Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: [v. 91, no. 2354]: April 26, 1913

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REAL ESTATE BUILDERS AND NEW YORK, APRIL 26, 1913 ililllfll,!!;,! P1IIIIIIII!1I1I!IIII!III!BI!1!II1!I!IM^^^^ llllllllilililliiBllilii^^^^^^^ 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. ■■WIMIIMIMMMIlllBillBlllBlll!^^^^^^ 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