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Procedure for the City of Greater
Board of Estimate and Apportionment,
New York City:
DEAR SIRS-At a meeting of the tax-budget committee on June 23d last, question was raised as to whether your board should not take further steps to develop the budget procedure, with a view to getting before citizens and officers more adequate information about the business affairs of the city. It was also urged that it would be in the interest of increased efficiency and greater economy to make the appropriation ordinance more simple.
As the recommendations were necessarily somewhat technical in character, the Bureau was asked to submit its proposals in writing. A first draft, with supporting arguments, was sent to the committee on July 26th. This draft has been the subject of a number of conferences with the staff experts of the board and departments, and, as a result, certain changes were made. Following this, the proposals and supporting data were put in type, without publicity, and sent to officers of the city as well as to the tax budget committee as a basis for discussion. Your committee, however, did not think it wise to recommend any broad changes for 1915, due to lack of time. The proposals are now sent to you in the hope that the tax-budget committee of the board may continue its work and take up at once the 1916 budget.
In brief, the thought is that your board, if it begins now, can prepare and submit in budget form:
A definite "financial program" for 1916
A well considered "work program" with estimates of expenditures for 1916, showing what public services are to be undertaken
A well considered public improvement program" with estimates of expenditures for 1916, showing proposed capital outlays
A well considered revenue program with estimates of revenue returns for 1916
issues and redemptions for 1916
A "balance sheet" showing present and estimated financial conditions as of the beginning and end of 1916.
An "operation account" showing past and estimated revenues and expenses as distinguished from borrowings and capital outlays with surplus or deficit at the beginning and end of 1916.
An "appropriation ordinance" for 1916 which is better adapted to the exercise of legislative and administrative control than is the present one.
The proposals are now reprinted and published for the reason that the subject is one which should have the widest consideration of citizens as well as of officers. As the report was submitted while the 1915 appropriation ordinance was being prepared, the descriptive and critical data does not go beyond the 1914 act. A separate report is being submitted showing an analysis of the 1915 ordinance.
R. FULTON CUTTING,
Chairman of Board of Trustees.
During the last seven years much progress has been made in finance administration. In no small measure this has been due to the introduction of a procedure that makes possible the scrutiny of departmental estimates by the board of estimate and apportionment and the exercise of more effective accounting control by the department of finance. Estimates have been systematized. A uniform method of analysis has been adopted. A complete system of appropriation and fund accounts has been installed, by means of which the accuracy of departmental reports may be determined, and the unencumbered as well as the unexpended balance of each final authorization to spend may at all times be known. Cost and property accounts have been put in where none existed before. The commissioners of accounts as a staff to the mayor have been made more useful and effective agents of central executive control. In the department of finance the bureau of municipal investigation and statistics has been established as a means. of current analysis and of special inquiry into requests for appropriation and for transfer of funds referred to the comptroller by the board of estimate and apportionment for report. Recently the bureau of standards and the bureau of contract supervision have been created by the board of estimate itself; the first of these bureaus was organized to standardize specifications both for personal services and for the material things, such as supplies and equipment to be purchased; the second bureau named was organized to standardize and supervise practices relating to contracts for construction and repairs other than by city labor.
The Annual Estimates Now Submitted Not a Budget
Notwithstanding these and many other changes in organization and procedure looking toward the production of more complete informa tion, there is still much to be done. In a strict sense New York does not have a budget. Each year, when considering requests for appropriations and the tax rate, its officers and citizens have before. them only incomplete data. They do not have before them a statement of financial condition; there is no balance-sheet, no operation account, no statement or analysis of cumulated surplus or deficit. There is no statement submitted with the appropriation bill showing fund resources and obligations. When asked to consider the next
available showing either the financial results of past operations, the unappropriated balance of resources on hand, or the unencumbered and lapsing balance of appropriations previously made. Even in the estimates only one side of the calculation is submitted, viz., estimates of expenditures. Estimates of prospective cash receipts and prospective revenues for the next year are not made up and published until several months later. For seven years an accounting installation has been in progress, with a view to making complete and accurate information promptly available on all of these subjects, but only a small part of the data produced is utilized either for budget or administrative purposes.
The Form of the Appropriation Ordinance Defective
The chief obstacle both to the introduction of an effective budget. procedure and to progress in the installation of the accounting means for obtaining complete and accurate information, whether for budgetary or for administrative purposes, has been the form of the appropriation ordinance. This is made the special subject of discussion on pp. 33-38 of the report which follows. In this relation two general observations only need be made:
1. That the existing form of the appropriation ordinance is one which defeats its purpose; and
2. That both the form of the appropriation ordinance and the conditions attached are entirely within the jurisdiction of the board of estimate and apportionment.
In so far as changes in the form of the appropriation ordinance are desirable, therefore, these changes can and must be made before the budget is submitted by the board of estimate and apportionment to the board of aldermen.
With a view to increasing the effectiveness of legislative control over governmental policies and over the revenues and expenditures, and, at the same time, to enabling executive officers to exercise more direct control over the efficiency and economy of transacting public business, the following constructive recommendations are made:
1. That the "budget" prepared by the board of estimate and apportionment, submitted to the board of aldermen, after public hearings on the "departmental estimates," and published in the City Record, as required by section 226 of the charter, carry with it
or program for next year; (2) a "work-program which will indicate what "public service" and what "public improvements" it is proposed to undertake; (3) a plan for "revenue" raising and "borrowing"; (4) a balance sheet of actual and estimated resources and liabilities, surplus or deficit; (5) a fund statement; and (6) a debt statement.
An appropriation ordinance-in the form and with the terms and conditions attached, which when passed shall govern.
The supporting data needed to get before the citizens and the board of aldermen what the board of estimate proposes as a work program for the next year, and whether the items and amounts requested by them should be granted.
2. That the form of the proposed appropriation ordinance submitted as a part of the budget be still further modified so as to provide for the exercise of more effective control over expenditures, and at the same time leave to executive officers opportunity to use business discretion in management.
3. That, with a view to providing for the exercise of more effective legislative and executive control over expenditures for salaries and wages, a schedule of authorized positions (with specifications of the character and grades of work to be done at fixed rates of pay) be attached to and made a condition governing each item or amount in the appropriation ordinance for the purchase of "personal services."
4. That, as a means of exercising legislative and executive control over the city's contracting and trading relations, a catalogue or schedule of standard specifications for "materials," " supplies" and " and "equipment" be promulgated, which by resolution would be a condition governing expenditures of this kind; and in so far as specifications may not be established, that control be provided for by central review by the bureau of standards and the bureau of contract supervision.
5. That as a means of providing for the exercise of positive control over the functions and activities of the government, an ordinance be promulgated or resolution be attached to the appropriation ordinance requiring that no work shall be done, or materials, supplies, equipment or