Commission is not suitable for the responsibility of supervising the budget machinery. This is indicated by the past experience with the present personnel, but is even more forcefully suggested by the very great importance of the budget machinery to the Legislature. It is believed that the general direction of budget activities should rest with the Governor and two members of the Legislature-the chairmen of the appropriating committees. This plan has been successful in other States and is especially worthy of consideration for a State that has not yet developed adequate legislative interest in budget problems.

Essential Budget Principles:

In the preceding criticism of the present budget, it has been necessary to emphasize many of the basic principles which should be recognized in a budget system. It is impossible, however, to gain an adequate conception of the working of a complete budget procedure from any analysis, no matter how complete, of the present machinery. In the following pages, it will be attempted to review briefly the things which appear to be essential to a budget plan of fiscal administration:

Four Fundamental Ideas: Before considering the operation of a budget system, the following elementary budget ideas should be stated:

1. That each line of work in every department and institution should be carried out according to carefully considered plans made in advance and that an essential part of such plans should be a complete analysis of costs. Any proper budget procedure compels administrators, who are primarily interested in service rather than in economy, to make careful plans, to consider and be ready to justify the expenditures they propose, and to review in detail the work of the agency and its various divisions.

2. That the estimates and plans of departments and institutions should be reviewed by the Governor before they are submitted to the General Assembly. No other individual officer in the whole State government has as compelling and as

continuous an interest in plans and costs as the chief executive, and his review, if at all comprehensive, is of almost incalculable value to himself, to the administrative officers concerned, and to the General Assembly.

3. That the General Assembly, before taking action on the plans and estimates of departments and institutions, as reviewed and commented upon by the Governor, should be supplied with complete and intelligible data as to fiscal needs, uniform as to the manner of presentation.

That statements of expenditures and expenditure plans should be prepared in consolidated form in order that the totals can be compared with the total revenues and the expenditure and revenue plans can be harmonized.

The importance of supplying the General Assembly with intelligible and complete data, in addition to the requests of State agencies and the recommendations of the Governor with regard to these requests, must not be underestimated. All the preliminary budget work-this is, the part preceding consideration of items by the General Assembly-is designed primarily to assist the appropriating body in making its decisions. The conception of an executive budget, taken from the British procedure, is sound in that it represents an ideal of executive leadership in intricate technical details which can hardly be handled wisely by a legislative body without assistance. This conception of an executive budget will be seriously misleading, however, if it ignores the fact that the principal and primary purpose of all the earlier procedure is to gather and present information to the Legislative body in such complete and intelligible form that that body can act intelligently in deciding upon a revenue plan and in allotting funds according to the real needs of the various State agencies. The legislative body can hardly be expected to know enough about the details of fiscal affairs to make appropriations wisely without assistance from the administrative officers; the degree of justice and wisdom with which it acts depends less upon its innate justice and wisdom than upon the completeness of the

facts brought to its attention and the force with which these facts are presented.

Another principle which must be observed if the budget procedure is to produce satisfactory results, though it deals with matters not usually considered in connection with the budget, is that the Legislature, after it has secured the data it needs and has made its decisions, should provide for the enforcement of its will by indicating its intent clearly in the appropriation act and by establishing some machinery to see that its intent is carried out by the expending officers.

The Departmental Budget: As indicated above, the budget procedure in the departments and institutions should serve a dual purpose; it should furnish the figures and supporting data for the State budget, and it should be of material assistance in securing proper management on the part of the immediate head of the branches concerned.

Departments and institutions need assistance in preparing their budget statements; at the very least they need to be told the form their requests should take, while many require considerable help in analyzing their own costs and in planning their work for the next fiscal period. Regulations must be prepared to guide the administrative officers and such help as they require must be furnished them. For this as well as other purposes the services of a budget officer are required for at least part of the year; he should either be an expert in securing and presenting essential data or should be capable of becoming such an expert in a very short period with guidance in the early stages. One of the commonest mistakes—and one almost sure to defeat the purpose of the budget work is to adopt a stereotyped form of printed estimates and to confine the preparation procedure to the securing of the figures necessary to print this book,

The Governor's Budget: The Budget Officer should also 'compile the budget;" that is, he should prepare the comparative tables, in brief and detailed form, showing the ex

penditures as embodied in the requests of departments and institutions and the significant facts as to income.

The estimates submitted by department and institution heads may be said to be the first budget; the second is that of the Governor. The Governor's budget is important but in practice the procedure should not be based upon its acceptance because there are invariably some important changes made by the Legislature. The Budget Officer should assist the Governor in his review; the Governor should be able to rely upon the Budget Officer for the study of all details.

The compilation of the Governor's budget consists merely of adding a column to the detailed tables of estimates to show the recommendations made by the Governor with explanations and of adding the tables to summarize the program advocated by him. The actual compilation, as in the case of the requests of departments and institutions, should be made by the Budget Officer.

The Legislative Budget: The legislative committees should take up the budget item by item and should have a full explanation of each from some source or other. The Budget Officer should in effect become the legislative budget officer while the General Assembly is in session. He should work with the ap propriating committees of the House and the Senate and for budget purposes during this time should be entirely under their direction.

The third-and in one sense the only true budget is that of the General Assembly; this is the one that is to become a fact. One of the greatest weaknesses of the budget procedure in many States is that the final and actual budget is never compiled; statements and schedules to show what has been done, what is intended, and what the effect upon the State treasury will be are never prepared. Far more significance is to be attached to statements and complete itemized schedules supporting the true plan, adopted by the Legislature and actually to be enforced, than to such statements and schedules

attached to the Governor's budget. The statement and schedules should be brought up to date daily as the appropriating machinery is driving ahead.

The Appropriation Act: The appropriation act as finally adopted must be compiled in such form as to indicate the plan or intent of the General Assembly and to make possible the enforcement of that intent. In every case the actual plan is or should be a detailed statement wherein costs are figured with greatest care. As long as conditions do not change, the detailed plan, if well prepared, should stand. When it comes to making an appropriation for a year or more, however, possible changes must be recognized; in fact, if they are not allowed, padded estimates will certainly result. The Legislature is confronted with the impossible task of enforcing many limitations of program requiring detailed stipulations and at the same time of making some provision for inevitable variations in program which time will show to be advisable. Thus has arisen the debate as to whether an appropriation act should be "itemized" or in "lump sums". This matter is argued at length by students and by legislators in nearly every State. Experience has demonstrated that there is one practical solution which may be applied in various ways-for the legislature to state its intention in very clear and fairly detailed terms but to allow variations (possibly subject to stated limitations in some cases) and always requiring some central approval for each variation. In effect then the actual appropriations should be in lump sums in the main, with some detail clearly indicative of the plan and intent of the General Assembly stated subordinately and subject to such changes as the Governor may approve.

Also the provisional holding of departments and institutions to the detail of the legislative budget, subject merely to explained causes for change, is necessary both to insure economy through cutting off expenditures that will not stand explaining and to insure accurate estimating and careful preparation of budget data. Every year tens of thousands of dollars. of money voted but found to be not strictly necessary are spent in every State where the system permits department and