be made good, and compliance with the contracts or agreements was enforced before payment was made of the amounts called for by the vouchers and estimates which had been certified to the finance department by the various departments." c. Control over Expenditures The auditor or comptroller is the person who can best perform the duty of keeping the expenditures within the limits set by the budget. To do this he must charge to its proper account, every bill allowed, and keep his books in such a way that he can tell in a moment whether or not there is money available for any bill that may be presented. But the heads of departments sometimes incur bills in excess of their appropriations, either through ignorance or trusting that the overdraft will be allowed in some way. This involves two evils it is an unwarranted attempt to force the hand of the government into granting a larger allowance, and it exposes innocent or venturesome claimants to vexation and perhaps loss. The remedy is to push the financial control back to the initial steps that led to the liability — to require that every contract or requisition for supplies shall bear the certificate of the comptroller to the effect that there is a balance appropriated to this purpose sufficient to meet the expense. This device has been generally adopted in the newer charters. Final responsibility for this control over expenditure may be vested in the council. This is the case in three fourths of the list cities, and probably in nearly all of the smaller cities, of the country that are not mentioned in this study. St. Louis is the largest representative of this class. The twenty-one cities where the council does not have this power are all north of the Ohio and the Potomac, except Jacksonville; Chicago is the farthest west of the number except San Francisco. Massachusetts contains four-Boston, Cambridge, Lowell, and Worcester. Indiana has three Indianapolis, Ft. Wayne, and Evansville. New York has five- New York, and the cities of the second class, though Rochester and Troy had been in the list when under the old charters. The others not yet mentioned are Baltimore, Cincinnati, Dayton, Erie, Manchester, New Haven, Philadelphia, and Providence; in the District of Columbia, the expenditure of appropriations is vested in the commissioners. There is frequently some compromise between the two methods of control. In Grand Rapids claims not recommended by the comptroller are allowed only by a three-fourths vote of all the members of the council. In 1896-97 nine such bills were acted on by the council; eight were not allowed and one was "referred." Chicago, Cincinnati, Erie, and Jacksonville limit executive control to the extent of requiring the approval of the council to formal contracts. Evansville and Worcester do the same with large contracts. On the other hand, Covington allows the department to make expenditures not exceeding $25, without consulting the council; Wheeling sets the limit at $100, and Cleveland at $250. Likewise the payment of regular salaries is often exempted from the action of the council, as in Pittsburg, Columbus, Superior, and Tacoma. Certain departments are excepted, as in Denver. The school board is most often thus favored; the commissions appointed by the governor, or otherwise independent of the rest of the city government, must also have control of the funds of their departments, or their independence is seriously impaired. It is at once evident that the cities which have the most highly developed budgetary systems are precisely the ones that commit to the comptroller the responsibility for the execution of the budget. The same conditions which make an elaborate budget necessary also render effective control over it by the council impossible. Then the execution of a carefully prepared budget is chiefly ministerial and there is little occasion for the legislative branch to have a part in it; also, reversing the order of cause and effect, where the council is done with the finances for a year the moment the budget is passed, there the making of the budget receives the closest attention. If the budget is only a tax levy, of course it does not appropriate at all; the council must make the appropriations later when it approves contracts, orders purchases or work, or allows bills. But it must not be supposed that, in the multitude of cities where bills must receive the approval of the council, the real work of auditing claims is done there. In a large city it could not possibly be done by the council or even the ordinary council committee. It goes where all detail work inevitably tends — into executive hands. d. Checks on Other Departments Finally the comptroller supervises the accounts of other officers who handle the city's money. He prescribes their forms of account and report, receives reports from them, and inspects their books. But it is over the treasurer that he exercises the most perfect supervision. All bills against the city must receive the approval of the comptroller before being allowed, even when they are allowed in form by the council; all pay rolls and warrants on the treasurer must be signed by him; as also must all checks drawn by the treasurer on the banks acting as depositories. He may keep informed of the money coming into the treasury either by countersigning all receipts given by the treasurer or by inspecting the treasurer's books, or both. In at least two cities, St. Paul and Omaha, the comptroller checks the books of the treasurer daily. Then by occasionally counting the treasurer's cash and receiving statements from the banks of the amount of city money on deposit, the comptroller has a perfect check on the treasurer. In Newark the treasurer informs the comptroller daily of the amount on deposit in the various banks. Not all cities, however, have a perfect system like this. The most frequent imperfection is that the comptroller has no direct means of knowing how much money comes into the treasury. Sometimes entire departments, like the board of education or the police commission, are independent of the comptroller. Sometimes the treasurer or other officers are allowed to spend or receive petty cash without any check whatever. In 1897 shortages were found in the accounts of three minor officers in Cincinnati, due to the imperfect system of accounting. CHAPTER XXVII CENTRAL CONTROL OF LOCAL FINANCE 90. The Growth of State Control in the United States. Professor John A. Fairlie has written the following account of the centralizing movement in the United States: 1 Local administration in the United States during the first half of the nineteenth century developed steadily in the direction of a completely decentralized régime. Our constitutional system inevitably made the local authorities subject to the state legislatures; and there was always a large amount of legislative control limiting the scope of local action. But within the limits. of powers conferred by the legislature there came to be no administrative supervision over the acts of the local officials. During the last half century there has been in evidence a counter wave, making its way slowly and with difficulty, and as yet far from overcoming the earlier tide; but nevertheless gaining in force as time goes on. In many branches of administra tion there have been established state officers and boards with varying powers of inspection and supervision over local officials. This has been the case in the field of health regulation (of which we have just heard), in charity administration, in school management, and in local finance. It is with the movement toward state administrative supervision in the last named of these fields that this paper is concerned. It is proposed, first to describe what has been accomplished in those states where most has been done; and then to consider the general principles of a wise policy in this matter. What has been done has been mainly in reference to taxation and accounting. What will be said as to a general policy will consider also the question of local indebtedness. 1 Reprinted, with consent of the author and the Association, from the Proceedings of the American Political Science Association, Vol. I. (1904). TAXATION Local authorities in this country have only such power of taxation as is conferred by the legislatures. And as yet no local authority in this country has been given power to determine for itself what kind of taxes it should levy, but may levy only those taxes specifically authorized by statutes. There is, therefore, no room for administrative supervision in this direction, since the local authorities have no sphere of independent action. As to the rate of taxation local discretion is also closely limited. For some taxes, notably the tax or license for the sale of liquors, the state law specifies the rate as well as the nature of the tax. For the general property tax more leeway is given; but on the one hand the local authorities are compelled by statute to levy taxes to meet certain expenditures, and on the other hand are usually restricted as to the aggregate tax rate; and between this Scylla and Charybdis a narrow course must often be steered. Under these circumstances again there is little opportunity for administrative supervision; and none has developed. When, however, we turn to the assessment of property for the general property tax, we find a wide field for local discretion, and in recent years significant steps in the direction of administrative supervision. Under the methods prevailing in the early part of the nineteenth century, local assessors had complete freedom in the valuation of property, not only for local taxes but also for state taxes. It was in reference to the state taxes that the first step was taken in the direction of administrative supervision. Beginning apparently in Ohio in 1825, state boards of equalization have been established in most states, with power to change the aggregate valuation of counties so as to equalize the apportionment of the state tax. These state boards of equalization differ widely in their organization; but none of them have the necessary means to perform their work satisfactorily. In some states they have been composed only of ex officio members, elected to other positions, and therefore unable to give much attention to their duties in regard to assessments. In several states the boards are composed of a large |