Evening star. [volume] (Washington, D.C.) 1854-1972, 1948-07-14
Alexandra Gets
Warning on
|0verspending
Dangerous Methods
Of Deficit Financing
Hit by Audit Report
By Mary Lou Werner

By Mary Lou Werner
Continued overspending by the
City Council may
seriously impair" its ability to
carry out the city's essential
functions, according to an au-
ditor's report which warns
against dangerous" financing
methods.
The auditing firm of Ernst g.
Ernst reported the city had gen.
eral fund deficit Of sos, AS at the
end of the last fiscal year, which is
$3.50, 98391 more than at the begin.
ming of the year.
This deficit exists, the auditors
report, in spite of the fact that most
capital expenditures have been
charged to a bond fund surplus.
This means the deficit cannot be
wiped out by funds from a future
bond issue but must be erased with
current revenue from future years.
Earlier Complaints Cited.
I'm the past we have commented
on the dangers of the practice fol-
lowed by City Council in making
special appropriations in excess OF
current revenue available to the
general fund, and the current deficit
is result of this practice" the fiscal
experts reported.
Unless City Council takes steps
to reduce expenditures to the
amount of revenue actually being
realized, this continually increasing
deficit will in time seriously impair
the provision of funds to meet the
necessary demands of the city's OPP
erations.
The examiners commented favor
ably, however, on decision earlier
this year in which the Council re-
quired an affirmative vote of three
fourths of its members before fur
ther special appropriations can be
authorized. This action was taken
on recommendation of the Councils
Finance Committee, headed by Col.
Everett A. Helmuth, after an audit
report last year was sharply critical
of many special appropriations made
by the Council.
Criticism Is Milder.
Another step in the right direc-
ton, the latest report said, was the
councils resembling of number of
special appropriations in an effort
to reduce the prior years deficit of
$172, 461.
Criticism directed at the council
this year was considerably milder
than In 1947. City officials believe
this is because most of the practices
frowned on by the auditors have
been in the process of correction
since last summer.
Last year, council authorized ap-
preparations amounting to $3.50,
360.24 more than was set up in tho
general fund budget but only $780,
278.53 more than its revenue. Coun-
Gil spent $2,742, 1929 compared with
a general fund budget of $2,483,-
39304. Revenue, however, increased
over the anticipated amount and
thus reduced the net difference be-
tween the budgeted and actual gen.
eral fund expenditures. Actual reve-
nue. was $2,610,475 instead of $2,483,-
393.04 as set up in the budget.
In reporting on the bond fund,
the auditors declared that in charg-
ing appropriations and expenditures
to this fund, city Council had dis
regarded the available balance in
specified ALLEGATIONS with the result
that two categories now show de-
ficiencies y"
Indicated Deficiencies.
The deficiencies indicated are
SIS ,261.71 for Fairgrounds and S25,-
528.62 for. sewers making total OF
$50, 1908.
"A previous deficiency was cor.
rected in the street category during
the year by the City Councils ac-
ton in resembling certain appropri-
ations,' the auditors declare. Amy
deficiencies in specific ALLEGATIONS
(such as in sewers and playgrounds)
still existing upon completion OF all
work covered by current uncom-
pleted bond fund appropriations
will have to be eventually absorbed
by the general fund or refunded
by future bond issue"
The remaining bond fund surplus
is only $1,595.55, the auditors said.
The fund consisted of bond issues
of December IS, 194l, and Deem
Der Is, 1945. The fund attracted
city-wide attention last August
when it was disclosed much of it
had been used for improvements
not contemplated when the bonds
were issued, resulting in failure
to complete work planned when the
bonds were issued.