on such
a proposition and may operate such railways when ap-
proved by three-fifths of those voting; or the city may
include in a franchise granted, the right to take over the
system upon specified terms. A municipality may also
transfer privileges acquired in one company to another,
tho any lease of public property for longer than five
years must be sanctioned by popular vote. In the case
of municipal operation the charges must be sufficient to
cover the cost of maintenance, interest charges, and to
create a sinking fund.
By a two-thirds vote, a city may issue bonds for the
purchase, or the construction and equipment of street rail-
ways; or may acquire the same by condemnation. In the
latter case, compensation must be allowed for the value of
existing franchises. If the system is owned by the city and
leased to a private corporation, the rental must include at
least interest upon the investment and a return for the
By a majority vote, the municipality may in lieu of
bonds, issue street railway certificates running for not to
exceed twenty years, payable only from the net income of
the railway, and bearing interest at a rate not specified.
These certificates may be secured by the issue of mort-
gage or trust bonds, which can be foreclosed after default
of interest for one year. Foreclosure carries the privilege
of operation by the private company for not exceeding
twenty years. Under the Mueller Law, it was provided that
"Rev. Stat. (1908) ch. 24, par. 655 et seq.; Laws of 1903, p. 285.
94 MUNICIPAL REVENUES IN ILLINOIS [454
loans secured by mortgage certificates could be issued out-
side of the debt limit ; but the supreme court has beld that
this may not be done under the present constitution.
Should the city operate a street railway system, there
must be kept separate accounts showing the actual cost to
the city, cost of maintenance, extensions and improvements,
operating expenses of every description, sinking fund, free
water, and free services rendered by the railway, interest,
depreciation, insurance and exemption of taxes, of which
an annual printed account, examined by an expert account-
ant, is required to be made to the city council. The ac-
counting of these various items presages the time when
city utilities will be conducted separately and distinctly
from one another, and independently of the city treasury;
and when any surplus created will be devoted to the use
of the consumers who have produced it. The rule which
forbids cities engaging in private business for a profit,
should enjoin their engaging in public enterprises for the
same purpose. 20
Sewer systems may be constructed under an act of
1883 permitting the levying of a three mill tax for that
purpose, 21 or they may be created under the local improve-
ment law which permits them to be paid for by special
assessments or general taxation. 22 There is no city in
which a revenue is derived from the operation of sewers;
and the method of extending the systems has been con-
sidered under the subject of "Special Assessments". 23
Cities owning landings on navigable rivers may lease
portions for wharfage for a period not exceeding twenty-
"See ch. IV for tax on franchises.
*Rev. Stat. (1908) ch. 24, par. 280.
"Ibid. ch. 24, par. 507 et seq.
"See chap. IV.
455] MUNICIPAL INDUSTRIES AND PROPERTY 95
five years. 24 Quincy has four such leases, one terminable
by either party upon sixty days notice; one to expire in
1912; and two to expire in 1934. The income from the
entire number is $320 per year. Rock Island also has
f 200 per year income of a similar nature.
Several other cities receive a small revenue from the
lease for space in municipal buildings, pasturage on land
used for garbage disposal, etc. A list of these with the
source of the income is given below:
RECEIPTS FROM CITY REAL ESTATE.
Alton $167. Ground rent.
Aurora 375. Office rent and use of polling places.
Champaign 265. Building rent.
Elgin 189. "Rents, etc."
Freeport 184. "Use of polling places."
Galesburg 231. Alley, land, and pasture rent.
Moline 250. "Use of city real estate".
Rock Island 1530. Rents and ground leased to railway.
Springfield 540. "Use of city real estate".
Urbana 52. Pasturage.
Such small returns from city property might be con-
trasted with the large revenues from the public domains of
some European cities where the management of real estate
is often an important corporate function.
OTHER CITY PROPERTY.
Aside from the interest on city funds, a small income is
derived from the occasional use of other city property.
Cities may own and operate bridges and ferries, 25 charging
a sufficient toll to cover interest, repairs, sinking fund and
operating expenses. In Ottawa the ferry tolls amount to
$3248 per year, while the city of Rock Island received
until 1908 about |4000 per annum from bridge tolls. The
bridge is now free. An obsolete provision of the statutes
M Rev. Stat. (1908) ch. 24, par. 247.
"Ibid. ch. 24, par. 194.
96 MUNICIPAL REVENUES IN ILLINOIS [456
permits cities coming into the possession of toll roads to
continue to collect a reasonable toll, tho no new toll roads
may be created.
More frequent sources of revenue of this sort are from
public markets (scale fees), use of ambulances and of city
machinery. The following cities report incomes of this
nature: Alton, |810, city scales; Aurora, $204, use of
ambulance ; Belleville, $480, use of city machinery ; Bloom-
ington, $300, from McLean County for tramp house ; Joliet,
$84, use of steam roller; LaSalle, $112, "use of city prop-
erty" ; Moline, $112, use of city scales ; and Streator, $18,
for ambulance hire. Doubtless most cities have items of
this nature, but have reported them as miscellaneous re-
ceipts. Those given are sufficient to show the amounts and
nature of this income.
INTEREST ON CITY FUNDS.
Interest on city funds is an almost unutilized source
of city income, as a rule such revenue being considered as
a perquisite of the city treasurer. The few cities having
permanent funds usually receive interest at some rate, but
the amount lost thru failure to receive interest upon cur-
rent funds is large. Such funds, however, vary in amount,
and their size is reduced by the gradual payments of tax
warrants and floating indebtedness.
In Chicago, bids are made upon the city funds and the
council awards to the highest and best bidders in sufficient
numbers to insure safety, bonds being given by the banks
as security. 26 A special scheme is adopted by which each
bank is checked against for only two months in the year
thus permitting an uninterrupted use of city funds for at
least five months. But by this plan only one and one-half
percent per annum is secured. Any law relative to the
smaller cities of the state should be sufficiently compre-
hensive to permit the cities to borrow money for corporate
purposes from such permanent funds as may be available,
"Merriam, Municipal Revenues of Chicago, p. 103 et seq.
