with the city corporation have power to levy taxes and to incur indebtedness, and, with the possible exception of the counties referred to in the following paragraph, each of these local governments, though independent of the city corporation, exercises municipal functions.

In 7 of the cities of over 300,000 population a percentage of the county receipts, payments, and cash balances based on the ratio between the assessed valuation of the city and that of the county-has been included with the figures for the city corporation and other local governments. This treatment seemed desirable because in the remaining 8 cities of Group I the original county organization had lost its identity from the standpoint of financial administration, this function having been absorbed by the constantly expanding city corporation. The addition of the county figures places the cities of Group I on a more nearly comparable basis than heretofore existed. In making comparisons involving the cities of over 300,000 population, however, it should be borne in mind that for 1907 county receipts, payments, and cash balances have been added to the city figures in Chicago, Pittsburg, Cleveland, Buffalo, Detroit, Cincinnati, and Milwaukee.

Of the independent local governments reported, the school districts are the most important and numerous, being reported in 69 cities; park districts are found in 4 cities; sanitary districts in 2 cities; poor districts in 1 city; a port improvement district in 1 city; and a bridge district in 1 city. Six cities each show two or more different kinds of independent districts. There is no material change since 1906 in the number of independent local governments reported, a new park district being reported for Tacoma, Wash., and a new bridge district for Portland, Me.; while the omission of the poor district in Scranton, Pa., and the addition of the school district in Kalamazoo, Mich., are due to changes in the method of reporting rather than to changes in governmental organization.

When there were several independent school districts within the limits of one city corporation a report was procured from each district, but the reports are consolidated into a single total in Table 2. In some cities the school district maintains only a part of the public schools, the city corporation maintaining the rest. In such cases the payments shown in Table 2 as made by the school district do not constitute the total payments of the city for public schools. The city corporation may also expend money for sanitation, parks, poor relief, port improvements, or bridge construction in addition to the payments for the same purposes by these independent districts. The transactions of all independent districts are analyzed and their payments or receipts added to the corresponding payments or receipts of the city corporation in making up the other financial tables of this report; thus, payments of an independent school district and of the

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city corporation for school expenses will be consolidated in Division VI of Table 5, and all payments for school outlays will appear under that head in Table 9.

As subordinate to each governmental unit, Table 2 shows those funds which are kept wholly separate from other funds and whose transactions are recorded by city officials in independent systems of accounts. An exception is made in the case of sinking, investment, and trust funds which are always shown separately, whether the city officials record the transactions of these funds with other city transactions or maintain separate systems of accounts therefor. With the exception just mentioned, the first column of Table 2 indicates the number of separate accounting systems or sets of records from which census agents must procure data in order to make a full report of the financial transactions of municipal governments. A large number of funds, as in New Orleans, La., and Louisville, Ky., indicates that many municipal transactions are not under a central accounting control and that accountability must be divided among several officials. Judging from the experience of the commercial world, it is believed that the best financial administration is possible only when all financial transactions are brought within the control of one accounting system and when one official is given the power and is held responsible for its proper conduct. In Washington, D. C., the Federal Government shares the administration and cost of municipal affairs with the District government, which fact in part accounts for the large number of funds in that city.

The term "general treasury" is applied to the principal system of accounts or that one over which the city auditor or comptroller exercises authority. The term "cash in transit" refers to a transfer of cash between departments or divisions of government, which transaction has been entered on the books of one department but not on those of the other. This condition is frequently found when the transfer is made at the close of a fiscal year.

The table shows wide differences as to the date when the fiscal years close. These differences complicate the work of showing comparable statistics, especially in cities which have several independent divisions of government closing their accounts on different dates. In Ohio and a few other states the statutes fix a uniform date for the close of the fiscal years of all city corporations. A uniform fiscal period for all cities in Massachusetts is urged in the first report of the state bureau of statistics on "the cost of municipal government in Massachusetts." Every state should have a law establishing a uniform fiscal year for its cities.

For some cities the cash reported as on hand at the beginning of 1907 differs from that shown in the report for 1906 as on hand at the close of that year.

Such differences may be due to: (1) Changes in the fiscal year, (2) inclusion of funds omitted from former reports, or (3) errors on the part of city officials or census agents.

TABLE 3.

