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pick them up on it the year following, why it is all right; they get away with it.

Mr. PILKERTON. Well, the Commissioners would undoubtedly take some action if they knew it was going on.

Mr. BATES. The Commissioners?
Mr. PILKERTON. Yes, sir.

Mr. BATES. Is there some restrictive authority somewhere along the line that just will not permit them to use money appropriated for some purpose and use it for, say, increases in salaries or additional personnel! Are there some restrictions somewhere along the line either with the Commissioners, the budget

Mr. PILKERTON. There are budgetary restrictions.

Mr. BATES. Then they are restricted in the budget even though the appropriations are in a lump sum.

Mr. PILKERTON. That is right, sir.
Mr. BATEs. Has it always been like that!

Mr. PILKERTON. Prior to 1945 there was much more detailed appropriating language than there is now; there were about 500 annual accounts appearing in the Budget. Now, there are about 200, I would say; that is before '45 it was broken down into personal services, maintenance, perhaps two or three other categories.

Mr. Barts. Equipment, repair, hose, and in the period prior to 1945, they would be restricted in the expenditure of the money within those specific items!

Mr. PILKERTON. That is correct.

Mr. BATEs. From your long experience as an auditor, do you think it simplifies budgetary procedure or the listing of expenditures in the journals of the department in any way by just restricting it to the one hearing? Is not it just as easy to classify expenditures and tie them in with the subtotal that you had prior to 1945 as it is to lump-sum them into a journal entry?

Mr. PILKERTON. I would say that it is. There would probably be about the same number of entries but less accounts.

Mr. BATEs. The only thing would be that you get the proper number of classifications.

Mr. PILKERTON. Yes, sir.

Mr. BARES. That was put in on the basis of economy or efficiency or what? What was the reason for that?

Mr. PILKERTON. There was some movement on to make these funds interchangeably available and not to have to come to Congress every time it was necessary to get the small item for the particular purpose, as I recall. The Budget officer is here, and he can probably speak to you better about that than I can.

Mr. BATEs. For interchangeable accounts. That is an old story. Why could not the budget officer or the Commissioners be authorized to approve such transfers in the interchange of accounts instead of wiping out the whole budgetary control! That is what you did when you lump-summed it, and wiped out these four or five or six specific appropriations. You just gave them carte blanche authority to spend the money any way they wanted unless there is some restriction somewhere along the line.

Now, you say that the Commissioners would probably take them to task in case they found it out.

Mr. PILKERTOX. I think I was discussing the

Mr. BATEs. Did you answer that question, Ir. Pilkerton, completely, or would you rather have the budget officer here answer that question? It is a very fundamental question.

Commissioner YOUNG. Mr. Chairman, I think Mr. Fowler could answer that question.

Mr. Bates. Mr. Fowler, the question I want to ask is this: Whether or not there can be an interchange of accounts wherein a given appropriation prior to 1945, according to the District Auditor, for the fire department, say, is in the sum of four million dollars, three million for personal services, half a million for equipment and repair, three hundred thousand for supplies, one hundred thousand, say, for hose. Now, those items were not interchangeable unless someone had authority; I mean, the department head could not interchange, transfer from one item to another, within those five or six items within the total budget appropriation for the department.

Now, this has all been wiped out, and there is a lump-sum appropriation. What control is there somewhere along the line over that department head interchanging those accounts himself without any authority or approval from anyone else or where is the stopgap here · to check any abuse!

Mr. FOWLER. We made a considerable study of all the items in the budget some years back with the Federal Bureau of the Budget, with a view to cutting down on the great number of items that we had in the budget. We had 288 or more items, cutting them down for a period of years; the first time, maybe about 40 or 50 items, the next time maybe 150.

We have appeared with representatives of the Budget before the full Committee on Appropriations; we went over that budget in detail,

and at that time they were assured that even though the items would ! be cut down that the justifications set forth would remain as they

had previously been presented and every single, solitary item justified, that is each item would be before the Congress, and then they told us this, Senator O'Mahoney speaking, in the hearings of 1946, reading from the report of the Senate:

Accordingly, the committee will look to the Commissioners of the District of Columbia, through the budget officer, to prepare within the limits of the appropriations provided by the respective departments a working budget which will establish the more necessary positions and functions and abolish positions and functions not determined to be vital. And then, we have this to say about it: In its report for the fiscal year 1945 the House Appropriations Committee suggested that a comprehensive budgetary control be adopted for controlling the appropriations of the District of Columbia, and to regulate expenditures in conformity with the intent of Congress. In compliance with this suggestion, the Commissioners, on June 30, 1944, promulgated regulations to effectuate this plan. The primary requirement of these regulations are as follows:

"One, agencies must make quarterly apportionments of their funds to control budgetary plans. These apportionments represent the maximum that can be obligated in any one quarter.

"Two, agencies must spend their appropriation in accordance with the object specified in the budget and justifield before the Congress. Deviations are permitted if such sufficient justification is submitted and approved in advance by the Budget office. **Three, agencies must submit monthly reports to the Budget office as to the status of the appropriations."

So, we do have an actual budget control over every single item.

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you, too.

Mr. BATEs. And you are the budget officer?

Mr. FOWLER. I am the budget officer and act as agent for the Commissioners.

Mr. BATEs. That is right, and that is where your control lies.
Mr. PILKERTON. That is right.