457] MUNICIPAL INDUSTRIES AND PROPERTY 97
from sinking funds, water funds, permanent improvement
funds, etc. 27 Such a move would secure five or six percent
upon these permanent funds, the present rate being about
three percent. Or if only the varying current funds are
available, arrangements might be made with banks, by al-
lowing the free use of city funds during the early part of the
calendar year, the municipality might borrow without in-
terest when the treasury is depleted. In Elgin, by such a
plan an average of $25,000 is borrowed each year.
Of the twenty-four cities, only seven receive interest
upon funds of any kind, the largest amount being $16,306,
which is returned to Quincy upon sinking funds aggregat-
ing $354,789. This is at a rate of about four and one-half
percent. Five percent is received upon the larger part of
this fund. All the interest accruing is reapplied to the
sinking funds. On May 1st, 1909, there was a general bal-
ance of $71,037 upon which no interest was noted. Evans-
ton received $3063 as "interest on city funds" the same
being applied to the salary fund. Freeport received $1916
as "interest on bank balances." On April 1st, 1910, such
balances were $67,534 for special assessments, plus $13,270
for general cash on hand. As "interest on sinking funds",
Galesburg received $1667 per year. As interest upon a "spe-
cial bridge fund" balance of $57,101, Peoria added to that
fund $1,001 during 1909; the interest upon a "bridge bond
sinking fund" of $8750 was $417. As the total income of
the city for the year is nearly a million dollars the interest
return is inconsiderable. In Alton the city finances are
in such excellent shape that the city was able to loan
$30,000 of the general fund at three percent interest. In
the above list, however, it will be noted that the return
from interest on current funds is inconspicuous.
The following table represents an estimate of the nor-
mal amount of funds which lie idle in the city treasuries.
There is shown the entire amount received during the year
for all purposes, as well as the balance on hand at the
beginning and at the end of the fiscal years.
"Cf. Laws of 1911, p. 150.
MUNICIPAL REVENUES IN ILLINOIS
BALANCES AND RECEIPTS FOR GENERAL FUNDS, SPECIAL ASSESSMENTS AND
SPECIAL FUNDS FOR THE YEAR 1909.
General Funds. 1
Balance at beginning Receipts, Balance at end
of fiscal year. 1909. of year.
Alton $14,286 $214,377 $69,39i 2
Aurora 23,750 220,334 18,870
Belleville 1,764 137,824 4J33 2
Bloomington 21,461 265,723 19,440
Danville 75,843 21 1,193 68,190"
Evanston 115,412 461,875 96,576
Freeport 6,368 111,696 13,270
Joliet 55,062 451,238 80,090
Ottawa 43,395 134,754 1,365
Peoria 14,024 576,694 21,942
Quincy 71,604 217,292 67,346
Rockford | 17,223 494,475 21,125*
Rock Island 6,775 "8,673 io,668 3
Urbana 5,718 85,059 276'
Special Assessments. 1
Aurora see above $146,000 see above
Bloomington $38,072 1 15,397 $69,333
Evanston see above 126,180 7,288
Freeport 82,230 98,414 67,534
Ottawa 13,644 43,269 23,920
Peoria 2,006 315,693 385
Quincy 1,632 27,009 6,597
Rock Island 4,520 14,491 7,097
Special Funds- 1
Aurora see above $69,273 see above
Bloomington $7,392 722 $i,35o
Joliet 78 25,574 15,552
Peoria 66,431 12,1 13 20,603
Quincy 354,789 16,304 37LO93
Rock Island 24,831 63,922 24,51 1
Grand Totals. 1
Alton $14,286 $214,337 $69,391
Aurora 23,750 435,607 18,870
Belleville 1,764 137,824 4,133
Amounts of less than one dollar not considered.
'Includes all funds.
*Fiscal year, 1907.
459] MUNICIPAL INDUSTRIES AND PROPERTY 99
TABLE 28. Continued.
BALANCES AND RECEIPTS FOR GENERAL FUNDS, SPECIAL ASSESSMENTS AND
SPECIAL FUNDS FOR THE YEAR 1909.
Balance at beginning Receipts, Balance at end
of fiscal year. 1909. of year.
Bloomington 66,925 381,842 90,223
Danville 75,843 211,193 68,540
Evanston 115412 588,055 103,854
Freeport 88,598 210,1 10 80,804
Joliet 55, 140 476,812 95,642
Ottawa 57,059 178,023 25,285
Peoria 82461 904,500 42,930
Quincy 425,826 260,605 445,036
Rockford 17,223 494,474 21,125
Rock Island 36,106 197,086 42,276
Urbana 5,718 85,059 276
These figures do not show the maximum or minimum
amounts in the treasuries, and no general rule concerning
the average amounts can be formulated, since the conditions
in each of the instances are radically different. In the
sixteen cities 28 issuing tax warrants it must be assumed
that the treasuries are practically empty for a part of the
year, and it is safe to conclude that a share of the sums
paid in as special assessments are almost immediately used
to retire assessment bonds. Delinquent assessments would
be an exception to this rule. Of taxes and licenses, which
form the working balances of the cities, the former come
in over a period of the five months from January to June,
while the latter are paid quarterly or semi-annually.
Under the recent commission government law for
cities, treasurers in such cities are compelled to return in-
terest at three percent on city funds. A review of the
workings of these cities at the end of the first fiscal year
will give a more certain clue to the interest loss of the other
cities of Illinois. Judging from the facts at hand, such loss
is not less than $500 in the smaller towns; increases to
f 1000 in cities of very moderate size ; and probably rises to
$5000 or more in the larger cities of the state.
"See Table 29.