Payments and receipts classified by character.-The aggregate payments and receipts are segregated in Table 2 into those to or from the public, and those between city departments, enterprises, or funds. In Table 3 each of these main classes of payments or receipts is further subdivided, the transactions with the public being given under two heads so as to show those for "meeting governmental costs" separately from those which are merely incidental to the conduct of the city's business, while interdepartmental payments and receipts are classified to show the character of the transactions.

1

Payments for meeting governmental costs are the net amounts of money which the cities pay or expend for meeting those costs essential to the conduct of their business later subdivided and defined as expenses, interest, outlays, and decrease in debt-while receipts for meeting governmental costs are the net amounts received from the public for the purposes of government, after making deductions for receipts in error and other duplications. In its previous reports the Bureau of the Census has given the name "corporate' to such payments and receipts, but since that term did not readily convey the intended meaning it has been thought best to substitute the more significant term "for meeting governmental costs."

The payments to and receipts from the public included under the heading for all other purposes are of three distinct classes, called by the Bureau of the Census, (1) counterbalancing payments and receipts, (2) payments for and receipts from investments, and (3) payments and receipts as agent or trustee. (These terms are discussed in full on page 27.)

In the following table the several subdivisions of these three classes of payments and receipts are shown, together with the numbers of the main tables of this report, in which the several classes of transactions are presented:

1 For a full discussion of terms, see page 26.

In the census reports for former years the payments and receipts above shown have been referred to as "temporary," but this term, like "corporate," has been discarded because it was not sufficiently descriptive to be generally understood or adopted.

Transfer or nominal payments and receipts are transactions between two divisions, departments, offices, or funds of the city government. (For full discussion, see page 27.) These interdepartmental payments and receipts are subdivided into four classes: (a) Service transfers, which are payments for public utilities furnished by a municipal enterprise, or for services performed by one department, enterprise, or office for another; (b) interest transfers, which are payments to a municipal fund by a division of the city government by the fund, or payments to a division of government as interest on city bonds or other city securities held by a fund as accrued interest on city securities purchased; (c) investment transfers, which are payments for securities purchased by one fund from another, or for city bonds or other obligations issued by a division of the city government to a fund; and (d) general trans

Of the $62,697,625 paid by the funds as investment transfers, $55,430,158 represents bonds or other securities purchased at the time of their original issue by the city, while the balance represents the transfer of investments between the sinking, investment, or public trust funds.

TABLE 4.

Payments and receipts for meeting governmental costs. Table 4 shows the principal classes of payments and receipts for meeting governmental costs, the aggregates of which are given in Table 3 and the details in Tables 5 to 17. These payments and receipts have been called "corporate" in previous reports, but, for reasons stated in the text for Table 3, that term is no longer used. The purpose of Table 4 is to present for each city a summary of those transactions which affect its financial condition-all counterbalancing, investment, trust, and nominal payments and receipts having been eliminated. This table may be called a "general" or "principal" summary (as described on page 29 under "accounting summaries") and presents an analysis of the city's payments and receipts for meeting governmental costs considered in their entirety, while the following tables present the details therefor.

The several classes of payments and receipts shown in Table 4 are fully defined on pages 22 and 23, and may be here briefly described as follows:

Expenses are the accrued costs, paid or payable, incurred in the maintenance and operation of the government and business undertakings of the cities.

Interest is the accrued cost, paid or payable, incurred by cities in the use of credit capital.

Outlays are the accrued costs, paid or payable, of lands and other properties and improvements, more or less permanent in character, which are used by municipalities in the exercise of their governmental functions or in connection with their business undertakings.

The payments or receipts on account of debt given in Table 4 are the excess of payments to, over receipts from, the public on account of debt-or vice versaand measure the net decrease or increase in city obligations held by the public.

The revenues of municipalities are the amounts of money or money's worth provided or obtained by them for meeting their costs of government, and are derived from (1) the exercise of the governmental powers of taxation and police control; (2) donations and grants for governmental uses; (3) the perform

ance of services or the furnishing of materials for compensation; and (4) the operation or management of the productive enterprises, investments, and properties of the government.

