MUNICIPAL BUDGETS 1. Development of municipal budgets.—It has always been necessary for some part of the govern mental agencies, either the administrative or the legis lative, to prepare rough estimates of the necessary expenses of the • corporation for the ensuing fiscal year. This information was used as a basis for tax levies. For many years, this work was undertaken in a haphazard and unscientific way. The gradual development of the science of government, the in creasing demands made upon municipalities for fur ther improvements, and the constantly increasing mu nicipal debts of our American cities have forced the authorities to adopt some systematic plan for financ ing and controlling the expenditures of municipal corporations. Furthermore the authorities realize that business methods, by which a complete check is had on all transactions and operations, are as impor tant in the management of municipal activities as they are in business organizations.
2. Distinction between private budgets and mu nicipal the preparation of private budg ets, the reader noticed that it was necessary to limit the expenditures of the fiscal period by the amount of the expected receipts. No such limits are placed upon the makers of municipal budgets. The expendi tures are determined, then the revenue is adjusted to correspond. This statement must be qualified, for tax levies and other municipal charges must not be exorbitant. Furthermore, the tax levy is offset by the amount of certain incomes which municipalities receive for water rates, dock and ferry privileges, in vestments in rapid transit enterprises, license and court fees, etc.
A municipal budget, then, is a comprehensive, de tailed plan or program of the work to be accom plished by the administration during the ensuing year, together with a detailed estimate of the cost thereof, covering all departments and all operations of the municipality. B5r the use of this plan, the taxpayers are enabled to check up the work of their represen tatives and the chief administrative officer is enabled to have a check on the acts of his subordinates by hold ing them to the limits of the budget.. Furthermore, it
gives the controller a record against which he may judge the various departmental warrants or 'checks, which are presented to him for payment. As a rule he has no authority to make payments in excess of the amount allotted in the budget to a particular depart ment or division.
To the department head, the municipal budget be comes an arbitrary guide in the making of purchases or in operating his department. He has definite limits set for him as to the expenditures which he can make. He knows that certain results in actual work, laid down at the beginning of the year in the financial program, are expected in return for his expenditures. He must not only keep his withdrawals within the limits of the budget, but he must obtain for these withdrawals a maximum of results and the completion of the program laid down in the original estimate.
3. Borrowing by municipal and business organiza tions diff erentiated.—The reader has seen that the private budget serves to keep the business house sup plied with sufficient funds to meet its obligations. The municipal budget on the other hand, while serv ing this purpose to a limited degree, does not always result in that desirable end. Municipal taxes are fre quently not collected until the latter part of the year, while the expenditures chargeable to the budget ap propriation, begin to accrue immediately. Many mu nicipalities have now adopted the plan of having taxes payable semi-annually. This reduces the necessity of borrowing and results in a considerable saving of interest for the municipalities. In a recent address, Hon. William A. Pendergast, former controller of the City of New York, illustrated the saving which New York City made by providing for the collection of taxes twice a year.
In 1906, on a tax levy of $94,000,000, the city paid in in terest, on revenue bonds issued in anticipation of the collec tion of taxes, $2,898,562.