QldttteU HntuBtattg BJibrarg Stljata, Wem inrfe BOUGHT WITH THE INCOME OF THE SAGE ENDOWMENT FUND THE GIFT OF HENRY W. SAGE 1891 Digitized by Microsoft® S8'# 6 1949 J id A: i5 ij JJO^ DATt DUE ra^m.^ ^'- Cornell University Library HJ2053.M4 G97 Evolution of the budget in Massachusetts olin 3 1924 032 550 000 Digitized by Microsoft® This book was digitized by Microsoft Corporation in cooperation witli Cornell University Libraries, 2007. You may use and print this copy in limited quantity for your personal purposes, but may not distribute or provide access to it (or modified or partial versions of it) for revenue-generating or other commercial purposes. Digitized by Microsoft® EVOLUTION OF THE BUDGET IN MASSACHUSETTS Digitized by Microsoft® THE MACMILLAN COMPANY MSW YORK • BOSTON • CHICAOO • DALLAS ATLANTA • SAN FRANCISCO MACMILLAN & CO., Limited LONDON • BOMBAY • CALCUTTA UBLBOURNB THE MACMILLAN CO. OF CANADA, liTD. TOKOMTO Digitized by Microsoft® SPECIAL STUDIES IN ADMIHISTRATION By The Bureau of Municipal Reseaech and The Training School for Public Service Evolution of the Budget in Massachusetts BY LUTHER H. GULICK Hefa gotfe THE MACMILLAN COMPANY 1920 All rights reserved Digitize^by Microsoft® COPYBIGHT, 1920,. By the MACMILLAN COMPANY. Printed from type. Published May, 1920, J. S.L Gushing Co. — Berwick & Smith Co, Norwood, Masa., U.S.A, Digitized by Microsoft® PREFACE This historical sketch of the development of the budget in Massachusetts is an outgrowth of a brief outline pre- pared for Representative Jpseph E. Warner during the faU of 191 7, when the author was the secretary of the Joint Special Committee on Finance and Budget Pro- cedure of the Massachusetts General Court. It is not the purpose of this discussion to prove or disprove any of the current budget dogmas, but solely to record in orderly fashion the long series of events that have led up to the present budget system of Massachusetts. The reformer who looks for immediate and revolutionary changes in the financial methods wiU find little consola- tion in the history of Massachusetts. For this very reason, the student of government who beheves there is some value in the gradual growth of the habits and forms of government, will see, it is hoped, a justification for this presentation of the evolution of the budget in Massa- chusetts. The author has several debts to acknowledge. Rep- resentative Benjamin Loring Young] has been a most helpful and constructive critic. Mr. Carl A. Raymond, Deputy Supervisor of Administration, and Mr. Louis A. Phillips, Legislative Reference Librarian, have rendered valuable assistance. The acute criticisms of Professor Digitized by Wicrosoft® vi PREFACE Thomas Reed Powell and the suggestions and advice of Professor Howard Lee McBain, both of Columbia Uni- versity, have guided the author in shaping the material of this study. Lest others may be charged with responsi- bility for statements of fact and of judgment contained in these pages, it is only fair to state that as the author has not in aU cases been guided by his counselors, the responsibility is his and his alone. L. H. G. New York, March, 1920. Digitized by Microsoft® PREFATORY NOTE This volume is the second in a series of special studies in administration in course of preparation by the Bureau of Municipal Research and Training School for Public Service, as announced in the first volume by Dr. C. C. Maxey, "County Administration — A Study Based Upon a Survey of County Government in the State of Delaware." Although Mr. GuUck's treatment is for the most part historical, the writing of history has not been his purpose. On the contrary, it is his intention to present for the / practical administrator dealing with state budgets an account of actual appropriation methods and the practice prevailing under an important piece of budget legislation. ( Not the least of his purposes has been to counteract the I superficial views which prevail in some quarters as to budget-making. There are some who write and speak as if "a budget system" could be established overnight by a mere act of the legislature imposing on some body or authority responsibility for preparing estimates of expenditures and revenues. In reality budget-making is a complicated process. In installing a budget system we are not confronted with the relatively easy task of adding a wing to an old structure, or of devising a new bureau or ofl&ce of government. On the contrary we are vii Digitized by Microsoft® Viii PREFATORY NOTE brought face to face with operations as complex as the multifarious activities of modem government and with processes which go to the very root of our constitutional law and political custom. If any one is under the delusion that the governor of the state or the President of the United States can on his own motion introduce a "budget system" by expanding his message into a monumental fiscal statement or by recommending the adoption of an act of appropriation prepared in executive chambers, it would be well for him to rid himself of that delusion immediately. If any one thinks that a mere statute requiring an executive consolidation of estimates is suffi- cient to install a "budget system," he also is in error. Above ail, it is a travesty upon the term to give the name "budget law" to an act which merely equips legislative committees with staffs of searchers. It might as well be said, once for all, that a budget system involves fundamental executive and legislative practices, carefully devised accounting methods, adequate expert service, efficient record keeping and work reporting — in short, all of the processes of good management. This is so in England, it is so in Germany, it is so in France, it is so in Japan, in Canada, and in every country where a budget system is in operation, even though there are, of course, certain differences in procedure. It involves an abandonment on the part of the public of the tradi- tional attitude that the treasury exists for the satisfaction of local needs. It involves the training of public servants equipped to operate a system based on soimd business Digitized by Microsoft® PREFATORY NOTE ix principles. Whoever expects, therefore, to rush a " budget bill" through the coming legislature and to see an im- mediate revolution in finances, is destined to be disap- pointed. Advocates of a budget system have before them a season of scientific research into accounting and reporting methods, civil service practices, public works management, cost measurement and record keeping. Moreover, they have before them a long campaign of public education. Mr. Gulick's study is merely an eloquent commentary illustrated by a wealth of detail on the principles laid down above. As such it wiU be welcomed I am convinced by those men of affairs who are actually wrestling with the problem of installing sound budget practices in detail. Chakxes a. Beard, Director, Bureau of Municipal Research, and Training School for Public Service . Digitized by Microsoft® Digitized by Microsoft® CONTENTS OHAPTEB PAQB I. Before the Constitution . . . . . . i Charter Provisions ; The Executive-Legislative Struggle ; Development of Legislative Control ; Underl3dng Causes. IL First Steps under the Constitution, 1780-1849 . . 11 The New Constitution ; The Budget of 1780; Legislative Committees of 1780; Development of "RoUs"; Appro- priations ; Position of Legislative Committees ; Position of the Governor. III. Laying the Budget Foundations, 1849-1910 . . 25 Creation of the Auditor ; Preparation of Estimates ; Appropriations ; The Authorization of Transfers ; Grow- ing Importance of Committees ; Increased Leadership of the Governor ; Development of Financial Control. IV. The Governor and the Budget, 1910-1918 ... 42 Part I. Budget Reform in 1910 and its Results — The Walker Act ; Governor's New Responsibility Recog- nized in Republican Platform; Democratic Governor Elected ; Governor Foss and the Walker Act ; Governor Authorized to Employ Experts ; Governor's Recom- mendations and Legislative Revision ; Results of Execu- tive Participation in Appropriation Process; Party Platforms of 1911 ; Creation of Commission on Economy and Efficiency ; Estimates to Auditor ; Governor Eliminated from Appropriation Process ; Supervisor of Administration Replaces Commission; Ultimate Result of Walker Act. ; Part II. Budget Reform in 1917 — Report of Economy and Efficiency Commission; Report on Revenues and Loans ; Chamber of Commerce Report ; The Legislature and Budget Reform. Digitized Sy Microsoft® xu CONTENTS CHAPTER V. The Joint Special Committee on Finance and Budget Procedure 71 Composition of Committee ; Sub-committee on the Budget. Part I. Preparation of the Budget for 1918 — Staff Assistance of Supervisor ; Institutional Visits ; Confer- ences ; Budget Policy ; The Subcommittee's Budget ; Budget Submitted to Legislature ; The Massachusetts Budget of 1918 ; Supporting Details. Part II. Providing for a Budget System — Budget Views of Committee Members ; Budget Program of Mr. Warner and Mr. Young ; Time Limit Forces Decision ; The Budget Recommendations of the Recess Committee. VI. The Legislature of 1918 and the Budget ... 94 Governor McCaU and Speaker Cox Advocate the Budget System ; Budget Progress in the Legislature ; Legislative Consideration of the 1918 Budget ; Public Interest in the Budget ; Conflict with Senate Over Committee Reference ; Budget Revisions of the House Committee; Revised Budget Bill Before the House; Budget BiU Before the Senate ; Significant Incidents in the Passage of the Budget Bill ; Disposition of Postponed Items ; Budget Recommendations for Capital Outlays; Relation of Budget Appropriation to Total Appropriations ; Ap- propriation BiUs of 1918; Appropriations for Metro- politan Districts ; Early Passage of Appropriation Acts ; General Satisfaction with New Budget System. VII. Establishing the Budget System 117 Part I. The Budget System Bill — Committee Recom- mendations; Referred to Joint Ways and Means Com- mittee ; Lack of Interest in Budget System ; Passage of the Bill. Part II. Other Financial Reforms in 1918 — Minor Recommendations of Recess Committee ; Salary Stand- ardization and the Administrative Control of Appoint- ments and Promotions ; Transfers of Funds Appropriated for State Departments. Digitized by Microsoft® CONTENTS xiii CHAPTER ^AGE VIII. The Constitutional Convention and the Budget . 129 Part I. The First Session of the Convention, 1917 — The Budget Resolutions Submitted ; Hearings Before the Committee on Finance ; Report of Committee. Part II. The Second Session of the Constitutional Convention, 1918 — Committee Report Before the Convention ; Debate on the Executive ; Committee on Finance Changes Its Mind ; Debate on the Budget ; The Convention's Address to the People ; Ratification by the People ; Analysis of Vote. IX. EXPEKIENCE with THE BUDGET IN1919. . . . 162 Form of Estimate Blanks for State Departments ; Preparation of the Budget by the Supervisor of Ad- ministration ; the Governor's Submission of the Budget ; Budget Recommendations of Inaugural Address ; Forms and Content of the 1919 Budget ; Legislative Considera- tion of the 1919 Budget ; The Budget Speech ; News- paper Comment on Budget Speech; Debate on the Budget Bill in the House ; The Budget Bill Before the Senate ; Supplementary Budgets ; The Budget and the Pork-Barrel ; Appropriations Based on the Governor's Special Messages ; Private Petitions for Appropriations ; Total Appropriations of 1919 Session. X. Budget Reeorm in 1919 . 194 New Constitutional Provisions ; Changes in Budget Law and Practice ; Reorganization of the Executive Depart- ments ; The Reorganization Act ; Effect of Reorganiza- tion on the Budget. XI. Constitutional, Conflict over the Budget in 1920 . 207 Preparation and Submission of the Budget ; The 1920 Budget ; The Expenditure Program ; The Revenue Program ; Budget Before Joint Committee on Ways and Means ; Results of Financial Inquiries ; Opinion of the Attorney-General ; Public Criticism of the Governor's Budget; The Governor's Revised Budget; Restoration of the Constitutional Principle of Executive Responsibility. Digitized by Microsoft® xiv CONTENTS CHAPTER PAGE XII. Classification of the Massachusetts Budget System 224 Classification of Budget Systems; Classification of the Massachusetts Budget System. XIII. Outstanding Facts in the Evolution of the Massa- chusetts Budget 228 Evolution of Estimates; Authorization; Audit of Ex- penditures; Execution; The Dynamic of Budget Re- form; Legislative Leadership; The Limits of Public Interest ; The Influence of the Budget Environment : Three Years of Budget Experience; The Value of the Budget System; The Need of a Budget Staff; The Failure of Massachusetts Provisions to Make the Gov- ernor Responsible for the Budget ; The Permanency of the New Budget System. Appendix I. The Budget Amendment of the Massachusetts Constitution 239 Appendix II. The Massachusetts Budget Act . . 241 Digitized by Microsoft® EVOLUTION OF THE BUDGET IN MASSACHUSETTS Digitized by Microsoft® Digitized by Microsoft® EVOLUTION OF THE BUDGET IN MASSACHUSETTS CHAPTER I BEFORE THE CONSTITUTION When the patriots of Massachusetts Bay resisted the imposition of a tax on tea by a government in which they had no voice, they were expressing a pohtical axiom well rooted in the hearts and pockets of our ancestors. Tax- ation and representation belonged together. It was one of the ideas that came over in the Arabella in the spring of 1630 when the goverimient of Masasachusetts was brought from England to this continent.^ The idea that taxation and representation belonged together was the more firmly fixed because of the long conflict that had been waged between the royal governors and the elected representatives of the colonists. Charter Provisions. In 1691 WiUiam and Mary granted Massachusetts a new charter. The frame of government, in the words of the charter, was as follows : "And Wee doe further for Vs Our Heires and Successors Will Establish and ordeyne that from henceforth for ever there ' Manual of Constitutional Convention, 1917, page 6. B I Digitized by Microsoft® 2 BUDGET IN MASSACHUSETTS shall be one Governor One Leivtent or Deputy Governor and One Secretary of Our said Province or Territory to be from time to time appointed and Commissionated by Vs Our Heires and Successors and Eight and Twenty Assistants or Coimcillors to be advising and assisting to the Governor. . . . And further Wee Will and by these presents for Vs Our Hehres and Succes- sors doe ordeyne and Grant that there shall and may be con- vened held and kept by the Governor for the time being. ... a great and General Court of Assembly Which said Great and General Court of Assembly shall consist of the Governor and Councill or Assistants for the time being and of such Freeholders of Our said Province or Territory as shall be from time to time elected or deputed by the Major parte of the Freeholders and other Inhabitants of the respective Townes or Places. . . ." The legislative power conferred on the general court was to enact "wholesome and reasonable laws," to "name and settle Annually all Civill Officers," to define their duties and powers, and " to Impose and levy proportionable and reasonable Assess- ments Rates and Taxes upon the Estates and Persons of all and every the Proprietors and Inhabitants of our said Terri- tory to be disposed of by Warrant under the hand of the Gov- ernor . . . with the advice and Consent of the Councill for Our service in the necessary defense and support of our Govern- ment of our said Territory and the Protection and Preserva- tion of the Inhabitants there according to such acts as are or shall be in force within our said Province and to dispose of matters and things whereby our Subjects inhabitants of oiir said Province may be Rehgiously peaceably and Civilly Gov- erned Protected and defended soe as their good life and orderly Conversation may win the Indians natives of the Country to the knowledge and obedience of the onely true God and Saviour of Mankind. ..." Digitized by Microsoft® BEFORE THE CONSTITUTION 3 It was also provided that the governor should have the veto power, that all laws should be sent to England for a further approval, and that the councillors should be elected by the Great General Court.^ The Executive-Legislative Struggle. This charter with its grant of the money power to the people's representatives formed the basis of the long strug- gle between the house and the governor, a struggle which is too well known to need any comment here.^ It is suf- ficient for our purposes to point out the saUent results of the struggle. These were : 1. The wide separation of the executive and legislative departments. 2. The absolute control of the people's representa- tives over the levy of taxes and the appropriation of funds. 3. The gradual assumption of executive power by the legislature through the agency of its financial control. 4. The establishment of the principle that fimancial measiires must originate with the "people's representa- tives" — the lower house. 5. The evolution of a "legislative budget" as a means of restricting the executive and keeping taxes down. 1 Charter of 1691. ^H. R. Spencer, "Constitutional Conflict in Provincial Massachusetts." Charles H. J. Douglas, "Financial History of Massachusetts from 1620 to 1775." Charles Bullock, "Finances of the United States 1775 to 1789.'' Digitized by Microsoft® 4 BUDGET IN MASSACHUSETTS Incidents in the Struggle. This conflict brought forth many exceedingly interest- ing incidents. So hostile were the representatives to va- rious royal governors that they decreased their salaries, which were voted annually, and even went so far in the bitterest fights as to make no grants whatsoever. Phips, the first royal governor, wrote to the home government "no salary was allowed or was intended," and asked the king to interfere."^ Dudley, the third gov- ernor, demanded the enactment of a permanent salary, only to be informed by the house, "As to settling a salary for the governor, it is altogether new to us ; nor can we think it agreeable to our present constitution; but we shall be ready to do what may be proper for his support." ^ In 1 7 20 Elisha Cooke, the leader of the " country party, " ^ was elected speaker of the house. Governor Shute dis- allowed the selection, but the house paid no attention. The governor then dissolved the assembly.^ When the new house met in July, the representatives took vengeance by cutting in half the gratuity voted annually to the governor's father, and in the following year decreased the governor's salary.* It is to be noted that the power over the governor's salary was used as a club and that up to 1735 the grant was customarily postponed to the last day of the session.* Indeed, in 17 21 the house refused to proceed to the passage 1 Bancroft, Vol. II, page 68. 2 Spencer, page 66. « Letter of Shute to Board of Trade, June i, 1721, Vol. 13, X. 24. * Bancroft, Vol. II, page 246. Digitized by Microsoft® BEFORE THE CONSTITUTION 5 of money bills till the governor notified them that he had approved the acts, resolves and elections of the session.'^ The gradual encroachment by the legislature on the executive power was the cause of continued friction almost from 1 69 1 to 1775. More than one governor complained bitterly to the home government. Governor Shute riiade the charge to the king in 1723 that the house had given orders to garrisons, examined and disposed of mili- tary supphes, discharged individual officers for poHtical reasons, and determined the number and ranks of armed men he might maintain.^ Perhaps the keenest complaint of all, however, was that of Governor Belcher in a letter dated December 26, 1732, to Newcastle, in which he said : "All the struggle in that matter is for power; if every ac- count of the Province must be subjected to the House of Representatives the King's Governor will be of very little signification. They that have control of the money will certainly have the power, and I take the single question on this head to be whether the King shall appoint his own Gover- nor or whether the House of Representatives shall be Governor of the Province." ^ Douglas, who condemns the tactics of the representa- tives in his financial history of Massachusetts, regards the financial struggle as part of the American Revolution.'* ' Spencer, page 66. ' Ibid., page 124, ' December 26, 1732, Belcher Papers, page 493. * Douglas, Financial History of Massachusetts, pages 57, 137. Digitized by Microsoft® 6 BUDGET IN MASSACHUSETTS The Origination and Amendment of Money Bills. There was also a long-continued conflict between the house of representatives and the council over the amend- ment of money biUs. In 1746, for example, the council altered the tax bill sent up to them by the house. It was returned, and the journal of the house reads : "Read and non-concurred. For as much as the House appre- hend the honorable Board (according to the constant usage of the General Court and ancient privilege of the Representatives of the People) may only concur or non- concur a Tax Bill, but may not make any amendment." On June 21st, the council persisted in amending the bill, and on the 24th the house refused to accept any amendment made by the council. Finally, on the 26th the coimcU gave in, at the same time notifying the house, — "Although the Board apprehend they have a just right to make an amendment on a Tax Bill, at least in a matter circumstantial, which was the point in dispute between the two Houses on the present Tax BiU ; yet rather than delay the important business of the Court at this critical juncture, the Board have concurred the Tax Bill as sent up by the Honorable House." Nevertheless, the cotmcil, that very afternoon, amended an appropriation (supply) bill and sent it down. Again the house non-concurred and sent a message to the board, saying: "It is very surprising to the House, that the Honorable Board should in their vote of this day begin a grant of a great expense to this Province; for how reasonable soever the par- ticulars voted may be, yet this House apprehend such Digitized by Microsoft® BEFORE THE CONSTITUTION 7 grants should always originate with the People, who are at the cost of them." This struggle between the two houses was settled by the constitution in 1780 with its provision that — "All money bills shall originate in the House of Representa- tives ; but the Senate may propose or concur with amend- ments as on other biUs," — a phrase which found its way into the federal Constitution in 1787.^ Development of Legislative Control. Paralleling this struggle for financial control by the representatives of the people, there was a gradual develop- ment of the machinery of financial control. In the earli- est days there were no separate appropriation acts, strictly speaking, for the right to spend was included in the right to coUect. The revenues were raised by grants of direct and indirect taxes "For the Defence of his Majesty's subjects and interests," and for other equally vague and general purposes. The revenue measures of a year were from three to six in number. They had no relation with each other, and no attempt was made to consider the financial problem as a whole and to plan accordingly.^ The revenue system of the province, coupled with the growing financial leadership of the house of representa- tives, brought about a significant change. The revenue needed was raised from two sources, direct taxes and 'Gilpin, Madison Papers, pages 1530-1531; Massachusetts Constitution, Part n, Chap. I, sec. Ill, Art. VII. ' See Province Laws and Resolves, Vol. I to V. Digitized by Microsoft® 8 BUDGET IN MASSACHUSETTS indirect taxes.^ The fact that the indirect taxes failed to meet the needs of the government made it necessary to fall back each year on polls and property taxes to be apportioned on the vairious towns. The representatives were sent by these towns and so had a lively appreciation of the unpopularity of direct taxes and as a result were always eager to prevent any expenditure that could pos- sibly be avoided. To make the expenditures for a given year as low as possible, they finally brought all the matters together in a single bill, paring it down to the lowest pos- sible figure and insisting that the coimcil could not amend it in any particular, nor introduce any other measures. This evolution of a "legislative budget," in which expendi- tures and revenue were balanced over against each other with great care, was complete by 1733. In that year practically the entire running expenses of the government were fixed and financed by a single biU entitled "An Act for Supplying the Treasury with the Sum of Seventy-Six Thousand Five Hundred Pounds, Bills of Credit, for Dis- charging the Pubhc Debt, &c., and for establishing the Wages of Sundry Persons, &c., in the Service of the Prov- ince." This combined appropriation and revenue biU provided : 1. Fixed salaries for the soldiers of the province. 2. That seventy-six thousand five hundred pounds should be issued in bills of credit, — "all sums shall be employed for the necessary defence and support of this 1 Douglas, Financial History oi Massachusetts, 32, [33 '59-95 ; Bullock Finances of the U. S. 177S-89. Bui. University of Wisconsin, pages 224-226. Digitized by Microsoft® BEFORE THE CONSTITUTION 9 government, viz., eight thousand one hundred and sixty- two pounds twelve shillings, part thereof, shaU be applied to pay the wages and other sums now due or that may be due by virtue of the establishment of Castle Williams as above, and to and for no other purpose whatsoever. ..." In similar fashion the other appropriations follow, each concluded by the clause "and to and for no other purpose whatsoever." 3. Pay for the councillors and for the representatives. 4. "That if there be a surplusage in any sum appro- priated, such surplusage shall ly(e) in the treasury for further order of this court." 5. That the bills of credit issued be redeemed by poU and property taxes as they fell due over a period of years.^ By 1733, then, the legislature had adopted a " segregated budget," in modern parlance, and had carefully guarded the surpluses by making them lapse into the treasury. This unity of financial planning continued, except for an upset at the time of the colonial wars, till 1775, when the war financing, both state and national, upset all orderly procedure. The period falling between 1733 and 1775 displays at times a imity of financial planning exceedingly refreshing to the present-day student of pubUc finance.^ Underlying Causes. It is an interesting phase of budgetary history that in provincial Massachusetts a unified financial program ' Province'Laws, Vol. II, page 690. ^i774 Province Laws, V, page 390. Digitized by Microsoft® lo BUDGET IN MASSACHUSETTS was developed as early as 1733. A careful study of the forces that brought it about lead to the conclusion that it was a result of the conflicting political interest of the peoples' representatives and the royal governors. A uni- fied financial plan was found to be the most efl&cient way of tying down the executive and limiting the direct taxes. Professor Bullock writes in his monograph on the Fi- nances of the United States, 1775 to 1789 : "It is probably safe to attribute the growth of a unified budget in this colony (Massachusetts) to the calculating and parsimo- nious character of the policy of the representatives. This conclusion does not necessarily exclude all possibihty of an influence having been exerted by the example of English methods. But it does seem certain that within the colony itself existed conditions which are a sufficient explanation of the course of budgetary development." ^ ' Bui. U. of Wisconsin, Vol. i, page 228. Digitized by Microsoft® CHAPTER II FIRST STEPS UNDER THE CONSTITUTION 1780 TO 1849 The New Constitution. The Massachusetts constitution of 1780 was the handi- work of John Adams as modified by the elected repre- sentatives of the freemen of the state.^ It preserved most of the old institutions and made changes only where necessary to correct Provincial abuses, or to replace the British crown. The sections of the constitution affecting finances and financial control were copied almost word for word from the charter of 1691 — with the omission of the religious and missionary phrases.^ The veto po-wer was left with the governor,^ the executive duties of the old council were turned over to the new council,* while the legislative duties of the old council went to the senate.^ The power to originate money bills was left with the house, though the senate, now elective, was given power to amend.^ The issuance of moneys from the treasxiry was made dependent, as under the charter, upon a warrant signed by the governor. '' ' Convention Manual 1917, page 22. ^ Part II, sec. I, Article IV. = Part II, Chap. I, sec. I, Article II. « lUd., Chap. II, sees. I-III. 5 Ibid., Chap. I, sec. II. « Ibid., Chap. I, sec. Ill, Article VII. nUd., Chap. II, sec. I, Article XI. Digitized b}\licrosoft® 12 BUDGET IN MASSACPIUSETTS Article XIII of the section dealing with the governor is interesting in view of the historical experiences of the province. It provides : "As the public good requires that the governor should not be under the undue influence of any of the members of the general court by a dependence on them for support, that he should in all cases act with freedom for the benefit of the public, that he should not have his attention necessarily diverted from that object to his private concerns, and that he should maintain the dignity of the commonwealth in the character of its chief magistrate, it is necessary that he shoxild have an honorable stated salary, of a fixed and permanent value, amply sufficient for those purposes, and established by standing laws : and it shall be among the first acts of the general court after the com- mencement of this constitution, to establish such salary by law accordingly." From a financial standpoint, the only important change brought about by the new constitution was the estabhsh- ment of a popularly elected governor, and even this inno- vation had Uttle effect for the time being because of the ingrained jealousy of executive power. The Budget of i'/8o. During the Revolution aU orderly finance disappeared, and it is not surprising to find a disorganized system in 1780. In the first session of the general court after the adoption of the new constitution there were eight acts and 157 resolves of a budgetary nature. If any financial plan had been adopted for the session, certainly no evi- dence of it is to be found in the number or sequence of the acts and resolves carrying a charge upon the treasury Digitized by Microsoft® FIRST STEPS UNDER THE CONSTITUTION 13 Summary Table from the Budget of 1780. The sums necessary for the services of the current year (exclu- sive of raising the men and the supply of beef, respectively assessed upon the towns) are as follows : For shirts, shoes and stockings for the Massachusetts Une .... £20,200 To pay for clothing from Europe, already purchased, and charges . 6,000 To import clothing from ditto 20,000 To pay for officers clothing, now due to them 12,000 To discharge part of the principal of the public debt 50,000 To purchase small stores for the army 11,000 Money required by Congress for payment of the troops, etc. . . . 86,000 Ditto, to discharge Quarter-Master's certificates 64,000 To discharge interest on the depreciation notes, and such of them as become due in a few days 9S>ooo To pay interest on the securities of government 118,000 For the support of ciyil government 30,000 For the Commissary-General's office 30,000 For the supplies of forts and garrisons 40,000 To discharge the debts due from the late Board of War .... 12,500 To pay interest on hard money notes 6,000 To procure 13,000 bushels of salt 9,75o Ditto — 74,500 gallons of rum 18,625 For redeeming one-seventh part of the new money 66,000 To procure 2000 barrels of pork 16,000 To pay for transportation of rum, salt and pork 16,000 Money for sundry charges of the war, not enumerated 212,000 (in specie . . £939.o7S Amounting in the whole to nine hundred and thirty-nine thousand and seventy-five -pounds, in specie. The means for payment of which, as we conceive, may best be obtained in the following manner By loan on the supply bill £400,000 The silver money tax now collecting 72,000 The surplus of beef, appropriated to the supply of pork .... 16,000 By the shoes, stockings, etc., proportionably levied on the sevetal towns 20,200 By the sale of confiscated estates 40,000 By excise on articles of consumption 5°,875 By a tax on poUs and estates 320,000 By a lottery for the purchase of clothing 20,000 (in specie . . . £939,075 Digitized by Microsoft® 14 BUDGET IN MASSACHUSETTS or providing funds for the treasury. But on February 27, 1 781, about the middle of the first session of the gen- eral court, a summary budget statement was prepared and ordered printed and publicly distributed.