Evening star., 1936-07-06
No Real Deficit.

In his financial report to the Commits
eioners the Districts efficient auditor,
Mr.. Donovan. does not recommend any
increase in the tax rate-despite the
showing of a paper deficit for the fiscal
year 1887 of 60,355-because there is
really no justification for any increase
in the tax rate
The deficit exists, it is true, on paper
AS far as current revenue is concerned,
the District is called on to discharge
appropriative demands exceeding rev.
enue by about $4,000 The District,
In other words, is being called upon to
put out in the fiscal year 1887 about
S4000,000 more than it takes in. It's
ability to do this is explained, first, by a
general revenue surplus existing from the
past fiscal year and, second, by the ex-
istence of fund in the Treasury which
the District accumulated in accordance
with the provisions of the otherwise
abandoned sixty-forty law of 1922.
For that reason the deficit of s960,355
exists only on paper. AS matter of fact,
the District will still have a surplus at
the end of the current fiscal year instead
OF deficit.
Under the amended fixed ratio law
of 1922 the District was ordered to ac-
cumulate within five years a sufficient
cash fund in the Treasury to enable it
to meet all appropriative demands at
the beginning of a fiscal year-before
Its own tax revenues became available.
This was in theory to enable the District
to be placed on 'pay-as-you-go" basis.
But the requirement was nonsensical.
For the District usually has available the
cash, in the form of the Federal lump
sum, to meet its bills at the beginning of
the fiscal year.
In accordance with the demands of
the law, however, and despite the fact
that Congress has ignored the other
provisions of the law, the District has
accumulated a fund of about S3,0000 900
In excess of its needs-a fund which
lies idle in the Treasury, without in
terest, and which only once before has
been called into use in avoidance of a
threatened deficit. Part of it is once
again to be called into use in avoidance
of threatened deficit. Outside of such
demands, the fund serves no useful
purpose.
Mr.. Donovans report, however, en-
phasizes, and correctly, the fact that the
District is apending about $4,O00,000
more than it is taking in, although these
expenditures-even under the liberalized
Senate amendments of the current
year-will not meet existing local needs.
He points to threatened revenue short
age in the next fiscal year. In this con-
nection he approves the study of local
tax resources already ordered by Com
missioner Hazen.
But it is to be remembered that while
there is a deMonstrable shortage of local
revenues, the shortage is due to no con-
dition of under-taxation in the District.
1t is due to the steadily diminishing
national contribution. The District ap-
propriations act for the current fiscal
year correctly places emphasis on the
Presidents forthcoming inquiry to de-
termire the fair and equitable" amount
Of the Federal contribution. The local
tax burden is now adequate, even burden
some in consideration of the Districts
unique revenue-producing disabilities.
The advice suggested already in these
columns is, therefore, repeated. The
important thing for the Commissioners
now to undertake is the preparation of
their case, which the facts make strong
enough, in behalf of liberal Federal
contribution really representative of the
Nations just obligation in support and
development of the National Capital.