MUNICIPAL REVENUES IN ILLINOIS
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Municipal indebtedness is of four kinds, (1) city
bonds, for the payment of which are pledged the faith and
credit of the city; (2) interest bearing certificates issued
in anticipation of the collection of taxes; (3) floating debt
in the nature of unpaid bills, cash paid by individuals in
advance for city services yet unrendered, such as water
rents, advances on pavement construction, etc., and lastly,
(4) public improvement bonds issued to contractors as
payment for special assessment work in which the respon-
sibility of the city extends only to the collection. This last
item is discussed briefly in another place. 1
By the state constitution the bonded indebtedness of
cities is restricted to five percent of the assessed valua-
tion, 2 which since 1909 has been one-third of the "fair
cash value." 3 The constitution also provides that suf-
ficient direct taxes must be raised to liquidate any bonded
indebtedness within twenty years from the date of incur-
'See Chapter IV.
"Constitution of 1870, art. 9, par. 12.
'Laws of 1909, p. 308.
FOOTNOTES TO TABLE 29.
'$12,681 not in the form of tax warrants.
'Includes $200,000 school tax warrants.
'Includes $78,800 school tax warrants.
'See Text, page 108.
'Itemized in year's expenditure as "bills payable".
'Predominating interest rates are italicised.
'Warrants carried for use of city funds.
102 MUNICIPAL REVENUES IN ILLINOIS [462
rence, and to pay the prescribed rate of interest. 4 It is
further provided that bonds may be registered with the
state auditor, 5 in which instance sufficient taxes to pay in-
terest and provide a sinking fund are certified by the
auditor to the several county clerks, such rates being col-
lected as if a part of the state tax.
The necessity for the bonded debt limit may be seen
by referring to Table 29. Fonr cities, Bloomington, East
St. Louis, Ottawa, and Springfield, had slightly exceeded
the maximum indebtedness allowed, 6 while Quincy was in-
debted to over ten percent of the equalized valuation and
devotes twenty-seven percent of the total taxation to the
payment of interest and the retirement of bonds. Four
other cities had a debt of three percent, while the remainder
were indebted to about one-half of their allowance. The
average was three and four-tenths percent of the assessed
Such a comparison of indebtedness, based upon the
property assessment, is the most equitable one, yet it is cus-
tomary to consider the per capita indebtedness as some
criterion of the financial condition of a city. According
to the census bureau, 7 there is considerable irregularity
in the per capita indebtedness of American cities of over
30,000 population, the tendency being to increase the in-
debtedness with the size of the city. This tendency is also
shown in the smaller cities of Illinois, but not to a marked
degree. In the municipalities of over 20,000 population
the average per capita debt was $11.005, while in those of
a less size the average per capita debt was $9.66. Or stated
in another fashion, the average population of the cities
of Illinois having a per capita debt of over $7.40 was
30,163; of those having such a debt under $7.40 it was
18,919. In the cities of between 30,000 and 50,000 popula-
4 Constitution of 1870, Art. 9, par. 12.
"Act of Feb. 13, 1865; amended April 27, 1877, and June 4, 1879.
That there is an excess in these cases is probably due to school dis-
tricts which are not exactly coextensive with the cities.
'Special Report, Statistics of Cities; 1907, p. 75.
463] LOANS 103
tion in the United States, the average per capita net debt
is a trifle over $40.00. 8
Bonds should, of course, be retired during the life
time of the utility for which they are issued; and in the
absence of exact data, the desirability of a fixed limit is
easily demonstrated. Peoria is still paying interest on
$42,000 of bonds representing bounties paid during the
Civil War. The interest has amounted to double this sum,
yet as estimated by the comptroller, a sinking fund tax
of $2,800 per year collected for ten or twelve years would
pay these bonds when due. 9
That the amount of taxation necessary to retire city
bonded indebtedness may not be excessive in any one year,
the city of Quincy (which in 1881 was burdened with a
debt of nearly $2,000,000 and still has a debt of over
$600,000 ) 10 makes use of a plan which insures a bond and
interest tax varying little in amount from year to year.
An ordinance passed in 1899, a certified copy of which is
on file in the office of the state auditor, outlines the amount
to be collected each year, and provides that any surplus
shall counteract later deficits. By this method, while the
amount paid for bonds and interest each year varies as
much as $35,000, the taxation decreases regularly by about
$3,0.00. This is a rather crude use of a complicated scheme
of debt retirement. The perfected plan would permit of an
equal annual tax devoted in the early years to the paying
of a large amount of interest and a small amount of prin-
cipal, changing gradually to the larger retirement of
principal as the amount of interest required declines. For
example, $20,000 indebtedness at 5% interest is incurred
by a city, and a $1,500 annual tax provided for liquidation.
The principal for the second year is $19,500 upon which
*Supra. cit. p. 307. This statement, however, represents only about
84% of the municipal indebtedness of the cities concerned. The re-
mainder, except less than one percent of floating indebtedness, consists of
tax warrants or short time loan certificates in anticipation of taxes.
'Annual report, 1009, p. 12.
"Annual report, 1910, p. 25.
104 MUNICIPAL REVENUES IN ILLINOIS [464
the interest is $975. Therefore, $523 of the bonds may be
retired as compared with $500 the previous year. If the
total of bonds may be retired only at the end of a stated
period careful actuarial work is necessary to determine the
proper tax levy. Although this plan insures absolute jus-
tice to the taxpayers, the difficulty of its administration
has prompted cities to turn to other methods of liquidating
indebtedness, one of which is the sinking fund.
A sinking fund provides that sufficient sums shall be
set aside from year to year, so that at the end of a pre-
arranged period a sufficient sum shall be in the treasury
to retire the bond issue outstanding. The fixed amounts
to be set aside each year, dependent upon the rate of inter-
est received upon the sinking fund, and the life of the bonds
to be retired, have been carefully calculated, and the tables
should be available for the use of the city comptroller. 11
The sinking fund method of debt retirement equalizes the
burden of the taxpayer, but is open to very decided dangers.