^ This statement, in addition to the summary estimates of expenditures and revenues, contains an explanation of the revenue measures, of some of the appropriations called for, and concludes with a discussion of the state debt and a ringing appeal to the patriotism of the people for support of a public loan. The financial balance sheet of this " budget" is reprinted on page 13. Legislative Committees of 1^80. ' In addition to handling many matters directly, the general court appointed a number of committees and individuals to which were appropriated lump sums for the discharge of obligations of the government. Among these committees were the committee for superintending purchases (R. Chap. 8, Oct.), the board of war (R. Chap. 10, Oct.), the committee to superintend the purchase of beef (R. Chap. 16, Oct.), the committee for methodizing and stating accounts (R. Chap. 20, Oct.), the committee for setthng with the army (R. Chap. 21, Oct.), and the committee to concur and pay accounts (R. Chap. 11, Oct.). All of these, but one, were carried over from the pre-constitutional days and in some cases were instructed "to proceed in their busi- ness according to the several directions of former general ' Resolves of 1780, Chapter 162. Digitized by Microsoft® FIRST STEPS UNDER THE CONSTITUTION 15 courts." ^ Others were not formally reappointed or reinstructed, but continued and acted as before.^ The most interesting of these committees from the budgetary standpoint is the committee to concur and pay accounts. It was an innovation created by resolve Chap- ter 11, of November 4, 1780, as follows : "Resolved, That Richard Cranch, Lemuel Kollock, Joseph Hosmer, Jonathan Webster, and Noah Goodman, Esqu'rs, be, and they are hereby appointed a committee on the part of this House, whose business it shall be to receive, examine, and pass on all accounts (not otherwise ordered) which shall be exhib- ited to them for allowance, for any service done in persuance of any resolve or order of the General Court, provided such accounts be properly vouched and authenticated, and the dooings of said committee respecting such accounts, or any three of them (who are hereby appointed a quorum) shall be considered as valid as any vote or resolve of this house, during the recess as well as in the sitting of the General Court. "And it is further Resolved, That Jabez Fisher and Ephraim Starkweather, Esq'rs. shall be a committee on the part of the Senate, and they are hereby authorized and empowered, both in the sitting and recess of the General Court, to concur and pay all such accounts as shall have been allowed by the com- mittee of the House as aforesaid, always taking proper vouchers for the same. "And it is further Resolved, That there be paid out of the public treasury to said committee of the Senate, a sum not exceeding two thousand pounds in the new emission of money, to enable them to pay off accounts as aforesaid, said com- mittee to be accountable for the expenditure of the money they shall so receive. ^ Resolves 1780, Chap. 20, October. ^ E.g. Chap. 2g, Jan. sess. See Chaps. 72, 85, 206, etc., grants to individuals for public purposes. Digitized by Microsoft® i6 BUDGET IN MASSACHUSETTS "And it is further Resolved, That the Committee on the part of the House shall keep a particular record, expressing the names of the persons whose accounts they shall allow, the towns to which they belong, for services done, and the sums allowed to them respectively, which record shaU be laid before this House once in every session, for their inspection. "And it is also Resolved, That the committee on the part of the Senate shall from time to time lay their accounts, which they shall have paid, together with the vouchers, and an ac- count of their expenditures, before this House, that said com- mittee of the Senate may be discharged from such sums of money as may appear to have been by them expended, pro- vided always that nothing in the foregoing method of examin- ing, allowing and paying accounts shall be considered as a precedent for the future, but to have been adopted merely from the necessity of the present times." A few days later certain former duties of the treasxiry were transferred to this committee on accounts by chapter 37 of the resolves. "Whereas," read the preamble of this resolve, "it has been fotind inconvenient that the bounties, . . . should continue to be paid by warant on the treasury : Therefore, to prevent unnecessary loss of time in getting said boimties, It is Resolved" that the committee on accounts be instructed to pay bounties. On receiving its appropriation, the house committee set about certifying the various claims that came before it as payable imder the orders and resolves of the general court, and the senate committee, on receiving this certifi- cate, paid out the amount indicated from the appropria- tion granted. From time to time the committee laid its "Roll of Accounts" before the general court to have it "allowed." At such times the committee was "dis- Digitized by Microsoft® FIRST STEPS UNDER THE CONSTITUTION 17 charged" of the amounts allowed. For example, on No- vember 24th, we find the following resolve : "Whereas the committee appointed on the part of the Senate to concur and pay accounts, have received of the Treasurer of this Commonwealth, by virtue of a warant from his Excellency the Governor, dated the fourth instant, two thousand pounds in bills of the new emission, and have pro- duced good and sufficient vouchers to the satisfaction of the Committee for auditing the public accounts, as by the certifi- cate of the said committee may appear, for the expenditure of one thousand nine hundred and ninety-five pounds thirteen shillings and two pence : Therefore, be it "Resolved, That the Committee for paying the accounts as aforesaid, be discharged of the aforementioned sum . . . leav- ing a balance of four pounds six shillings and ten pence, due to the Commonwealth, for which said committee is to be ac- countable." 1 The committee was granted another lump sum of five thousand pounds by resolve Chapter 64. In similar fashion the committee was later discharged from this as well.^ During the session the total advances to the committee were £30,000. This committee clearly formed one of the important links in the financial administration of the earliest days. Development of "Rolls. " In 1785 Governor James Bowdoin vetoed the customary aimual resolve creating the committee to receive and pay accounts described above. He held that the practice was unconstitutional and a usurpation of executive power. He said : "The legislature is to raise money in the several ^Resolves 1780, Chap. 77, October. 'Ibid., Chap. 180. c Digitized by Microsoft® i8 BUDGET IN MASSACHUSETTS ways mentioned; and the executive is to dispose of it for the public service according to such acts as are or shall be in force." ^ As a result, the actual administration of appropriations was in danger of passing from the legislature to the execu- tive. The last lump-sum grant to a committee was voted in 1785.^ The legislature, however, was quick to see that this power could be retained by examining the specific claims first and then appropriating the needed sums specifically. To accomplish this the committee on accounts was recreated without the objectionable powers, and proceeded to prepare, at least once a session, "RoUs" of all amounts which, in their judgment, were due municipalities or individuals and for which no appro- priation had been made. Each "Roll" was then laid before the legislature and "His Excellency the Governor" was "requested to issue his warrant for the payment of the corporations and persons borne on this Roll." The first such roll was passed November 17, 1786,^ and the tactful addtess to the governor was discontinued with roll No. 37 passed June 22, 1797.* Beginning with roll No. 38, it was resolved "that there be allowed and paid out of the pubHc treasury" the amounts indicated.^ The function of these "Rolls" is indicated by the sub- jects customarily contained in them. In 1804, for ex- ' Veto message of July i, 1785, Acts and Res. 1784, page 723. ''Acts and Res. 1785, Feb. Chap. 125. ^Ibii., 1786, Nov. Chap. 128, Resolves. ^Ibid., 1797, May, Chap. 42, Resolves. ' Ihid., Jan. Chap. 135, Resolves. Digitized by Microsoft® FIRST STEPS UNDER THE CONSTITUTION 19 ample, there were two "Rolls" of $16,378.48 and $30,- 496.48, respectively, one passed the last day of the May session, and the other the last day of the January session.^ Each of these classifies the accounts under six heads : Paupers, mihtia, convicts, sheriffs, printers, and miscel- laneous. Under this last head appear such items as repair of the state house, stationery, surveying, record books, messenger service, postage, and auditing accounts.^ That these "Rolls" were used as a means of meeting deficiencies also is indicated by resolves of 1791 and 1792. In 1 791, twenty-four pounds were appropriated to Jacob Kuhn, chief messenger of the general court,^ to purchase "fml and candles" for the court.* In 1792, in "Roll No. 24," appears the item : ^ "To Jacob Kuhn for the Money expended by him for the purchase of Wood Coal &c. for the use of the General Court over and above the sum of twenty four pounds paid him by the Treasurer persuant to a Resolve passed June i8th, 1791 . . . £2/8/si. The passage of "Rolls" was continued throughout this entire period, the last appearing in 1848.® During the latter years the "Rolls" were split up, such sections as the pauper or miHtia accounts appearing separately.'' This system made it possible for the legislature, and more 'Acts and Res. 1804, Resolves, May, Chap. 58; Jan. Chap. 153. ^ Ibid., page 396. 'Jacob Kuhn discharged the administrative functions of the sergeant-at- arms, an office which was not created till 1835. * Acts and Res. 1791, May, Chap. 79, Resolves. ^Ibid. 1792, May, Chap. 82, Resolves. 'Ibid. 1848, Chap. 70, Resolves. ''E.g. Ibid., 1839, Chap. 38, Resolves; 1842, Chap. 92, Resolves. Digitized by Microsoft® 20 BUDGET IN MASSACHUSETTS especially for the house, to keep its hand on the adminis- tration of an important part of the commonwealth's finances, notwithstanding the abolition by the governor's veto of the committee to receive and pay accounts. Estimates. During the period 1 780-1849 the general court custom- arily had the benefit of estimates, both of revenues and expenditures, in making its appropriations.^ These esti- mates were prepared by the treasurer, who was at this time elected on joint ballot of the two chambers,^ and were submitted to the house with recommendations by the committee on finance.^ Occasionally the treasurer was given broad powers to gather material on which to base his estimates, but no effort appears to have been made to get the ideas of the heads of the various depart- ments.* In form, the estimates first appear in brief tables with considerable text, though at times there are no tables.^ The preparation of estimates was not a regu- lar duty of the treasurer, but was required from year to year by special order of the house. In 1827 the order was passed on June 19th ; ^ in 1837 on January gth,^ and in 1839 on January i6th. On this last occasion the treasurer complains that he has had but two days to draw up the 1 For certain years it is impossible to find any evidence of estimates. This is especially surprising from 1844-1S47. . 2 Const. Part II, Chap. II, sec. IV, Art. i ; Amend. Art. XVII. 3 E.g. Report of Committee on Finance for 1822, 1827, 1828, 1832, 1833, 1834, 1836, 1838, 1841, 1843, etc. ^ E.g. Order of House, June ig, 1826. 6 £ g_ jgj^ * House Documents 1827. '' lUd. 1837. Digitized by Microsoft® FIRST STEPS UNDER THE CONSTITUTION 21 estimates.^ In 1843 the treasurer was given from Janu- ary '28th, Saturday, to February 3d, Friday, to prepare the estimates.^ Throughout this entire period the finan- cial data presented in the estimates rarely exceeded two pages in length.^ After four years during which no estimates appear to have been made, either by the treasurer, or by the com- mittee on finance, the treasurer in his report for 1848 almost apologizes for furnishing on his own initiative an estimate of revenues and expenditures for the coming year. He says that he trusts there may be "no impro- priety in putting the legislature in immediate possession of all the facts that can now be obtained, " though it has not been the custom for some years.* The estimate shows a balance of $18,000 — which may have had some influence in leading the treasurer to take so rash a step, though it must be pointed out that the preceding years had also shown surpluses.* Appropriations. During the entire period appropriations were made both by acts and resolves, by far the greater number being contained in resolves.^ These were scattered along 1 House Documents 1839. ' Ibid., 1843. '£.5.1837,1838,1839. ' House Documents 1848, No. 4, page 5 ; Joseph Barrett elected in 1844 was the Treasurer. ^ Governor's Inaugurals 1845, 1846 and r847. ' Following the provincial custom which was undoubtedly developed to avoid the necessity of sending financial votes to England. In 1731 Belcher received Instructions from England that the resolves must give way to acts in financial matters. Court Records, Vol. XV, pages 158-160. Digitized by Microsoft® 2 2 BUDGET IN MASSACHUSETTS through the sessions, a marked tendency being to crowd them through on the last day of the session. Throughout the period lump sum appropriations were the rule, except for the "Rolls" described above. There were many statutory authorizations, especially of salaries, which operated Uke continuing appropriations.^ An effort was made to safeguard money bills by requir- ing in the house rules that "no grant of moneys shall be made to any of the civil ofl&cers of the government or ofl&cers of Harvard College, without a time being as- signed therefor" ; ^ "No resolution shall pass for a grant of money without being read on two several days";^ and "No bill shall pass to be engrossed and no grant of money shall be made on Saturday or Monday." * An effort was also made to secure an earlier presentation of financial petitions by a resolve of 1816, which read: "Resolved, that no application or motion for any grant of money, at the next session of the General Court, be received after the third Wednesday thereof." ' In spite of these efforts, however, the appropriations were as chaotic at the end of the period as at the begin- ning.^ In fact, a further element of confusion was intro- 1 E.g. 1848, Chap. 82 Acts ; Chap. 301 Res. ; Chap. 14 Res. ; Chap. 58 Res. ; Chap. 6s Res. ; Chap. 74 Res. ' House Rule No. I, 1808, amended 1812 by requiring one day's notice, and repealed in 1821. ' Ibid, n, 1808 ; later extended to aU Resolves ; 1839 amended to read "on three several days." ■> Ihid., Ill, 1808 ; dropped in 1809. ' Acts and Resolves, 1816, Chap. 49, Resolves. « In 1848 there were 48 Resolves and 2 Rolls. Digitized by Microsoft® FIRST STEPS UNDER THE CONSTITUTION 23 duced by the increasing practice of passing continuing appropriations. Position of Legislative Committees. The importance of the committees of the general court in the budgetary process remained unchanged. The ingrained fear of the executive and the natural desire of any group of men to hold on to effective power resisted any marked lessening of the influence of thd legislature in financial matters. The bicameral system and the in- crease in the business and in the membership of the gen- eral court made the committee system indispensable.'^ In addition to the committee on accounts described above/ the house maintained a standing committee on finance and a standing committee on the payroll. Neither of these were joint committees/ as was the committee on accounts.^ The senate had no committee on finance till 1848.= The leadership of the committee on accounts seems to have been unquestioned. Its rolls were accepted without amendment, though occasionally criticized by governors.^ The committee on finance appears not to have fared quite so weU. For example, in 1822 it recommended a state ' Membership over 700 in 1812 (Con. Con. Manual, 1917, page 26). * See page 14. 'Rules of the House, in Manuals, 1808 to 1848. ^ Joint Rules, in Mantials, 1808 to 1848. ^ Senate Rules, 1847 and 1848. 'E.g. Acts of 184s, page 674, Governor George N. Briggs : "The records of the Legislature show a great inequality between the sums drawn from the treasury by the different towns and counties in the State for the support of paupers, compared with their population and the number of paupers returned." Digitized by Microsoft® 24 BUDGET IN MASSACHUSETTS tax of $100,000 which was rejected by the house.^ In 1829 it recommended a tax of $75,000, which was enacted in Chapter 27 of the acts of 1829.^ In 1832 it recom- mended a state tax which failed, and the appointment of a committee on retrenchment which carried.^ In 1833 it advised the diversion of the proceeds from the sale of Maine lands to current expenses which was adopted by Chapter 40.* In 1842 in spite of an exceedingly hot minority report, the lead of the majority was followed and no state tax was enacted.^ Position of the Governor. The governor's influence seems to have increased slightly during the latter part of the period.^ Almost every in- augural address of every governor deals with the subject of finance, after the custom handed down from provin- cial days. However, the advice given was seldom specific or based on detailed knowledge and was more often than not disregarded by the legislature. In fact, it is safe to say that the power of the governor depended on his per- sonal qualities rather than upon his office. ' House Documents 1822 ; Acts of 1822. ^ Ibid., i82g. ' Ibid., 1S32 ; House Journal i S3 2. < Ibid., 1833, Acts of 1833. 5 ji^ig^^ j8^2, Acts of 1842. " Governor Marcus Morton was peculiarly successful in his retrenchment reform. See his inaugural of 1843. Digitized by Microsoft® CHAPTER III [LAYING THE BUDGET FOUNDATIONS 1849 TO I910 Creation of Auditor. In 1849 the legislature created an auditor to be elected annually by the two branches by joint baUot.-^ He was required "to examine all accounts and demands against the Commonwealth," except for debt charges and pay- rolls of the council, senate and house of representatives, and to "certify the amount due on any such demand, the head of expenditure to which the same is to be charged, and the law authorizing the payment thereof, to the governor, who may draw a warrant, as provided by the Constitution." It was also provided that "No warrant shall be drawn for the payment of any account or demand, except the said payrolls, which has not been certified as above." ^ The auditor was also required to countersign all receipts, to keep account of receipts and expenditures "under appropriate heads," ^ to make an annual audit of the treasurer's books and vouchers,* and finally to prepare and submit to the legislature annually at the beginning of the session a " complete statement of the public prop- ' Acts and Resolves 1849, Ch. 56, sec. i. ^Idem, sec. 2. ^ Idem, sec. 3. ^ Idem, sec. 4. Digitized by Microsoft® 26 BUDGET IN MASSACHUSETTS erty of the Commonwealth, its debts and obhgations of every kind, its revenue and expenses during the preceding year, and the balance left in the treasury at the close of such year" and "an estimate of expenses for the current year, distinguishing those which are ordinary and current from those which are extraordinary, together with an estimate of the ordinary income of the Commonwealth, and of all other means which he may be able to point out for the defraying of expenditures, and shall annex, to said statements or estimates, such representations or suggestions as he may deem necessary." ^ That the general court really meant to turn over to the auditor the great bulk of the work with which the committee on accounts was engaged is evidenced by various resolves of 1850, which refer to the auditor per- sonal accounts submitted to the legislature in accordance with the custom of seventy years. In 1849 it was also provided that pauper accounts should be submitted to the secretary, and by him turned over to the auditor for allowance,^ and from this time on there were no more "RoUs."^ Attention must be called to the new departure made in requiring the preparation of estimates by the auditor and their submission to the general court at the beginning of each session. This is the beginning of a staff agency to gather and sift estimates for the legislature. At this time there was, of course, no sifting. • Acts and Resolves 1849, Ch. 56, sec. 4. « Idem, Ch. 151. = Acts and Resolves 1848, Ch. 70, Resolves, was the last. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 27 It is interesting, in the light of present day discussion/ to see that the auditor was considered from the very first a part of the executive department in spite of his election by the legislature. It is specifically provided that he "shall at all times comply with any regulations, in relation to the duties of his office, not repugnant to this act, which may be transmitted to him in writing by the governor and councU," ^ and that his books are to be ex- amined and his office to be selected by the governor and council.^ In the list of office holders published in 1849 and subsequently, the auditor is classed with the governor, lieutenant governor, council, secretary, and treasurer. The sergeant-at-arms, however, is classed with the legis- lature.'^ In 1855 an amendment to, the constitution made the auditor an elective official.^ This amendment was put forward by the legislature itself and was not in any sense the result of a popular effort to separate the auditing fimction from the legislature. It was merely an inci- dental result of the wave of democratic control which swept the country.^ There is no clearer evidence of this than in the constitutional convention of 1853, where an amendment to the constitution was drawn providing for the popular election of the secretary, treasurer, auditor 1 F. A. Cleveland in Bureau of Municipal Research Bulletin 61. ^ Acts and Resolves 1849, Ch. 56, Acts, sec. 7. ^Idem, sec. s, 6. * Idem, pages 267, 281. ' Constitutional Amendment, Art. XXVII, ratified May, 1855. ° Cf. Manual of Const. Conv. 1917, page 6^, and Report of Joint Special Committee of 1852. Digitized by Microsoft® 28 BUDGET IN MASSACHUSETTS and attorney-general.^ Neither in the debates of the convention nor of the committee of the whole was the auditor mentioned in discussing this amendment; in fact it was customarily referred to as the amendment deahng with the popular election of the "Secretary, Treasurer, &c." ^ Preparation of Estimates. The first estimates prepared by the auditor covered six pages.^ Of these, four are devoted to revenues and expenditures. The size and content of the estimates remained about the same for the next six years. In 1856, however, the auditor's duties were substantially enlarged by a resolution providing : "That all expenditures by the heads of departments, boards or commissioners, and all other persons acting under the authority of the Commonwealth, shall be embraced in the annual estimates of the auditor, and be provided for by annual appropriations.* As a result, the estimates of 1857 increased to twenty- three pages, twenty pages of which were explanatory material.^ In the following year the auditor improved the document by placing the information in tabular form and especially by adding the comparative figures of the past two years. This reduced the document to ' Defeated by the people, as were all other suggested amendments. ^Journal 1853 Const. Convention, p. 419, 450; Journal of Committee of the Whole, p. 452. ' Auditor's Rept., 1850 House Docs. ^ Acts and Resolves 1856, Ch. 74, Resolves. ^ House Docs. 1857, No. 9. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 29 but three pages, explanatory material being placed in footnotes.^ In 1858 a very important overhauling of the state finan- cial system took place, affecting both estimates and appro- priations.^ An act was passed relieving the auditor of the duty of preparing estimates of expenditures and re- quiring, "Every public officer or board having charge of any depart- ment of the public service requiring an expenditure of money from the state treasury, other than the payment of salaries, to submit in writing, to the speaker of the house of representa- tives, on or before the fifteenth day of January, a detailed esti- mate of the sums, which in the judgment of such officer or board wiU be necessary for the maintenance of the departments severally under their charge, for the current year.^ As a result of this transfer of duty, the auditor's esti- mates during the next years relate only to revenues.* Beginning in 1862, the auditor again presents brief esti- mates of expenditures ; ^ until 1870, however, the depart- mental estimates sent to the speaker remained unpub- lished. In this year they appear as a pamphlet consisting of twenty-four separate letters.'' In this same year the auditor presents his estimate including salaries for the first time.'' In 1872 the departmental estimates appear not to have been published. 1 House Docs. 1858, No. 5. ' For discussion of appropriations see page 33. 'Acts and Res. 1858, Ch. 158, Acts, sec. i. * E.g. 1861 House Doc. 50. ^ 1862 House Doc. 5. ' 1870 and 1871 House Doc. 6. ' 1870 House Doc. gg. Digitized by Microsoft® 30 BUDGET IN MASSACHUSETTS This unsatisfactory system was given up in 1872, and the secretary of state was ordered to receive the estimates, which were now to be submitted a month earlier, and to present them "in one document" to the legislature when it convened.'' From this time on the departmental estimates were printed each year as House Document No. i. The first year, 1873, it contained twenty separate letters and cov- ered twenty-one pages. A few salaries were included. The auditor continued to make his estimates in what was now regularly House Document 6. These fail to agree with House Document i, as for example in 1873, where the auditor estimates $11,500 and the department $11,750 for the harbor commission.^ The auditor how- ever appears to have based his estimates roughly on the departmental requests. In 1 88 1, in conformity with Chapter 160 of the Laws of 1880, the estimates appeared in tabular form together with the citation of the authorizing statute and the appro- priation of the previous year.^ By Chapter 41 of the Laws of 1885, the tabulation and presentation of the departmental estimates was again entrusted to the auditor. Thus, after almost thirty years of experimenta- tion, the general court returned to its original procedure with the important exception that the estimates were now admittedly those of the departments themselves, and not those of the auditor.* ' Acts and Res. 1872, Ch. 349 Acts. ''■ House Doc. 1873, No. i and No. 6. ' Ibid., 1881, No. I. ■! See Acts 1858, Ch. 158, side heading. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 31 In 1905, on the initiative of Joseph Walker, chairman Df the house committee on ways and means, the beginning di the fiscal year was changed from January i to Decem- ber i.^ This change was made in order that the ways and means committee might have before it in January the actual expenditures of the previous year. Until this change was made departments frequently covered up the fact that they had large unexpended balances from the previous appropriation, and based their story of needs on this previous appropriation rather than upon their expenditures. The shifting of the fiscal year in 1905 was thus the first step in the effort to secure a more thorough revision of departmental estimates in Massachusetts. It is re- garded by some as the first accomplishment of the move- ment that culminated in the adoption of the budget sys- tem in 1918. A direct effort was made in 1907 to introduce some planning into the handling of departmental estimates. During the session of 1907, a minority report from the joint committee on ways and means protested against the duties imposed upon the committee and pointed out the impossibiUty of giving adequate consideration to the mass of imsifted departmental estimates which came to the committee at the opening of each session.^ During the summer a recess committee attempted to work out a remedy, aind in its report to the next general court stated that there should be "some board to consider these ^ Acts of 1905, Ch. 211. ^ 1907 House Document 1566. Digitized by Microsoft® 32 BUDGET IN MASSACHUSETTS financial problems in a broad way, giving due considera- tion to the conditions of the treasury, the probable tax levy and the policy of the commonwealth." The majority report recommended the creation of a "Board of Fi- nance" to be composed of the lieutenant governor, the treasurer, the auditor, and the chairmen of the house and senate committees on ways and means. The powers and duties of the committee were outlined as follows : "The estimates of revenues and expenses should be referred to such board for its consideration and report to the legislature. . . . The board of finance should have authority to conduct of its own voUtion informal special investigations of expendi- tures and of financial methods and management." ^ The net result of this agitation was small indeed. The committee itself was so much divided that it could exer- cise no constructive leadership in the legislature, and its recommendations were forgotten almost as soon as filed. This effort to systematize the estimates never reached the stage of serious consideration. From 1905 until 1910 the other significant changes in the estimates were the inclusion of salaries ^ and of the comparative expenditures of the past three years,' and the separate presentation of capital outlays and such extraordinary requests.* In the case of estimates for buildings, trustees of institutions were required to present prehminary plans and specifications and reUable archi 1 1908 House Document 225. Three minority reports were filed as well as the majority report. 2 Acts 190S, Ch. 211, sec. 6. s Acts 1908, Ch. 597, sec. 5. "House Doc. I, 1905 to 1910. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 33 tects' estimates with their request for appropriations.-^ Institutions also presented a limited amount of unit cost data beginning in 1902.^ By the end of the period the book of departmental estimates covered over 100 pages and contained in some detail estimates for the chief running expenses of the government.^ Appropriations. During the years 1848 to 19 10 there were two separate periods during which an attempt was made to systematize the appropriation process. The first was in 1858 and the second in 1896. In 1858 fundamental and revolutionary steps were taken. The very first act of the session provided : "No money shall be paid from the treasury of the Common- wealth at any time hereafter, except upon the warrant of the governor, drawn in accordance with some appropriation con- tained in some act or resolve duly passed within the same po- litical year." * Debt charges and the salaries of the governor and the judges were specifically exempted,^ and it was provided that unexpended balances should lapse.^ This act, at a single sweep, abolished all continuing ap- propriations and made it necessary for the legislature to vote all appropriations yearly.^ To make sure that this revolutionary move would be fully understood, the legis- ■ Acts igo7, Ch. 320, Acts 1908, Ch. 597. ^ House Doc. I, 1902 ff. 'Ibid., igog. * Acts of 1858, Ch. i, sec. i. ^Idem, sec. 2. • Idem, sec. 3. ' Cf . Acts of 1858, Ch. 96. D Digitized by Microsofi® 34 BUDGET IN MASSACHUSETTS lature added to the maintenance bill of the year the pro- vision that the appropriations of the bill were to be con- strued as repealing any previous acts or resolves making a larger grant/ and that : "All acts and parts of acts, all provisions of law whatsoever, resolves and parts of resolves, customs, traditions, usages and prescriptions, which are inconsistent with the provisions of this act (excepting only such as may be contained in the Con- stitution of the United States, the Constitution of the Common- wealth of Massachusetts and the first Chapter of the acts of the present year) are hereby repealed, abrogated, and annulled." ^ In harmony with this drastic reform a single mainte- nance bill for 1858 was drawn and passed within a month of the convening of the legislature.^ This was supplemented by six appropriation measures. These provided : 1. An emergency fund for the governor and council of $10,000.* 2. An appropriation of the income from the school fund.^ 3. Appropriations to meet past deficiencies, fourteen items.* 4. A reappropriation of $58,000 of unexpended bal- ances.^ 5. Appropriations to cover the expenditures authorized by resolves during the session.^ 6. Supplementary appropriations for 1858.