REAL   ESTATE







BUILDERS





AND







NEW YORK, APRIL 26, 1913





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THE COST OF GOVERNMENT IN NEW YORK CITY





A Study of the Principal Causes of the 98 Per Cent. Budget Increase
Which Has Taken Place in the Last Ten Years—Remedies Suggested.





I





By HENRY BRUERE, Director, Bureau of Municipal Research.

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NEW YORK CITY'S gross funded
debt is $1,122,690,042.75. Its an¬
nual interest and debt redemption bill,
as shown in the 1913 budget, is $54,977,-
381.34. Its budget is rising toward the
$200,000,000 mark, and its taxes continue
to increase. Since 1903, as indicated by
budget appropriations, the expenditures
of the city and county governments in¬
cluding State taxes have increased from
$98,119,031.10 to $192,711,441.16, or 98.43
per cent. In this time the population of
the greater city has increased from 3,-
781,423 to 5,372,983, or 42.09 per cent.
Obviously the outgo of dollars is out of
proportion to the income of population.
Mere growth in the number of persons
to be served by the government, there¬
fore, does not furnish a complete ex¬
planation of why taxes increase. From
1908, the year when the budget-making
and accounting reorganization began, the
annual budget has risen from $143,572,-
266.17 to $192,711,441.16, a 34.23 per cent,
increase. Here again, the rise in the cost
uf government has outsped the growth
of population, which in this period was
21.49 per cent. If the average annual
rate of increase in the past five years
holds good for 1913, the 1914 budget will
be something over $205,000,000.
A Business Administration's Expendi¬
tures.

Five years ago Comptroller Metz an¬
nounced that the city could be put on a
self-paying basis, were business methods
adopted. Since then it has been repeat¬
edly proclaimed by men in touch with
city affairs that the waste in supplies and
payrolls approximated from $20,000,000
to $25,000,000 a year. With the convic¬
tion that this Avaste could be eradicated
the present administration went into of¬
fice pledged to business management.
For the past three years this administra¬
tion has made the city budget. What is
the result? The 1911 budget, the first
budget made by the present administra¬
tion was $174,079,335.16. In 1913 it is
$192,711,441.16, having increased $18,632,-
106, or 75 per cent, of the $25,000,000 esti¬
mated waste of four years ago. Ques¬
tions such as the following inevitably
come to mind:

Who Is Responsible?

Who is responsible for this increase?

Was it unavoidable?

Have the activities of government in¬
creased in proportion to these increased
expenditures?

Is the city now run on business lines?

Will city expenditures continue to
grow?

These questions and others of interest
to taxpayers and citizens who wish effi¬
cient government, this and following
articles will attempt to answer.

It is only by analyzing the budget in
some   detail   that   responsibility   can   be





Ttte present article is the first of a series
of five, written by Mr. Bruere at the request
of the Record and Guide. The purpose of
the series is to discover why taxes are in¬
creasing out of proportion to the growth ot
population. If the causes of the dispropor.
tionate increase in taxes can be ascertained,
there should be no great difficulty In getting
the men of public spirit in tbe community to
cooperate toward obtaining effective reme¬
dies.

Mr. Bruere's first article, the second in'
stattment of which will follow next week
analyzes the increased cost of government,
locating il) tbe divisions of governmental
activity in which tbe principal Increases
have occurred and (2) the causes of these
increases, ft emphasizes the important
fact that the concentration of fiscal respon¬
sibility supposed to exist in the city admlnls
tration Is more apparent than real, as the
Board of Estimate has "more or less furls
diction" over only $85,000,000 In a budget
of nearly $193,000,000.

The second article will discuss what will
be shown to be a principal factor In tbe
rising cost of government—the mounting
bonded indebtedness of the city. The third
article will describe present efforts under
way to eliminate waste and to obtain £
dollar's worth of service for a dollar's taxes,
and results already obtained from tbem.
The fourth will deal with obvious next steps





for taxpai'crs to Insist upon In bringing
about greater efficiency and economy In city,
government The fifth article will forecast
tendencies in development of city activities J
prospective undertakings and methods of
financing them.                                                I





placed for increases in expenditure. Let
us begin with the budget for 1913.

The budget is made up of mandatory
and discretionary items. The mandatory
items are those fixed by act of Legisla¬
ture or those representing binding legal
commitments, as the debt charges. An
illustration of expenditures compelled by
statute is the product of the three-mill
ta.x which the city must impose for edu¬
cational purposes. The discretionary
part of the budget consists of items
which the board may deny, but never
does; as, for example, minimum allow¬
ances for running the necessary business
of the city, and of items providing for
the extension of activities or the en¬
largement of working forces.

By all odds the largest group of ex¬
penditures in the entire budget is dis¬
cretionary  in its origin,  but becomes  a





mandatory charge upon the city once the
initial step is taken, namely, charges for
the payment of interest on and for the
redemption and amortization of the city
debt- The growth of the city debt
charges explains approximately one-third
of the growth of the total budget, as is
indicated by Table I-

The Corporate Stock Budget.

In the 1913 budget the debt charges
amount to $54,977,381-34, or 28.53 per
cent, of the total. Problems involved
in the city's $1,000,000,000 debt, of which
the annual debt service appropriations
furnish only a part, are so numerous
that they will be treated in a separate
article. It may be said here, however,
that the present enormous debt service
appropriation results largely from an
utterly chaotic method of initiating and
financing public improvements during
previous administrations. One of the
first steps taken by the present adminis¬
tration was the establishment of a cor¬
porate stock budget which, for the first
time in the history of the city, coordi¬
nated public improvement authorizations
with the actual borrowing capacity of
the city. In 1909 at one time the out¬
standing authorizations for the issue of
corporate stock amounted to $180,000,-
000 as compared with a borrowing ca¬
pacity of $3,000,000. This condition the
present administration has sucessfully
corrected.

Deducting city debt services from the
total budget there is left $137,734,059.82.
The next largest single item of e-xpen-
diture is for educational purposes. The
educational budget for this year is $35,-
206,846.96. Of this sum $24,614,587.29 or
69.91 per cent, is a mandatory charge
representing the product of the three mill
school ta.x. Since 1908 the discretionary
part of the school budget has increased
$7,735,994.34, or 270.84 per cent. A part
of this increase is attributable to the fact
that except in the purchase of supplies
no one has ever attempted to apply scien¬
tific principles of administration to the
schools. Studies made as part of the
recent school inquiry show that there is
considerable waste in school manage¬
ment. An expert engineer, after sttidy-
ing the heating plants of the various
school buildings, reported that an annual
saving of $350,000 could be effected if
the department of education adopted as





Table  I—Growth  of  Debt  Service   Appropriations.





Debt Service.





Other Charges.





Total Budget.

Status   in   1903...............$97,119,031.10

Increase    1903-1908...........    46,453.235.07

Increase    1908-1913...........    49.139,174.99

Total   increase   1903-1913.....$95,592,410.06

Status   In   1913...............$192,711,441.16





Per cent.
Amount.        of total.
$23,694,068.85      24.39





16.760.704.01
14.522.608.48

$31,283,312.49

$54,977,381.34





36.08
29.56





Amount.
$73,424,962.25

29,692.531.06
34,616,566.51





32.72      $61,309,097.57
28.53    $137,734,059.82





Per cent.

o£ total.

75.61

63.92
70.44

67.28

71.49