Unless compound interest is paid upon the sinking fund
the method is an extravagant one; the taxpayer not only
pays the interest upon the bonds outstanding, but also
loses the interest upon the cash contributed to the retire-
ment fund. Also, owing frequently to the lack of publicity
for municipal accounts, sinking funds are used for general
It is not uncommon for cities to invest sinking funds
in their own securities. From this arises a danger, espe-
cially in larger cities or in other communities dependent
upon local capital for funds. If a city is required to throw
a large quantity of sinking fund securities into the market
in order to retire bonds of an earlier maturing date, the
disturbance to the financial market may be serious. New
York City, in the decade from 1950 to 1960, will be com-
pelled to put approximately $200,000,000 of such sinking
"An excellent set of tables will be found in Sprague's Tables of Com-
pound Interest, Discount, Annuities, Sinking Funds and other Computa-
tions for use in the Accountancy of Investment, published by the author
for the New York University School of Commerce, Accounts and Finance.
465] LOANS 105
fund securities before New York bankers. This is perhaps
a "far cry" to be urged for consideration in the smaller
cities of the nation.
The difficulties suggested have prompted municipal-
ities to resort to the use of the simpler, but less equitable,
plan of bonds retiring serially over a series of years. The
bulk of the interest is borne by the tax payers in the earlier
years; but they have the compensating advantage of using
the utility created while it is new. Practically all of the
Illinois municipal bonds are of this serial type.
Tax warrant indebtedness is incurred entirely for cur-
rent expenses, and represents how far the expenditures
have at some time exceeded the income of the city. Table
29 shows that the cities which are already heavily bonded
are, with few exceptions, also issuing a large amount of
tax warrants, though the less indebted cities are by no-
Such indebtedness is bad, not only because it repre-
sents municipal extravagance, but owing to the excessive
rate of interest which it bears. The funds for the most
part are furnished by banks, the preponderating rate of
interest being five percent, though as low as 4.74% was
charged in Jacksonville, and as high as six percent in
Springfield and Peoria. Elgin, by allowing the free use of
city funds to banks, has been allowed to borrow $25,000
annually from them practically free of interest. The rates
charged are from one to two percent higher than those
on municipal bonds, of which 46.6% are floated at 4% ;
27.1% at 4.5% ; 14.2% at 5% ; 8.2% at 3.5% ; and .075%
at the high rate of 6%. About 82% of the bonds outstand-
ing are floated at 4.5% or below; while only $11,000 in
warrants are drawing less than 5%, and these are at 4.75%.
Before 1911 there was no statute which allowed a city
to invest the money of its special funds in warrants or cer-
tificates drawn against the general fund. Such a law
secures to the municipal corporations the high rate of in-
106 MUNICIPAL REVENUES IN ILLINOIS [466
terest paid on temporary indebtedness, and is desirable,
even though affecting only a limited number of the smaller
cities of the state.
Under the circumstances mentioned, the question nat-
urally arises, would it not be expedient to relieve the
necessity for the annual issue of tax warrants by the float-
ing of a bond issue at a lower rate of interest? There are
at least three reasonable arguments against such a process.
In some cities the maximum debt limit has already been
reached, so these new bonds could not be legally issued.
Again, the presence of a large indebtedness of a temporary
nature is a guarantee against further marked extrava-
gance on the part of the city officials. That the total in-
debtedness must be kept within such bounds that loans
may be easily made prevents its growth out of the pro-
portion to the wealth of the city. Finally, the discrep-
ancy between the rates of interest on bonds and warrants
is more apparent than real.
Tax warrants represent the need of an amount of
money for a short time, since they are usually issued in the
winter and are retired as soon as the taxes are paid in the
spring or early summer. Though the average life of a war-
rant is seven months, there are reasons for believing that
the greater amounts of money are used for a less time than
this. For example, Bloomington, Galesburg, and Spring-
field, all of which are heavy users of tax warrants, pay
interest for five months or less. In order to have a suf-
ficient sum on hand it would be necessary to issue bonds to
approximate the amounts of warrants out, sums which, ac-
cording to the most conservative estimates, would lie in the
city treasuries for five months in the year. On such a
basis, the cities would not be the losers, if they pay five-
twelfths more for warrants than bonds. If four and four
and one-half percent be taken as the typical bond rate of
interest, then it would be profitable to float warrants at
5.6% or 6.3%. Of course, in cases where the warrants are
running for year terms, as are $200,000 of Rockford school
warrants, funding would be expedient.
467] LOANS 107
In Galesburg, while school tax warrants are not issued,
the salary warrants of the fiscal year, are drawn upon an
empty treasury and bear interest at six percent.
No defense can be offered for floating indebtedness.
It is in all cases but one (see table 29) connected with
large bonded and warrant indebtedness ; and one is entitled
to assume that there has been at some time mismanagement
in the conduct of the business of the cities so burdened.
Such indebtedness emphasizes most strongly the need for
scientific budget making in municipal business. Every
departmental head should be required to estimate in ad-
vance and in detail the needs for the year's adminis-
tration. Such executives should then be required to spend
the sums appropriated according, to the advance estimate,
or return any unexpended balances into the general fund
of the municipality.
Any city working without a classified budget is as
liable to suffer from unexpended departmental balances
as from floating indebtedness. The two are products of the
same cause, a poorly drawn budget. To the ordinary
voter and taxpayer a deficit becomes known through the
newspaper; the use of unexpended balances is not so easy
to discover. The curious citizen may be prompted to in-
quire of his city clerk for a statement of monthly expendi-
tures of the several departments for the past fiscal year.