^ ' Acts 1858, Ch. II, sec. 6. « Idem, sec. 9. ' Idem, Ch. 11. * Laws of 1858, Ch. 22. None of this appropriation was used. Acts 1859, p. 484. ' Idem, Ch. 96. « Idem, Ch. 131. '' Idem, Ch. j^o. ^ Idem, Ch. n?,. '/dew, Ch. 173. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 35 It is to be noted that the last three bills were passed on May 27th, the last day of the session. This heroic and apparently successful effort to unify the appropriation process persisted with fair success till 1863, though in 1859 nineteen separate bills were passed, fourteen of them for current maintenance.-^ Beginning in 1863, however, a custom developed of separating the maintenance bill into three or more bills providing sepa- rately for the salaries of the executive departments, the salaries of the judiciary, and the expenses for materials, supphes, etc., of the government. This division was never clean-cut, however, either inclusively or exclusively, and every attempt to group appropriations seems to have broken down.^ Appropriation by individual resolves, which had been discontinued in 1858,^ became more and more common in the course of time, adding still further to the confusion. This practice was permanently discontinued, beginning with 1880. In 1879 eight appropriations were made by resolve alone.^ In 1872 an attempt was made to introduce some order into the chaos by requiring the ways and means committee to draft a single maintenance biU based on the depart- mental estimates.^ The only result appears to have been Chapter 349, requiring the secretary to gather and pub- Hsh the estimates. At any rate, the number of bills in- ■ Laws i8sg. ' Laws 1863, Ch. I, 22, 31, 34, etc.; 1879, Ch. 5, 6, 7, 13, 29, 36, 77, etc. 'Laws 1858, Ch. 148. ^Res. 1879, Ch. 9, 14, 20, 27, 36, 44, 46 and 50. ^ House Doc. 1872, No. 335. Digitized by Microsoft® 36 BUDGET IN MASSACHUSETTS creased to twenty-one in 1884, to thirty-four in 1892, and to forty-nine in 1895. In 1896 occurred the second effort of the period to systematize appropriations. Instead of attempting to bring all salaries together in a bill, or all "expenses," the system now adopted was that of bringing all appro- priations for a given department together in a single bill.^ This had the merit of classifying appropriations by spend- ing units, but it resulted in the passage of a much larger number of bills, thus tending to increase the confusion. In 1896 there were ninety-nine appropriation bills, and in spite of the efforts at rigid classification, many related items are to be found in separate bills.^ Between 1896 and 1910 this attempted systematiza- tion gradually disintegrated, though at no time was it definitely given up. The Authorization of Transfers. By Chapter 549 of the Acts of 1908 the governor was authorized, with the approval of the council, to use the lump sum appropriation of the executive department as a fund from which to make transfers to supplement inad- equate appropriations whenever the auditor certified to the necessity of the transfer. This act introduced into the law the first provision in Massachusetts for transfers between appropriations. At the time of the passage of this act, the emergency appropriation was increased to $100,000 annually. ' E.g. Laws 1896, Ch. i, 3, 4, s, etc. 2 Ihid., Ch. 25, 104, 122. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 37 Growing Importance of Committees. The importance of legislative committees in the budget- ary process grew steadily between 1849 and 1910. The leadership of the committee on finance was confirmed by the house rule, introduced first in 1858, providing that "All bills and resolves involving an expenditure of public money, shall, after their first reading, be referred in course to the Committee on Finance, for report on their relation to the finances of the Commonwealth." ^ This provision, readopted from year to year, has by long usage become part of the structure of government in Massachusetts. During the early part of this period, the legislature and its committees alone received the departmental esti- mates.^ In 1859 Governor Nathaniel P. Banks com- plains : ^ '"ilie legislature by statute of 1858, Chapter 158, has de- prived the executive department of the power to make an exact statement of the wants of the government for the present year." By 1879 the committees are classed with the governor and the legislature when it comes to power over appro- priations. In speaking of retrenchment Governor Talbot says : * "In all matters requiring change, the final decision rests with the Legislature. The labor of investigation falls upon its committees. But the duty of recommendation is vested in the Executive." 1 House Rules, Ch. V, 59. ^ During the years when estimates were delivered to the speaker. 'Inaugural address, January 7,^1859, p. 492, Acts of 1859. * Acts 1879, p. 691. Digitized by Microsoft® 38 BUDGET IN MASSACHUSETTS He refers also in subsequent remarks to "the lengthened hearings before the committees." ^ The final position of the ways and means committee, which was substituted for the finance committee in 1896,^ is a matter of current knowledge. By 19 10 it is safe to say that this committee had more power over the normal course of appropriations than any other agency, the legislature and the governor included. It became the accepted agency for determining the financial poUcy so far as appropriations and the state tax were concerned. Its leadership prevailed except in occasional and extraor- dinary instances. TTie Increased Leadership of the Governor. Inconsistent as it may seem with the increased power of the committee on ways and means, the development of the influence of the governor in financial affairs during the period ending in 19 10 is equally marked. The bud- getary revolution of 1858 was due in part to the efforts of Governor Banks.^ Governor Talbot led the move- ment of 1879 which resulted in many salary reduc- tions,^ and Governor Draper held a firm hand on the financial affairs of the commonwealth during his three terms. It was due partly to his influence and to the confidence he inspired that a new departure was made possible in the financial procedure of the commonwealth in 1910. ' Acts 1879, p. 692. .« House Rules 20. ' Acts 1858, p. 173 £E. » Acts 1879, p. 690 ff., and index under salaries. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 39 Development of Financial Control. In 1849 the legislature turned over to the auditor the responsibihty for scrutinizing all payments to insure their regularity. From this time on the committee on accounts had less and less to do, until it was finally abolished in 1869.^ During the same period, however, the machinery of control was extensively developed. In 1858 it was specifically enacted that "no pubUc functionary shall make any purchases or incur any liabilities in the name of the Commonwealth, for a larger amount than that which has been appropriated by law for the service or object; and it is hereby enacted and declared that the Commonwealth has no responsibility for the acts of its servants or oflScers, beyond the several amounts duly appropriated by law." ^ This provision together with the powers conferred upon the auditor ^ brought about a very real control of expenditures. In order that the legislature and the public might have information concerning financial transactions, various provisions were enacted requiring financial reports. In 1859 annual financial reports were required of all officers or boards.* The auditor's report presented not only information with regard to revenues and expenditures, but also with regard to debts, funds, investments and balances. He was directed to include everything "that may be useful or interesting to the people of the Common- ' House Rules 1868, 1869. 'Acts 1858, Ch. II, sec. 7; Ch. 159, sec. 13, 14. ' See p. 26. *Laws 1859, Ch. 221. Digitized by Microsoft® 40 BUDGET IN MASSACHUSETTS wealth." ^ It was required that the various heads of expenditure be separated and classified by spending units and finally that "no expenditure exceeding five hundred dollars, shall be included under any indefinite head." ^ These requirements were amended occasionally as in 1867, 1884, 1905, and 1908,^ but stood in 1910 substantially as in 1858 and 1859. A gradual improvement in the auditor's accounts be- gan almost as soon as Henry E. Turner took over the ofiice. In 1902 the institutional accounts as presented by the auditor were systematized, and what previously appeared as "miscellaneous expenses" were now classified as food, clothing and material, furnishings, heat, light and power, repairs and improvements, farm, stable and grounds, and miscellaneous. With this change it became possible for the first time to present a slight amount of unit cost data.^ In 1908 the auditor was authorized to appoint a " Super- visor of Accounts" with power to "direct and control all the accounts in all the departments" with full authority to "prescribe, regulate and make changes in the methods of keeping and rendering accounts." It was further provided that "He shall establish in each department a proper system of accounts, which shall be uniform as far as practicable. He shall establish a proper system of accounting for stores, supphes and materials, and may provide, where he deems it necessary, for a continuing inventory thereof. He may inquire into the methods ' Laws 1858, Ch. 158, sec. 5. ^Laws 1867, Ch. 178; 1884, Ch. 207; 1905, Ch. 211; 1908, Ch. 630. ' Auditor's Report, 1902 ff. Digitized by Microsoft® LAYING THE BUDGET FOUNDATIONS 41 of purchasing and handling such stores, supphes and materials by the departments, reporting to the auditor such changes as may in his judgment be deemed wise. He shall provide such safeguards and systems of checking as win insure, so far as possible, collection of all the revenue of the Commonwealth." ^ With these powers, the auditor began a fundamental reform of institutional accounting which was much needed. Until 1908, for example, no state institution was audited with the exception of the Danvers State Hospital.^ The process, however, was a slow one. In 191 1 Governor Foss said : "In 1908 the legislature directed the state auditor to inaugurate a system of accounts for each of these several state institutions; but the investigators report that to date, no comprehensive system has been put into efFect and that the lack of it is a great detriment to the state and the insti- tutions." ' Without the advances that were actually made, how- ever, the subsequent steps towards a budget would have proved almost impossible. ' Laws igo8, Ch. 597. This act was drafted by Mr. Turner. ^ Statement of Supervisor of Accounts, 1917. 'Acts of 1911, p. 1259. Digitized by Microsoft® CHAPTER IV THE GOVERNOR AND THE BUDGET 1910 TO 1918 DxmiNG the years 1910 to 1918 events moved rapidly in the financial history of the state. There were two conscious efforts to establish a budget system and to make the governor responsible for drawing up the financial plans of the commonwealth. I. Budget Reform in 1910 and Its Results The Walker Act. In 1910, Speaker Walker, backed up by Governor Draper and a safely Republican legislature, secured the enactment of a law which, for the first time in the history of the state, drew the governor into the budgetary process. It was a revolutionary step. This act was entitled "An Act to Provide for Supervision by the Governor and Council of Expenditures and Other Financial Operations of the Commonwealth." ^ The act provided that : 1. Departmental estimates for current expenses shall be separated from estimates for capital outlays, etc., each to be published in separate documents. 2. Estimates shall be submitted to the aviditor by November isth and by him to the governor and council the first week in January. ' Laws of 1910, Chapter 220. 42 Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 43 3. "The governor shall transmit the same (i.e. depart- mental estimates and estimated revenue) to the general :ourt with such recommendations, if any, as he may deem proper." 4. In the case of special appropriations and capital outlays, the governor "shaU make recommendations as to how much should be raised by the issue of bonds and liow much should be paid out of current revenue." 5. Plans, estimates, and specifications of new buildings requested shall be submitted to the governor and council. 6. The auditor shall act as the staff agent of the gov- ernor and council in gathering "information with regard to revenues, expenditures and other financial operations." 7. The governor may split up the estimates and trans- mit them severally to the legislature or withhold items for further investigation at his discretion. This act has the distinction of being the first law passed by any state definitely turning over to the governor the responsibility and the opportunity of drawing a budget."- Governor's New Responsibility Recognized in Republican Platform. The Republican platform of 1910 shows beyond any doubt that the leaders of the party recognized the full import of the new fiscal legislation. The platform reads, in part : ^ The Ohio budget system, often Ksted as the first, was established by Senate Bill No. 227 of May 10, 1913, Laws, 1913, p. 659. See also Bulletin gi of the Bureau of Municipal Research. Digitized by Microsoft® 44 BUDGET IN MASSACHUSETTS "We approve the series of acts of the legislature, passed within a few years, to improve the administration of the finances of the commonwealth, the method of making appro- priations, of accounting, and especially the act of the last legislature, which placed upon the governor direct responsibil- ity for all estimates for appropriations, and so gave to him more effective control over the expenditures of the common- wealth." 1 The Democratic platform was entirely silent on the new budget legislation. Democratic Governor Elected. In the November elections the Repubhcans suffered an unexpected aild serious defeat. Eugene N. Foss, Democrat, was elected governor by 35,000 votes. The council and the senate remained Repubhcan, however, and after a bitter fight the Republicans elected Joseph Walker speaker and organized the house.^ The governor himself minced no words in describing the situation as follows in his inaugural address : "The plurality of over 35,000 which I received on clearcut issues indicated unmistakably and overwhelmingly the wUl of the people. "Moreover, in the total popular vote for the lower house of our legislature a plurality of over 38,000 was registered against the return of our senior senator to the United States Senate.' Yet, owing to our gerrymandered districts we have today a small Republican majority; and we are confronted with the possibiUty of returning to the senate of the United States a man whose retirement the people thus clearly demand." * ' Boston Transcript, October 6, igio, p. 3. : ^ Senate and House Journals, 1911 ; Laws 1911, p. 1301, 1302, 1304. ; 5 Henry C. Lodge. * Laws of 1911, p. 1129, Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 45 As we shall see later, this difference of political allegiance of the governor and the general court and the council had a profound effect on the subsequent evolution of the budget. Governor Foss and the Walker Act. Eugene N. Foss became Governor and was sworn into ofl&ce on January 5, 191 1. He commenced immediately to go over departmental estimates in order to submit his financial recommendations to the legislature in ac- cordance with the Walker act. On January 11 he sub- mitted his recommendation for the salaries and expenses of the executive and legislative departments, amounting to $496,800. These were passed without change by the legislature.^ He followed this on January 20 with recommendations for the departments of the secretary, the treasurer, the auditor, the attorney-general, the sergeant-at-arms, the ballot law comanissioner, the civil service commission, the state board of conciliation and arbitration, the controller of county accounts, the board of registration in dentistry, the district police, and the salaries of the entire judicial department, all together amounting to $1,174,958.32. The legislature proceeded to draw and pass separate biUs for each of these depart- ments as had been the custom since 1896. In almost every case the governor's recommendation was followed, though $6,800 was added to the appropriation for "in- cidentals" for the sergeant-at-arms,^ while $200 was cut 1 Chapters i and 2. ' Acts of 1911, Chap. 117. Digitized by Microsoft® 46 BUDGET IN MASSACHUSETTS from the "expenses" allowed the board of registration in dentistry 1 and $500 was cut from the governor's allowance to the district poUce for the maintenance of a patrol tug.^ In going over these estimates Governor Foss soon foimd that he needed more assistance and more power. The attorney-general, a Republican who ran ahead of all other Republicans in the faU elections, ruled that the governor had no authority to make investigations of the various departments.^ While this question was in the air, Speaker Walker is reported as saying : ''My bill for the control of the state finances is domg just what I wanted it to do. It has placed the responsibility where it belongs — on the governor — and made him realize it. He is now responsible to the people. "Before the bill was passed last year there was no real re- sponsibility an5rwhere. It is now 'up to' the governor. He must exercise control and be responsible for increase in expendi- tures and in the debt as well. If our accounting and auditing system is wrong it should be made right. The governor must investigate. He cannot evade the responsibihty. If he needs assistance, he must have it. If the council does not prove an efficient body to investigate and advise (I had hoped it would), then experts must be employed to investigate, and advise the governor." * Following this and the opinion of the attorney-general, Governor Foss wrote to the legislature concerning the Walker act : ' Acts of 1911, Chap. 66. 'Idem, Chap. 112. ' Opinion of January 21, 1911, Acts of 1911, p. 1155. * Acts of 1911, p. 1154. Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 47 "In order to pass upon any estimate for any department, board or institution, in accord with this statute, the executive should have the right to ascertain whether or not the business of that department, board or institution is being conducted on an efficient basis. "However, Chapter 220 does not invest the executive with authority to obtain the information which is necessary for arriving at a just conclusion ; and there is no law under which the executive is empowered to obtain such information, as will be seen from the appended letter from the attorney general under date of January 21, 1911, to which your atten- tion is respectfully directed. " I therefore ask for such authority at once . . ." ^ Governor Authorized to Employ Experts. On March 2, slightly over a month later, and after something of a struggle, the legislature passed Chapter 82 granting the governor the authority to employ experts " to make such investigations of any of the commissions, departments or institutions of the Commonwealth as he believes is necessary to enable him to carry out the pro- visions of Chapter 220 of the acts of 1910." It was provided that these experts should report in writing and that copies of their reports should be filed with the council and with the joint committee on ways and means, and that they should be paid for from the emergency fund of the governor and council. The governor immediately set to work with his new assistants and, beginning the end of March, reported severally and independently upon the appropriations for the salaries and maintenance of the various departments 1 Acts of 1911, p. 1155. Digitized by Microsoft® 48 BUDGET IN MASSACHUSETTS and institutions. The last such message was dated July lo, 1911, two weeks before the close of the session. The Walker act provided for the separate consideration of estimates for capital outlays, or "specials," as they are called.^ With the aid of the experts, the governor attempted to sift the $1,753,075 requested for specials and to make his recommendations. The first of these reports is dated April loth, and the last July loth.' 2 The Governor's Recommendations and Legislative Revision. The results of the governor's recommendations are interesting. His recommendations for salaries and for current maintenance were, of course, largely fixed by existing state law and as a result were in the main fol- lowed by the legislature. The following are t3^ical recommendations in cases where the state law allowed him some leeway : "The pending appropriation for fisheries and game [Com- missioners of Fisheries and Game] is $73,285, or more than $11,000 above the cost of that department in 1910. I approve only an appropriation equal to last year's costs, and instead of spending more money, I recommend placing the department in the hands of a single commissioner or manager, with obvious economy. "The pending appropriation for the State Forester, aside from the $150,000 item for moth work [discussed in an earUer message] amounts to $30,000. Last year, aside from moth work, $27,000 was spent, and I can approve of only that 'Acts 1910, Chap. 220. * Acts 1911, p. 1265. The session lasted 206 days and was prorogued July 28, 1911 {Id., p. iiis). Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 49 amount for the present year with, however, an earnest recom- mendation that the legislature consider means of effective forest conservation and development, which the province of the State Forester does not include." ^ In each of these cases the recommendation of the gov- ernor was disregarded. An appropriation of $73,285 was granted the commission on fisheries and game, and an appropriation of $30,000 to the state forester.^ But taken all in all, the recommendations of the gov- ernor and the actual appropriations for current expenses and salaries are in striking accord. The governor's recommendations total $12,811,326.49^ and the corre- sponding appropriations are $12,818,557.49, or but $7,231.00 higher. The total increases were slightly more, as there were a few small decreases, as has been noted. In the field of "specials" there was a more marked difference of opinion. Governor Foss set to work with his experts to sift out the requests for land, buildings, and other capital outlays. The following are typical examples of his messages to the legislature : "Foxborough State Hospital requests $100,000 as a special appropriation, but the investigators find that this request is not planned on an economical basis. For instance, the ' colony- method ' of housing patients is known to be the most economi- cal. Yet, at Foxborough, a colony cottage is asked for, which will cost over $500 per patient ; an utterly extravagant cost 1 Special Message of June 8, 1911, Laws of 1911, p. 1232. ^Laws of ipii) Chap. 672, 729. ' This does not include a few cases in which the governor's recommendations are indefinite. E Digitized by Microsofi® 50 BUDGET IN MASSACHUSETTS when compared with the costs of similar buildings at other institutions. "Added to this request is an item of $17,000 to maintain two remodelled farm buUdings, with 32 patients for six months of the present year, and to furnish certain supplies. Even omitting the $2500 automobile and other easily preventable expenses, this request represents a cost of $600 per capita per year to maintain each of these 32 able-bodied inebriates on a farm. "1 cannot approve this $100,000 special expense for Fox- borough. It appears absolutely unreasonable, and even the ordinary running expenses of the institution are so high that I desire to see the institution entirely reorganized and put upon a sound footing. "Boston State Hospital wants $166,875. $22,000 of this is for a nurses' home to provide for 33 nurses needed in con- nection with the new male infirmary. The per capita cost of this building would be $668. At Wrentham an employees' building has been built at practically one-half this per capita cost. I cannot approve this item. A cheaper style of con- struction would prove equally serviceable. "A central service building to cost approximately $37,750, is wanted with other factors of a 'farm group,' making a total of $83,000. "Mr. Harpham's detailed discussion of the plans convinces me that the whole scheme is an extravagant one. For example, although the institution now has two central heating power plants, $10,500 is wanted for a third boiler plant for this 'farm group.' There is no good reason for putting in a high priced, high pressure boiler plant merely to heat these buildings. A low pressure heater at a small fraction of the cost would do the work. "$42,000 is wanted for a 'service building' for storage and refrigeration. Yet by remodelling the practically unused basement of the present buildings, the investigators state that a large excess of storage space can be provided above the present need. Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 51 "An expensive ice machine, to avoid the present labor of cutting ice, is equally unnecessary. Again extensive cold storage of food is not desirable in an institution so near the Boston markets. I cannot approve any detail of this special appropriation of $166,875. "Less costly dormitories undoubtedly should be provided for and built. For reserve power a single new dynamo might be installed, or a contract made with the electric light com- pany for power to use in an emergency if needed. The remain- ing items are, in my Judgment, unwarranted." ^ In each of these cases the legislature disregarded the governor's recommendation. After some consideration the Foxborough State Hospital was granted $144,000 and the Boston State Hospital $166,875. Governor Foss, however, vetoed the grants and no attempt was made to pass the resolves over his veto.^ The following recommendations from the message dealing with state hospitals are equally representative.^ In each case, the action of the legislature is indicated in brackets. "Monson State Hospital calls for $43,000 for a refrigerating plant and machine shop, a dining room and new laundry facili- ties. I cannot approve of these as they stand. But I call your attention to the investigators' recommendations. They suggest making increased facilities by utilizing a basement which has been finished but never put in use. . . . [Cut to $17,000 and voted, Resolves, Chap. 137.] "I cannot approve the Northampton State Hospital's re- quest for $46,925 for a bakery and laundry. The investiga- tors report that a simple rearrangement of the present quarters 1 Special Message of June 27, 1911, Laws of 1911, p. 1249. ' See Veto Messages of June 19 and July 24. ' Special Messages of June 27, 1911, Laws of igii, p. 1251. Digitized by Microsoft® 52 BUDGET IN MASSACHUSETTS will provide the necessary room and leave only the new ma- chinery to be purchased. [Voted in full, Resolves, Chap. 156.] "I cannot approve the total of the Worcester State Asylum's request for $90,800. Instead of a new nurses' home to cost $29,000, the investigators think there is enough unused space available for present needs. [Cut to $88,400 and voted. Re- solves, Chap. 149.] "The proposed new buildings for patients are considered un- necessarily costly per capita and the plans should be revised and then resubmitted. "Similar criticism holds for the elaborate $17,000 storage house. Here also a high priced, high pressure boiler is wanted for heating only, whereas a cheaper one, as commonly used for house heating, should be provided. I believe the $2400 re- quested for hydrotherapeutic treatment to be in line with modern methods and approve it. [Storage house allowed, hydrotherapeutic equipment disallowed. Resolves, Chap. 149.] "Westborough State Hospital requests $28,480 for altering buildings, for new lands and for sewage beds. The buildings undoubtedly need complete renovation and the appropriation as a whole appears sound. It contains no extravagant de- mands and is approved. [Cut to $18,900 ; new land and sew- age beds disallowed; Resolves, Chapter 128.] "The Massachusetts School for the Feeble-Minded requests $61,688 for new buildings for nurses and patients. The nurses' building would cost $873 per person, and the building for patients $688 per person. At the Wrentham State School a more economical scale of buildings has been followed, and if the trustees of the Massachusetts School cannot do as well, I recommend that the school be enlarged no further, and all necessary additions made at Wrentham. The appropriation is not approved. [Extension to nurses' home allowed at $15,000; Resolves, Chap. 132.] "Gardner State Colony requests $21,400 for new buildings, equipment and water supply. The principal new building Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 53 is to cost less than $300 per capita, and the remaining items are moderate. I therefore approve them all." [Allowed; Resolves, Chap. 129.] Governor Foss vetoed four resolves authorizing appro- priations in violation of his previous recommendations. None of these were even brought to a vote after the veto. In one case a part of a vetoed resolve was subsequently repassed and consented to by the governor.-^ The total "specials" for which exact figures can be readily given are : Departmental requests $2,170,550 Governor Foss approved 1,186,732 Legislature voted 1,970,220 Vetoed by governor 417,475 Final appropriation i>SS2,745 In other words, the recommendations of the governor were increased 23.5 per cent. In fact, a detailed study shows that the actual variation is greater than this, as a number of cuts were made in amounts allowed by the governor.^ It is to be noted that the resolves authorizing these appropriations were signed by the governor with the exception of one.^ Results of Executive Participation in Appropriation Process. The financial record of the session shows that the gov- ernor's recommendations for current expenses were, in the main, of necessity adopted by the legislature, but that his recommendations for "specials" were extensively ' Veto Messages of June 19, July 20, and 24th; Resolves 1911, Chap. 152. ^ See Resolves, Chaps. 98, 104, 105, 128, 149. 'Acts 191 1, Chap. 630, allowed to become a law without the signature of governor. Digitized by Microsoft® 54 BUDGET IN MASSACHUSETTS increased and that in approving these increases he fol- lowed the lead of the legislature. As a result of this experience Governor Foss was con- vinced more than ever of the wisdom of the suggestion made in his inaugural address that a state board of finance should be created to investigate all departments and institutions and to go over estimates and make recom- mendations to the legislature. In submitting his last special message on appropriations two weeks before ad- journment, he said : , "In thus concluding the work of investigating, I call atten- tion to the imperative need, in this state, of a central finance board. This investigation has revealed the lack of any clearly- defined state policy in the spending of public funds, and the lack of any uniform standard in the management of the business affairs of the state. \ "It is my judgment as a business man, that these public expenditures as a whole do not return more than 50 cents of value to the taxpayers for every dollar spent. "This absurd condition is precisely what would be expected in any business house if there were no well-defined and central- ized business responsibility. "In my opinion the best way to remedy this condition is to establish at once a state finance board. This board should consider the total expected annual revenues of the state, and, after mature deliberation, should estimate what percentage of these funds could be reasonably expended on each branch of the state's business. "They should also have power to investigate and report on the business methods of the various county governments and, when occasion demands, city and town governments, as I recommended in my inaugural message. "They would sit throughout the year, and act in close and Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 55 continuous cooperation with the various head officials of de- partments, boards, and institutions of the state. "They should hear the opinions of such officials and consider these, not separately, as is now done by the ways and means committee, but together and in comparison. They could thus arrive at a fair distribution of the state's income. "One of their duties would be to present to the legislature, when it convenes, their estimate of the sums needed by each division of the state's business, and this estimate should be used by the legislature as a check upon the estimates now sub- mitted by the heads of these divisions. "By this method, the legislature would have before it a busi- nesslike analysis of the fiscal situation, at the start. It would be assisted in its duty of checking extravagance, and with the help of the finance board the legislature could do more in two months than it now accomplishes in six. "Our existing law fixes upon the governor the duty of pass- ing upon pending appropriations immediately upon his as- sumption of office. Thus the legislature is required to wait whUe the necessary survey of these expenses is made by the executive. Under the businesslike plan proposed this would be finished when the legislature convened." ' The Republicans, who had made the governor the initia- tor of fiinancial legislation only to have the new position of power captured by the forceful and popular leader of the opposition and used for what they regarded as partisan ends, also learned a few things during the session of 1911. Every attempted disclosure of inefficiency and favoritism was a criticism of previous ^Republican rule. As a result the "experts" of the governor were thoroughly hated. Theirs was a thankless task at any rate, and the necessary superficiality of most of the investigations gave ^ Special Message of July 10, 1911 ; Acts of 1911, p. 1265. Digitized by Microsoft® 56 BUDGET IN MASSACHUSETTS an opening for attack. But further than this it became clear to the RepubHcans that the financial powers recently- given the governor and the Democrats must be restored to the legislature and the Republicans, or at least to a body of men under their control.