Mr. Bates. That is why I am coming to you, because you can well appreciate that even if you wipe out some 50 items and you give the department head free rein to do as he wants now under some appropriation without some restriction or supervision such as you say the law puts upon you, and he must notify you ahead of time so that you can disapprove that so-called interchange from one item to another or any disagreement with the justification sheet, so that you are the controlling factor here.

Mr. FOWLER. I have the control.
Mr. BATEs. Of course, that puts a great deal of responsibility on

That answers that question all right. Mr. PILKERTON. Now, this fund accounting is important from another standpoint. The act of June 29, 1922, required the Commissioners of the District of Columbia to operate on a pay-as-you-go basis after 1927. It provided for a tax rate, on the full value, and not less, all real estate and tangible property subject to taxation in the District of Columbia, as will, when added to other revenues, produce money enough to pay such annual expenses as may be imposed on the District of Columbia by Congress, and in addition to such annual expenses, a surplus fund such as to enable the District of Columbia to get on a cash-paying basis by the end of the fiscal year 1927.

Now, the tax rate for 1939 and 1940 on real estate and tangible personal property was fixed by law. After 1940, the tax rate, of course, would have to be fixed by the Commissioners so as to cover all obligations of the Government. So that, if this program is to succeed, certainly we have to have more taxes to carry on the operating costs of the District Government or the real estate and personal property tax would be all out of proportion.

That same act, however, made provision for the advancement of money from the Treasury of the United States from time to time to meet general expenses of the District, as authorized by Congress, and to repay those amounts so that if we get low in cash revenue we have available this authority, to continue operations during a lean revenue period until we get into a tax period such as March, for example, when the collections are about $15,000,000—and that gives us sufficient cash balances to carry on.

Mr. TALLE. How do you manage that short-term borrowing? Mr. PILKERTON. There is provision in the 1946 Appropriation Act. You mean this short-term borrowing?

Mr. TALLE. Yes.

Mr. PILKERTON. This is a provision in the 1939 Revenue Act, and it is carried on each year either in an appropriation act or in some other act. This is just temporary borrowing.

Mr. TALLE. Yes. I wonder how you do it. What are the mechanics!

Mr. PILKERTON. Requisition of funds, and the Treasury honors the requisition so that we do not exceed the over-all revenue.

Mr. Bates. Mr. Pilkerton, I just want to make this a matter of record. These tables that I have before me are tables that you prepared ?

Mr. PILKERTON. Yes, sir.

Mr. BATES. And showing the revenues from the District, the form of taxes and all other sources for a 10-year period, '37 to '46, inclusive, and also the expenditures by the General Government, the water and highway departments. Now, those figures show that there has been an increase, right or wrong-I am not criticizing the increase, but when you get down to the basis of why it has taken place and analyze the source of revenue to compare with the situation in 1937 when total revenues, including the taxes, were about $39,372,793; and in 1946 they were $67,405,161, and the estimate for this year is—where is that estimate for this year, Mr. Pilkerton, the estimated revenues ?

Mr. PILKERTON. Estimated revenues are on another statement. I did not carry this revenue statement into 1947 and 1948 because the current fiscal year is not completed, and we have no way of determining what the revenues will be.

Mr. Bates. I see. There was an estimate probably in the budget ? ? Mr. PILKERTON. Yes, sir.

Mr. BATES. We can put it on this sheet. Now, the thing that attracted my attention, particularly, was in 1937, the total expenditures of the District were $42,759,132; the expenditures in 1946 were $72,369,790, including a $15,000,000 expenditure for capital improvements, and the estimated expenditures for 1948 are $95,082,500. Now, if there is no objection, Mr. Chairman, I suggest that these tabulated figures be put in the record for future study by the committee.

Senator Cain. That will be done.

Mr. BATES. Is there any outstanding debt at all in the District of Columbia, Mr. Auditor!

Mr. PILKERTON. No, sir.

Mr. BATEs. What is the sum total of all invested funds, what you might call free cash?

Mr. PILKERTON. In the general fund there is $15,000,000 invested, five of which takes the nature of cash, and in the highway fund, $2,000,000, and in the water fund, $1,773,000 par value.

Mr. Bares. You say about 15 million in the general fund, including 5 million cash. What is the other 10 million? Is that redeemable any time the Congress authorizes you to use it?

Mr. PILKERTON. Only $10,000,000 was provided for postwar improvements, and I believe we have authority in the 1948 estimate to liquidate some of these securities. The other $7,000,000 is treated as cash-not reserve.

Mr. BATEs. Thank you, that is all, Mr. Chairman.
Senator Cain. Thank you; that is all.

Gentlemen of the committee, ladies, and gentlemen of the District, it now being the hour of 4:30, we are promptly going to adjourn. This hearing will be continued, subject to the willingness of the committee members, at 10 o'clock tomorrow morning in this room, Mr. George J. Bates, acting as chairman. The first witness will be Mr. Edward A. Dent, Assessor of the District of Columbia; and we shall endeavor, if we can, to notify other witnesses hy name whom we particularly want to call on tomorrow morning.

It is our intention, and I think those who have been spectators, have determined that what we have in mind is to provide the District officials with an adequate opportunity to be heard before we consider specific pieces of legislation which will be defended first by the interested parties within the District officialdom; and, secondly, all who, as citizens, care either to be heard for or against, will be given that opportunity.

This meeting is therefore adjourned until 10 o'clock tomorrow morning.

(Whereupon, at 4:35 p. m., the committee took an adjournment to 10 a. m., Wednesday, March 19, 1947.)

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