He will be interested to note if there is a marked increase
in departmental expenditures in October and March,
more especially for salaries. If services were unnecessary
ten months in the year, there should be some explanation
if the payrolls are excessively large in the two months
which immediately precede elections. And, if this expla-
nation is honest, it will frequently demonstrate why de-
partmental heads have not sufficient funds to complete the
The indirect effect of a floating debt is even greater
than the loss of the cash which at some time has been
108 MUNICIPAL REVENUES IN ILLINOIS [468
wasted. When dealers are compelled to wait an undue
period for the payment of bills, the city business drifts into
the hands of middlemen. These make all proper allowance
in their prices for long waits, and the city treasury suffers
In Champaign, the f 20,000 of floating debt represented
an unpaid light bill of nearly six months standing; while
$20,000 of Urbana bonds in 1909 were a judgment for
floating debt on current expenses. It may be advanced that
owing to unexpected decreases in revenues, debts of this
kind must occasionally be incurred. This is perhaps some-
times true; but such losses could be anticipated and more
adequately met if city finances were put upon the same
sound basis that is demanded in the best private business.
The elimination of unsecured indebtedness by this
means, as well as the promotion of efficiency in public ex-
penditures, would be secured if the more elementary steps
necessary to scientific public budget making were followed :
1. The finance committee of the city council should
require every department head to submit an estimate of pro-
posed expenditures for the coming fiscal year.
2. This estimate should show all suggested expendi-
tures classified by salaries, wages, services other than per-
sonal, materials, supplies, equipment, structure and parts,
land, capital outlays, fixed charges, pensions and contin-
gencies. 12 Such a division would enable city officials to
know the cost of a single service or supply for the entire
city, or to compare costs as between departments.
3. The departmental estimate should also show the de-
partmental expenditure for the same services, etc., for
the year previous, the expenditure of the past six months
of the current year, the expenditure of some typical month
of the current year, and any increase asked for next year.
"The complete classification as suggested for the United States gov-
ernment by the President's Commission on Economy and Efficiency may
be seen on page 4 of their circular No. 19, to be obtained through any con-
gressman, or the similar classification of New York and Philadelphia can
be secured by corresponding with the comptroller of these cities.
469] LOANS 109
4. Such estimates should be printed in a tentative
budget, and public hearings held where both officials and
citizens could appear to defend or protest against suggested
5. The final revised budget having been passed, every
departmental head should be required to regulate his ex-
penditures as outlined, all salaries and wages to be ex-
pended at the rate of one-twelfth or one-fiftysecond per
month or week, except for temporary employes.
6. Any change in the segregation of the budget should
be made only after a vote of the city council.
7. All unexpended balances at the end of the fiscal
year should be returned to the treasury of the city.
Such an outlined plan is not experimental but is in
operation in the largest cities of the country. Not only
are appropriations more efficiently expended, but they are
considerably reduced when granted after public hearings.
In a single year in New York City, surplus appropriations
of 13,000,000 were returned to the municipal treasury,
which, under the system in vogue in Illinois municipalities,
would perhaps have gone to salary increases and work not
contemplated or advertised at budget time.
SUMMARY AND CONCLUSIONS.
In the preceding text repeated comparisons have been
drawn between the important items of revenue income
of the several cities, especially upon a per capita basis.
It is unnecessary to review these here, aside from stating
the conclusions which they substantiate. The total gen-
eral revenue, however, should be considered. This general
revenue account will exclude the more uncertain and un-
stable items of school revenue, road and bridge taxes, spe-
cial assessments, and commercial revenue which is not
net profit. The deduction of these items, all of which faiL
to affect directly the general administration of municipal
government, leaves a balance devoted entirely to the sup-
port of the cities. This residual general fund for each
city is given in table 30, with the principal component
parts. In table 31 is shown the data in percentages.
The minimum per capita income is $4.23. This is
found in Champaign, one of the smallest of the cities
studied. Similarly low per capita revenue of $4.53 and
$4.40 prevails in Streator and Jacksonville, both small
cities; while the largest per capita revenue, $11.74, is in
East St. Louis, the largest municipality considered. Such
figures indicate that there is a relationship between the
size of the city and the necessity for increased income per
inhabitant. This fact, with its causes, has been commented
upon in the introduction to this study. It is not to be
expected, however, that this rise in per capita income will
be regularly progressive as population increases. Two
of the smallest municipalities, LaSalle and Ottawa, have
a per capita revenue only equaled by five of the largest
cities of the group; while Kockford and Decatur, both
among the larger communities studied, have about the
minimum cost of government per resident. Setting aside
471] SUMMARY AND CONCLUSIONS 111
the possibility of mismanagement of city funds, this may
mean that these smaller cities have assumed costly civic
functions, which the larger municipalities have not as yet
seen fit to undertake.
Considering the twenty-four cities as a group, the
earlier contention that with increasing population the
municipalities must undertake activities formerly left to
individuals, is amply borne out. Of the six largest cities
in the list, five have a large per capita revenue, and only
four municipalities of between seventeen and seventy-five
thousand population have an income of less than f 6.00 per
person. The summary table No. 32 shows graphically the
relative rank of all the cities as regards population and
per capita general income.
A summary of the conclusions which have been dis-
cussed in the text indicates the defects in the system of
property taxation and the nature of other undeveloped
sources of income, which it has been in part the purpose
of this thesis to consider :
1. There is a wide diversity among the municipalities
of the state in the rate of assessments of both real and per-
sonal property. In few communities is real estate taxed at
its full cash value, while personal property escapes with
from one-fifth to one-third of its legal burden. Undoubt-
edly this latter discrepancy is only an unofficial recognition
of the unfair double taxation inherent in the assessment
of most personal property. Without entering into a dis-
cussion of justice in taxation, it may be said that a careful
readjustment of personalty values would add as much as
30% to municipal incomes.
2. The continuation of two officials for the collection of
municipal taxes, one before and one after taxes become
delinquent, involves an unnecessary duplication of ad-
ministrative machinery and results in loss of efficiency and
increased costs. If the functions of the town collector
were transferred to the county treasurer, taxes could be
collected more expeditiously, more completely and at a di-
112 MUNICIPAL REVENUES IN ILLINOIS [472
3. Practically every city is collecting the maximum
legal tax allowed for general purposes, yet there is an in-
creasing demand that the municipalities assume new and
expensive duties. The maximum total tax rate of three
percent on the assessed valuation (one percent on the sup-
posed full value) is inadequate to meet the needs of the
4. The percentage of total income received by Illinois
cities from other sources than the general property tax
ranges from 60% in Joliet to 3% in Urbana. The large
proportion of municipal funds derived from these mis-
cellaneous sources in certain cities indicates the inade-
quacy of the present system of taxation.