^ Norman H. White, a prominent Republican and chairman of the house ways and means committee, claimed that the executive was usurping the powers of the legislature.^ Thus ended the drawn battle of 191 1. Party Platforms of igii. As was to be expected, the 1911 Democratic platform contained a new plank demanding "a permanent state finance commission" in accordance with the recommen- dations of Governor Foss.^ The Republican platform dropped its hearty endorsement of the laws which had "placed upon the governor direct responsibility for all estimates," ^ and taking up the defensive, maintained that "out of the futile search of our opponents has come an overwhelming vindication" of the Republican adminis- tration of departments and institutions.^ The Creation of the Commission on Economy and Efficiency. Governor Foss was reelected by a substantial majority. In his inaugural address he repeated his recommendation for the creation of a state finance board. 1 The Boston Democrats joined the Republicans in this feeling, though with them, it appears to have been solely a desire for legislative influence. (Cf. Lomasney in ways and means committee hearing on Judicature Commission bill, 1917.) 2 Hennessy, p. 236. 'Boston Transcript, October 5, 1911, p. 6, Acts 1912, p. 952. * From 1910 platform, p. 43 ante. « Boston Herald, October 5, 1911, p. 4. Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 57 The legislature was still more Republican than its predecessor and was of course only too ready to repeal the Walker Act. The creation of a state finance board to be appointed by the governor and council would be a great improvement, it was said, because the council, being elected by districts, was also an entrenched Republican body.-^ Thus the governor's recommendation and the legislature's wish coincided, and as a result the Walker Act was repealed and a "Commission on Economy and Efficiency" created, consisting of the auditor, and two appointees of the governor and council. The governor was to designate the chairman, and provision was made for a secretary and the necessary clerical force.^ Estimates to Auditor. The new law required every officer or board having charge of any department, institution, or undertaking which received an annual appropriation of money from the state treasury to submit to the auditor, on or before ' In vetoing the bill providing for salary increases for the members of the council during the previous session, Governor Foss had paid his respects to that body in these words : "The Council was created in conformity with European and Colonial prec- edents to advise the chief executive upon state matters, but, as an institution, it is not in keeping with our democratic form of government. "The Council possesses no working organization for the conduct of any productive public work; and is not vested with any constitutional power to initiate any public service. It is an auxiliary to the executive and for this reason it may be urged that the Council furnishes a check upon the acts of a chief execu- tive moved by political motives. But if so, it is true that the Council must equally thwart the will of that majority of the people by whom the governor is elected." (Veto message of May 18, 1912, Acts of 1912, p. 1065.) * Acts 1912, Ch. 719. Digitized by Microsoft® 58 BUDGET IN MASSACHUSETTS November 15 of each year, statements showing in detail the amounts appropriated for the current fiscal year; estimates of the amounts required for the coming fiscal year for ordinary running expenses, with an explanation of the reason for any increase and with citations of stat- utes relating thereto; and the expenditures for the current year and also for the two preceding years. Officers, heads of departments, boards, and commis- sions, and trustees of institutions who recommended appropriations from the state treasury for special pur- poses were required to submit detailed estimates to the auditor on or before November 15 of each year. Estimates of Expenditures and Revenues to Governor, Commission, and Legislature. The auditor was required to prepare two documents; one an estimate for ordinary running expenses, the other for special purposes. These he was required, on or before December 15, to submit to the governor-elect and to the commission on economy and efficiency; and on or before the first Thursday in January, to transmit printed copies to the legislature. Form and Content of Estimates. The estimates for ordinary requirements were to in- clude : the estimates proper, together with a statement of the general appropriations for each unit of organiza- tion and the expenditures thereof for the preceding fiscal year, and the unexpended balance as of the preceding Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 59 November 30; also the statements received from the heads of the various organization units, together with the auditor's estimate for the ensuing fiscal year of the ordinary and other revenue of the state. The estimates for special purposes were required to be classified by the auditor. Examination of Estimates by Commission. In neither case was the auditor authorized to revise estimates. The commission on economy and efficiency, however, was required to examine the auditor's state- ments and report thereon to the legislature on the day that the auditor submitted his tabulations to the legis- lature, and at such other times as it might see fit, "to- gether with such facts, suggestions or recommendations as to any or all of the appropriations requested or the method of raising money for the same as it may deem expedient." Investigation and Reports. Various provisions of the law related to the investi- gating work of the commission, which was authorized to require the attendance of witnesses and to examine accounts and documents. It was authorized to make special examinations of the management or finances of any department, institution, or undertaking receiving an annual appropriation, and to report thereon from time to time to the governor and coimcil and to the legislature if in session. Upon request of either branch of the legis- Digitized by Microsoft® 6o BUDGET IN MASSACHUSETTS lature, of the ways and means committee of either house, of the governor, or of the finance committee of the council the commission was required to make a special exami- nation, and also to give any information in its possession. Furthermore, the commission was required to inquire into the laws governing financial procedure, to consider the possibiUty of promoting economy and efficiency by changes in the law, organization, or procedure, and "by the substitution of the budget method of appropriating money," and to report on these matters from time to time to the governor and council and to the legislature if in session. A general report was also required to be made to the gov- ernor and council and to the legislature in January of each year, with drafts of bills for any suggested legislation.^ Governor Eliminated from Appropriation Process. This new act deprived the governor of the right to investigate departments, to hire experts and to initiate a budget. That this was intentional and was the resxilt of political friction was recognized in the constitutional convention of 191 7, where the creation of the commission on economy and efficiency was mentioned as a case in which the legislature "put it over" the governor.^ Personnel of the Commission. The commission on economy and efficiency was first composed of John N. Cole, chairman, and Francis X. 'Acts 1912, Ch. 719. 2 Convention Debates, 2d Session, Vol. 108, p. 9. See page 143. Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 6 1 Tyrrell, with John E. White, auditor and member ex ofiScio.^ Mr. Tyrrell became chairman in 19 14 on the resignation of Mr. Cole, and Thomas W. White was added. In the same year the organization of the com- mission was changed by dropping the auditor and adding a third appointive member.^ This position was filled by Russell A. Wood until 191 6 when Charles F. W. Archer was appointed. All of these appointees, with one excep- tion, were good Republicans — an evidence of the success of the attempt made by the legislature to cut down the investigatory and financial power of the governor by turn- ing these powers over to a commission appointed by the governor aiid council. The single exception was Mr. Tyrrell, who gained control of the commission in 191 4. Supervisor of Administration Replaces Commission. The work of the economy and efficiency commission under the chairmanship of Mr. Tyrrell was far from "satisfactory" to the dominant party in the legislature. This, and the fact that the Republicans had regained the governorship through the election of Samuel W. McCall, brought about and made possible the transfer of the powers of the commission to "safer" hands. As a result the commission was summarily abolished in 1916 and its powers transferred to the new department of the supervisor of administration.^ In making this trans- ' Mr. White was the nominee of the Republican caucus elected by the legis- lature to fill the vacancy created by the death of Auditor Turner in igii. Hennessy, p. 260. ^ Acts of r9i4, Ch. 698. = lUd., Ch. 296. Digitized by Microsoft® 62 BUDGET IN MASSACHUSETTS fer, the former powers of the commission were still further reduced. The supervisor was authorized to make investi- gations and recommendations on estimates only on the request of the legislature, the ways and means committees, the governor, the council, or the finance committee of the council. The power of the supervisor to compel the production of books and the attendance of witnesses was similarly Hmited to authorized investigations. Charles E. Burbank, a progressive Republican who had been prominent in the reuniting of Progressives and Re- publicans for the McCaU ticket was appointed supervisor of administration. Thomas W. White and Ernest H. Maling were appointed deputies and Charles F. W. Archer secretary. Mr. Maling resigned later in the year, and early in 191 7 Mr. Carl A. Raymond, who had been in the auditor's ofl&ce for many years, took his place. Fol- lowing the death of Mr. Burbank, Mr. White became supervisor, and Mr. Raymond first deputy.-^ Ultimate Result of Walker Act. In 1910 the ei5ort was made in the Walker Act to place responsibility with the governor for sifting the estimates and recommending a financial plan for the government. This proved so "unsatisfactory" to the legislature under the administration of an opposition governor that it was given up and the powers transferred to the commission on economy and efficiency. This commission fell into "unsafe" hands and was abolished. The attempt in " The position of second deputy had not been filled in March, 1920. Digitized' by Microsoft® THE GOVERNOR AND THE BUDGET 63 igio to make the governor responsible for financial meas- ires thus ended by leaving him in precisely the same posi- ion he had previously occupied. The only concrete ■esult was the development of an efficient staff agency he department of the supervisor of administration. Development of Control over Expenditures. During the period 1910 to 1918 certain important teps were taken in developing the administrative control )f departmental and institutional expenditures. The ;reation of the department of the supervisor of adminis- jation, with its broad investigatory powers, laid the 'oundations of a supervisory agency. Among his other iuties, the supervisor was authorized to edit all annual md special departmental reports in order to prevent mnecessary printing. This placed under his control ipproximately one-third of the state's printing.-' During 1916 also, the control of state insane asylums, /fhich were spending three to four million dollars annually, vas taken from the various boards of trustees and en- justed to a commission on mental disease composed )f a single executive and administrative head and an ad- visory commission.^ A further act of 1916 provides : "Without the consent and approval of the governor and council it shall be unlawful for any head of a department or other officer of the commonwealth to increase the salary of any employee under his direction who is receiving an annual salary of one thousand dollars or more, notwithstanding any act heretofore passed authorizing such an increase." ' ' Acts of 1916, Ch. 296. 2 /j^ _ ch. 285. 3 iiM., Ch. 2. Digitized by Microsoft® 64 BUDGET IN MASSACHUSETTS The powers vested in the governor and council by this act were exceedingly important. As there were no salary standards up to 1919, the governor and council were given a very real control over salary increases and by this means over appointments and departmental administration.^ The lack of any policy and the inability or refusal to handle the work scientifically, however, resulted in its degener- ation into a personal and political engine rather than one of constructive reform. Occasionally salary increase questions were referred to the supervisor of administra- tion, though his advice was not at all times followed. The actual amount of control exercised over depart- mental expenditures by the governor and council under this power as well as under the powers inherited from the earliest days was slight indeed. The supervisor's control over printing was effective and efl&cient, but it did not extend far.^ The work of the director of the commission on mental diseases was also markedly successful. Except for these elements of partial supervision, the only admin- istrative control of expenditures was that of the auditor, whose sole interest lay in the conformity of expenditures to appropriations. II. Budget Reform in 191 7 The failure of the initial attempt to make the governor responsible for state finances delayed and made much more difficult the course of budget reform. Those who 1 Cf. Economy and Efficiency Commission report, "Red Book," p. 31, "The effect of this authority is practically to control appointments." ^ Cf. 1919 Public Document 119, p. 18 ff. Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 65 were genuinely interested in reform, however, realized the causes of the failure and set about to secure a fair trial of the budget system. Report of Economy and Efficiency Commission. Late in the legislative session of 1916, the commission on economy and efficiency issued a "Report on Budget Procedure" ^ in which appeared the following "Findings" and " Recommendations " : Summary of Findings The principal disadvantages in the present procedure which this report seeks to improve are the following : 1. Tabulation of estimates : a. No complete tabulation of estimates and requests for ap- propriations is now made. b. The present tabulations (House Documents No. i and No. 2) are necessarily incomplete because of the many requests for appropriations filed directly with the legis- lature. c. The present tabulations contain no information concern- ing requests for expenditures to be met from loans, and no provision is made for compiling such requests. 2. Review and adjustment of estimates : a. The estimates cannot be studied in the aggregate so as to consider the relative importance of the many estimates, neither can they be considered in relation to the avail- able revenue. b. The estimates for any individual department or project as given in House Documents No. i or No. 2 cannot be considered with the assurance that they are the com- plete or total estimates for that department or project. ^ 1916 House Doc. 2288, May 27, 1916. p Digitized by Microsofi® 66 BUDGET IN MASSACHUSETTS c. No plan for financing the state is now prepared in advance of the granting of appropriations and of authorizing loans. d. The governor has no part in the consideration of esti- mates, and is given no facilities for investigating them or for taking such part in the financing of the common- wealth as the chief executive should take. The governor's action is now negative, being restricted to the veto of appropriation bills which are passed from tioie to time throughout the whole legislative session (136 such bills were enacted in 1915). 3. Preparation and enactment of appropriation bills : a. An unnecessarily large number of appropriation bills is now enacted, with the result that the time of the legis- lature is wasted. Moreover, difi&culty is now en- countered in ascertaining from the statutes the total amount appropriated for the current expenses of some of the departments. b. The present method of enacting appropriation bills is unsystematic. 4. Form of appropriation bills : a. In drafting appropriation acts little or no consideration has been given to the effect which the form of the act may have upon departmental administration. As a result, the acts for some small appropriations now con- tain an unnecessarily large amount of detail, while some large appropriations are granted in lump sums. b. No standards for the drafting of appropriation acts have been adopted, with the result that items for a single department may be arranged on two or more bases which are inconsistent, thus causing confusion as to the amount authorized for different purposes and objects. Summary of Recommendations For the purpose of making such improvements in the methods of granting appropriations as may be effected Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 67 without amendment of the Constitution, and with- out change in the fiscal year, the Commission on Economy and Efl&ciency submits the following recom- mendations : 1. That the Legislature require all bills, resolves and petitions for appropriations and bond issues to be filed with the clerk of the House of Representatives not later than 5 p.m. on the fourth Wednesday preceding the convening of the Legislature, and that any such bill, resolve or petition filed subsequent to that time be referred to the next General Court. 2. That provisions be made for the Commission on Economy and Efficiency acting for the Governor to prepare complete tabu- lations of all estimates and requests, and for that commission to investigate and report to the Governor concerning all estimates and requests. 3. That the Governor submit to the General Court not later than the first Monday in February a budget containing all estimates and requests, with his recommendations as to the amounts which should be granted and the amounts which in his opinion should be raised by a State tax and by loans, if any. 4. That a single appropriation bUl be enacted for each department's expenses of administration, operation and main- tenance. 5. That, so far as practicable, appropriation bills be reported and enacted in the order followed in presenting the estimates in the Governor's budget. 6. That definite " budget days " be designated by the General Court for consideration of appropriation bills. 7. That appropriation acts be drawn in such form and detail as will afford an effective control over the expenditure of appro- priations. 8. That definite standards be followed in the draftmg of appro- priation bills so as to insure a consistent and effective system for the granting of appropriations. Digitized by Microsoft® 68 BUDGET IN MASSACHUSETTS ■ Report on Revenues and Loans. During the same session the commission reported on the administration of state revenues and loans.^ The report pointed out that over $5,ocx3,ooo ^ was annually- expended from special funds without annual appropria- tion and said : "So long as large amoimts of revenue are expended without appropriation, as at present, no geniiine budget procedure can be put in force. When aU expendi- tures for state activities are brought within the scope of appropriation acts the first step towards budget reform wiU be taken." ' Chamber of Commerce Report. ■ ■ ■ r- ..~ ., -^ During 1916 the Boston Chamber of Commerce also took an interest in budget reform. It appointed a special committee on the state budget which reported late in November.* This report endorsed the recommendations of the commission on economy and ef&ciency. In place of the sifting of estimates by the commission on economy and efl&ciency, which had now been aboUshed, the report recommended the estabhshment of a new "budget com- mission" composed of the supervisor of administration and the two chairmen of the house and senate ways and means committees.^ This budget commission was to draw the budget, the governor to present it to the legis- ' 1916 House Document 2223, April 29, 1916. ' Ibid., pp. 35, 6$. 3 nii^ pp y_ 8 * November 24, 1916. The committee was : Roland W. Boyden, Charies J. Bullock, and Robert Luce. » " State Budget System," p. 6. Digitized by Microsoft® THE GOVERNOR AND THE BUDGET 69 latiire with his recommendations, and the legislature to revise it up or down at its discretion. Though the committee felt that the power to veto items in appropriation bills had "no necessary connection with the budget system," a constitutional amendment granting this power to the governor was endorsed.^ The Legislature and Budget Reform. Considerable unfair criticism has been directed at the legislature of 191 6 for not taking action on the budget recommendations of the commission on economy and efficiency.^ As a matter of fact, these recommendations were received so late in the session that the cause of reform would only have been jeopardized by any attempt to suspend rules and force consideration. The legislature and the state as a whole were but slightly educated on the budget question in 191 6. In 191 7, however, the reports on the administration of funds and on the budget were taken from the files and referred to the joint committee on ways and means, together with a bill embodying the Boston Chamber of Commerce recommendations.^ When the current finan- cial business had been disposed of, five hearings and several executive sessions were held, and a bill reported which brought under legislative control, through the require- ment of annual appropriations, revenues of special funds previously expended imder standing laws and without 1 "State Budget System," p. 8. 'E.g. Journal of Committee on Finance of 1917, Constitutional Convention. ' 1917 Senate Document 88, submitted by Senator Malcolm E. Nichols. Digitized by Microsoft® 70 BUDGET IN MASSACHUSETTS specific appropriation, amounting to more than $5,000,000 annually. This bill was passed and approved by the governor as Chapter 277 of the General Acts of 1917. This act in itself, and in the principle which it laid down, represented the most important single advance in the financial administration of Massachusetts since 1910.^ It was what the commission on economy and efi&ciency had termed the indispensable "first step towards budget reform." ^ The pressure of legislative business, the wide differ- ences of opinion among members of the ways and means committee, and the general apathy of the state as a whole on the budget question made it impossible to reach any decision with regard to the broader question of the budget. It was therefore decided to turn the entire question over to a recess committee, a decision in which the friends of the budget and the friends of recess committees per se concurred. In order that this committee might have time to examine the departmental estimates and to prepare a tentative budget for 1 91 8, a bill was introduced and passed requiring the submission of the estimates on October isth, a month earlier than had been the custom.* ' 1918 House Document, No. 1185, page 22. ' 1916 House Document, No. 2225, page 8. 'Acts of 1917, Chapter 278, General. Digitized by Microsoft® CHAPTER V THE JOINT SPECIAL COMMITTEE ON FINANCE AND BUDGET PROCEDURE The joint special committee on finance and budget procedure was created to "investigate and report on any and all changes which they may deem necessary for the better, more economical and more efficient administration of the financial affairs of the commonwealth," and to "concern itself especially with a study of budget proced- ure." It was provided specifically that the committee " shall also consider the estimates calling for maintenance and special appropriations of the departments, boards, commissions and institutions of the commonwealth ; and it may present in its report a prehminary budget or finan- cial scheme for the fiscal year commencing December first, nineteen hundred and seventeen." ^ Composition of Committee. The committee was composed of three senators appointed by the president of the senate and six repre- sentatives appointed by the speaker. The legislators selected were men of long legislative experience, all of whom had taken a part, more or less prominent, in finan- cial affairs while in the legislature, and seven of whom ' House Journal 1917, p. 1143. 71 Digitized by Microsoft® 72 BUDGET IN MASSACHUSETTS were members of the ways and means committees during the preceding session. The committee was thoroughly- representative; it contained leaders of the older as well as of the newer type; it reflected the viewpoints, the desires, and the fears of the chief varieties of political opinion represented in present-day state government. The committee was thus in a position to work out a plan that would be acceptable to the various groups of the legislature. It was also linked with the finance committee of the constitutional convention through Mr. Collins, who served on both committees. The members of the joint special committee on finance and budget procedure were as follows : Senators James W. Bean, of Cambridge; Walter E. McLane, of Fall River ; Malcolm E. Nichols, of Boston ; and Representa- tives Joseph E. Warner, of Taunton ; Samuel I. Collins, of Amesbury; Benjamin Loring Young, of Weston; Harrison H. Atwood, of Boston; William F. French, of Haverhill ; and John H. McAllister, of Lee. In addition to the duties of the committee with regard to the budget, it was required to investigate and report on fees and funds, and on the reorganization of the execu- tive department by the consolidation and aboUtion of commissions, boards and bureaus.^ The committee fol- lowed this natural division of the work and estabHshed three subcommittees, one on the budget, one on fees and funds, and one on consolidation of commissions.^ ' House Journal 1917, p. 1144. ' House Document 1918, No. 1185, p. 9. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 73 Subcommittee on the Budget. The subcommittee on the budget, with which we are alone concerned here, was composed of Senator Bean, and Representatives Warner and Young. It contained peculiarly able, progressive, and respected men, who not only knew the practical problems of government in Massachusetts and the balance of interests in the state house, but also the general trend of current thought on budget questions. This subcommittee had two main tasks, first, to pre- pare a budget for 191 8, and second, to draw up a statute providing for a budget system for the future. As was natural, the thinking and. the work on the two matters went on contemporaneously in part. For the sake of clarity, however, the progress of the committee in the two fields will be discussed separately. I. PeePARATION of the BtTDGET FOR I918 Staff Assistance of Supervisor. The subcommittee on the budget began its work by going over the "P.B.L's.," as the recurrent annual ex- penditures "provided by law" are termed. This con- sideration was continued till November 8th, when the departmental estimates demanded the entire time of the coDimittee.^ On October 3d, the main committee unanimously voted : ^ Journal of Subcommittee on the Budget, p. 8. Digitized by Microsoft® 74 BUDGET IN MASSACHUSETTS "That the Supervisor of Administration be requested to prepare for this Committee a report on all requests from the officers, heads of departments, boards, commissions and trustees of institutions for appropriations by the General Court in the fiscal year 1918, both for maintenance and for special purposes or objects, and to include all material pub- lished in House Documents I and II, and such other estimates as should be included therein." ^ This action was taken after some discussion and as the result of the decision of the subcommittee on the budget that the best argument before the legislature for a budget would be to prepare a budget and let the legislature see how it looked and how really "safe" it was. Both Mr. Young and Mr. Warner, also argued that after the committee had prepared a budget, it would be in a better position to know what kind of a statute to draw providing for the preparation of budgets for the future. In accordance with this request Mr. Carl A. Raymond, the second deputy in the office of the supervisor of adminis- tration, set to work as soon as the estimates were received to sift them over and to draw up the rock bottom needs of the departments and institutions for the coming fiscal year. In arriving at these figures Mr. Raymond held informal conferences with the heads of all important departments, and in a majority of cases revisions were made with the cooperation and approval of the depart- ments concerned. 1 Journal of Joint Special Committee on Finance and Budget Procedure, p. 16. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 75 Institutional Visits. In order to be in a better position to consider the in- stitutional requests for capital outlays and extraordinary repairs, the subcommittee spent a part of its time during October and November visiting the institutions which had requested special appropriations.^ Before making each trip the estimates of the institutions to be visited were gone over and excerpts made of items deserving special inquiry. Whenever institutions were visited which were under the supervision of the commission on mental diseases, Dr. George M. Kline, the director, accompanied the committee. Beginning on November 8th,^ and continuing through December,^ Mr. Raymond submitted the results of his work to the subcommittee from time to time. In almost all cases the revisions arrived at by Mr. Raymond were adopted. Conferences. Formal conferences were had with the adjutant-general, the state guard, the highway commission, the state board of agriculture, the commission on waterways and public lands, the trustees of the Norfolk State Hospital, the board of medical examiners, and the state board of chari- ties in order to work over estimates and questions of ' 1917 House Document 1185, p. 9. The entire committee was invited to join the subcommittee on these trips. ' Journal of Subcommittee on Budget, p. 8. ' Journal of Joint Special Committee, p. 29. Digitized by Microsoft® 76 BUDGET IN MASSACHUSETTS reorganization.^ These were in addition to conferences held previously by the supervisor's ofl&ce, and were made necessary because of the peculiarly difl&cult problems which the committee was called upon to settle in drawing its recommendations for these departments. Budget Policy. During its work the committee had occasion to settle two very important questions concerning the form and content of its tentative budget. Late in September Senator Nichols raised the entire question of private members' bills and petitions carrying charges on the treasury and suggested that "the committee make some attempt through advertising to bring together before the convening of the general court all private petitions and bills involving any expense to the commonwealth." ^ The following draft of such an advertisement was presented for discussion by the secretary : "The Commonwealth of Massachusetts Joint Special Committee on Finance and Budget Procedure Room 435, State House Appointed under Joint Order of the two branches of the General Court on May 25, 191 7. The Joint Special Committee on Finance and Budget Pro- cedure, appointed to prepare a budget for the fiscal year be- ginning December i, 1917 hereby requests all persons who are 1 In the case of the Norfolk State Hospital, following the conference, the trustees prepared a radically revised estimate. In other cases, revisions were made by the subcommittee itself. 