In 1909, on a tax levy of $122,750,000, the city paid in interest, on revenue bonds issued in anticipation of the collec tion of taxes, $5,194,241.
In 1912, under the semi-annual tax plan, on a levy of $150,500,000, the city paid in interest, on revenue bonds is sued in anticipation of the collection of taxes, only $2,479,635.
Thus, it will be seen that the municipal budget does not seek to provide the funds at the time when they are needed, as is the plan of a private budget, but it is interesting to note that progress has been made in this respect, and that municipal authorities are alive to the evil of interest charges and large floating debts.
4. the old-time ( so called) budget system, each department head fur nished the legislative body with a lump estimate of the needs of his department. This method was open to numberless objections. Inasmuch as the appro priation was made in one lump sum for the depart ment, all possible avenues for misapplication of the funds were open. The amount which was to be ex pended for salaries was not stated, nor was the amount to be expended for any one of the department's usual needs specified in the budget. Consequently, there was open to the head of the department the oppor tunity of diverting funds, which should' have been used for the real needs of the department, to improper purposes.
When the legislative bodies began to prune the de partment head's estimates, the department head sim ply increased his estimate above the figure which he actually expected to get. Any reduction by the leg islative body simply tended to bring his particular allotment down to the amount which he actually de sired.
5. The modern budget.—The modern budget takes several different forms, but is founded on the idea of a collateral check and investigation of the estimates submitted by department heads. The de partment heads are expected to confer with those qualified under them and submit an estimate which measures, as accurately as can be' foreseen, the actual needs for the ensuing period. There are two kinds of budgets now in use, the segregated and the lump sum, which, while varying somewhat in form, are practically representative of modern municipal budget practice.
6. The segregated budget.—The segregated bud get provides a very complete and absolute check on the operations of every department. Departmental estimates are submitted on a form which calls for de tailed information in support of the requests made by the department head. All proposed expenditures are
itemized in detail so as to make them readily com parable with the transactions of previous years. The definite appropriation of sums for specific purposes prevents the diversion of funds to objects other than those for which they were designated. The depart ment head has a fixed allowance for salaries and other expenses, and there is no opportunity for him to util ize any part of the appropriation for other purposes without securing the necessary authority for so doing. Under this method, estimates are in such a shape that they may be subjected to intelligent scrutiny by ex pert examiners of a budget commission or by any one interested.
This method has many disadvantages which will often defeat its purpose: a considerable expense is entailed in the employment of a large clerical and examining staff ; rigid classification will frequently hamper the heads of departments and handicap thein greatly in their work; it is so inflexible that any un foreseen contingencies or changed conditions cannot be satisfactorily provided for. On the other hand, if the idea of segregation is carried out with judgment, it will prove, as a rule, efficient in operation.
7. The method is di rectly opposed to the segregated budget in many of its features. Under this plan, the estimate for each department is expressed in a lump sum. However, to overcome the disadvantages of a lump sum appro priation unsupported by further details, and in order still to maintain the flexibility of the operation of the lump sum budget, cost schedules and working plans are made a f)art of the budget. These cost schedules and work plans must cover the complete operation of the department. The current year's expenses, the program of work to be covered, and a working plan of the effects of this year's projects on ensuing years must be made a part of the estimate. This method provides for the carrying thru of new projects to their completion even tho the administration changes. The lump-sum budget system has shortcomings as well as advantages. There is no way of keeping a department head strictly within his appropriation, for, unless the cost schedules are made a mandatory part of the budget, he has full power to shift funds at his pleasure. On the other hand, as soon as the cost schedules are made rigid and controlling, the lump-sum budget becomes, in effect, a segregated budget.