Morris tribune. [volume] (Morris, Minn.) 1880-2000, 1912-07-05
SEPARATING THE ITEMS.
Tax Commission Wlstes of Pro-
per Public Accounting.
xXIII.-THE COST OF GOVERN
MENT IN MINNESOTA, NO. 4.


was called to the fundamental dis
tinction between general revenues.
derived from taxes, licenses, fines.
etc.. and commercial revenues, IN
cluding special assessments and the
earnings of public service enterprises;
and it was pointed out that unless
these classes of income are reported
separately, no one can find out how
mrch or how little of burden the
government really imposes on the peo-
Pile.
On the side of expenditures, an
equally fl ndamental distinction exists
between maintenance charges and the
cost of permanent improvements.
Under maintenance are included cur
rent expenses of all sorts, ordinary re-
pairs. and such per cent for depre-
citation as will be 81 fficient to renew
the physical plant by the time it is
worn out. This sort of accounting is
customary in all well-managed pri-
vate enterprises; it is equally indis-
pensable in all public service enter
prises undertaken by the municipality !;
and it is essential in the ordinary
operations of government, if the pub
lie is to have the means of knowing
what is the real cost of government,
and whether current revenues are
equal to the expenditures properly
changeable against them.
Permanent improvements, on the
other hand, cover investments in lands,
buildings, bridges, new highways
and other physical properties which
are designed to serve for a number
of years. Expenditures for such pur.
poses are often met in whole or in
part by public loans; and in any case
they are not properly part of the
cost of government in any one year,
but should be spread out over num-
Der of years corresponding to the dur
ability of the improvements in ques-
tion.
It is therefore absolutely necessary
to separate payments fer maintenance
from payments for permanent improve
ments, both in public service enter
prises managed by the municipality
and in the ordinary operations Of the
government. Unless this is done
(and in the systems of accounting
used by municipalities it is often not
done) no one on earth can tell what
is the true cost of government, nor
whether public service enterprises
conducted by the government are real
ly making money or losing it, nor
whether the present generation is
paying it's way, or saddling upon the
future not only the cost of permanent
improvements but part of the ex-
penditures for the salaries of public
officials and other current expenses.
I In fact there is no doubt that vari-
Gus municipalities actually have re-
venues insufficient to pay maintenance
charges plus interest on the public
debt, and as result are every year
going deeper into debt to meet current
expenses by piling up larger masses
of unpaid warrants, or overdrawing al
the bank, or borrowing money and
using part of it to pay bills which
should be paid from revenues. This
is clearly the road to financial ruin,
yet tits to be feared that some COM
munities are treading it. quite uncon-
sciously, because their public accounts
neglect these fundamental distinc-
tions; and unless these distinctions
are observed, a financial statement
tells little which it is important fol
the public to know.
1t was in view of considerations
|, such as the foregoing that the sche,
dulles for the present investigation in
to the cost of government in Mime
sofa were prepared so as to call for &
separation Of special assessments from
taxes, of general revenues from com.
mercial revenues, of all ordinary re-
ceipts from loans and other extraord
mary receipts, of maintenance charges
and interest from payments for perm.
anent improvements and debt reduc'
tion, and finally, for a classification
of the outstanding debt according te
its character and the purpose fol
which it was incurred. This under.
taking is unavoidably more or less
burdensome for the accounting officers
who are called upon to divide some
of their accounts in order to fill out
i the schedules, and it is not less bur.
densome for those in charge of the in.
vestigation; but it will be we'll worth
doing if it brings more clearly to
Eview the real cost of government in
Minnesota.
& 5.