2 Journal of Joint Special Committee on Finance and Budget, p. 12. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 77 planning to lay before the next General Court petitions and bills involving any expense to the Commonwealth to submit the same to this Committee by Dec. ist, 1917, in order that all requests may be included in the complete plan for financing the Commonwealth for the coming year. James W. Bean, Chairman, Joseph E. Warner, House Chairman." After considerable debate, it was voted, on motion of Mr. Young : "That instead of advertising, the committee notify through the mail aU legislators elect, all towns and cities through their duly constituted authorities, and publish in the Boston Adver- tiser alone an advertisement similar to that prepared by the secretary." ^ But on further consideration and extended debate, the entire matter was laid on the table on motion of Mr. Young. It was the final judgment of the committee that any attempt to gather in the private bills and petitions in this way woidd be unsuccessful and that any recommendations would necessarily be superficial and even if thorough would be misunderstood and resented. The second important decision was with regard to the inclusion of recommendations for the debt service and for capital outlays in the budget. It was pointed out that the newspapers, the legislature, and the public in general overlooked these items and therefore had an idea that the commonwealth was spending in aU about $20,- 000,000 a year, and that if the committee included every- ' Journal Joint Special Committee on Finance and Budget Procedure, p. 13. Digitized by Microsoft® 78 BUDGET IN MASSACHUSETTS thing in its budget the total would amount to $10,000,000 more, merely because of these inclusions. The subcom- mittee decided that the only thing to do was to make a clean breast of the entire affair, to include everything in the budget that belonged there and to explain to aU critics that the seemingly large increase was due in the main to the confusing financial system of the past.^ The Subcommittee's Budget. On December 31st, the subcommittee submitted its preliminary budget and a maintenance biU for the coming year to the full committee. A discussion of well over an hour followed, almost entirely concerning the appro- priation for the state guard. Mr. French, who was akeady slated for house chairman of the committee on military affairs of the next legislature, stated that he was ready to fight in the legislature for a material reduction of the appropriation demanded by the adjutant-general. As this coincided with the judgment of the other members, it was decided to cut the recommended appropriation to $350,000 in spite of the pohtical dynamite contained in the item. The committee then voted unanimously : ^ "That the Table of Estimates, Cuts and Recommendations, as prepared by the Subcommittee on the budget, be approved as reported with a single change to be incorporated in the Budget statement, with reference to the recommendation for the State Guard." ' Journal of Subcommittee on the Budget, p. ig. ^ Journal Joint Special Committee on Finance and Budget Procedure, p. 25. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 79 On motion of Mr. French, it was also voted : "That the General Appropriation Bill, providing for the maintenance of the Government of the Commonwealth, re- ported by the Subcommittee on the budget, be approved as reported." Btidget Submitted to Legislature. On January 2, 191 8, the budget was reread, and after a few verbal changes in the explanatory statement it was unanimously approved, signed and delivered to the clerk of the house of representatives for submission to the legislature. Copies were prepared for the press and distributed late in the afternoon. This ended the labors of the recess committee in the preparation of the first budget of the state of Massachusetts. It had received estimates amounting to $36,064,918.16,^ exceeding by many millions the largest total which any preceding legis- lature had ever been called upon to consider. As a result of hearings, interviews, first-hand visits to institutions, committee discussions and Mr. Raymond's work, $4,903,593.92 was cut from the departmental requests, and appropriations amounting to $31,161,324.24 were finally recommended.^ On the revenue side the committee recommended a state tax of $11,000,000^ and appealed strenuously against the issuance of bonds.* The following table shows the cuts in departmental estimates made by the committee in preparing the tenta- tive budget of 1918 : 1 1918 House Document 17, pp. 13, 23, 65. ^ Ibid., p. 13. ^ Ibid., p. 17. *Ibid.,p.g. Digitized by Microsoft® 8o BUDGET IN MASSACHUSETTS The Estimates and the Budget, 1918' Departmental Estimates Bddoet Recommendatiok Reduction Amount Percent of Estimates Maintenance . Capital outlays Interest . . . Deficiency . $ 27,092,806.82 5,222,111.34 3,700,000.00 50,000.00 $ 25,568,490.35 1,842,833.89 3,700,000.00 50,000.00 $ 1,524,316.47 3,379,277-45 S-6 64.7 Total . . . $36,064,918.16 $31,161,324.24 $4,903,593-92 13-5 The Massachusetts Budget of igi8. The budget submitted to the general court on January 2, 1918, is a statement of twelve pages. It appeared as House Document No. 17, together with some fifty pages of supporting details and drafts of appropriation and other bills to carry out the recommendations of the budget. The budget i^ divided into two sections, dealing with expenditures and with revenues. The section on expen- ditures discusses in order — 1. Maintenance of established departments and in- stitutions. 2. Deficiencies. 3. Debt service. 4. War emergency. 5. Capital outlay (Institutions, Rivers, Harbors, and .Highways). * 1918 House Documents 17. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 8i The section on revenues deals with — r. Free cash on hand. 2 . " Ordinary ' ' revenue. 3. "Other" revenue.-^ 4. State tax. In addition to explanatory text, the budget contains five important nummary tables. These present : 1. A statement of the departmental estimates, the budget recommendations of the committee, and the comparative appropriation for the previous year, for the main governmental services classified in fifteen groups. 2. A summary of treasury transactions for the pre- vious fiscal year, excluding only trust funds, deposits, sinking funds and metropolitan district funds. 3.. Estimated "ordinary" revenue for the coming year compared with actual receipts for the past two years, classified by 23 sources. 4. Estimates of "other" revenue for the coming year compared with actual receipts for the past year, classified by 20 sources. 5. A balance sheet as of the close of the coming year. This last table deserves special attention. Title and all it was as follows : ' Composed of revenues which since December i, 1917, have been paid into the general fund as ordinary revenue in accordance with Ch. 277 of the General Acts of 1917. A separate classification was made merely for purposes of com- parison with previous years. (1918 House Doc. 17, p. 16.) G Digitized by Microsoft® 82 BUDGET IN MASSACHUSETTS Stjmmary op Budget Summary of the Plan for Financing the Activities of the Commonwealth for the Fiscal Year 1918 Estimated Estimated Free cash on hand Expenditures to be Dec. I, 1917, say . $2,000,000.00 made for — Estimated revenue Maintenance . . . $23,898,490.35 from — Deficiencies . . . 50,000.00 Ordinary revenue Funded debt obliga- (compared with tions .... 1,600,000.00 previous years) . . 12,627 200.00 Interest .... 2,100,000.00 Other revenues . . 5,426,800.00 War emergency . . 870,000.00 State tax .... 11,000,000.00 Capital outlays for Bond issues .... public works, con- Accumulated, funds struction, improve- derived from in- ments, etc. . . . 1,842,833.89 come of State prop- Maintenance of in- erty, etc., under dustries of certain control of the Com- institutions . . . 800,000.00 mission on Water- Overlay .... 292,675.00 ways and Public Lands .... Vo, 000.00 Total .... Total .... $31,454, 000.00 $31,454,000.00. Supporting Details. The second section of House Document No. 17 con- tained first of all a tabular presentation of the mainte- nance estimates filed by the 132 spending units, the budget recommendations of the committee, and the difference between the two. Comparative data on past expendi- tures appeared in House Document No. i, together with the detailed requests of the departments. This tabulation was followed by a single maintenance appropriation bill embodying the recommendations of the committee. It was deemed advisable to draw up such a bill in order to overcome the long-standing habit Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 83 of preparing a hundred or more separate bills and in order to sliow in concrete form the advantage of expressing the appropriation in semi-tabular form with figures instead of close text with spelled out numbers. In both of these efforts the committee was successful, as will be seen by reference to the biU finally passed.^ The committee's bill covered 36 pages and contained 502 items amounting in all to $24,496,990.35. The total for each spending imit was added up as a basis of comparison with the pre- ceding tabular summary and House Document i. It is to be noted especially that the bill contained the annual appropriations for the legislature and the judiciary along with all other state departments. The next statement presented in tabular form the estimates for capital outlays and special improvements, together with the committee's recommendations. These covered five pages and were classified by the 28 spending imits which had filed such estimates. The recommenda- tions of the committee on capital outlays were included in the budget,^ but not in the general appropriation bill, inasmuch as there was no legal authorization as yet for these appropriations.^ The final pages of House Document 17 contain the drafts of five bills, the passage of which was imperative before the enactment of the general appropriation biU. These were : 1 Ch. 106, Sp. Acts, 19 1 8. ^ See "Budget Summary" on page 82. ' The general appropriation bill contained over $500,000 for capital outlay for highways, harbors and forest lands in accordance with existing authoriza- tions. (House Doc. 17, pp. 12 and 13.) Digitized by Microsoft® 84 BUDGET IN MASSACHUSETTS 1. An act authorizing the payment of salaries and trav- eling expenses of members of the legislature in anticipation of appropriations. (This act was recommended in order that there might be no eiJort in the legislature to tear apart the general appropriation bill, by the immediate passage of that section dealing with members' salaries and expenses.) 2. An act repealing a section of the revised code fixing the "expenses" of the executive department and substitut- ing for it the provision that the amount was to be deter- mined by aimual appropriation. (The amount fixed by law was clearly insufficient. It had forced a round- about method of evasion which the committee felt should be eliminated by allowing an adequate appropriation in the budget.) 3. An act to discontinue the newspaper pubhcation of the general laws. (The budget recommended no appropriation for this publication.) 4. An act to discontinue the purchase of historic town records of births, marriages and deaths. (The budget recommended no appropriation for these purchases.) 5. An act relative to the preparation of the indices and of the table of changes in the general laws. (This act shifted certain clerical duties and functions in accord- ance with the budget recommendation.) II. Providing rou a Budget System The second main task before the subcommittee on the budget was to work out the details of a bill to establish the budget system in Massachusetts. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 85 Budget Views of Committee Members. In spite of the long continued agitation for budget reform there was no consensus of opinion in the state on details. The joint special committee itself represented all types of opinion on the budget, some members going so far as to oppose during the earlier discussions any change whatsoever. A clear majority were at first against any increase of the governor's powers and therefore op- posed allowing him to draw up a budget. Even in the subcommittee on the budget there was a decided differ- ence of opinion. This was brought out clearly early in July when its members appeared, on invitation, before the "Committee on State Finance" of the constitutional convention, which was at the time working over the budget proposals submitted to the convention. The testimony of Messrs. Young, Warner and Bean at this time is sig- nificant as indicating their views before the subcommittee entered upon a thorough discussion of the budget. Mr. Young argued for a constitutional amendment requiring the submission of a budget by the governor, allowing revision by the legislature either by increasing or decreasing items, and granting the governor the power to veto or decrease items. On the specific question of increase of items by the legislature he said : "The power to increase should be left with the legislature. This power will not be abused because it will have to over- come the prestige which will attach to a measure recom- mended by the governor." ^ Mr. Young favored a broad ^ Journal of Committee on Finance, p. 10. Digitized by Microsoft® 86 BUDGET IN MASSACHUSETTS amendment which would leave all details to be determined by the legislature, even with regard to a limitation on the passage of private bills and resolves carrying charges on the public treasury.^ Mr. Warner agreed with Mr. Young "absolutely," as he put it, though there were many matters concerning which he had arrived at no definite conclusion. It was his opinion that if a restriction on private bills proved necessary, it should be imposed by the legislature itself, as in England, and not by a constitutional amendment. Mr. Warner was convinced that a restriction would not prove indispensable to a budget, for "the power to increase items will not be abused — it will not even be used except for good cause shown." ^ Senator Bean said : "I am not in favor of an executive budget. We tried it in 191 1 and the only result was a failure. It stirred up hard feeling between the legislature and the governor and dragged the session on through the summer. I am in favor of a recess committee of the two houses on ways and means to look over requests for appro- priations, to follow up the expenditures, and to make recommendations to the incoming ways and means com- mittee. This method would get the best results." ^ On the question of special bills, Mr. Bean beUeved that the adverse report of the ways and means committee 1 Journal of Committee on Finance, p. 14. 2 jj^^ p j j ' Ibid., p. 14. Mr. Tyrrell of the Commission of Economy and Efficiency, who was present, denied that an adequate trial was given the executive budget in igii, since there was at the time no adequate staflt agency to assist the governor. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 87 would be a more powerful deterrent than any provision requiring an unusual vote in the legislature. He pointed out that time honored custom, and the constitution, had made "the right of private petition sacred," and that its restriction by prohibiting financial measures not in the budget would be foreign to the traditions of Massa- chusetts. The testimony of these three men is interesting as an indication of the point which the members of the com- mittee had reached in their thinking on the budget before they imdertook the specific task of preparing a budget statute for the commonwealth. Little Discussion of Budget Problems till December. At the time the committee on finance of the constitu- tional convention made its report, an informal exchange of views among members of the recess committee showed considerable opposition to the preparation of the budget by the governor and especially to the proposition that he be allowed to defend his budget on the floor of the legis- lature. Even Mr. Collins, who as member of the com- mittee of the convention had not voted against the prop- osition, joined in the criticism of these features and pre- dicted the defeat of the entire budget resolution in the convention. In spite of this early discussion of budget proposals no real consideration was given the matter till late in Decem- ber. For the time being the energies of the committee were devoted to other and more pressing matters. The Digitized by Microsoft® 88 BUDGET IN MASSACHUSETTS subcommittee on the budget made its institutional visits and struggled away with the 191 8 budget. The other subcommittees were engrossed with other matters. The November election absorbed the time of some, as did also the city election in December. Senator Bean, the chairman of the committee, and a member of the sub- committee on the budget, failed of reelection in November, and the work on the 1018 budget was thus left largely in the hands of Mr. Warner and Mr. Young. The Budget Program of Mr. Warner and Mr. Young. By the middle of December, Mr. Warner, Mr. Young, Mr. Raymond and the secretary of the committee were agreed on the main provisions of the budget statute to be recommended by the subcommittee. The chief diffi- culty lay in making the measure revolutionary enough to be valuable and conservative enough to "get by" the main committee and the legislature. The compro- mise arrived at was : 1. The preparation of the budget by the supervisor of administration, on the basis of departmental estimates. 2. The revision and submission of the budget to the legislature by the governor. 3. A single appropriation biU providing for budget recommendations with precedence over all other appro- priations. 4. No interference with the power of the legislature to increase or decrease items in the governor's budget or to introduce private bills or accept private petitions. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 89 At various times the elements of this program were discussed with other members of the committee individ- ually in order to insure its adoption when the time was ripe for discussion by the committee as a whole. By this time all members of the committee either believed in a budget and a single appropriation bill, or else felt it could do no special harm. Several members who had opposed the governor's revision and presentation of the budget were swung around by the argument that the passage of the suggested measure would "steal the thun- der" of the constitutional convention and would "put the governor on record" on all financial matters so that he could not shift the blame to the legislature for allowing appropriations he had secretly urged them to make. The action of Governor McCall in bringing pressure to bear on the house ways and means committee in 191 7 to reverse their adverse report on an appropriation for the Pilgrim Tercentenary Commission, the passage of which he followed with a veto, was still fresh in the minds of aU. In spite of these arguments, however, the passage of the measure appeared doubtful when it was first dis- cussed on December 27th, on the eve of the convening of the legislature, and of the presentation of the final report of the committee.-^ Time Limit Forces Decision. Because of the inability of the full committee to agree on the budget statute, and especially on the section of 'House Journal 1917, p. 1143, Journal of Committee, p. 28. Digitized by Microsoft® go BUDGET IN MASSACHUSETTS the report dealing with, consolidation of commissions, an extension of three weeks' time was secured in which to arrive at a decision and to complete the report.-^ These three weeks were busy days for all the surviving members of the committee.^ Four of the members were committee chairmen, and the remainder were on the house ways and means committee, which was holding hearings during the same period on the 191 8 budget.^ As a result, further consideration was virtually impossible, and as it was necessary to report something, the various subcommittee reports were acquiesced in and adopted, including the budget statute, to which opposition had arisen earher, and the highly controversial sections on administrative reorganization. In the latter case, however, the follow- ing door was left ajar : "The above recommendations have been approved by the committee but not in every case by a unanimous vote." * The Budget Recommendations of the Recess Committee. The report of the committee, in so far as it relates to the budget, is significant because it is a legislative criticism of legislative financial practices. "Massachusetts now has no budget system," said the committee. "When the General Court meets in January there is no imified plan for the expenditures and taxes of the year." ^ 1918 House Journal, page i65. ' Mr. Bean and Mr. Collins were not members of the igiS legislature. 'Manual 1918, p. 519 £f. * 1918 House Document, No. 1185, p. 67. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 91 Criticism of Defects. The main defects in the financial procedure pointed out by the committee were : I. There are no satisfactory estimates of the financial needs of government. The committee said in part : "The estimates are prepared solely by the departments in charge of the work to which they relate and by the officers who wiU actually expend the appropriations when made. The figures are often unduly high in the expectation that reductions win be made by the Committee on Ways and Means. Even if not intentionally excessive their value is lessened by the fact that they represent the partisan opinion of an interested de- partment which naturally wishes its work to cut a large figure in comparison with other public activities. "Furthermore, the individuals who are responsible for pre- paring the estimates have absolutely no responsibility for the State tax ; their only interest is to see their departments well supplied with public funds. They are under no pressure to keep the State tax down." ' It was further pointed out that the estimates now prepared are seriously incomplete, not even containing the total requests of department heads, to say nothing of the flood of private biUs and petitions involving a financial charge. On the question of estimates the com- mittee concluded: "This present procedure in the prep- aration and tabulation of estimates fails to give the legislature a comprehensive plan of the actual needs of the government." ^ ^ 1918 House Document, No. 1185, page 16. ^ Ibid., page 18. Digitized by Microsoft® 92 BUDGET IN MASSACHUSETTS 2. An orderly consideration of financial measures is impossible. After pointing out that orderly consideration is con- ditioned upon an orderly plan and calling attention to other undesirable features of the present procedure, the committee concludes : "The worst feature of the present system is the impossibility of giving proper consideration to all of the needs of the State government, in relation to each other and in relation to the revenues of the State and the State tax. Individual matters are decided and enacted one by one throughout the length of the session, without the formation of any definite plan, except as one exists in tentative form in the mind of the Ways and Means Committee. The public and the Legislature have no idea until the last days of the legislative session what the appropriations will amount to and what the State tax will be. This is due to the lack of comprehensive budget plan upon which all appropriations can be based." ^ 3. "The process of appropriation is confusing both to the Legislature and to the public." It was pointed out that there were 136 separate appropriation acts in 1915 and 116 in 1917, and that "The large number of appropriation bills at present prepared and passed makes it impossible for any individual not an expert to ascertain what has been appropriated for any one department or for any given service." ^ Curative Recommendations. In order to cure these outstanding evils, the committee recommended that : ' 1918 House Document No. 1185, page 20. = Ibid., page 21. Digitized by Microsoft® THE JOINT SPECIAL COMMITTEE ON FINANCE 93 1. The budget system be adopted. 2. The budget be prepared by the supervisor of admin- istration under the direction of the governor, for, in the words of the committee : "The governor should be held responsible for state expenditures. He should therefore be originally responsible for the entire financial pro- gram." ^ 3. "Budget Days" be set aside for the consideration of the budget, when the governor may be permitted and the heads of other executive departments may be required "to appear before the general court on its request to explain the appropriations recommended in the budget." ^ 4. The legislative rules be changed to require the presentation of all private financial bills and petitions during the first week of the session and their immediate consideration by committees of original reference. 5. All appropriations based on the budget be included in a single "general appropriation bill" to be given pre- cedence over all private appropriation bills.^ These were, in brief, the budget recommendations of the committee. In addition 19 specific major recom- mendations were made with regard to funds, fees, fines, bonds, printing, public institutions, the courts, and depart- mental-reorganization. These dealt ^only indirectly with budget problems and are therefore not reviewed here. ^ 1918 House Document 1185, page 24. • Ibid. 'Ibid., page 72. Digitized by Microsoft® CHAPTER VI THE LEGISLATURE OF 1918 AND THE BUDGET Governor McCall and Speaker Cox Advocate the Budget System. The legislature of 1918 was convened on January 2. Channing H. Cox, Republican, was elected speaker of the house by a vote of 172 to 54.^ In his opening remarks, this legislative leader of the majority party stated that the first task before the legislature was the establishment of a "more scientific method of making appropriations." He continued, "The report of the special committee which has been studying this subject during the recess deserves our immediate attention and action. As one looks back over the legislative history of the common- wealth he is astounded to find that, with no real budget, with little or no advance investigation of estimates, the appropriating power has been used as wisely as it has." ^ On January 3, Governor Samuel W. McCall laid before the two branches his legislative program. As was natural, this war time inaugural address placed special emphasis on war measures. It also contained the gover- nor's industrial and social program, a word on education, on the constitutional convention, and an exhortation * 1918 House Journal, p. 6. ^Ibid.,x>.6. 94 Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 95 rigid economy. At the request of budget advocates, he governor included a paragraph referring to the work if the joint special committee on finance and budget •rocedure and urging the legislature to estabhsh a budget ystem. He said, "A legislative committee on finance and budget procedure has given the subject of a state budget very exhaustive con- sideration during the recess. I have referred upon former occasions to the need of providing for an efiicient budget system. The constitutional convention has under considera- tion an amendment to the constitution providing for a budget, but untU that is passed by the people, legislative action upon this subject cannot bind governors or subsequent legislatures. But it would be binding upon the departments and would probably be followed as a rule of action. As chief executive, with a high responsibility for administration, the governor should be enabled to examine all estimates of appropriations, and to submit to the legislature a budget containing a state- ment of appropriations deemed by him to be necessary for the proper maintenance of the government. This budget should include the amounts required for ordinary maintenance, to meet deficiencies, to pay interest and maturities upon debt, and also to provide the additions and improvements to exist- ing institutions which may seem necessary or desirable. The recommendations for spending money might well be accom- panied by recommendations for raising it, whether by loans or new taxes. A haphazard system of public finance is likely to be an expensive system. The comprehensive grouping of the financial needs of the government will result in the saving of time to the legislature, a better apportioning of appropriations among the different departments and a lessening of expendi- ture. I heartily recommend action designed to secure a proper budget system." ^ ' 1918 Senate Documents, No. i, p. 13. Digitized by Microsoft® 96 BUDGET IN MASSACHUSETTS Budget Progress in the Legislature. It will be seen that the members of the recess committee had not been resting on their oars in the matter of secur- ing a most favorable introduction for their budget recom- mendations. The two men to whom the commonwealth looks for leadership at the state house, the governor and the speaker of the house, were both induced to come out squarely for the adoption of a state budget system, and to refer specifically to the recommendation of the joint special committee on finance and budget procedure. Elements of humor were not lacking in this situation. It will be remembered from the discussion in Chapter V above that the recess committee had not completed that section of its report which was to deal with the state bud- get system at this time, and that differences of opinion threatened to prevent a satisfactory report. Both the governor and the speaker were in a measure endorsing a blank check. The work of the 191 8 legislature on budget matters revolves about two centers, first, the 1918 budget; and second, the bill estabhshing the budget system. The , legislative history of these two matters is discussed sepa- rately in this and the following chapter. Legislative Consideration of the 1918 Budget Public Interest in the igi8 Budget. The 1918 budget as drawn by the joint special com- mittee on finance and budget procedure was submitted Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 97 to the legislature on January 2, 1918. The budget sum- mary, excluding the supporting details/ was also handed to the press representatives. The prominence which the more serious papers gave to this material is perhaps the best indication of the extent of public interest in the new budget. Of course there were even some Boston papers that took no notice of the 1918 budget. There were also many papers of the smaller cities and towns that overlooked it.^ The more substantial papers how- ever showed an intelligent interest. The Boston Tran- script printed the essential details of the 191 8 Budget in a two-column box. It hailed the document as the "first model budget" of Massachusetts, and presented in tabu- lar form the departmental requests, the budget recom- mendations, and the 191 7 appropriations. The budget summary was also reprinted in full.^ The Springfield Republican not only covered the budget in its news col- umns, but took occasion to comment editorially on some of the chief political issues involved, observing, "A num- ber of issues are stated clearly in the preliminary budget plan of the legislature's special recess committee." * If one thing is more noticeable than others in this pubhc discussion of the 191 8 budget it is the directness with which the papers proceeded to the emphasis, in news columns, and to the discussion, in editorials, of the chief political issues raised by the budget. * See page 83. ' Cf. the Lowell Courier Citizen. ' Boston Transcript, January 3, 1918, p. 2. * Springfield Republican, January 3, 1918, p. 2 ; January 4, p. 6. H Digitized by Microsoft® g8 BUDGET IN MASSACHUSETTS Conflict with the Senate over Committee Reference. Both Mr. Warner and Mr. Young had come to feel that it was to the best interests of the legislature to pro- vide for the consideration of the budget by the joint committee on ways and means. This procedure would make it unnecessary for the budget bill to receive the attention of the house committee and then of the senate committee separately. It would obviate the necessity of calling in the department heads for two separate legislative committee hearings, and would make it possible by eHminating the duplicate hearings to enact the appro- priation bill early in the session so that the departments could go about their year's work without further delay and doubt. The very fact that the two committees worked out a joint program would mean the saving of time later on. It was also pointed out that practically all other legislative matters were reported on by joint committees. There were those also who beheved that the small senate committee, which works comparatively in the dark, would needlessly delay action on the budget appropriation bill as a means of bringing pressure to bear on some legislator or some administrative department for personal ends, and that this danger would be considerably lessened if the committees acted jointly. As a result of these suggestions, and especially because of the influence of Messrs. Young and Warner, no difficulty was raised in the house against the reference of the budget and the budget ap- propriation bill to the joint committee on ways and means.