are entitled to have an interpretation by those who are responsible for the preparation and submission of the annual budget. They are in daily touch with the affairs of the city. They are employed by citizens to know about its finances, its properties and funds; its work. They have several large staffs of experts to keep them informed and to help in the interpretation of conditions and results. The mayor has a staff of approximately a hundred men in the office of the commissioners of accounts; the comptroller has a large staff in the bureau of investigation and statistics, besides the facilities of analysis provided in the bureau of bookkeeping and audit; the board itself has a number of staff bureaus such as the bureau of standards and the bureau of contract supervision. Each head of a department has facilities for developing and submitting plans and has focused the attention of his experts on what has been done, what is under way, and what is proposed, in preparation and discussion of the annual estimates. A carefully prepared statement or "address" which will serve to explain and to interpret the accomplishments and proposals of the administration would be of immense value both to officers who are looking for support and to citizens who wish to think and act intelligently about what the government is doing and proposing.

Need for Financial Statements

The purpose of the summary financial statements is to present information in such form that each conclusion may be caught at a glance. To this end, as many summaries of details are needed as there are primary relations to be expressed and conclusions to be reached. The summaries suggested above have to do both with past, present, and prospective or future conditions and results. These summaries are of the same general character as would be submitted by the president of a corporation with his annual report to the annual meeting of stockholders or to the board of directors. It would be quite compatible with the procedure outlined in the charter for the board or mayor as chairman of the board of estimate and apportionment (or executive committee submitting the budget) to incorporate these summaries in the interpretative statement as a part of the matter published in the City Record and sent to the board of aldermen. In this case the summaries would be an integral part of the explanatory text; in which event only the supporting details need be carried as related statistical matter. Whatever their use, the summaries (the few pages through which perspective would be gained) should be prepared and submitted as a part of the budget.

Plans for meeting future needs must necessarily involve consideration of present conditions and past results. It is impossible to know known what obligations have already been incurred and what are the resources available for further appropriations. Judgment with respect to the cost of future work must necessarily be premised on experience gained in past work; so, too, in considering matters of revenue and the relation of revenue to expenses. These summaries would be prepared by the comptroller. The supporting financial statements and schedules would be found in his quarterly and annual reports. The summaries need only be incorporated in the budget, with a reference made to the supporting details contained in quarterly and annual reports.

Need for a Balance Sheet

What in common business parlance is known as a "balance-sheet " is a statement on one side of which is a summary of what the city ownsthe resources on hand and on the other is set off what the city owes. In other words, in a balance-sheet the liabilities are balanced off against the assets, the result being exhibited as surplus or deficit. For the purpose of understanding present financial conditions it is necessary to classify assets and liabilities in such a way that the obligations which are to be met out of general revenues may be set up against the assets that are available for meeting them. It is also necessary to show separately obligations in the nature of loans for which sinking fund provisions have been made, or which are to be considered in relation to properties acquired for continuing use. In municipal finance no different methods need be employed to enable the citizen to understand financial conditions than are customary in private corporation practice for the information of the stockholders. The budget hearing, which is provided for by section 226 of the charter serves the same purpose as an annual meeting of stockholders of a private corporation. A balance-sheet statement is one of the essential documents to be submitted at an annual meeting of both. This is information that has been wholly lacking from the budget in New York, although the data are available for a fairly complete statement of current assets and liabilities.

Need for an Operation Account

Another instrument which is always shown at an annual meeting of stockholders in private corporations is what is known as an "operation account." The balance-sheet is in the nature of an instantaneous photograph of financial conditions taken on a particular day. The operation account is in the nature of a biograph; that is to say, through the operation account may be shown the revenues and expenditures as they have accrued from month to month during the year, and the totals accrued and incurred during the year. For thinking about the future as well as for thinking about the present it is necessary to know what the expenditures have been, and to have them so classified as to show the current expenses as distinguished from capital outlays, fixed charges, etc. As opposed to these expenditures, it is necessary to know whether the expenses have been covered by revenues and to what extent borrowing has been resorted to in order to meet capital outlays, etc. The citizen as well as the officer should know whether the city is running ahead or behind financially. The City of New York has never had placed before it an operation account either as a part of a budget or in any other con-nection.

Need for a Surplus Account

In addition to a comprehensive statement of revenue and expense, it is necessary to know whether there has been a net increase or decrease in the current surplus or deficit. This is affected not only by the excess of revenues or expenses, as the case may be, but also by a large number of other things, such as writing off of uncollectible taxes, discount or premium on sale of municipal credit; losses or waste of stores; losses through bank failures, defalcations, etc. Exact information of this kind has not been made available in the past as part of the statement of affairs before appropriations were made and the tax-levies fixed.