5. The amount of municipal income derived from
liquor licenses, does not depend upon the number of licenses
issued, but with considerable uniformity varies directly
with the cost of the license. An increase in the minimum
cost of saloon licenses from f 500 to f 1,000 per year would
not only result in the issue of fewer licenses, but would be
accompanied by a decided increase in revenues. Also, of
no inconsiderable importance is the reduction in police
force which may follow a limitation in the number of
saloons and their segregation into a restricted district.
6. In cities where there is a real restriction in the
number of saloons in proportion to the population, the
licenses normally acquire a monopoly value. The amount
of this monopoly value has been estimated for several
cities under consideration. Since the municipalities have
reduced the number of existing licenses they should pro-
portionately increase the charge to cover any loss in reve-
nue. A premium on saloon licenses is a criterion of such
7. Municipal revenues from general license taxation
would be increased by assessing high licenses against a few
industries and occupations which are accustomed to license
taxation. In numerous instances the present rates are un-
profitably low, -and the energy necessary for a complete col-
lection of the tax is dissipated over a wide field. It is
473] SUMMARY AND CONCLUSIONS 113
not infrequent that licenses fail to yield revenue because
the licensing ordinances are too intricate to be easily ap-
plied by the crude machinery provided for that purpose.
8. Cities which largely utilize special business taxes
find in them a remunerative source of revenue. In view
of the usual under-assessment of stocks-in-trade, doubtless
some tax of this nature is justified. Such taxes, however,
are difficult to administer with any degree of equality,
and there is usually local prejudice against their impo-
sition. A trend in this direction must be gradual, begin-
ning with those occupations which require some measure
of sanitary or police control.
9. One of the most profitable and equitable of tax
returns is that from the licensing of vehicles. This tax,
going into a special fund for the repair of streets and al-
leys, relieves to some extent, the unequal burden imposed
by the special assessment laws upon the property owner.
The rates upon horse drawn vehicles are by no means
uniform throughout the state and where the minimum tax
is imposed, the return is not large. The tax upon auto-
mobiles, however, can be made to return a very considera-
10. Insurance brokers frequently avoid the payment
of the tax upon the business of foreign fire insurance com-
panies and in some municipalities the law is not enforced
at all. This would be avoided if a nominal license fee
were imposed upon all insurance dealers and they were
compelled to render an annual report, under oath, of all
11. Revenues from fines and costs are restricted by
the frequent non-assessment of fines if costs are paid, by
failure to assess high fines, inclination to allow cases to
be prosecuted by the state's attorney, rather than by the
city officials, and finally the limited number of arrests
which find their way into the police courts.
12. Fees and departmental charges are neglected
sources of municipal revenue, which, were they adequately
imposed and collected, would produce an income equal to
114 MUNICIPAL REVENUES IN ILLINOIS [474
that obtained from general license taxes. A complete fee
system, however, would involve not only the abolition of
the practice of allowing fees as salaries, but the introduc-
tion of an adequate system of accounting and control
which would insure cities receiving payments made.
13. Under the present prevailing system in Illinois
by which public service corporations are usually allowed
to fix their charges at the point of maximum profit, fran-
chise taxes are a tax upon the profits of the corporation
rather than upon the consumer. However, only a few utili-
ties pay for the privileges they enjoy, and these only small
sums. A considerable number of franchises will expire
in the near future permitting cities to make provision for
franchise payments. These costs may be imposed either
as a percentage of the net or gross annual receipts or as
an initial charge for the right to continue in business, or
However, the number of perpetual franchises, espe-
cially in the gas and telephone industries argue in favor
of some form of legislative control over the prices de-
manded for these services. Should this regulation of com-
modity charges be brought about, any tax imposed by the
city upon public service corporations would probably be-
come a burden upon the consumer. The conditions require
the careful and honest consideration of city councils and
of the state legislature.
14. In the operation of municipal water plants, three
cities apparently show a distinct surplus over all charges
and three other cities make a satisfactory financial record ;
while seven cities have a high percentage of operating
expenses, in two of them the operating expenses exceeding
the total revenue. In a few cities the water rates are too
high; but in most they are too low to meet operating ex-
penses, thus burdening the tax payer at the expense of the
water consumer. Estimates for six municipal lighting
plants indicate that three have furnished street lighting
at a cost less than the charges of private corporations.
Were the municipalities authorized to do commercial as
475] SUMMARY AND CONCLUSIONS 115
well as public lighting, the costs would probably be further
15. Publicly owned cemeteries have been conducted
at a financial loss, but the sums involved are so small as
not to demand serious consideration.
16.i The income from real property owned by the
municipalities is an inconsiderable part of the budgets, and
is not an adequate return upon the value of the property
17. None of the cities investigated received a sufficient
return in the form of interest upon the cash balances in.
their treasuries; most of the cities received no interest
whatsoever upon these funds. The annual loss is very con-
siderable, and should be prevented by a statute requiring
city treasurers to account for a return upon public funds
in their possession.