^ * House Journal, p. 23. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 99 The senate, however, refused to concur in this reference, and on informal conference no progress was made. As a result the house ways and means committee proceeded to go over the budget as if it had been referred to them alone/ Budget Revisions of the House Committee. The house ways and means committee devoted from January 7 to January 25 to the revision of the budget bill with its 502 items totaling $24,496,990.35.^ While no public hearings were held during this period, aU heads of departments who felt that mistakes had been made in the budget recommendations for their work were given an opportunity to present their cases. Over half of the departments affected either expressed themselves as being satisfied with the budget recommendations or failed to make a protest. On January 25, Chairman Warner reported to the house the recommendations of the committee. The new bill differed in certain particulars from the old. It contained two new items, so that the items numbered up to 504, and dropped several. The total appropriation carried by the bill was $27,464,746.39.^ It wiU be seen that the bill reported by the ways and means committee appropriated almost $3,000,000 more than the budget bill. An analysis of the two bills shows however that the two bills are not strictly comparable ^ The Legislative |JoumaIs were never corrected to indicate what actually happened. See House Journal, p. 23, Senate Journal, p. 122. ^ House Document 17. ^Jbid., 1176. Digitized by Microsoft® lOO BUDGET IN MASSACHUSETTS until certain allowances have been made. At the time the original budget bill was drawn, the treasurer had not been able to determine the exact amounts needed for interest and debt service, and as a result it was not possible to include any definite amount in the budget bill. By the time the ways and means committee made its revision, the treasurer reported that $3,641,164.09 was required. This amount was therefore included in the revised budget bill. It accounts for the two addi- tional items, numbers 503 and 504. An important political controversy had arisen over the state guard and the adjutant general's department. The adjutant general and the officers of the state guard were attempting to enlarge their establishments beyond what the legislature deemed necessary. The governor sided officially with the military authorities, as is evi- denced by his inaugural, while the ways and means com- mittee urged the need of economy. The committee on military affairs was of course the storm center, and as it had not reached a decision at the time the budget biU was revised, the six items in question were cut from the bill and a report on them postponfed pending action by the committee on military affairs. These military items totaled $405,000. A further item of $13,000 for the maintenance of the pohce steamer Lexington was also omitted pending action on a message from the governor of January 22 advising the sale of the steamer.-^ Because of the uncertain authority for the appropriation of cer- ' 1918 House Journal, p. 148. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET loi tain educational gratuities, three items of the budget bill carrying $180,000 were also temporarily dropped. And finally an item of $15,000 was added to meet an obligation which the recess committee did not understand as having accrued.'^ When allowances are made for these non-comparable items, the two bills are as follows : Budget BUI (House 17) $23,913,990.35 i Revised BiU (House 11 76) 23,823,582.30 I Decrease $90,408.05 The following table shows what part of the budget biU remained imchanged, and what parts were increased or decreased, and their relation to the total involved : numbee of Iteus Amount Per Cent of Bddget Bill Budget BiU Unchanged Decreased Increased Net Decrease 491 431 18 42 $23,913,990-35 23,629,299.58 187,549-41 97,141-36 90,408.05 100.00 98.80 -79 .41 ■38 From this it is clear that the budget bill of the joint special committee on finance and budget procedure was revised but slightly by the ways and means committee before submission to the legislature. After all had been said and done a net decrease of about a third of one per cent was made. 1 1918 House Documents, 17, 1176; items 67I, 270, 280-285, 473-47Si So3> S04. Digitized by Microsoft® I02 BUDGET IN MASSACHUSETTS The Revised Budget Bill Before the House. On January 25 the revised budget bill was reported to the house by Chairman Warner.-' Beginning on Janu- ary 28 two entire sessions and a considerable part of a third were devoted to the discussion of the budget biU. On the second day of the debate seven amendments were offered, all of them to eliminate or reduce items on the bill. Of these three, reducing the bill by $52,675, were rejected, and four, reducing the bill by $518,354, were adopted. On the following day three further amend- ments were put forward, one to cut out $4600 more, which was rejected, and two to restore $510,354 of the amount eliminated the previous day. As a result the bill went to the senate as it had been received, minus $8000.^ The $8000 eliminated by the house was composed of two items, the first appropriating $5500 for the main- tenance of the police steamer Lotis, and the second appropriating $2500 for examination of recruits of the state guard. It will be remembered that the questions of police steamers and the state guard were bones of contention, and that a number of items referring to the same matters had aheady been severed from the budget biU by the ways and means committee.^ During the discussion of the budget bill by the house, Mr. Warner, chairman of the house committee on ways and means, was continually on his feet answering ques- tions and explaining items. While the bill was still ' 1918 House Journal, p. i66. * Jij^^^ p j^^^ j^g^ jg^ ' 1918 House Document 1176, Items 270, 280-285. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 103 before the house, Representative Young is reported as saying: "The general appropriation bill was discussed yesterday in the house during the whole session, and will be again to-day. For the first time in recent history, the Massachusetts legislature took a real interest in a financial measure, and the new system has more than justified itself already." The Budget Bill Before the Senate. The budget biU as passed by the house was received in the senate on February i and referred without dis- cussion to the senate committee on ways and means.^ Here it was held for over a month. Senator C. L. Gifford, chairman of the committee, was none too friendly to the budget system, and as his service on the recess committee on taxation had precluded his appointment to the recess committee on the budget, he was entirely unfamiUar with the budget bill, and so demanded a careful working over of the entire measure. At this stage no public hear- ings were held, though a number of the department heads were given an opportunity to restate their cases. The change in commodity prices made it necessary also to reconsider the appropriations for some of the state insti- tutions. On March 5, Senator Gifford reported the bill with 18 amendments. Seven of these made further reductions in the bill, while eleven provided increases. The total increases amounted to $48,042, while the decreases were 1 1918 Senate Journal, p. 168. Digitized by Microsoft® I04 BUDGET IN MASSACHUSETTS $21,800, leaving a net increase of $26,242. It is especially interesting to note that over $39,000 of the increase is in institutional maintenance which the house ways and means committee had reduced.-' On the following day, all of the amendments recom- mended by the senate committee were adopted in a block and without discussion.^ On March 11, when the bill was passed to be engrossed, three amendments were offered. The first made a decrease of $400 ; the second reintroduced an item of $1000 which had been cut out by the senate vote of March 6 ; and the third reintroduced an item of $5500 for the maintenance of the steamer Lotis which had been eliminated by the house. Of these amendments the first two failed, while the third was adopted on a roll call. The vote stood 18 to 14, with four paired, and three not voting.^ The vote by parties was as follows : Republicans Democrats TOTAl Yes No Not voting .... IS 2 S I I 20 16 3 Total 32 7 39 It will be seen that there was no party issue involved. As a result of these 19 amendments adopted by the senate, the budget bill was increased by $23,742, or less than a tenth of one per cent of the total amount carried by the bill as it came to the senate. ' 1918 Senate Journal, p. 330. ^ Ibid., p. 372. 'Ihid. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 105 Senate Amendments Adopted by the House. On March 13 the amended budget bill was returned to the house and there referred to the committee on ways and means.^ This committee recommended concurrence in all the senate's amendments.^ When the matter came up for vote on the 21st, there was no opposition except to the single item regarding the appropriation for the police steamer Lotis. The rejection of the senate's amendment however failed on a standing vote, 38 to 75, and the remaining amendments were adopted in a block without discussion.^ The bill then passed through its final stages and was laid before the governor and was signed by him on March 28 as Chapter 106 of the Special Acts of 1918.* The Budget Bill as Passed Compared with the Original Bill. The budget bill as finally passed in Chapter 106 carries appropriation amounting to $27,488,488.39. While this is $2,991,498.04 above the budget bill as drawn by the recess committee on the budget, a careful analysis shows, after eliminating the non-comparable items as above, that the bill appropriates less than the original recom- mendation by only $66,666.05, or shghtly over one quarter of one per cent. Significant Incidents in the Passage of the Budget Bill. There are five significant incidents in this brief story of the passage of the budget bill in 191 8 : 1 1918 House Journal, p. 458. ^ Ihid., p. 500. ^Ibid., p. 534. * Ibid,, p. SS7 j Senate Journal, p. 470. Digitized by Microsoft® io6 BUDGET IN MASSACHUSETTS 1. At no stage was a private motion made on the floor of either house to add a new item or to increase an exist- ing provision of the budget bill with the exception of three attempts to reintroduce items which had been cut out previously. 2. There was no pohtical division on the budget at any stage. 3. There was practically no revision of the budget by the legislature itself. Neither house was interested in discussing more than half a dozen items, and the only individuals in the legislature who knew enough about the budget bill to criticise it were already responsible for its preparation. 4. The only detailed examination which the budget bill had at the hands of the general court was in the ways and means committees. Each branch of the legislature accepted all the suggestions of its ways and means com- mittee, and the two houses came to an agreement on all matters without even a temporary deadlock or a confer- ence committee. 5. The chairman of the house ways and means com- mittee was. the chief proponent and defender of the budget bill. Disposition of Postponed Items. The budget items eliminated by the house ways and means committee were subsequently reported in two groups. Items 280 to 285, providing for the adjutant- general and the state guard, were reported on February Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 107 11.^ The ways and means recommendation showed a cut of $80,140 beyond the extensive cut abeady made by the recess committee. This recommendation of the ways and means committee was adopted both in the house and in the senate. In the house alone was there any discussion of the measure. An effort to amend by making further radical decreases was defeated on a voice vote.^ Later in the session a number of minor amounts were allowed for the adjutant-general's depart- ment, bringing the total appropriation for his department up to $342,155.81.^ Item 270 of the 1918 budget bill was never reported. The governor's special message advising the sale of the pohce steamer Lexington resulted in the passage of a law providing for the sale of the steamer.^ This made it unnecessary to pass an appropriation for its maintenance. Items 473, 474 and 475 were reported on March 14. The bill reported called for an appropriation of $180,000, the amount provided for in the tentative budget, in ac- cordance with the resolves of previous legislatures by virtue of which the grants were made.^ With the settle- ment of these questions, every matter raised in the tenta- tive budget bill was disposed of. Budget Recommendations for Capital Outlays. The joint special committee on finance and budget procedure was called on to sift over departmental requests ' House Journal, p. 246. ^ Ibid., p. 281 ; Special Acts of 1918, Ch. iii. ' 1919 House Document 200, p. 52. * Senate Journal, p. 392. ' House Journal, p. 472 ; Special Acts of 1918, Ch. no. Digitized by Microsoft® io8 BUDGET IN MASSACHUSETTS for capital outlays, totaling over $5,000,000.^ Of this amount, $270,000 was carried in the budget bill, and was enacted without revision. Excluding this $270,000, which was appropriated practically as a maintenance item, the following table indicates the requests, the budget recom- mendations, and the final action of the legislature : Budget Recommendations for Capital Outlays^ Departmental Requests Budget Recommendation Appropriation Increase oe Decrease Commission on Waterways and Public Lands . . Other State $2,473,141-69 $400,000.00 $1,778,342.00 + $1,378,342.00 Departments and Institu- tions . . 2,478,969.65 1,172,833.89 1,129,546.15 -43,287.74 Total . . . $4,952,111-34 $1,572,833-89 $2,907,888.15 + Si,33S,°S4-26 From this table it will be seen that the budget recom- mendations for the commission on waterways and pubUc lands were radically revised by the general court. The joint committee on metropolitan affairs to whom the recommendations of the commission on waterways and public lands was referred, reported in favor of the com- mission's plans for the improvement of the Port of Bos- ton. This was followed by a favorable report by the senate committee on ways and means, and then by a favorable report by the house committee on ways and ' House Document 17, pp. 12, 13, 65. " Ibid., p. 60-65 ; 1919 House Document 200 ; General and Special Acts of 1918. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 109 means.^ While the final appropriation represents a marked difference of policy from that recommended in the tentative budget, it will be seen that the change of policy was approved by those who had drawn the budget. The recommendations of the tentative budget for the capital outlays of the remaining institutions and depart- ments was $1,172,833.89. This figure represented a cut of $1,306,135.76 from the departmental requests. The budget recommendation was in turn materially re- vised by the house ways and means committee and the legislature. The final appropriation omitted fourteen capital outlay items from the budget and added fourteen. The decreases totaled $186,856.00 and the increases, $143,568.26, leaving a net decrease of $43,287.74. The gross decrease was 15.8 per cent, the gross increase 12.2 per cent, and the net decrease 3.6 per cent of the total amount carried by the tentative budget. Relation of Budget Appropriation to Total Appropriations. The 1 91 8 budget failed to cover all of the needs of the commonwealth. The extent of this failure, as well as its causes, can be seen in the table on the following page. The recommendations of the governor were as vague as they could well be, though in many instances the amount he regarded as necessary was "understood" by the leading members of the ways and means committee. The governor's recommendations had to do almost exclusively with emergency war matters, and were passed ' 1918 Bulletin No. 35, p. 26, 8s ; House Journal, p. 590, 601, 630. Digitized by Microsoft® no BUDGET IN MASSACHUSETTS through the two houses under suspension of the rules in the main. Basis op 1918 Appropriations .Basis Budget Governor's messages Private petitions and departmental re- quests not submitted to budget com- mittee Supplemental maintenance requests of departments and institutions .... Estimates of metropolitan boards and commissions Total Appropriation Per Cent op Total $31,196,436.54 3,476,030.41 80.7 9.0 760,357.67 2.0 1,152,238.10 3-0 2,065,001.56 $38,650,064.37 S-3 lOO.O The $760,357.67 appropriated on the basis of various petitions and requests also represents chiefly war emer- gency matters. At the same time there are included in this item appropriations for recess committees and for a very few other items that might be termed "private." Such items were, however, very successfully eliminated in 1 91 8. In the opinion of those who are in a position to know, this was due (i) to the budget procedure which forced the consideration of each matter in relation to the tax rate, and (2) to the war situation which made it possible to argue that road and harbor bills would not "help win the war. " At any rate they were all disposed of without serious difficulty. During the latter part of the legislative session, the increases in commodity costs began to be felt not only by the state institutions, but also by the lower-salaried Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET iii employees. As a result the departments and institutions requested substantial increases in the appropriations for their supplies and for salaries. In response to this appeal $1,152,238.19 was appropriated. It is to be noted that the 191 8 budget and the single maintenance appropriation bill based upon it covered in addition to the executive departments the legislative and the judicial departments as well.^ The estimates of these departments were revised and reported in the same manner that other requests were handled. The judicial department estimates came to $722,423.67, and the recess committee recommended all but $3835.00 of this amount. Similarly $7300.00 was cut from the estimates for the legislative department, and both cuts were approved by the legislature as indicated in Chapter 106 of the Special Acts. The outstanding fact with regard to the appropriations of 1918 is that the budget was the basis for but 81 per cent of the appropriations passed. This was due to the fact that other requests were received by the legislature direct from the governor and also from private individuals, members of the legislature and state officials. The re- quests in this last case represent chiefly estimates which according to law should have been filed with the regular departmental estimates. ' As had been recommended by the Jomt Special Committee on Finance and Budget Procedure, Chapter i of 1918 (General) was enacted authorizing the treasurer to make advances during January and February to the members of the legislature for salaries and expenses at the rate provided by the appropriations of the previous year. (1918 House Document 17, Appendix.) Digitized by Microsoft® 112 BUDGET IN MASSACHUSETTS Appropriation Bills of igi8. During the session of 1918, 22 appropriation acts were passed by the general court and signed by the governor. Of these 21 were classified by the secretary of the com- monwealth as "Special Acts" and one as a "General Act."^ This difference in classification was due to the fact that one of the acts contained not only an appropria- tion but also some other provision of general law. The practice of confusing appropriations by mixing them with general provisions of law has been steadily combated by the ways and means committee during the past few years. In 1917, for example, there were eleven such acts. The total number of appropriation bills enacted also repre- sents a marked decrease.^ The number of appropriation acts passed during 1915, 1917, and 191 8 is as follows : 1916 1917 1918 Appropriation acts passed 136 116 22 The confusion of appropriations was lessened not only by a decrease in the number of bills, but also by the concentration of over 70 per cent of the total appropria- tions in a single act, based on the budget bill. The largest amount to appear in any single act during the previous decade was in the 191 7 act providing for the institutions administered by the commission on mental diseases. This bill carried some 12 per cent of the 191 7 appropriations.^ The concentration of appropriations in a single act brought ^ Appropriation Acts of igrS were : Special Acts, i, 17, 18, 27, 67, 95, 96, 97, 106 (Budget Act), no, rii, 140, 146, 148, 149, i6r, 170, 177, 182, 186, 189; General Acts, 37. 2 1917 House Document, 1185, p. 21. ' Special Acts 1917, Ch. 212. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 113 about in 1918 is the most complete since the heroic effort of 1858.1 A marked improvement in the form of appropriation acts is also evident in 1918. The chief appropriation bill made a great step forward by placing the appropria- tions in semi-tabular form with the amounts appropriated at the right of the page in arable numerals. The following is a typical excerpt from the budget appropriation bill : Service of the Auditob of the Commonwealth For personal services of the auditor, office and other assistants, a sum not exceeding forty-eight thousand seven himdred fifty dollars $48,750.00 For service other than personal, travelling expenses, office suppUes and equipment, a sum not exceeding five thousand dollars . . 5,000.00 Total $53,750.00 It will be observed that this is very far from being a "segregated budget." In the case of offices divided by law or by practice into distinct bureaus the appropriations are generally further subdivided. The appropriations for the maintenance of institutions are each in a single lump sum. In fact the average item of the bill as a whole amounts to $46,000.00. There are 57 individual items rimning from $100,000 up, and four above one million dollars.^ In 1 91 7, and previous years, appropriations for office supplies and equipment and for miscellaneous expenses were made under the greatest variety of phrases. In 191 7 for example there were no less than 34 distinct phrases used, each intended to cover the same authorization. ' See page 34, ante, '^ Special Acts of igi8, Ch. 106. I Digitized by Microsoft® 114 BUDGET IN MASSACHUSETTS The words "contingent," "necessary," "sundry," "inci- dental," "current," "office," "general," and "other" all appeared singly and in a variety of combinations to qualify the word "expenses."^ This confusion was remedied by the 1918 bill. Appropriations for the Metropolitan Districts. The 191 8 budget failed to include recommendations for the metropolitan districts. This material was delib- erately omitted because of the lack of time at the dis- posal of the joint special committee on finance and budget procedure. The appropriation for the metro- politan park commission and the metropolitan water and sewerage board, based upon the estimates of these two departments, amounted to $2,241,521.53. Of this sum 1176,019.97, being the share of the expense borne by the state, was included in the appropriations based on the budget, while the balance, $2,065,001.56, was granted by chapter 67 of the Special Acts of 1918 supple- mented by Special Act 182 and General Acts 157 and 177. Early Passage of Appropriation Acts. Massachusetts is distinguished from the great majority of states by the absence of the "last minute appropriation rush." This commendable distinction is not due entirely to the adoption of the budget system, though the experi- ence of 191 8 would lead to the conclusion that the budget system will help in securing early action on appropria- tion measures. 1 See especially Special Acts of 1917, Ch. 374, 98, 37, 6. Digitized by Microsoft® THE LEGISLATURE OF 1918 AND THE BUDGET 115 The percentage of the total appropriations of the session enacted by periods during the 191 7 and 191 8 sessions, and for comparison recent figures for New York and for Ohio, are given below. Percentage of Total Appropriations Enacted During Specified Period of Legislative Session ^ Massachusetts 1918 Massachusetts 1917 New York 1916 Ohio 1915 Pee cent Enacted During First Half OE Session 80 67 Pee cent Enacted Beeore Last Week OF Session 90.4 93-3 60 190 Per cent Enacted During Last Weee OF Session 9.6 6.7 94.0 81.0 While the figures presented in this table for New York and Ohio are not from the latest sessions, they represent substantially what happens from year to year in the average American state legislature. The increase of appropriations in Massachusetts dur- ing the last week of the 191 8 session over those of the 191 7 session is due to the increases which a rising price market made necessary in the institutional and departmental appropriations and to an appropriation for $1,000,000 for the pay of soldiers. In fact 1918 appears in a more favorable Hght than 191 7 when these items are deducted. In comparing the Massachusetts "last week" and "last day" appropriations with those of other states it is im- ' Massachusetts figures based on analysis of appropriation bills ; New York figures from Municipal Research Bulletin No. 72 ; Ohio from Mss. report by C, K. Matson. »$ 10,000. °$ 33,115- Digitized by Microsoft® Ii6 BUDGET lisr MASSACHUSETTS portant to note that practically every doUar of the Massa- chusetts items represents appropriations made in accord- ance with resolutions passed earlier in the session specify- ing the amounts to be appropriated. Thus the figures for Massachusetts would be still further improved if the date of the resolution were substituted for the date of the appropriation. General Satisfaction with New Budget System. The first experience of the legislature with the new bud- get was universally satisfactory. Representative Young's remarks early in the session that "the new system has more than justified itself already" seems to have expressed the majority opinion. The best evidence of this is seen in the permanent establishment of the budget system dur- ing the same session of the legislature, as described in the following chapter. Digitized by Microsoft® CHAPTER VII ESTABLISHING THE BUDGET SYSTEM I. The Btidget System Bill Committee Recommendations. The budget system bill recommended by the joint special committee on finance and budget procedure provided as follows : ^ I. Preparation of the Estimates. a. Estimates for the "ordinary maintenance" of departments, institutions, and undertakings receiving annual appro- priations from the treasury of the commonwealth shall be prepared by the officer or board in charge and sub- mitted to the supervisor of administration by October 15. A copy goes to the auditor. These estimates " shall not include any estimate for any new or special purposes or objects not authorized by statutes." ^ J. Estimates for financial needs of departments, etc., not in- cluded above, including those to be financed by assess- ments or by bond issues, shall also be submitted by the department heads to the supervisor by October 15. No copy is required for the auditor. c. Estimates for revenues and other available funds shall be prepared by the auditor and submitted to the supervisor and to the clerk of the house by December 26. d. Estimates of requirements for interest and debt service, for legally authorized claims against the state, and for ' House Document, 1918, 1185, p. 71. * The fiscal year in Massachusetts begins on December i. 117 Digitized by Microsoft® Ii8 BUDGET IN MASSACHUSETTS other such needs as are not covered by a and h above shall be submitted to the supervisor and to the clerk of the house by the auditor on or before December 26. e. A tabulated statement of the estimates submitted under a above, together with the comparative appropriations of the previous year and the expenditures for the three previous years shall be prepared by the auditor and sub- mitted to the supervisor and the clerk of the house by December 26. 2. Revision of Estimates and Preparation of the Budget. a. The supervisor of administration shall revise aU estimates and submit to the governor a budget " setting forth such recommendations as the governor shall determine." No date is fixed for the completion of the supervisor's work. The supervisor is required to "make such in- vestigations as may be necessary." b. The governor may call upon the auditor for information and for assistance in the preparation of the budget.^ 3. Submission of the Budget to the Legislature. "The budget shall be submitted by the governor to the general coxurt not later than the second Wednesday in January of each year." ^ 4. Content and Classification of the Budget. a. The budget shall contain "all estimates, requests and recommendations for appropriations or other authoriza- tions for expenditures from the treasury of the common- wealth." It shall also include "definite recommenda- tion of the governor as to the financing of the expendi- tures recommended and the relative amounts to be raised from ordinary revenue, direct taxes, or loans." With the budget the governor shall submit such mes- sages as he deems necessary. ' The bill provides for the appointment of a deputy to assist the auditor in this work. See page 119. ' The General Court assembles on the first Wednesday of January, Con- stitutional Amendments, Article X. Digitized by Microsoft® ESTABLISHING THE BUDGET SYSTEM 119 b. " The budget shall be classified and designated to show separately estimates and recommendations for : (a) expenses of administration, operation and maintenance, (b) deficiencies or overdrafts in appropriations of former years. (c) new construction, improvements, additions and other capital outlay. (d) interest on the public debt and sinking fund and serial bond requirements. (e) all new and other requests and proposals for expendi- tures." 5. Appropriations. a. "All appropriations based upon the budget to be paid from taxes or revenue shall be incorporated in a single bUl to be designated the general appropriation bill." b. "Except on recommendation of the governor the general court shall not enact any other bUl carrying an appropria- tion before final action on the general appropriation bUl." 6. Supplemental Budgets. The governor may submit, from time to time during the session of the general court, "supplemental messages or recommendations relative to appropriations, revenues and loans." Referred to Joint Ways and Means Committee. This bill was referred to the joint ways and means committee on February 28.^ No action was taken, however, until after the bulk of the appropriations had been disposed of. On May 10 the bill was reported to the house without a single alteration.^ Its passage through the house was uneventful, though on the third reading an amendment was adopted striking out three ^ Senate Journal, p. 308. * House Journal, p. 787 ; House Document 1528. Digitized by Microsoft® I20 BUDGET IN MASSACHUSETTS lines which authorized the auditor to "appoint a deputy in his department at an annual salary not to exceed thirty- five hundred dollars" whose duty was to furnish the governor any information necessary for his revision of the budget. It was asserted by Representative Martin Hays of Boston ^ that these three Hnes were intended to provide a "berth" for James W. Bean, chairman of the recess committee, who had failed of reelection to the senate. The amendment and the bill were adopted on voice votes, and the right of reconsideration cut off by the suspension of house rule 15 on motion of Representa- tive Hays.^ The bill with its amendment reached the senate May 17.^ On its second reading, the amendment made in the house was struck out on motion of Senator Nichols, a member of the recess committee ; and on motion of Senator McLane, also a member of the recess committee, the following lines were eliminated: "Except on recom- mendation of the governor the general court shall not enact any other bill carrying an appropriation before final action on the general appropriation biU." Both of these changes were made on voice votes.