Need for Debt Statement

A balance-sheet does not give all of the information required about indebtedness. The constitution and statutes of the state place on municipalities certain restrictions on borrowing power. Under the constitution and statutes, indebtedness which at one time is exempt, at another time must be reckoned as non-exempt in the calculation of the margin of borrowing power. Within the last few years these data have been nade available, but they have not been presented as a part of a budget or statement submitted in support of requests for appropriations.

Need for a Fund Statement

In a municipality there are definite legal restrictions laid upon the appropriating body, as well as on executive and administrative officers, with respect to the expenditure of money. Money raised for one purpose cannot be spent for another. Appropriations may not exceed the resources of the fund against which they are granted, as these resources are legally defined. A distinction is made between appropriations against a general fund made up of general revenues and receipts and appropriations against loan funds, special revenue funds, trust funds, etc., etc.

Neither the board of estimate and apportionment, the board of aldermen, nor the public are in a position to think about future funding of the beginning of the fiscal year of each of these several funds or classes of funds. In order to do this, it is necessary to know the present and estimated unappropriated balance or resources of each fund, the present and estimated unexpended balance of appropriations, the present and estimated amount of the unexpended balance which is unencumbered by contracts, open market orders, etc. Through the accounting revision of the last few years, the means has been provided for making this information available, but it has not been made a part of the budget.

Need for Summaries of Estimates

The "balance sheet," the "operation account," the "surplus account," the " debt statement," and the " fund statement " constitute what Professor Henry C. Adams in his "Finance" refers to as the "executed budget." The suggested summaries and statements which follow under the caption of "Summaries of Estimates" constitute what the same author terms the " estimated budget." It is to be noted that both the "executed" and the " estimated" budgets deal with revenues as well as expenditures. In both presentations of the budget the purpose is to present a clear picture which will enable the citizen or the officers to see facts and conditions in perspective-to lay the foundation for consideration and discussion of conclusions to be reached with respect to the amounts to be granted in the "act" of appropriation.

Comparative Summary of Revenue Estimates

The estimates of revenues which are prepared and submitted should be in such form as to lend themselves to clear thinking about two questions, viz.: (1) revenue raising policy to be adopted, and (2) adequacy of return. Both of these ends are subserved by arrangement of items of past and prospective revenues according to the character or method of providing income to the city. As bearing on the question of revenue policy it is desirable to distinguish clearly between taxes in their several forms, local assessments, leases, privileges, licenses, franchises, etc. Each of these methods of raising revenue has an important bearing on the economic and social relations in a community which must be taken into account in deciding whether the revenues shall be produced through the exercise of one power or another of the government. From a summary picture of the amounts produced every question of policy can be raised and considered in relation to the return derived from each imposition.

Comparative Summary of Expenditure Estimates

Before decision is reached as to what amount should be appropriated by the city, the many details of proposed expenditures should be analyzed, tions to be considered. (1) It is necessary to know the amounts requested by each organization unit or officer to whom appropriation is to be made -a statement required by the charter. (2) It is desirable to have a well defined "work-program" with a view to determining whether each kind of activity or class of work for which requests are made is desirable in itself. Decision must be made as to what is to be done before careful estimates can be prepared of the cost. The summary by function would provide the comparative data for such use. (3) The proposed work must then be stated in terms of kinds and cost of "personal services " and material things to be purchased. Such a summary is also needed to determine what conditions should be attached to the funds provided for making these purchases, the items of appropriation and the exact terms of each grant or authorization to spend. (4) A fourth summary is needed to lay the foundation for thinking about the method of financing. For this purpose it is necessary to know what amount would be needed for current expenses (such as for operation and maintenance), what amount for capital outlays (lands, buildings, and equipment), what amount for fixed charges (interest, sinking funds, etc.). (5) A further summary is needed as a means for determining what is to be the amount charged against the general fund (tax budget), what amount against loan funds, etc. To this end it is necessary to have the analysis which will show to what fund or class of fund the proposed expenditures are to be charged. For example, it may be thought desirable to pay for all self-supporting properties out of loan funds, and all non-supporting properties and equipment out of an annual amount to be mentioned in the tax budget, or out of local improvement funds. Without several summaries neither citizens nor officers can have any intelligent comprehension of what estimates made up of many thousands of items mean. There can be no financial plans. Only two of these, at most, can be shown in an appropriation ordinance without defeating its purpose. Even then, the items should be summarized.

Supporting Detailed Schedules of Estimates

The summary tables or statements above referred to should be brief enough to enable one using them to get a quick impression. The various relations and facts having been presented in summary form the questions which may be raised with respect to each of the several items making up the summary statements should be answered through direct references to detailed schedules or supporting documents, so as to enable the citizen or the officer to go into any subject intensively if he may wish. In any event, a supporting detailed analysis of this kind would be necessary for the purposes of committee work and report prior to the preparation of the appropriation ordinance by the