18. Considerable sums are spent by municipalities as
interest upon short time loans made in anticipation of
taxes. The rates of interest are higher than those upon
bonds but since the funds are needed for only a few
months, it is more expedient to pay a higher price for
short time loans than to issue bonds. In some in-
stances, however, debts of this nature might well be
funded. A yet more profitable plan would be for cities
to borrow from their special funds, which will insure a
much higher rate of interest on these than is at present
19. The keeping of city accounts upon a receipt and
expense basis rather than by revenues and liabilities
works to the continual detriment of administrative ef-
ficiency. Budgets are made up on crude estimates of city
receipts, and not upon the more correct basis of amounts
legally accruing to the municipality over a designated
period. This system of accounting not only prevents inter-
ested citizens or officials from learning the exact financial
status of the corporation, but enables executives to thrust
the burden of extravagance or dishonesty upon following
116 MUNICIPAL REVENUES IN ILLINOIS [476
20. Less than one-half of the cities included in this
study publish annual reports of their financial affairs,
and in those published there is a marked lack of unformity
as regards date of appearance, matter contained, method
of presentation and value to the public. There is urgent
need of some private or public body which will cooperate
with municipal officials in applying tests of efficiency
to city government, and making the results known through
uniform city reports.
SUMMARY AND CONCLUSIONS
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MUNICIPAL REVENUES IN ILLINOIS
SOURCES OF GENERAL REVENUE, 1909, IN PERCENTAGES.
Jl ' *
Belleville . .
Decatur . . .
E. St. Louis
Evanston . .
/ " * *T
6 S .I
" / *
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Freeport . . .
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Rock ford . .
Streator . . .
SUMMARY AND CONCLUSIONS
RANKING OF TWENTY-FOUR ILLINOIS CITIES, 1909.
[ alty Assessment
General Tax Rate
Percent of General
Income from Taxes
E. St. Louis . .
Springfield . .
Quincy . .
Rock Island .
Champaign . .
Constitution of Illinois.
Kurd's Revised Statutes of Illinois (1908).
Session Laws of Illinois, 1907, 1909.
Kales and Liessmann : Compilation of Illinois Tax Laws and Decisions*
Report of the Auditor of Public Accounts (1008).
Reports of the Wisconsin Railroad Commission.
United States Bureau of the Census : Special Report, Statistics of Cities,
President's Commission on Economy and Efficiency, Circular No. 19.
C. E. Merriam : Report on the Municipal Revenues of Chicago, City Club
of Chicago, Pub. No. 2 (1906).
John A. Fairlie : Report on the Taxation and Revenue System of Illi-
Frank J. Goodnow : City Government in the United States.
Sprague's Tables of Compound Interest, Discount, Annuities, Sinking
Funds and other Computations for use in the Accountancy of Invest-
Alton : Annual Reports, 1009.
Aurora : Municipal Officers' Annual Report, 1909.
Bloomington : Annual Reports, 1909.
Evanston : Annual Reports, 1909.
Elgin : Annual Reports, 1909.
Freeport : Annual Reports, 1909.
Galesburg: Annual Reports, 1909.
Joliet : Annual Reports of City Officers, 1009.
LaSalle : Annual Reports, 1009.
Peoria : City Comptroller's Report, 1909.
Quincy : Annual Reports of City Officers, 1909.
Rockford: Annual Reports, 1909.
Rock Island : Annual Reports, 1907.
Springfield: Annual Report of Water Works, 1910.
Streator : Annual Reports, 1009.
Accounting methods, municipal, 8, 115.
Agricultural property exempt from tax, 14.
Alton, 40, 41, 42, 50, 62, 90, 91, 96, 97.
Amusement licenses, see licenses.
Appleton, Wis., 82.
Arrests, 49, 50, 51, 54.
Assessments, 16, 19, 20, 23;
rate of, 1 1 1 ;
rank of cities, 119.
Aurora. 22, 27, 40, 50, 51, 53, 57, 62, 67, 72, 81, 89, 96.
Automobile licenses, see vehicle tax.
Back taxes, 25.
Bakery tax, 42.
Beloit, Wis., 82.
Belleville, 40, 41, 42, 61, 96.
Billiard licenses, see licenses.
Bloomington, 38, 41, 48, 52, 53, 59, 62, 70, 71, 81, 89, 96, 102, 106.
Bonded debt, see debt.
Brewer licenses, see licenses.
Bridge tolls, 95.
Broker's tax, see licenses.
Budget making, 107, 108, 109.
Bureau of the Census, 8.
Business taxes, 10, 41, 42.
Cab license, see licenses.
Capital stock, taxation of, 15.
Cemeteries, public, 89, 90, 115.
j-*8, ?* 89, 9*7 108-, -nor
Champaign County, 21.
Charges, departmental, see departmental charges.
Chicago, 8, 12, 13, 30, 48, 96.
Cigarette license, 40.
City funds, 96-99; see also interest.
City hospitals, 92.
City property, 95, 115; see also real estate.
Clearing house, municipal, need for, 10, 116.
Coal dealer tax, 42, 43.
Collection of taxes, losses in, 24.
Commercial revenues, 58.
County treasurers, collections by, 24.
Cyclone tax, 13.
122 MUNICIPAL REVENUES IN ILLINOIS [482
Danville, 25, 38, 56, 71.
Decatur, 18, 29, 30, 41, 56, 71, 72, 78, 81, no.
Delinquent taxes, see taxes.
Departmental fees and charges, 10, 58, 61, 113.
Dog tax, 32, 33.
East St. Louis, 13, 18, 21, 33, 40, 41, 42, 44, 46, 48, 50, 59, 61, 72, 81,
1 02, no.
Eau Claire, Wis., 82.
Electric light, see Franchises and Lighting Plants.
Elgin, 22, 29, 72, 84, 97, 106.
Endowments, 56, 91.
Evanston, 10, 18, 24, 38, 40, 43, 45, 51, 56, 57, 59, 70, 71, 78, 89.
Exemptions from taxes, 14, 15.
Expenditures, classified, need of, 108.
Fees, 58, 59, 60, 113, 117, 118.
Fines, police, see police fines ;
library, see library fines.
Fire insurance tax, 32, 45, 46, 113, 117, 118.
Firemen's relief fund, 32.
Fireworks tax, 42.
Floating debt, see debt.
Fond du Lac, Wis., 82.
Foreign fire insurance license, see fire insurance tax.
Foundry license, see licenses.
Franchises, 9, 10, 15, 62-68, 114.