* With these amendments, the bill passed through its remaining stages without comment. The house, after a brief debate, solely on the new posi- tion in the auditor's department, accepted the amend- ments made by the senate, and the bill was sent to the 1 Mr. Hays was elected majority floor leader in 1919, ^ flouse Journal, p. 813. ' Senate Journal, p. 695. * Ibid., p. 720. Digitized by Microsoft® ESTABLISHING THE BUDGET SYSTEM 121 governor for signature on May 27.^ The following day the bill was signed as chapter 244 of the General Acts of 1918.^ Lack of Interest in Budget System. The consideration of the budget system bill by the leg- islature emphasizes above everything the surprising lack of interest on the part of the people's representatives in the budget system. There was almost no discussion in either house concerning the fundamental features. The chief argument over the bill had to do with a specific job incidentally created in the auditor's department. Why the Bill Passed. In view of the total absence of recorded votes and of discussion of budget problems in the legislature, it is diffi- cult to analyze the situation and to classify the forces which brought about the passage of the budget system biUby the Massachusetts legislature of 191 8. An exami- nation of the situation, however, shows that the most im- portant reason for the passage of the bill was the fact that it came before the legislature with the imanimous and favorable report of the joint ways and means com- mittee. It thus had the backing of the financial leaders of the legislature and the tacit approval, at any rate, of the majority and minority party leaders of both houses. Under these circumstances, it is not imcommon for meas- ures to "slide through" without so much as a rising vote. ' Senate Journal, p. 761 ; House Journal, p. 866. ' James W. Bean was appointed by the auditor to fill the position created by the bill. Digitized by Microsoft® 122 BUDGET IN MASSACHUSETTS This is what happened in the case of the budget bUl. The experience with the budget earher in the session had been satisfactory ; consequently no one opposed the budget system bill seriously. The changes that it contemplated stepped on nobody's toes, except the deputy auditor's, and a small and influential group thus found it possible to secure the acquiescence of the remaining leaders of the legislature, and the favorable action by the two houses. Those who believed in the budget system were aided powerfully by the budget propaganda of the previous few years, and by the high tax rate. The term "budget" had been made almost synonymous with efficiency, econ- omy and lower taxes. Then, too, the constitutional convention was ahnost sure to pass a budget amendment, and if the legislature could act first, it would deserve the credit for leading the way, and might even prevent the passage of a budget system by the convention which might vest in the governor powers now belonging to the legisla- ture. The influence of the office of the supervisor of administration was in favor of the adoption of the bill. This unquestionably served to allay the suspicions of many, as both Mr. White and Mr. Raymond had been at the state house for many years. II. Other Financial Reeorms in 191 8 In addition to the major reforms, the 1918 general court enacted a number of acts which deserve mention because of their part in laying the foimdation for an effec- tive state budget system. Digitized by Microsoft® ESTABLISHING THE BUDGET SYSTEM 123 Minor Recommendations of the Joint Special Committee on Finance and Budget Procedure. Excluding the tentative 191 8 budget and the budget system bill, the joint special committee on finance and budget procedure made 19 specific recommendations for the enactment of new laws or the revision of existing laws. In view of the customary failure of recess commit- tees to produce any tangible fruits as the results of their labors, it is interesting that this recess committee can point to a remarkable record of achievement. Of the 19 recommendations, 14 had been written into the laws of the commonwealth by the end of the 191 8 session, and two others were carried through in 1919.^ In the majority ' The following is the list of the Recommendations of the Joint Special Com- mittee on Finance and Budget Procedure, with their disposition. Recess Repoet House Doc. 17 House Doc. 1185 Legislai IVE Report DisposrriON House Doc 3 1918 General Ch. r 1 164 ti tt Ch.io 1 165 It It Ch. 8 1166 tt It Ch. 16 119s it It Ch. 151 1176 Special Acts Ch. 106 (Bud- get App.) 1413 General Acts Ch. 202 1434 n Ch. 189 1436 It Ch. 17s 1478 It Ch. 290 IS" Journal, p. 12. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 137 4. A single appropriation bill with precedence over all other appropriation bills. 5. The right of the legislature to increase or decrease items. 6. The limitation of appropriation bills not recom- mended by the governor by requiring for passage a ma- jority vote on roll call of all the rn^embers of each chamber and a provision of revenues in each bill to meet the ex- pense involved. 7. The veto or reduction of appropriation items by the governor. This report of the subcommittee was discussed at length on July 12, when a number of minor verbal changes and rearrangements were made. The participation of the governor in legislative debate on the budget was taken for granted. An attempt to exclude subordinate executive ofl&cers on the grounds of "lack of dignity in proceedings which might result " failed by a three to eleven vote.^ The only serious difference of opinion arose on the provision allowing the legislature to increase items in the budget. After a "long discussion participated in by every member" it was decided seven to five to adopt the provision as it stood. ^ Because of the relation between the budget and the reorganization of the executive departments, the com- mittee on finance decided to secure the informal opinion ^ Journal, p. 21. "Ibid. Dissenting: Ferry, Lowe, Bellinger, Theller and Finn. Absent: Hoit and Putnam. Presiding: Parkman. Hoit and Parkman agreed with the majority (Journal, p. 24). Putnam was absent throughout. Digitized by Microsoft® 138 BUDGET IN MASSACHUSETTS of the committees on state administration and on the executive on its tentative draft of the budget amendment. This action was taken in place of a suggested joint effort by these committees on executive and budget matters because of the "disadvantages to be expected from entan- gHng the work of this committee [committee on finance] with the more contentious subjects before the other committees [state administration and executive]." ^ The budget amendment "met the general hearty approval" of the other committees, however, and was finally and formally adopted on July 16 with five members dis- senting on the clause which ' left with the legislature the power to increase items, and one "reserving his rights" on the requirement of a special majority for the passage of private appropriation bills.^ 11. The Second Session or the Constitutional Convention 191 8 Coikmittee Report before the Convention. The committee on finance of the constitutional con- vention completed its amendment on July 17, 1917.^ It was not tiU July 10, 1918, however, that the amend- ment was given its second reading. At this stage five amendments were moved. Two of these were textual, a third extended the last date for the presentation of the budget from three weeks to two months after the conven- ing of the legislature, a fourth made provision for a 1 Journal, p. 21. 2 Ibid., p. 24. ' Convention Doc. No. 325, Conv. Journal, p. 99. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 139 " vote on account" pending the passage of budget appro- priations, and a fifth, by Mr. DelHnger, limited the power of the legislature solely to decreasing or omitting items in the governor's budget.^ The vote on these amendments came up on the following day after a protracted session on the compulsory voting amendment during which two rolls were called. As a result of efforts by the committee on finance, all amend- ments were withdrawn with the exception of that extend- ing the last date for the presentation of the budget, which was rejected 19 to 82 ; and one of the committee's textual changes, which was adopted.^ With this single inconse- quential change the amendment was passed, and ordered to a third reading. At this stage there was very little interest evinced. Half of the convention delegates pres- ent left their seats for the lobby as soon as the compulsory voting fight was over and the budget amendment taken up.^ Debate on the Executive. Between the second and the third readings of the bud- get amendment a protracted and bitter debate on the executive took place. This debate and the votes taken at the time have an important bearing on the subsequent consideration of the budget amendment and therefore deserve consideration as a part of the debate on the budget. ' Convention Journal, p. 752, 753. ^ Ibid., p. 760. ^Ibid., p. 759. 222 voted on the compulsory voting amendment, and but loi on the budget. Digitized by Microsoft® I40 BUDGET IN MASSACHUSETTS Recommendations of Committee on the Executive. In making its report, the committee of the constitu- tional convention on the executive stated that : "The primary purpose of the amendments now reported is to integrate our state government as an organic whole and to introduce effective responsibility into all its workings, — responsibility to the governor so far as honest and efficient administration is concerned, responsibility to the legislature in respect to observance of the laws which it passes and the proper expenditure of the public money which it appropriates."^ This required that the governor be the head of the administration and that his "advisory but potent influ- ence in shaping legislation" be recognized constitution- ally. For, in the words of the committee : "However faithfully and ably a legislative body may perform its duties, it cannot supply the element of political leadership, of responsible initiative; its very numbers, its very method of election by a large number of constituencies, prevent this. The executive alone represents the whole body of the people because he alone is elected by and is responsible to them; in state government it is therefore chiefly to the governor that the people look for improvements or reforms, whether these are to be secured by administrative or by legislative means. They expect him to put forward and to push to success legislative policies of his own, — not merely to content him- self with ceremonial and supervisory duties. "This tendency in our political development now calls for corresponding constitutional changes, particularly needed in this state, in order that through formal recognition this newer function of the executive may be made more effective for good and at the same time subject to greater publicity and ^ Convention Doc. 311, p. 10. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 141 responsibility. If the governor is to be in fact a leader of political thought, an initiator of progressive measures, or even an authoritative party leader, it is certainly desirable to recog- nize these conditions and to provide more fuUy for the powers and responsibilities which should accompany such a develop- ment of the executive function. "This can best be accomplished by giving formal recognition to the extra constitutional relations between the executive and legislative departments which now exist to so considerable an extent in fact." ^ The specific amendments recommended ^ by the com- mittee were : 1. All state ofl&cers and employees not in the judicial or legislative departments "shall be under the authority and control of the governor, and all such ofl&cers vnthout exception shall furnish him with any ofl&cial report, in- formation or opinion which he may require." 2. The governor may remove for cause after notice and hearing any officer subject to his appointment. 3. The term of office of the governor and lieutenant governor shall be two years. 4. The governor shall dehver a message to the legisla- ture at the beginning of each regular session and at any other time, and " so far as practicable he shall accompany any specific recoromendations with drafts of bills. ' ' These are to be known as " executive bills," and must be reported on by legislative committees within thirty days, and given precedence in the legislature, and can only be re- jected on a roll call. * Convention Doc. 311, p. 12, 13. ' Ibid., No. 311. Digitized by Microsoft® 142 BUDGET IN MASSACHUSETTS 5. In case the legislature refuses to pass or amends an "executive bill," the governor may submit it to the people at the next state election. Similarly, bUls passed over the governor's veto may be submitted to the people by the governor provided he takes the necessary action within thirty days to secure the submission. If vetoed bills fail of subsequent passage over the veto the measure may be submitted to the people by a majority vote in the legislature. 6. "The governor may at any time attend a session of either branch of the general court and speak upon any pending bill. Upon the written request of the governor any executive or administrative ofi&cer shall be admitted temporarily to a seat in either branch of the general court with the right to speak upon any matter coming within or under his official authority, but without a right to vote ; and upon the request of either branch made to the governor any such officer shall appear in person be- fore it." 7. The governor may return to the legislature any bill laid before him for signature with the recommendation that it be amended by the adoption of specific changes. Such an amendment can be rejected only on a roll call. The governor may also amend biUs by striking out por- tions, which can be replaced only by a two-thirds vote. 8. The succession of officers, in case of the death, ab- sence or incapacity of the governor and heutenant gov- ernor shall be: secretary, attorney-general, treasurer, and auditor. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 143 The committee took special care to point out in its statement in support of the amendments that these recom- mendations should be considered with the budget amend- ment, for "state finance in its broad aspects, and the establishment of a budget system, are certainly related very closely to the position of the chief executive in the government of the state and the authority which is to be vested in his ofl&ce." ^ Debate in the Convention. The convention took up these recommendations in logical rather than nvimerical order.^ As a result the second matter to be discussed, and the one which interests us most directly, was the amendment authorizing the governor and his subordinates to appear in the legislature and to take part in debate. The discussion was opened by Josiah Quincy, chairman of the committee on the executive. He summarized what he had to say in the sentence, "The whole object is to bring these two branches of government, which now operate very often too much at arm's length, with too little understanding on the part of each of the position of the other, into closer relations." ^ On the specific question of the appearance of the executive to discuss measures in the legislature he said : "The personal appearance of the man who backs up the proposal ■will, to my mind, tend, without bringing either au- thority under the domination of the other, to bring these two * Convention Doc. 311, p. 8, 9. ^ Convention Debates, Vol. 97, p. 92. ' Ibid., p. 106. Digitized by Microsoft® 144 BUDGET IN MASSACHUSETTS authorities, legislative and executive, into more efficient work- ing relations with each other." ^ Martin Lomasney, the well-known leader of a faction of the Boston Democrats, led the attack on the proposed amendments. He was ready at all times to interpose critical questions, and to call up concrete instances of friction between the governor and the legislature. The following excerpts indicate his position : "This scheme is one to put into the hands of one man, who may not belong to any party, the power to interfere in this powerful and dangerous way with the workings of the legislative department. It is a scheme, it seems to me, to put a premium upon demagogues in the governor's chair. ..." * "I suggest that this proposal wUl create in this state for the first time under our constitution party government inside these legislative walls after the members have left party government behind on inauguration day when they took their oath of office. And that is one of the worst features of the bUl. ... "A governor reaches members of the legislature who are of his own party and he often appeals to them to assist him because it might affect his political fortunes in the fall. And you are now starting to put that partisanship into the constitution. "I do not believe in having our governor the recognized party leader in the legislature, so that everything that is done there shall be done with the idea in mind of what effect it will have on his political fortunes." ' In view of Mr. Lomasney's position that the right of the executive to debate measures in the legislature "wiU create in this state, for the first time since the constitu- tion, party government," the remarks of Mr. Kinney 1 Convention Debates, Vol. 97, p. no. * Ibid., p. 174. ' Ibid., p. 120, 122. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 145 deserve attention. Mr. Kinney opposed the amendment because "policies shoxild not emanate from the governor, but from the people." ^ He said further: "I believe in party government . . . and it is this tendency to get away from party government, the tendency in this bill to permit the executive, after he has once been elected, to force his own individual policies on to the commonwealth, if possible, which I believe would ultimately destroy de- mocracy." ^ "This bin wiU be destructive of party government. In case this bin becomes operative you will encourage executives to leave their party principles and to formulate individual poli- cies." ' " If you are going to put into effect the system of government this bill is permeated with in every line, you are going to destroy legislative government, representative government, and substitute for it an elective autocracy, which to my mind is absolutely destructive of the fundamental principles of democracy." * The voices raised in favor of the amendment were few and xmimpassioned. Mr. James A. Lowell alone openly attacked the sacred "separation of powers." He not only criticised it as unworkable, but maintained that it was practically non-existent. He regarded the amendment as necessary to make the governor a real political figure. He added, "If we give to the governor this authority, and more I hope, we shall make the office open and attractive to the leading spirits of the state anxious for a political career." ' ' Convention Debates, Vol. 97, p. 140. ^ Ibid., p. 144. ' IbU., p. 155. * Ibid., p. 148. 5 iijig^ p_ jjy^ ., L Digitized by Microsoft® 146 BUDGET IN MASSACHUSETTS Amendments Voted Down. The vote on the amendment authorizing the executive to appear in the legislature showed but a handful in its favor. On a standing vote 37 voted in its favor and 124 against.^ The convention was clearly opposed to giving up the time-honored mask of "separation of powers." The general attitude of the delegates toward the governor is also indicated in their defeat of every other amendment reported by the committee on the executive, except the two providing for the succession of ofl&ce and the return of bills by the governor with recommendations, from which the clause requiring a roll call in case of the rejection of the governor's amendment was eliminated.^ The program of the committee on the executive was completely rejected in spite of the fact that it was the unanimous report of a group of men who had to their credit not only service in the executive department, but also nineteen years in the legislature.^ Committee on Finance Changes Its Mind. As a result of the discussion of the budget amendment on its second reading and as a result of further reflection, the committee on finance presented two important amend- ments when the budget amendment came up for a third reading on August i, 1918. These made the following changes : ' Convention Debates, Vol. 97, p. 187. * Amendments passed by Constitutional Convention, p. 11, 13. ' Convention Debates Vol. 97, p. 97. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 147 1. The requirement that all funds "received on account of the commonwealth from any source whatsoever shall be paid into the treasury of the commonwealth and no money shall be paid out imless specifically authorized by the general court" was dropped because there were found to be so many advisable exceptions such as the pay- ment of judicial salaries, interest and debt obligations, and many other debatable special revenues and payments.^ 2. The right of the governor to designate a representa- tive to appear before the legislature in support of the budget was eUminated. This was done, as Mr. Theller said on the floor of the convention: "Because, to put it in plain words, we were afraid the governor, who should be responsible for the budget, would make some minor officer the 'goat' of something the governor had put in the budget. For that reason there was included in the proposed scheme only this : that the governor may come before the legislature." ^ Debate on the Btidget. The fight on the powers of the governor was still fresh in the memory of the convention when the budget amend- ment was given its third reading. It stirred the embers again and rekindled the smoldering fires. Martin Lomasney again sprang to the attack. He was opposed to any increase of the governor's power, to his participation in legislative debate, to any restriction of the legislature in the initiation or passage of appropriation ' Report of Parkman, Convention Debates, Vol. 107, p. 130. ' Convention Journal, Vol. 108, p. 26. Digitized by Microsoft® 148 BUDGET IN MASSACHUSETTS measures, and above all to the removal of the section of the committee's original report requiring all moneys received to be paid into the treasury and to be disbursed only on specific authorization by the legislature. "Is it not of more consequence," he asked, "to have that restriction inserted in the biU than it is to have the gov- ernor come in and talk to the legislature, breaking down the separation of our legislative, executive and judicial system?" ^ Mr. Charles L. Underhill opposed the section allowing the governor to discuss appropriations in the legislature, illustrating his points with incidents from the administra- tion of Governor Walsh. Mr. Samuel W. George took the same tack, illustrating his arguments with incidents from the administration of Governor Foss. The follow- ing from the convention debates^ is of interest, especially in connection with chapter IV above : Mr. George : . . . We had at that time elected a business man for governor. He had inherited a big plant over in Jamaica Plain, and he regarded himself a big business man; that is, he admitted it. He was a learned man. I know he was a learned man, because he was in Congress at the time, and after he was elected governor he thought he could hold both jobs, he found that he could not do that ; then he thought when he became governor he could appoint his successor in Congress. That is additional evidence of intelligence. He could not do that. Then he thought he could elect a United States Senator. Well, he did not do that. Finally, he thought he ought to have a budget system and a board of economy and efficiency to assist him. The Legislature passed a law to au- ' Convention Debates, Vol. 107, p. 135. '^ Ibid, Vol. 108, p. 8, 9, 10. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 149 thorize the auditor to use this very system that we are about to adoptj by sending the annual estimates to the governor and council the latter part of December. I think it was in the year 191 1 that this weU-equipped business governor was to supervise the financial operations of our state appropria- tions. Mr. Brown: Mr. President. Presiding Officer : Does the gentleman yield ? Mr. George : Certainly. Mr. Brown : Merely to ask the gentleman if he was speaking strictly by the card when he said the governor wanted that budget system, or was it put over on him ? Did the governor ask for it, or did the legislature think they had him and put it over on him? My best memory is that the legislature put it over that governor and thought they had the best of him. Mr. George: Mr. President, I don't know whether the governor "had" the legislature, or the legislature "had" the governor. If the legislature "had" the governor they didn't have much. But I say this : that the governor advocated a board of economy and efficiency to consider what? To con- sider the budget. He made it an issue, and he took it before the people, and he said it would be a great thing if he only had a board of economy and efficiency, or efficiency and economy, I don't know which one it was. Now let me tell you they had it. We finally created the board of economy and efficiency and the expenses of our state government increased from $14,269,000 in 1911 to $20,312,000 in 1915. I don't know what the increase would have been if we hadn't had the board of economy and efficiency, but that was a fairly good increase under the new system. The upshot of it was that the legisla- ture said : "We will give the governor, being a business man, an opportunity to advise the legislature," so this great docu- ment, which is sent in as Document No. i, was referred to the governor. He employed several certffied accountants, and they drew several thousand dollars from the treasury. He Digitized by Microsoft® ISO BUDGET IN MASSACHUSETTS kept appropriation bills back, as he did not know what to do with them. He never had any experience. A man might be a very successful man in managing a blower factory, or running a cotton factory, but he did not know anything about the state departments, so he employed other men who did not know any more than he did, except that they were certified accountants, and after spending $30,000 or $40,000, I think the last recommendation came into the legislature on April 23, and they kept the legislature hanging here back and forth, delaying public business. Finally after two or three years trial, the law was repealed. Now we are asked to make this same system a part of our Constitution. Certainly you don't intend to say that the governor of Massachusetts is going to run into the legislature every day or two and discuss with the legislature an appropriation bill. Why that is an absurdity. He ought not to do it. He ought not to be allowed to do it. If he was allowed to do it he would only do it for political purposes, that is all. Some- body would want him to go in and advocate a certain appro- priation, and if he thought there were any votes in it, he would go in and advocate it, if he thought there were any votes to go in and oppose it, he would go in and oppose it. Arguments in Support of the Budget. The action of the legislature in 191 8 in approving the budget bill of the joint special committee on finance and budget procedure made any discussion of the advisability of the adoption of the budget system beside the point. This was specifically stated by Mr. Parkman at the open- ing of the discussion,^ and was tacitly admitted by all of the speakers. ' Convention Debates, Vol. 107, p. 130. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 151 In spite of the fierce opposition to "administration bills" in the debate on the executive, no voice was raised against the preparation and submission of the budget by the governor except that of Mr. George. When issues had become badly confused Joseph Walker went so far as to say : "I imagine that this convention really wants, if possible, to provide a proper budget system for the commonwealth of Massachusetts. I imagine an overwhelming majority of this convention want to do it. This matter has been agitated more or less, and I yet have failed to find a citizen of the commonwealth who does not say that he is in favor of the budget system — the executive budget — ■ and does not hope that the convention will work out some system." '■ At another point in the debate, Mr. Walker wrtmg from Mr. Lomasney this characteristic but significant statement : "I deny that statement. I rise to a question of privilege. I deny that statement absolutely. I am in favor of a budget system." * Mr. George B. Churchill also supported the budget amendment. He opened his remarks by saying : "We have before us one of the most important problems that has been presented to this convention. In my opinion a satisfactory solution of this problem is one of the most de- sirable things in our convention." ' These excerpts indicate the position of the vast majority of the members of the convention. The only obstacles 1 Convention Debates, Vol. 108, p. 36. ^ Ibid., Vol. 108, p. 39. 'Ibid., Vol 108, p. 62. Digitized by Microsoft® 152 BUDGET IN MASSACHUSETTS in the way of the adoption of a budget amendment lay in the difference of opinion as to the details which should be placed in the constitution. Once Mr. Lomasney's main point had been disposed of by reinserting the phrase that "All money received on account of the commonwealth from any source whatsoever shall be paid into the treasury thereof," ^ there were two well-defined groups in the convention. The first believed in placing the responsi- bility for the budget squarely on the governor, which made necessary the limitation of legislative activity in financial matters ; the second opposed any increase of the influence of the governor, especially at the expense of the legislature, and consequently believed in a budget system which divided the responsibility between the legislature and the governor. As no roll was called on this issue it is impos- sible to make an accurate analysis of the two groups. It is in general true, however, that the Boston Democrats and delegates of legislative experience formed the second group, while progressive Republicans and non-Boston Democrats composed the first. These divisions were far from hard and fast, however. Those in favor of an executive budget were led on by the dissenting members of the committee on finance.^ Mr. Theller said in the course of his remarks : "You are introducing an executive budget; you are trying to fix responsibility ; and every time you put your finger on the man that makes the proposals and make him justify them, you are simply putting another safeguard around them, and ' Amend. XVI, Sec. i, Convention Journal, p. 830. 2 ggg page 137. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 153 you are also doing a thing which sometime we are eventually going to do — -remove part of the separation of powers, and make it a cooperation of powers and departments."' Mr. Dellinger made two attempts to secure amend- ments to prevent the legislature from increasing the gov- ernor's budget. The first was an absolute restriction, while the second provided merely that the legislature " shall not increase or add items . . . except by a vote by the yeas and nays." ^ Without such a provision, Mr. DeUinger said : "The governor can well say, 'I wUl only submit a plan, I wiU not submit a real budget, but I will submit a plan,' and divide the responsibility with the legislature, while if the legislature is allowed to increase or add items only by a call of the yeas and nays, then the responsibility will be much more on the governor to prepare a correct budget, and also the responsibility will be placed on certain members of the legislature. We wiU know just who is to blame for increas- ing or adding items to the budget. The best budget system in this country, and the one mentioned before, the one in England, probably the best budget system in the world, does not allow Parliament or the lawmaking bodies in this country, to increase or add items. I believe that we should have such a budget system in this state, but a goodly number of the mem- bers of this convention seemed to be opposed to going that far. Therefore my amendment, which is about haK as strong as my original amendment, the one that I offered at the other stage, is probably as far as they would go." ' Even the innocuous amendment proposed by Mr. Dellinger was rejected. The vote stood 50 for and 73 ' Convention Debates, Vol. 108, p. 27. ^ Ibid., Vol. 107, p. 147. ^Jhid., pp. 149, ISO. Digitized by Microsoft® 154 BUDGET IN MASSACHUSETTS against.