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REAL ESTATE
AND
NEW YORK, DECEMBER 2, 1916
RESULTS OF CITY BUDGET ANALYZED
Comparative Study of City's Appropriation, Chargeable Against
Current. Revenues for 1917, Compared With Other Years
By DR. FREDERICK A. CLEVELAND, Director, Bureau Municipal Research
PART FOUR.
' N the second nuinber of this series a
A graph was used to show the actual
increases in appropriations for expenses
from year to year, from 1903 to 1917 as
compared with an assumed average rate
of increase in community demands. As
a matter of fact, the assumed average
rate of annual increase of community
demands (6 per cent), whether right or
wrong, does not depart widely from the
actual increases in appropriations from
1898 (the date of consolidation) to 1908
(the time when elected e.xecutive officers
began to address themselves seriously
to the problem of improving the meth¬
ods of doinif public business).
Explanatory Chart.
In 1907 it was estimated that not less
than 25 per cent of the total resources
made available for public service was
wasted—in fact, worse than wasted. No
one will contest the view that the ele¬
ment of waste was large whether he re¬
gard the estimate as high or low. To
give point to the discussion of methods
of control used during the last few
years Chart V is prepared on the basis
of a 6 per cent assumed normal increase
and an assumed 25 per cent of prevent¬
able waste durin.g the first few years.
Upon this is also traced the actual rec¬
ord of increases from 1898 to 1917.
A glance at this chart shows that dur¬
ing the first ten years, 1898 to 1910, the
actual increase in appropriations follows
closely the 6 per cent assumed normal
on the graph. Then there is a gradual
departure until 1917, when the rate be¬
gins again to rise and parallel the 6 per
cent curve. Whether the 25 per cent of
estimated waste is a fair approximation
is not in point. The purpose of the
chart is to raise for discussion two ques¬
tions: (1) whether there are still further
savings to be realized through better
management; (2) whether the methods
of control now used are not such as
make further savings impossible.
The first question admits of but one
answer. Without doubt there is still a
large amount of preventable waste than
has not yet been cut out. Even a
cursory knowledge of present business
practices supports this conclusion. But
can the resources made available each
year for public service be used to high¬
est advantage so long as the present
methods of control are continued? The
writer is convinced that they cannot—
and for these reasons: (1) because the
methods used for purposes of control
are arbitrary and out of harmony with
the principles of representative govern¬
ment; (2) because the methods of con¬
trol now in use violate principles of
good business management. The seri¬
ousness of this criticism suggests first
a brief description of existing methods
of control—after which consideration
may be given to what are thought to be
defects and limitations.
Method of Preparing Budget.
The present method of preparing the
annual appropriation bill is briefly this:
1—To require heads of depart-
rnents to prepare "estimates" of ex¬
penditures chargeable against the
"tax bud.get."
___22rJp_submitthese to the Board
of Estimate which iu turn hands
them over to its staff agents.
3—The staflf agents of the Board
of Estimate then make up a "tenta¬
tive" appropriation bill which is sub¬
mitted to the Board itself for dis¬
cussion and after a paring process
the amended bill goes to the ap¬
propriating body under the title of
"budget of the City of New York."
This method just described is thought
to be defective in manv particulars and
chiefly in the followin'^ respects:
1—The plan brings into review
only a part of the city's activities
and financial requirements; the
amount of the "expenses" which are
made the subject of careful scrutiny
is only about 40 per cent of the total
annual expenditures, while the en-
the correct process, is wholly reversed
and with this there is a loss of publicity
because the board as a reviewing body
conies to be the proooser while adminis¬
trative officers become ineffective critics
—the public being left in the dark and
the city being deprived of the business
judgment of officers in charge of its
various services
The methods of accounting prescribed
by the Comptroller are desi.gned to pro¬
vide for publicity as well as exact in¬
formation both to officers and to the
controling boards. The information
which the accounts prescribed by the
Comptroller are designed to produce is
of two kinds: (1) information to prevent
overdrawinc? of apnropriations; (2) in¬
formation which will
tell the story of
tire bill carries only about 80 per
cent of all authorizations.
2—The preparation of the "budget"
is put into the hands of the staffs of
the Board of Estimate instead of re¬
quiring the executive officers them¬
selves with their staff and line ad¬
visors to prepare, submit, explain
and defend the proposals which are
to be voted on by the representative
body—a practice which thwarts all
efforts to force on executives the
necessity for planning and for ren¬
dering a strict account of their ac¬
tivities, the attitude of the executive
under the circumstances being to
ask for more than he needs in the
hope that he may get what he thinks
he is entitled to.
3—The initiative bein.g taken by
an irresponsible staff of a central
board the conclusions reached are
necessarily arbitrary and the meth¬
od of control is one of minute limi¬
tations and restrictions on the man¬
agement instead of critical review
and approval or disanproval of
executive plans with provisions for
enforcing strict accountability as to
the manner in which public money
is expended.
While this criticism of method is
couched in general terms the fact is that
what is being done and whether the
business of the city is being carried on
economically or wastefully.
The methods used by the staff agencies
of the Board of Estimate in the prepa¬
ration of the "budget," however, are
such that it has been found impossible
successfully to install and operate the
last kind of accounts, the result being
that both the board and the public are
vvithout information concerning the ac¬
tivities of the city and have little or no
basis for judgment as to whether the
management of nublic affairs is what it
should be. While the Comptroller has
been spending- thousands of dollars each
year trying to provide the means for en¬
forcing accountability through accurate,
up-to-date information on cost of work,
tbe staff of the board has been spending
other thousands in a manner to prevent
it. In other words, the budget-making
staff of tbe board has been working at
cross purposes with the staff of the
Comptroller and neither of them has
been svmnatheticallv supported by the
staffs of the several departments.
The citv is spending $100,000,000 a
vear hiring men to carry on its work.
One of tlie essentials to efficient public
service is t^-e develonment of a loyal
personnel aiH an esprit de corps based
on fair treatment of its employees. For