Franchise taxes, 61, 63, 117, 118.
Freeport, 24, 38, 40, 47, 50, 71, 72, 97.
Galesburg, 18, 35, 40, 71, 72, 89, 97, 106, 107.
Gas Works, see franchise taxes.
General funds, 98.
General licenses, 117, 118;
see also licenses.
Gifts, grants and subventions, 55.
Gifts by individuals, 57.
Green Bay, Wis., 82.
Grocery tax, 42, 43.
Hay and grain dealer tax, 42, 43.
Hospitals, see city hospitals.
Hotel tax, 42.
Hydrants, 79, 80, 81.
483] INDEX 123
Ice dealer tax, 42, 43.
Income, city, no, 117, 119.
Inspections, income from, 58.
Insurance funds, taxation of, 16.
Insurance license, see fire insurance tax.
Interest on public funds, 10, 13, 96, 97, 98, 99, 115, 117, 118.
Interest on debt, rate of, 100.
Interurban railways, see franchise taxes.
Jacksonville, 18, 44, 50, 57, 89, 105, no.
Joliet, 8, 9, 17, 18, 38, 40, 43, 50, 62, 79, 81, 96, 112.
Juul law, 12, 14.
Kane County, 21.
LaSalle, 18, 29, 41, 49, 50, 56, 70, 72, 79, 81, 96, no.
Libraries, 13, 18, 91, 117, 118.
License cities, taxes in, 18.
License districts, limitation of, 27, 28, 29.
License revenue, 26.
Licenses, general, 9, 30-42;
legality of, 26;
liquor, 9, 26-30, 34, 49, 112, 117, 118, 119.
Lighting plants, 9, 10, 86, 87, 114. ,
Liquor license, see licenses.
Livery stable tax, 42.
Loans, 101, 115.
Losses in collection of taxes, 24.
Lots, assessment of, 20.
Lumber yard tax, 42, 43.
Madison, Wis., 85.
Mains, miles of, 80.
McLean County, 96.
Meat dealers' tax, 42, 43.
Meters, water, use of, 84.
Method of investigation, 7.
Milk dealers' license, 39.
Miscellaneous income, 57, 58, 61.
Moline, 22, 41, 44, 48, 96.
Motorcycle license, see vehicle tax.
Municipal industries, 73 ; see also water plants, lighting plants, etc.
Mueller law, 93.
New York City, 104, 109.
"No-license" cities, 18.
124 MUNICIPAL REVENUES IN ILLINOIS [484
Omnibus license, see licenses.
Ottawa, 21, 30, 33, 35, 40, 41, 51, 67, 81, go, 91, 92, 95, 102, no.
Park districts, 13, 18.
Paving, free, 64.
Pawnbroker licenses, see licenses.
Peoria, 13, 30, 38, 40, 41, 43, 46, Si, 52, S3, 56, 59, 62, 70, 71, 72, 80,
Peddler licenses, see licenses.
Personal property, 9, 15, 20-22.
Pleasure drive districts, 14.
Police costs, 52.
Police fines, 9, 47, 48, 49, 51, 52, 54, 113, 117, 118.
Pool license, see licenses.
Prostitution, licensing of, forbidden, 32.
Property tax, theory of, 14.
Public libraries, see Libraries.
Public property, sale of, 58.
Quincy, 8, 18, 22, 39, 48, 51, 56, 61, 91, 95, 97, 102, 103.
Railroads, taxation of, 15, 20.
Railroad Commission of Wisconsin, 77, 86.
Real estate, taxation of, 20, 94, 95, 115.
Real estate broker tax, 42, 43.
Reports, lack of city, 116.
Restaurant tax, 42, 43.
Road and bridge tax, 24.
Rockford, 18, 25, 29, 30, 33, 35, 40, 41, 44, 46, 48, 52, 53, 57, 62, 71,
72, 75, 106, no.
Rock Island, 22, 30, 35, 39, 40, 48, 95.
Sale of public property, 61.
Saloons, see licenses, liquor.
Sanitary districts, 14, 18.
School debt, see debt.
School tax, 13, 56.
Services, water, kind of, 80.
Service privileges, 61.
Sewers, 71, 94;
see also special assessments.
Sheboygan, Wis., 82.
Sinking funds, 13, 103, 104.
Special assessments, 68-72, 98.
Special funds, 98.
Springfield, 13, 30, 41, 43, 44, 50, 59, 62, 71, 72, 78, 79, 81, 84, 85, IO2,
485] INDEX 125
State grants, 55, 56.
Store goods dealers' tax, 42, 43.
Streator, 17, 18, 27, 35, 52, 53, 56, 96, no.
Streets, see special assessments.
Street car license, see licenses.
Street lighting, see Lighting Plants.
Street railways, municipal, 93. 94;
see also franchises.
Subvention, see gifts.
Taxes, assessment of, 12, 16;
business, see business taxes ;
collection of, n, 16, in;
exemption from, 14, 15;
personal property, 21 ;
powers of municipalities, li;
school, see school tax ;
when due, 16;
see also property, business, vehicle, etc.
Tax income, 17-19, 24, 112, 117, 119.
Tax rates, 9, 13, 18, 19, 112, 119.
Tax warrants, 105, 106, 115;
see also debt.
see also franchises.
Telephone and telegraph, assessment of, 20.
Town collectors, collections by, 24.
Transportation, free, 64.
Tuberculosis sanitariums, 92.
Undertaker's tax, 42.
Unimproved property, exemption from taxation, 14.
Urbana, 9, 18, 21, 35, 40, 43, 71, 108, 112.
Vehicle tax, 10, 32, 43, 44, 45, 113, 117, 118.
Water plants, 9, 10, 74-85, 114.
Wheel tax, see vehicle tax.
Wisconsin Railroad Commission, 77, 86.
MUNICIPAL REVENUES IN ILLINOIS
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MAP SHOWING LOCATION OP CITIES STUDIED.