The Governor is Chairman by the terms of the statute. The law makes no provision for a Secretary to the Commission and the position has so far been filled by the Assistant Auditor. Although the State Inspector and Examiner is required by law to assist the Commission, his services have been asked for but little.

Criticism of the Present Organization:

In the section of this report dealing with State finances and financial methods, the budget law and the present budget system are discussed at length. It is sufficient for the purposes of this chapter to state that Kentucky's present system does not fulfill the purposes of a budget.

The budget law is at fault positively in two respects, namely, that it provides an unsuitable membership for the Budget Commission, and that it stipulates that the Commission shall not employ a clerical staff. It is at fault negatively in a number of regards; for example, in not abolishing special revenue funds and in not laying down such prescriptions and specification as would make a failure to prepare an adequate budget a direct violation of the law. Blame for the present inadequate budget procedure may nevertheless be placed with the Budget Commission which has, up to this time, failed to develop the budget to its proper position and usefulness, and has, so far as is known, made no attempt to remove the existing obstacles to such a development. Some of this failure may be due to the unwise composition of the Commission and possibly more to the lack of an adequate staff.

Divided Responsibility for the Budget Recommendations: The question of who should prepare the budget is admittedly a difficult one. As between the so-called "legislative budget" and the "executive budget" the State of Kentucky has chosen the latter. By the executive budget is meant one prepared by the executive branch of the government and submitted to the Legislature for adoption. The executive budget carries with it the idea of leadership in the executive officials, who are under

this policy presumed to be more perfectly informed as to governmental activities and conditions and to be best fitted for planning future activities and expenditures. The Legislature, on the other hand, is placed in the position of representing the citizens of the State in listening to the proposals of the executive branch and approving or disapproving according to the information submitted. This idea of the executive budget as opposed to the legislative budget is the one more generally adopted in this country. It is undoubtedly sound in theory and fails only when the budget prepared by the executive is not an adequate source of information for the Legislature's guidance and when the Legislature ignores the executive's opinion.

It is to be presumed that the executive budget plan is accepted, the next question is as to who shall represent the executive. The State of Kentucky has a budget commission, but it is not inherently and logically necessary that the budget be prepared by a commission rather than by one man. The purpose of having a commission is to provide for consultation and the representation of more than one division or phrase of government. Briefly it may be stated that responsibility for the preparation of the budget should be placed with elective officers who are in the highest degree responsible for the conduct of the government activities, and this responsibility for the budget should not be hindered or dissipated by the participation of other officials having different relations to the electorate and to the administration of the government. It does not appear that any executive officer other than the Governor meets the requirement.

It follows that two of the present members of the Budget Commission, namely, the Auditor of Public Accounts and the Chairman of the Tax Commission should not be given representation on that body or at least that they should not be responsible for the final recommendations as to budget items. It is recommended that the preparations of the budget be left in the hands of the Governor only.

The right and propriety of the Governor's position as the

executive who makes the budget recommendations is obvious. Any limitation upon the Governor's power in this connection should, it is believed, be regarded as contrary to the fundamental scheme of our government. The arguments which can readily be advanced for obtaining the advice of the Auditor of Public Accounts, the principal financial officer of the State, and of the Chairman of the Tax Commission, the principal revenue officer, in preparing the budget are sound, but they do not apply to the essential act of formulating budget recommendations. Whatever information the Auditor or Tax Commission is able to give as to expenditures, probable income, or other matters, is available either to the Governor or Budget Commission, and can be completely set forth in a few typewritten statements.

Benefits to Accrue Through Legislative Representation in Budget Making: Entirely aside from the question of who should be responsible for budget recommendations, it may be felt that a budget commission is desirable in order to realize incidental advantages which may accrue through the commission form of organization. It may be considered, for example, that the Auditor of Public Accounts should be required to be present while the budget is in progress of being formulated, in order that his responsibility as advisor to the Governor and Legislature on certain questions of financial policy may be fully recognized. The Auditor of Public Accounts could be a member of the Commission and could be required to be present and to give his advice to the Governor, or he could be required to be in attendance without being a member of the Commission. For the reasons indicated above, he should not be responsible for the recommendations submitted to the Legislature, but the benefits to be realized from his close association with the budget preparation work does not require that he be responsible for the estimates. It is believed that the right plan to secure the necessary co-operation of the Auditor of Public Accounts is to require him to assist the Governor when called upon, without giving him the status of a member of the Commission.

On the other hand, it is highly desirable that the members of the General Assembly who will be responsible for the greater

part of the work connected with the Appropriation Act should be familiar with the details as to budget needs and should have as long a time as possible to study the needs. In a number of States the plan is followed of having representatives of the legislature on the budget commission, and although this is believed never to be a success so far as it attempts to modify the principle of the executive budget and divide the responsibility for the budget recommendations, it undoubtedly is a great success in giving the representatives of the legislative committees the opportunity they need to go into problems of departmental and institutional management which they could not study thoroughly during the sessions of the Assembly.

It is believed to be highly desirable, therefore, to have a budget commission of three, including the Governor and the chairmen of the two legislative committees concerned with the Appropriation Act, though it is to be understood that the recommendations in the form submitted to the Legislature should be those of the Governor solely. It will be found in practice that the members of the Legislature do not wish to go on record with the Governor in making recommendations as such a record would tend to embarrass them in connection with their work as members of the legislative committees, but they will appreciate the opportunity they may have to participate in the pre-legislative budget preparation work.

Between sessions of the Legislature there is a need for a small deliberative body representing the Legislature to advise the Governor on such matters as the approval of transfers between appropriations and expenditures from the Governor's contingent fund. The importance of an adequate system for making transfers and of a central contingent fund as a part of a budget procedure that will lend itself to the kind of legislative control that is vital, are considered in full in the report on the system of financial administration of the State. It should be mentioned here, however, that the existence of a budget commission including two members of the Legislature, as indicated above, tends to facilitate the operation of such a system and is of material value in enforcing the Appropriation Act strictly

and fairly but without crippling the essential activities of the State government or limiting departmental and institutional activities which should be allowed freedom of action.

The Requirements as Regards a Budget Staff: As has been noted above, one of the principal defects in the present organization is the absence of any staff that can give its full and undivided attention to the special technical problems of budget making. The budget problems are highly technical and cannot be handled by any one who does not devote a great deal of time and thought to them. It has been demonstrated in this State and elsewhere many times that a "part time" arrangement for staff cannot be a success.

Had the State Inspector and Examiner been made the Secretary of the Budget Commission and had the law requiring that officer to assist the Budget Commission been taken seriously the results would undoubtedly have been far better than those actually realized. Although the Inspector and Examiner has other duties which would prevent him handling the budget problems with entire success, he has one great advantage as compared with any other State officer in that he is familiar with the conditions in the various departments and institutions. His functions require him to study the workings of the departments and institutions in such a way that he, better than any other State officer, could assist the Budget Commission.

In connection with the proposals which are made in other reports for the assignment of all duties connected with auditing to the office of the Auditor of Public Accounts, it is proposed that the general inspectional functions of the office of Inspector and Examiner serve as a basis for establishing the office of Budget Officer. In essence, the proposed Budget Officer would be the Inspector and Examiner stripped of the routine field auditing functions but given in place the far more important responsibilities of assisting the Governor and the Legislature in preparing the budget. The inspectional functions of the office carry over without change and the name might be kept as before were it not well worth while to have a position in the