The several subdivisions of expenses and revenues are defined in the introduction to this report and also in the text descriptive of the tables giving the details of payments for expenses and receipts from revenues. In Table 4 of this report, payments for expenses of municipal service enterprises-i. e., those undertakings which are maintained solely for public purposes, as lighting streets, and do not serve private consumers are presented separately, while in previous reports they were merged with payments for "general expenses.' A further slight change is made in that interest is classified as coordinate with expenses rather than as a subdivision thereof as formerly.

As the per cent distribution of payments and receipts for meeting governmental costs is given in Table 33, no discussion of this important analysis is needed here. In computing the payments for outlays shown in Table 4, deductions are made not only for the duplications due to erroneous payments later corrected by refund receipts and to interdepartmental transactions, but also for receipts from the sale of real property. Such receipts arise from the conversion into cash of a part of the city's permanent investment, which had been acquired by means of outlays previously reported, and correspond to those receipts of a commercial enterprise which result from the conversion of one form of capital asset into another. Hence such receipts must be deducted from gross payments for outlays to ascertain the net addition, during a given period, to the value of the city's permanent properties. The cost of this net addition must be met either from revenues or from loans.

The column of payments on account of debt shows that 30 of the 158 cities reported payments for reduction of debt in excess of receipts from new debt obligations incurred. In 1906, 53 out of 158 cities and in 1905, 63 out of 154 cities reported net payments for reduction of debt. In most cities reporting net receipts from debt, the loans were made in order to construct public improvements, for which the payments, as shown in the column for "outlays," are greatly in excess of the net receipts from debt. For very few cities does the amount of such receipts reported represent much more than 50 per cent of the payments for outlays.

Excess of payments or of receipts.-The last four columns of Table 4 correlate, or "strike a balance between," payments and receipts for meeting governmental costs. Three bases of study are presented: (1) The excess of payments for revenue expendituresthat is, expenses, interest, and outlays, over receipts from revenues, or the reverse; (2) the excess of receipts from revenue over payments for expenses; and

(3) the excess of payments for revenue expenditures over receipts from commercial revenues-that is, receipts from the performance of services or the furnishing of materials for compensation. In all of these comparisons, it should be borne in mind that payments and receipts are given and not accrued current expenses, interest, outlays, and revenues. The relative merits of studies based respectively on payments and receipts and on accruals may be disregarded for the present, since too small a number of cities keep their accounts on the basis of accrued revenues and expenses to justify the Census Bureau in adopting that basis for its statistics. Table 4 is deficient in that it does not show the cash balances available for meeting governmental costs at the beginning and the close of the year. A deficit in the receipts from revenue for the current year might, for some cities, be largely or wholly offset by a free cash balance at the beginning of the year.

An excess of payments for revenue expenditures over receipts from revenues indicates that during 1907 payments for the costs of government exceeded receipts from revenues. This excess is sometimes referred to in governmental finance as a "revenue deficit" or "deficit in revenue receipts." Such a term may be correctly used in governmental business in referring to the excess of expenses, interest, and outlays over revenues, since all such costs must even ually be met from revenues, while in private finance outlays are always chargeable against capital receipts. In governmental business, however, good financial management may demand that a part of the cost of new work be distributed, by means of loans, over a series of years. Thus all outlays are not necessarily chargeable against the revenues of the current year.

For each group of cities the amount given as the excess of payments for revenue expenditures over revenue receipts is the sum of the several excesses reported, and not the excess of all revenue expenditures over all revenue receipts for the group; that is, in computing for each group of cities the excess of payments over receipts those cities with an excess of receipts over payments are excluded.

Of the 158 cities, 119, or 75.3 per cent, show an excess of payments for revenue expenditures over revenue receipts, while in 1906, only 57.6 per cent, and in 1905, 62.3 per cent, showed such an excess. The 119 cities showing revenue deficits in 1907 include 13 of the 15 in Group I, 23 of the 39 in Group II, 34 of the 47 in Group III, and 49 of the 57 in Group IV. With the exception of Camden and Hoboken, N. J., each of the 119 cities with a revenue deficit in 1907 had sufficient revenues to meet its expenses and interest, so the deficits may be considered as due to payments for improvements and additions.

