Evening star., 1927-04-28
SEPARATE FEDERAL
BUDGETS ENDORSED
Individual System Urged for
Each u. S. Revenue
Producing Service.
BY WILL p. KENNEDY.

Employment of supplementary bud
gets for each of the revenue-producing
services of the Federal Government
such as the Postal Service, the Pana-
ma Canal, the Alaskan Railway, the
United States Emergency Fleet Corpo-
ration and the Inland Waterways
Corporation-is one of the recommen-
dations made by the Institute for Gov
ernment Research for strengthening
the national budget system, that are
awaiting the return of Congress.
It is proposed that each of these
revenue producing services should be
set up as a subsidiary corporation,
with it's own board of directors, it's
own personnel and its distinct ac.
counting, reporting and budget sys-
tenn, the net results Of the latter,
however, to be tied into the general
budget. BY such device, 1t is argued
that the conflicting considerations of
an all.comprehensive budget and irde-
pendent consideration of the financial
operations and needs OF these special
services would be secured.
In addition to the services named
above, certain other business services
such as the Forest Service, the
Bureau of Reclamation and Center
Market in the District of Columbia.
operated by the Department of Agri"
culture, may upon examination prove
to be suitable for similar handling,
the report written by DIR. William F.
Willoughby, director of the institute,
points out.
Group Held Fatal Defect"
All this in spite of the fact that
one OF the essential features of a cor
rect budget system is that the legisla-
ture shall be given at one time and
through the use Of one document,
known as the budget, complete pic
ture of the financial condition, opera
tions and needs of the Government.
The practice OF short-circuiting, as
it were, certain classes of receipts or
expenditures and of not having them
figure in the budget, or of having two
or more separate budgets. is declared
to be "a fatal defect.
Notwithstanding this, examination
of the character of the activities and
financial operations OF most govern
ments. ard particularly that of the
United States, shows that there are
certain services which are OF q very
special character and which conse.
quently should be handled In a special
way in the budget--which. as a prime
feature of their operations. are pro-
ductive of revenue and which may,
therefore, be given the general desig-
nation of revenue-producing enter
prises.
From the standpoint of financial ad.
ministration, DR.. Willoughby empha-
sizes. these services differ radically
from the ordinary administrative serv-
ices. Only to a negligible extent do
the operations OF the latter produce
an income, and the cost of their oper-
ations has, therefore, to be met from
the, general fund. the increments Of
which are derived for the most part
from general taxation.
Direct Relationship.
In contrast to those services, the
others designated as revenueproduc-
ing present q condition where there
is a direct relationship between reve.
nue. and expenditures, and the general
principle followed is that of having
the expenses met as far as possible
out of the revenues. From this it
results that while the extension of the
operations of an ordinary administra-
tive service makes a corresponding
increased charge on the general fund.
no such result follows in the case of
u ryenueproducing service, since,
normally, expansion In the work of
such a service produces a correspond
Ing income.
So the general financial resources
and condition of the Government are
affected only to the extent to which
such services, by their operation, pro-
duce a surplus that can be turned over
to the general fund or a deficit that
has to be met from the surplus fund.
From the general budgetary stand
point, therefore, all that is required is
that the general budget shall carry In
the case of each revenue-producing
enterprise the one item (surplus or
deficit) showing the net results of its
operations.
Therefore. supplemental budgets are
advocated, which are not entirely in
dependent of the general budget, but
constitute, as it We're, supporting doc
uments to tho budget.
Reasons Advanced.
The following reasons are cited why
the operations of these enterprises,
the Institute for Government Re-
search believes, should in each case be
carefully segregated and given the in
dependent consideration suggested:
First. They have practically the
same character as private enterprises
conducted for gain. 1t is in the high
est degree desirable, DIR. Willoughby
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