The Washington times., 1924-07-23
c. MUS I
BUILD UP
RESERVE
Increase From So oo, 900 to
$4,000, 900 Necessitated
by 6o-4O Plan Failure

The District must increase the
amount Of the cash reserve which
Congress has ordered it to set
aside by July /, 1927, if Congress
continues the lump sum plan Of
appropriation for needs Of the
National Capital and refuses to
re-enact the 6O-4O plan, it was
stated today by Daniel ]. Dono-
van, District auditor.
He estimates that the cash re-
serve will have to be increased
from 100000 to 100000 as
a result of the abolition Of the
60-4O plan and the substitution
Of the 100000 appropriation.
Action Is Necessary.
In Auditor Donovans' opinion.
there is absolutely no hope for re-
irstatement of the 60-4o plan and
consequently the increase in the
cash reserve must be considered i'm.
mediately.
Under the terms Of the District
appropriation bill for the fiscal year
ending June 80, 1928, it was pro-
vided that by July /, 1927, the Dis.
tTict should have accumulated cash
In an amount sufficient to enable 1t
tc tide over the period between July
!. when the new appropriations are
made available, and November, when
the first payment of District taxes
in the fiscal year are made. with.
out going to the Federal Treasury for
aid.
In previous years it had been
necessary for the Federal Govern.
ment to advance the District funds
often running into the miIIiona. IN
order to carry the local government
over until the returns began TO
come in.
Estimate on Old Basis.
1t was estimated, when the cash
reserve law was passed, that a fund
OF $4,000 would be sufficient to
carry the District over the annual
lean period. This estimate, however.
was based upon an annual apprO.
priation Of $22,000,OO and upon the
6O-40 plan.A
Since the law was passed the an.
nual appropriations have increased
steadily to high water mark this
year Of $4,000, 900. Next wear they
undoubtedly will be even greater.
District officials state. At the same
time Congress has abolished tie
oO-4V plan and has substituted
a lump sum plan which this year
amounted 10 less than 80 per cent
oi the Districts expenses, thus in.
creasing the burden on local taxpay.
'crs greatly.
AS a result Of the increases.
which must be met from the Dis.
trict income. the Districts proper
ton OF expenses between July 1,
ana the beginning Of tax receipts,
also increases. This increase must
pc met by the cash reserve.
TO aid in raising the cash reserve,
Congress ordered that real estate
ana tangible personal property
should be assessed at its full value
and at such rates as would make
possible a regular annual payment
into the cash reserve, which would
build up an adequate reserve by
July 1. 1927.
Assessed Value.
In 1922. prior to passage Of the
cash reserve law, the assessed
value of real estate In the District
Of Columbia was $472,S74.209. The
first full assessment was completed
january /, 1928. and established
the full value of real estate IN
the District at $T67,O66, 5b5. The
tax rate, however, was dropped
from $1.S2 in 1912, to $l.20 during
the past fiscal year. This year the
rate has again begun 70 mount,
and is now at $40.
The cash reserve, since the pnss-
age Of the law, has been accu
mulated at a rate of $780, 900 a
year. On June 90, last, the reserve
was Sl,2OO,0OO. At the present rate
It Will be $1,S00,00O at the close
OF the current fiscal year, leaving
two years in which to complete the
raising OF the reserve fund.
Under the anticipated increase IN
The total amount Of the cash re.
serve the annual payments into the
:und must be greatly increased dur.
ing the next Two years, Another
tax increase next year IL regarded
as a necessary step to meet this
increase.
Debt Almost Paid.
The District, however. will be as
sisted materially In meeting the in.
crease by the clearing up OF the
funded debt, which viii be accom-
plished on August /, when the last
Of the S.65 per cent District bonds
issued under authority Of Congress
In 1874 win mature.