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CHAPTER I

THE BUDGET AS AN INSTRUMENT OF PLANNING
AND OF PUBLICITY

Section 226 of the charter of Greater New York makes four distinct steps in procedure necessary to the raising of money to meet the city's fiscal needs:

1. The preparation of "departmental estimates" by the spend

ing officers of the city

2. The holding of public hearings on the estimates and the
preparation, submission, and publication of a "budget"
including a proposed "appropriation ordinance" by the
board of estimate and apportionment, acting as a cen-
tral executive committee of the administration

3. The consideration of the "departmental estimates" and
action on the proposed "appropriation ordinance" by
the board of aldermen, acting as a legislative body
4. The fixing of the tax rate and the levy of taxes by the board
of aldermen, acting as a legislative body

In the introductory text (pp. 7 and 8), the defects in present budgetprocedure are pointed out. The constructive recommendation pertaining to the form and content of the "budget" assumes that its primary purpose is to serve as an instrument of planning, and to give publicity to the facts necessary to official and citizen judgment about the matters of public business to be undertaken. To this end it is suggested that the annual "budget" when submitted by the board of estimate and apportionment, as required by charter, be in two parts:

Part I-Containing a "financial program" with a resolution fixing the revenue and borrowing policy; a "work program" and an "appropriation ordinance "-prepared in the exact form which the board of estimate and apportionment, as the central executive committee of the administration, would have it (Appendix, see exhibits 1 to 3 inclusive, pp. 92 to 94)

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Part II-Containing a "budget statement" to consist of all the supporting data needed either by citizens or officers to apprise them of what "public service or "improvement" it is proposed to finance, what is the cost of each undertaking, activity, or service, whether the funds requested should be granted, and in what amount, and how the requested expenditures are to be met

tionment would advertise or publish what has been done with the funds that have been granted to spending officers during the past and current fiscal periods, and what is the present financial condition, as well as the amount requested and the conditions which in its opinion should be attached to funds to be granted for the next fiscal period. This advertisement of their plan for the future and of their account of stewardship is for the information of citizens and the legislative branch of the government.

Practice in Parliamentary Government

This plan is not new. It is the budget procedure used in most advanced parliamentary governments. In parliamentary governments the cabinet prepares and submits the appropriation bill. With this and in support of it are presented the facts necessary to carry conviction that the funds are needed. This "bill" is usually separately submitted, and the budget statement with the "Financial Program," or the supporting bundle of documents are what constitute their budget." Responsibility for the preparation of the budget, including the appropriation bill, is placed upon the cabinet as an executive committee. Such a procedure locates responsibility for proposals and gives to the legislative branch the facts necessary for consideration of money

measures.

Charter Requirements of New York

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The proposal conforms to the requirements of the charter of the city of greater New York relating to the "budget." Since each member of the board of estimate and apportionment is chosen by the people as sovereign, he is directly responsible to the sovereign for his acts. The board acts in the capacity of a central executive committee or cabinet. As such the charter requires it to prepare and submit an annual appropriation bill or ordinance and attach such terms and conditions as are thought to be desirable in order to make control over expenditures effective. It is also required to supply the data needed to settle questions that have to do with the raising of revenue. With a view to defining clearly the responsibility for financial proposals in parliamentary countries, the legislative branch has itself adopted the rule that no motion may be made with respect to an item in the appropriation bill submitted except to reduce. This rule has also been made mandatory here by charter-the board of aldermen may reduce but it may not increase the amount of any item contained in the appropriation bill submitted by the board of estimate and apportionment. The charter of New York has gone still farther than is customary in parliamentary budget practice, in that it prohibits the board of aldermen, the legislative branch, from changing any of the terms or conditions estimate and apportionment. The ordinance submitted as a part of the budget must, therefore, be in the exact form in which it is to be passed by the board of aldermen; otherwise it cannot be acted upon by this board.

Extent to Which the Board of Estimate Has Failed to Use Charter Powers

Hitherto the board of estimate and apportionment (the executive committee or cabinet) has complied with the requirements of the charter in that it has submitted each year an appropriation ordinance with all terms and conditions attached. It has not, however, prepared and submitted the various supporting financial statements needed to consider the ordinance and which are therefore a necessary part of a "budget." Certain information which ordinarily is incorporated in a budget has been available to the board of aldermen and to citizens if they went to the trouble of collecting and interpreting it, but the board of estimate and apportionment has left out of its "budget" concept practically everything except the appropriation ordinance. It has neglected to lay before citizens and the legislative branch its next year's "financial" and "work" plan; it has neglected to render an account of stewardship. As before stated, it has not prepared and submitted summaries of work done, with unit costs-information essential to judgment as to whether its management of affairs has been efficient or whether its requests for revenue and for authorization to spend are reasonable. A comprehensive budget statement is still lacking. What is most serious is this: that since it has not distinguished between an appropriation ordinance" and a "budget," it has attempted to elaborate the appropriation ordinance to make this serve as an instrument of publicity. Added to this, the principle of extreme itemization was utilized to enforce on officers the judgment of the examiners of the board, with respect to the needs of definite organization units, with the result that the elaboration of analysis and itemization has in a measure defeated the purposes of the appropriation act as an instrument of legislative control over the contracting and purchasing relations. At the same time the restrictions on the administration have stood in the way of efficient management.

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Component Parts of a Budget as a Means of Publicity

The form of budget proposed is one which would serve both as an instrument of accountability for funds previously appropriated, and as a means of enabling citizens and legislative officers to determine whether requests for appropriations should be granted or any items basis for consideration of questions of policy having to do with work to be done or the amounts which are needed for each kind of work. It would be the means for getting at amounts to be raised in the form of revenue and amounts which the city should borrow in order to supplement its revenues. It would enable citizens and officers interested to look into the future with a degree of business certainty that is desirable in a great institution such as the City of New York. In outline the "budget statement" (which would be submitted with the "appropriation ordinance", the "work-program", and the "resolution fixing the revenue and borrowing policy of the next fiscal year") would contain the following:

1. A brief explanatory text by the board characterizing the plans submitted and explaining the new features in requests for funds or probable changes in tax rate

2. Summary financial statements, comprehending:

a-A balance sheet

b-An operation account

c-A surplus account

d-A debt statement

e-A fund statement

3. Summaries of estimates, comprehending:

a-Comparative summary of actual and estimated revenues

b-Comparative summary of actual and estimated expen

ditures classified by

1. Organization units and functions

2. Organization units and character
3. Organization units and objects

c-Statement of increases and decreases in departmental
estimates by action of board of estimate and appor-
tionment

Need for Explanatory Text

The average citizen is busy with matters other than public business. He cannot take the time or employ the staff needed to analyze and draw conclusions from hundreds of pages of figures such as make up the budget of a corporation which is subdivided into over one hundred and fifty departments, boards, commissions, and offices, which carries on a great variety of enterprises, each one of which is technical in its requirements, and whose financial transactions amount to more than $500,000,000 each year. Even with all the details summarized and presented in the form of balance sheets, operation accounts, and digests of revenues and expenditures, the significance of these sum

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