If the expenditures and revenues of those cities showing an excess of revenue receipts over revenue

expenditures are excluded from consideration, the percentage of revenue expenditures not met from revenues was 23.1 for the cities of Group I, 12 for those of Group II, 16.3 for those of Group III, and 15.1 for those of Group IV. The percentages are exceptionally large for New York city in Group I; for Seattle, Wash., in Group II; for Trenton, N. J., Wilmington, Del., Camden, N. J., New Bedford, Mass., Oakland, Cal., Yonkers, N. Y., and Schenectady, N. Y., in Group III; and for Altoona, Pa., Passaic, N. J., Jacksonville, Fla., Wichita, Kans., Galveston, Tex., New Britain, Conn., and Oklahoma City, Okla., in Group IV. So far as the figures for a single year can be trusted, these percentages indicate that the proportion of costs of government not met from revenues does not vary materially with the size of the cities.

For all cities combined and for each group of cities, the amount of the excess of payments for revenue expenditures over revenue receipts agrees rather closely with the excess of receipts over payments on account of indebtedness. But for many individual cities there is no such agreement between the two items. Twenty cities report net receipts from debt, yet do not show revenue deficits. On the other

hand, 11 cities show revenue deficits, yet do not report net receipts from debt. It is evident, however, that the excess of costs over revenues must be met either from loans or from accumulated revenues; and while an analytical summary of payments and receipts for one year will not indicate from which source such costs are met, a statement covering a series of years would unquestionably show that a majority of the cities are annually borrowing money to meet the costs of government.

An excess of receipts from revenues over payments for revenue expenditures is the converse of the excess discussed above and indicates that during 1907 receipts from revenues exceeded payments for the costs of government. This excess-frequently referred to in governmental finance as "revenue surplus"-is available for reducing present indebtedness, for meeting expenses of a future period, or for making improve

ments.

Of the 158 cities reported, 39 show an excess of revenue receipts over payments for revenue expenditures; in other words, these cities raised revenues sufficient not only to meet all current expenses, including interest on debt, and to pay for all new work, but to accumulate a surplus as well. In 1906, 67 out of 158 cities, and in 1905, 58 out of 154 cities reported a similar revenue surplus.

While the columns of Table 4 indicating the relation between payments for expenditures and receipts from revenues show the outcome of the financial transactions of each city during the year 1907, they do not disclose whether the policy of the city is (1) to

pay for the largest possible proportion of public improvements from current revenues, or (2) to incur debt for such improvements, and thus leave the largest portion of their costs for future payments. This information would be disclosed, however, by a statement of revenue expenditures and revenue receipts for a series of years.

or

An excess of receipts from revenues over payments for expenses and interest is shown for 156 of the 158 cities. This excess must not, however, be considered as a "revenue surplus," as is the excess of the income revenues of a commercial enterprise over its expenses, because wise municipal administration demands that at least part of the costs of new properties and improvements be paid from current reveBut the amounts here shown may be considered as that portion of revenue receipts available for the acquisition of permanent properties or for the reduction of debt.

nues.

An excess of payments for revenue expenditures over receipts from commercial revenues shows the amount of payments for government purposes paid or payable from general revenues that is, from taxes and other contributions by the citizens. With the exception of expenses of public service enterprises, which in most cities are chargeable against the revenues of such enterprises, it is impossible definitely to charge the several classes of expenditures against specified classes of revenues. of revenues. But in a general way But in a general way it may be assumed that general expenses, interest on funded debt other than that for public service enterprises, and the larger portion of outlays are paid or payable from general revenues, while special service expenses, expenses of invested funds and of public service enterprises, interest on indebtedness of such enterprises and on special assessment loans, and the smaller portion of outlays are paid or payable from commercial revenues. The outlays last referred to comprise (1) those to be met by special assessments, the receipts from which are included under "revenues from special services," and (2) those outlays for public service enterprises which are paid, in accordance with local policy, out of the revenues of such enterprises.

Comparative summary, 1902 to 1907.-Appended to Table 4 is a summary of payments and receipts from 1902 to 1907 for those 148 cities of over 30,000 population which have been included in the census reports on statistics of cities for all of the years named. In this summary the payments and receipts from 1902 to 1906 are adjusted to the classification employed for 1907, so that they may be comparable for the six years. The payments and receipts presented in this summary, with the exception of those on account of interest and indebtedness, include certain counterbalancing payments and receipts which could not be segregated for 1902, 1903, or 1904. The amount of