^ This ended the attempt of those in favor of an executive budget to secure a strengthening of the proposed amendment. An attempt in the opposite direction also failed. Mr. Avery proposed to substitute for the amendment recom- mended by the committee on finance the following : "The general court shall establish a budget system. The governor shall have authority to veto items or parts of items in loan or appropriation bills." ^ Mr. Avery was so confident that his amendment could command a majority vote that he forced the matter to a roll call at the close of a protracted afternoon session. The vote however stood 72 for and 89 against.^ The issue raised in this vote was far from clear. It did not involve the issue between the executive and the legislative budget. Most of the friends of the budget system voted against the motion, however, and most of the enemies of executive power voted for it. An analysis of the vote shows : Republicans Democrats . Independents Progressives Socialists . Laborites . Total . Foe Against 39 62 31 24 2 I I I 72 89 ' Convention Debates, Vol. io8, p. 77. ' Ibid., p. 89. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 155 There were 159 members absent. Of the 39 Republicans favoring the amendment, 2 were from Boston, of the 31 Democrats, 18 were from Boston. Mr. Underhill's amendment, depriving the governor of the right to defend the budget, was adopted on a voice vote, the issue having been settled in the earlier debate on the executive. Even the friends of the executive budget conceded that a fight on this issue was hopeless and might jeopardize the entire amendment. An amend- ment by Mr. Hobbs, making it easier to pass private appropriation bills by striking out the requirement of a roll call and a majority vote of aU members, also carried 78 to 42 on a standing vote.^ With these changes and two textual improvements, the budget amendment was referred to the committee on form and phraseology.^ The suggestions of this committee on phraseology were adopted without opposition,^ and the convention voted on August 20, 1918, to submit the budget amendment to the people for ratification or rejection.* The Convention's Address to the People. On the closing day of the second session of the consti- tutional convention, Ex-Governor John L. Bates, the president of the convention, summarized in an unimpas- sioned and non-partisan style the work of the convention. This statement was issued to all registered voters as "an explanatory statement of the amendments to be submitted ' Convention Journal, p. 830. ^ Ibid., p. 832. ' Ibid., p. 8yo. ' Ibid., p. 8gi. For text of amendment see Appendix. Digitized by Microsoft® IS6 BUDGET IN MASSACHUSETTS to the people." ^ In this statement each amendment is briefly described together with the reasons for its adoption by the convention — where this could be done without partisanship. The following is the section deal- ing with the budget amendment : "At the last session of the General Court an excellent stat- ute was enacted providing for a State budget system. The Convention, however, has deemed it wise to recommend a con- stitutional provision on the subject because certain essential features of a satisfactory budget system are not at present within the power of the General Court to provide. Such a system should require that the Executive, who is responsible for carrying on the business of the State, should ascertain the needs of the State departments, should learn what revenues are available and should recommend to the General Court a systematic plan covering both the revenue and the expendi- tures of the ensuing year. The budget bUl enacted by the Legislature last April makes adequate provision for these features, but since the General Court after considering the recommendations of the Governor may enact a general appro- priation bill widely different from that recommended by the Governor, he should be empowered to act iadependently upon each item of the biU, and not be compelled to accept or reject the measure as a whole. The veto power of the Governor, as now limited in the Constitution, does not permit this and hence the Convention recommends the adoption of this amendment setting forth the outlines of a budget system and authorizing the Governor to act on each item in an appropriation bUl as if it were a separate measure. This plan will commend itself to the sound business sense of the people." ^ It is interesting to note that Mr. Bates gives the budget amendment twice as much space as any other amend- ' Amendments passed by the Constitutional Convention, p. 15. Ubid.,p. 18. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 157 ment, with the exception of that providing for biennial elections, and that he goes so far as to endorse the budget act of 1918, to outline the principles of a budget system and to advocate writing it into the constitution. Ratification by the People. The vote on the amendment was very light indeed. There were eighteen other amendments submitted at the same time, and, in addition, it was a state election and an election for United States Senator. The total number of votes cast for governor was 422,370 ; the total for senator, 417,842; and the total number of persons voting was 429,447.^ As was expected, the heaviest vote cast on any amendment was brought out by the initiative and referendum amendment, on which 96,698 blanks were nevertheless cast. Though the budget amendment was sixteenth in the list of nineteen amendments, and adjacent to that providing for biennial instead of annual elections, it received the lightest vote at the election without exception. A total of 192,407 blanks were cast, distributed among the counties in varying proportions. The vote on the 19 amendments submitted to the people by the constitutional convention in November, 19 18, is shown in the table on the following page. It will be seen that every amendment was carried by a substantial majority, and that the budget amendment ranks among the four receiving the fewest opposing votes. ^Calvin Coolidge, Governor; David I. Walsh, Senator. From record of votes issued December 11, 1918, by the council; Public Document 43, 1918. Digitized by Microsoft® 158 BUDGET IN MASSACHUSETTS PopTTLAR Vote on Constitutional Amendments, 1918* Amendment Yes No Blank Initiative and Referendum . . . Public Interest in Natural Resources Regulation of Advertising . . . Preservation of Landmarks . . . Adjournments of General Court . Militia Officers Governor as Commander-in-Chief . Order of Succession Governor's Recommended Amend- ments 170,646 172,111 193,92s 183,265 147,104 155,649 155,114 172,125 164,499 153,315 156,796 161,833 161,214 134,138 153,972 155,738 142,868 152,800 158,394 162,103 102,768 84,127 81,933 100,552 91,686 84,822 78,245 76,972 105,591 86,023 79,787 83,095 128,403 90,233 81,302 108,588 87,009 81,586 96,698 154,568 151,395 164,249 181,791 182,112 189,511 179,077 187,976 Women Notaries Public .... Retirement of Judicial Oificers . . Revocation of Franchises .... BuUfling Zones Compulsory Voting Lending State Credit BUDGET SYSTEM Biennial Elections Recess Committees Executive Reorganization . . . 170,541 186,628 187,827 185,138 166,906 185,242 192,407 177,991 189,628 189,467 Analysis of Vote. The following tabulation shows the comparative extent of interest shown in the counties as evidenced by the per- centage of those voting who voted on the budget amend- ment. The counties fall into the following three groups : Group I. Most interested counties, in which the blank votes were 45 per cent and below : Bristol, Essex, Hamp- den, Middlesex, Norfolk, and SufiEolk. Group II. Less interested counties, in which the blank votes were 46 per cent and 47 per cent: Barnstable, Berkshire, Hampshire, and Worcester. ' The amendments are presented in the order in which they appeared on the baOot. From the official return of votes as issued by the council, December 11, 1918. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET 159 Group III. Least interested counties, in which the blank votes were 48 per cent and above: Dukes, Franklin, Nantucket, and Pl3Tnouth. The lowest percentage of blank votes was 42 per cent for Middlesex, and the highest, 58 per cent for Nan- tucket. The six most interested counties represent the predomi- nantly urban sections of the state. They contain all but one of the ten largest cities,^ and over 76 per cent of the total population. The density of population in each of the six most interested coimties is greater than that in any of the remaining counties. The density of population and the assessed wealth in the three groups is : pofdt-ation per Squak:e Mile Assessed^ Wealth Group I (most interested) . Group II (less interested) . Group in (least interested) , 961 188 141 $ 4,474,685,415 716,605,209 244,914,060 There were three counties, Dukes, Franklin and Nan- tucket, which returned a majority against the adoption of the budget amendment. These three counties are the three ranking at the bottom of the list in density of population. Their combined population per square mile is but 66. They also represent three of the four least ' Worcester. Blank votes in the city of Worcester itself were but 40 per cent. Public Document 43, 1919. * N. B. this is the "assessed wealth," and fails to include a large part of the intangible wealth, most of which is concentrated in the group one counties. Digitized by Microsoft® i6o BUDGET IN MASSACHUSETTS interested counties in the vote on the budget amend- ment.^ An analysis of the vote on the budget amendment by cities and towns shows a similar situation. The following table shows the number of towns, by population groups, voting for and against the budget amendment : Vote by Cities and Towns on Budget Amendment Population Class Majority Foe Budget Majority Against Budget Total Number or Cities & Towns sooo and below .... sooo to 10,000 .... 10,000 to 30,000 30,000 to 100,000 . . . Above 100,000 . . . . , 106 47 34 18 6 133 6 I I I 239 S3 3S 19 7 Total " 211 142 3S3 The population of the 211 cities and towns in which a majority vote for the budget amendment was cast was 3,308,580, or 90 per cent of the total population of the state. The chief opposition to the budget came from the small towns and the support from the cities.^ In spite of the extraordinarily light vote on the budget amendment in comparison with the other eighteen amend- ments submitted at the same election, such a comparison also shows that there were but eight amendments that carried with a larger percentage majority. It is also of interest that the budget amendment was defeated only in the three counties which defeated every other amend- ' Population and density figures are from the 1915 Massachusetts Census, Table 11 ; Wealth figures from 1916 apportionment. " 1919 Public Document 43 ; State Census of 1913. Digitized by Microsoft® CONSTITUTIONAL CONVENTION AND THE BUDGET i6i ment. There were but six other amendments which re- ceived a majority vote in all but these three conservative ultra-rural counties ; the initiative and referendum amend- ment was carried in but two coimties, Suffolk and Plym- outh; and the compulsory voting amendment, which preceded the budget on the ballot, was carried in but four.^ From these facts it is clear that the people as a whole had very little interest in the budget amendment ; they had less interest in it than in any other amendment sub- mitted at the fall election. In spite of this marked apathy, there was considerably more interest in the budget in the populous urban sections than in the rural counties, and the only coimties to return a majority against the budget amendment were the three most rural counties of the state, counties which voted against every other amendment submitted. Few cared about the budget and those few hved in the cities. It was their votes that placed the budget amendment in the constitution of Massachusetts. ' Record of Votes issued December ii, 1918, by the Council. Public Docu- ment 43, 1919. Digitized by Microsoft® CHAPTER IX EXPERIENCE WITH THE BUDGET IN 1919 The experience of Massachusetts with the budget in 1 91 9 is significant, as it represents the first year under the budget law enacted by the 191 8 general court as well as the first year under the 191 8 budget amendment to the constitution.^ These two budget provisions, one of law and one of the constitution, were prepared and carried to enactment and ratification by two overlapping groups of men who acted at all times in thorough harmony. As a result the two provisions dovetail into one another with- out a seam. The budget amendment of the constitution adds materially to the budget law in the sections dealing with appropriations and the veto of items ; while the bud- get law supplements the constitutional provision in the sections dealing with the form and content of the budget and its preparation by the supervisor of administration. Form of Estimate Blanks for State Departments. The estimate blanks issued to the departments and in- stitutions in 1918 for the 1919 budget were prepared by the supervisor of administration. They follow in the main the blanks as previously issued by the auditor, though considerably more classification and detail is • Constitutional Amendments 1918, No. 16 ; General Acts 1918, Ch. 244. Digitized by Mierosoft® EXPERIENCE WITH THE BUDGET IN 1919 163 required in the estimates for personal service, and a more systematic grouping of estimates for foods, except in the normal schools, is furnished. In conformity with sections i and 2 of the budget act, one set of estimate sheets is prepared for maintenance and other ordinary expenses akeady authorized by law and another set for extraordinary expenses, for capital out- lays, and objects not as yet authorized by law. Because of the essential difference between the information required concerning the maintenance of departments and of state institutions a separate set of blanks is used for the two. In the case of normal schools still another set of blanks is provided. Briefly these blanks are as follows : I. Estimate Blanks for Maintenance. a. Departments, Boards, Commissions and other non-insti- tutional agencies of the Conunonwealth. Estimates on six forms, showing, Form I. Name of department, total estimate, signatm-e. Form 2. Classified estimate for personal services, show- ing total salary roll at beginning of previous year, with total changes due to salary increases or to new positions or to elimination of old positions or to vacancies ; and showing proposed changes for the coming fiscal year for salary increases, filling positions now vacant, new positions, and temporary service. Form 3. Supporting details for Form 2, giving each salaried ofEcer or employee separately with official classification, present rate of salary, proposed increase, and the amounts required for new employees. Form 4. Detailed estimates for office and incidental expenses, showing separately, books, maps, express- age, postage, printing, etc., including typewriters and Digitized by Microsoft® l64 BUDGET IN MASSACHUSETTS other machines. The amounts expended the previous year are required in a parallel column.^ Form 5. Detailed estimates for traveling and other expenses classified to show purposes of travel, means of travel, etc., together with the expense of the pre- vious year. Estimates for other expenses are itemized by the department to fit its individual needs. Form 6 (which is attached to and forms the second sheet of form i). Summarizes the estimates presented on forms 2 to 5, cites the statutory authority for each group, and presents for comparison the last appropria- tion similarly classified. b. Hospitals, Insane Asylums, Prisons, and all other institu- tions except Normal Schools. Estimates on 36 forms : Form I. Name of institution, total estimate, signature. "■ Forms 2 to 24. Classified estimates for personal services with supporting details, same general form as form 2 for departments. Each of the following groups are segregated, with two blanks apiece: medical stafE, administration, kitchen and dining room service; domestic service, ward service male, ward service fe- male, industrial and educational, engineering, repairs, farm ; stable, garage and grounds ; and rehgious in- struction. This last has but one blank. Form 25. One page summary of forms 2 to 24 with comparative appropriation allotments for each ser- vice. Forms 26 to 35. Detailed estimates each on a separate form for : travel, transportation and ofiice expenses ; food ; clothing and clothing materials ; furnishings and household supplies; medical and general care; heat, light and power; farm and stable; grounds; 1 As the year previous to the year for which estimates are offered does not close till a month and a half after the estimates are due, the expenses of the previous year are made up from 9 months' actual and 3 months' estimated expenses. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 165 repairs, ordinary; and repairs and renewals, not re- curring annually. Expenses for freight, contract services, and other distributable expenses, including extra service, are apportioned under each head. New boilers, new engines, etc., are included under repairs, not recurring annually. Form 36. (Attached to form i.) Summary of forms 25 to 35, with statutory authorizations and previous appropriation. c. Normal Schools. Estimates on 1 7 forms, as follows : Form I. Name of Normal School, total estimate, signa- ture. Forms 2 and 3. Personal services, classified and in de- tail as on forms 2 and 3 of departmental estimates. Forms 4 to 11 : Detailed estimates, each on a separate form for : travel, oflftce and other expenses ; normal school supplies ; training school supplies ; furnishings ; heat, light and power; grounds; repairs, ordinary; and repairs and renewals, not recurring annually. Form 12. Summary for normal school boarding haU, showing: receipts past year; average number of boarders ; and expenditures for personal services, food materials, supplies and other expenses. Forms 13 and 14. Normal school boarding hall, personal services, classified and in detaU as on forms 2 and 3. Form 15. Detail estimate for boarding hall food, with expenditures for last year. Form 16. Detail estimate for boarding hall supplies and other expenses, with expenditures for last year. Form 17 (attached to form i). Summary of forms 2 to 16, with statutory authorization and previous ap- propriations. Estimate Blanks for Special Purposes. Form I. Name of department or institution; object; summary of estimates ; signature. Digitized by Microsoft® 1 66 BUDGET IN MASSACHUSETTS Form 2 (attached to form i). Explanation and de- tails of each project listed on form i. In case of estimates for building construction or alter- ations, including heating, plumbing, lighting, and ventilation, preliminary studies, general specifications and one reliable estimate shall accompany forms i and 2 if the estimate for any one purpose exceeds $5000.' Preparation of the BiMgef by the Supervisor of Administra- tion. The departmental and institutional estimates for the 1919 budget were due in the hands of the supervisor by October 15, 1918. As a matter of fact, many estimates were not received until after this date. This is especially true of estimates for special purposes. While this was due in a measure to negligence on the part of state ofl&cials, it was also due to the war situation. The signing of the armistice on November 11, 1918, made it possible for the institutions to lay plans for new construction in 1 919 which would not have been requested under war conditions. In fact, 84 per cent of the total estimates for special pur- poses submitted to the supervisor were filed after the time fixed by law. The estimate of the conmiission on waterways and public lands, amounting to $2,547,000, was not filed till December 30. Mr. Carl A. Raymond, deputy supervisor of adminis- tration, took personal charge of the revision of estimates and the preparation of the 1919 budget. Though he was assisted by other members of the office, the major part ' The form numbers here assigned are those of the author. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 167 of the work fell entirely on him, even to the extent of the preparation of comparative tables. Mr. Raymond fol- lowed in the main the procedure he had worked out in 1 91 8, and called the department heads in to go over with him the estimates they had submitted. While most of these conferences were with not more than a single individual, a few of them assumed the aspect of large hearings. Of some of these conferences a stenographic record was kept, while of others Mr. Raymond was satis- fied with a memorandum which he himself dictated cov- ering the main questions involved. In each case, he dictated a brief statement of his tentative decisions with regard to the estimates involved. All of the memoranda, with such other material as was pertinent, were boimd in with the related departmental or institutional estimates in a large looseleaf binder. All of the estimates together filled three large volumes. These are Mr. Raymond's private estimate files and contain many pencilled nota- tions and references on the estimate sheets in addition to the various memoranda and other papers. The requests submitted to the supervisor of adminis- tration, and his recommendations, are indicated in the table on the following page. It win be observed by comparison with the figures on page 80 that the reductions made in departmental esti- mates in preparing the 1919 Budget were greater than those made in 191 8 for maintenance appropriations, but that the 1919 reductions in capital outlays were con- siderably smaller. Digitized by Microsoft® i68 BUDGET IN MASSACHUSETTS Departmental Estimates for 1919 and the Supervisor's Budget Recommendations ^ Departmental Supervisor's REDCCnOK %of esti- Estimates Recommendation Amount mates Maintenance State departments and institutions . . . $29,975,709.34 $27,892,794.05 $2,082,915.29 6.9 Metropolitan districts 2,260,861.36 2,116,493.41 144,367.95 6.4 Total maintenance 32,236,570.70 30,009,287.46 2,227,283.24 6.9 Capital Outlays and Specials State departments and institutions submitted too late . 3,359,011.50 1,200,000.00 ^ 2,227,283.24^ 64.2 = submitted in time . 937,545-63 511,293.55 426,252.08 45-4 Metropolitan districts 306,000.00 281,000.00 25,000.00 8.1 Total capital outlays . 4,602,557.13 1,992,293.5s 2,610,263.58 S6.7 Interest and Debt , . . 3,738,353-44 3,738,353-44 Grand Total .... $40,577,481-27 $35,739,934-45 $4,837,546.82 11.9 The Governor's Submission of the Budget. The tentative budget for 191 9 was delivered to the newly elected governor on January 3, 1919.^ On January 8, Governor Coolidge transmitted the dociunent, with- out change, to the general court.* While the intervening period was unquestionably too brief to allow any con- sideration of the details of the budget, it must be remem- bered that Governor Coolidge, as lieutenant governor, was remarkably familiar with the affairs of the common- wealth. It is also reported that he was consulted during the preparation of the budget on doubtful questions as they arose. The budget was prefaced by a four-and-a- ' Based on 1919 House Document 185, pp. 7, 14, 31, 76, 79, 81, 103, 113, 117- 123 ^ Tentative recommendation, /Jji., p. 14. ^/Wrf., p. 13. * Ibid., ■p. 5, Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 169 half page letter of transmittal signed by the governor. The key sentences from this letter were : " In compliance with the provisions of the Constitution . . . and the laws of the Commonwealth, ... I am submitting herewithbudget recommendations for the fiscal year 1 91 9. . . . The Auditor of the Commonwealth's estimates of receipts from the ordinary and other revenue for 191 9 . . . is as foUows, — . . . The proposed expenditures [i.e. unrevised departmental estimates] amount to . . . The estimates for expenditures have been studied by the Supervisor of Administration, and his recommendations are embodied in the summary of financial statements submitted with this budget. . . . This is surely not the time for indiscriminate increases in salaries and wages. There are however, some deserving cases in some branches oi the service where fxurther increase would be justified. . . . The unprecedented high prices of commodities is also reflected in the request for appropriations. This is a subject which should be given very careful attention. . . . The requests of the Metropolitan Park Commission and Metropolitan Water and Sewerage Board are included in the summary of financial statements, together with the recommendations by the Super- visor of Administration. . . . No deficiencies in appropriations of 1 918 requiring appropriations this year have been reported. . . . The proposals for capital outlay amount to . . . A large part of this sum is made up of requests filed long after October 15, the statutory date for filing estimates. The Supervisor of Administration is unable at this time to recom- mend a number of projects, and others are receiving further study. Should it appear desirable, these will be included in a supplemental budget. . . . Interest requirements of . . . and sinking fund and serial bond requirements of ... is the tribute we must pay to former administrations in their having put off the date of settlement with the tax collector. . . . The net direct debt of December i, 1918, shows a decrease for the past year of ... . Nothing is better than the 'pay as you Digitized by Microsoft® I70 BUDGET IN MASSACHUSETTS go' policy, and it is hoped the Legislature of 1919 wUI find it expedient to finance their obligations for all normal require- ments without recourse to loans. . . . Estimates have been filed for new projects and undertakings of . . ., to which must be added all sums due to the reconstruction or transition period, which you may after mature deliberation consider worthy of enactment. In this field I may later find it desirable to make specific recommendations. . . . The estimates for revenue submitted by the Auditor of the Commonwealth appear to be very conservative. . . . The summary tables are made up with a tentative figure of $11,000,000 for the state tax. This sum should be a maximum, and I urge you to practice economy to such an extent that after all proper and reasonable provi- sions have been made for works of reconstruction and assimi- lation of the soldier into civil life, the tentative amount for the state tax may be reduced." ^ The italics and brackets are here inserted to call at- tention to the fact that the governor made no specific recommendations whatsoever with regard to the revenues or the expenditures of the state. His message assiuned no responsibility for the budget, and referred to the only seC' tion of the document that recommended a specific cotirse of action measured in dollars and cents as "the supervisor's reconmaendations." In the governor's entire message there was no statement of the total expenditure recom- mended by the budget. He contented himself with recit- ing the unrevised departmental requests. Biidget Recommendations of Inaugural Address. Governor Coolidge's refusal to take any responsibility for the 1 919 budget is all the more significant in the hght 1 1919 House Document 185, p. 5. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 171 of the recommendations of his inaugural address, delivered on January 2, a week before the presentation of the budget. In that address there are no less than thirteen major recommendations which belonged in the 191 9 budget. Take for example the governor's recommendations for the welcome of returning troops, for the subventions to public schools, for the instructions of aliens in English, for a survey of the street railway situation, for the improvement of the port of Boston, for the Plymouth exposition, and for the creation of a loan fund to encourage home owning. In a munber of these recommendations he said in so many words, "It is urgently recommended that such taxes be laid and appropriations made" as are necessary, or, "To begin this great and important work some appro- priation should be made." ^ Why was it that the "gov- ernor's budget" made no allowance for the financial aspect of the legislative program of the governor as laid down in his inaugural ? The governor's policy seems to have been calculated to avoid any possible breach with the legislature. That friction over ■ the new budget powers of the governor was possible was indicated by the remarks of more than one legislator at the convening of the general court. This feeling disappeared during the session both because of the governor's policy and because of the remarks and leadership of the chairman of the house committee on ways and means. Representative Benjamin Loring Young. • 1919 Senate Document, p. 6, 9, etc. Digitized by Microsoft® 172 BUDGET IN MASSACHUSETTS Form and Content of the iqiq Budget. Eliminating the governor's letter of transmittal, the 1919 budget is composed of : 1. A seven-page statement by the supervisor, explaining in detail the recommendations for capital outlays contained in subsequent pages. The requests for the metropolitan dis- tricts are included. 2. The auditor's estimate of revenues for 1919 by sources. 3. Asummaryof general fund treasury transactions for 1918. 4. Statement of the condition of the state debt, showing the direct and the contingent debts separately. 5. A six-page statement of the recommended appropria- tions for 1919, excluding metropolitan districts, itemized by spending units, and showing the amounts allowed for salaries, other expenses, and capital outlays and the source from which the appropriation was to be financed. 6. A general summary of receipts, excluding metropolitan districts, showing by sources the amounts credited to the general fund, to special funds, and the total. 7. A balance sheet as of the end of the fiscal year of 1919, based upon the two preceding tables. 8. A detailed estimate of proposed expenditures for 1919, for the state government, including the legislative and judi- cial departments. This statement covers 85 pages, and con- tains 507 enumerated items many of which are further sub- classified. A sample section of this book of estimates is re- produced below. 9. An identical statement for the metropolitan districts. The items are numbered consecutively, following right on from those above. It is to be noted that the governor's budget contained no appropriation bill. Opposite are two sections from the detailed esti- mate of proposed expenditures for 1919. The item Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 173 ■9s lit M 8g Bio sis 00 l^ 00 w OOOOOOO^i oOOiHWOOOt^' o O O w 0\ I OOOQOOOOO 000000000 1 O O CO M O O w I yD -O -^ ^^ O O MD -O i-i ioi>. Ch H 00 'O 00 000 •<:j-mcOW ^O OK) O tJ-00 t^^t^Oirnt^-^O O 10 0 <-» H P e M to H a a >u 'is O cd .^ > 3 3 ■ en rt 2 "^ .2 .2 -3 •a lis S M a »•« ° §■§ o -9 "* ^=3 S o II ■4J ^ TO M O ■3 x) o, a a o a . Digitized by Microsoft® 174 BUDGET IN MASSACHUSETTS numbers of colmnn i were followed in the appropriation bill. The estimates are classified by spending units, and the capital outlays are in each case grouped after the maintenance items of the institution or department in question. Legislative Consideration of the igig Budget. The budget, on receipt, was referred immediately to the house committee on ways and means. Representa- tive Benjamin Loring Yoimg was now chairman of this committee in place of Representative Joseph E. Warner, who had been elected speaker of the house.-^ Work of the House Committee on Ways and Means. "Immediately on receipt of the budget," Mr. Yoimg reported to the house, "the Committee sent a notice to each state department, setting aside two weeks for pubhc hearings and inviting all persons interested to appear. The Committee also requested that statements in writing be filed. Open hearings continued for two weeks and a further week was devoted to executive sessions." ^ During this time, Mr. Raymond, who had prepared the budget for the governor, and Mr. Hawley, deputy auditor, were in constant attendance. Mr. Ra)Tnond had with him his personal estimate files mentioned above, for his own information and for the use of the committee. Under the direction of Mr. Young, who took an unusually active part in the revision of the budget, Mr. Raymond drafted • Bulletin 43, p. 122. '^ House Document 1370, p. 25. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 175 the various appropriation and other measures for the com- mittee, with the exception of a few matters handled by the deputy auditor. The following table indicates, as far as figures can show, the work of the house ways and means committee on the budget of 1919 : 1919 Budget Cuts of the House Ways and Means Committee' Ways and Means Governor's Budget Ways and Means Budget Bnx Reductions Per cent Amounts of Budget Uaintenance State departments and institutions .... $27,892,794.05 $27,471,008.98 $421,785.07 I-S Metropolitan districts . 2,ir6,493.4i 2,127,290.52 + 10,707.11 2 +.5 = Total maintenance . . 30,009,287.46 29,598,299.50 411,077.96 1-4 Capital Outlays and Specials State departments and institutions .... 1,711,293.55 1,600,793.55 110,500.00 6-5 Metropolitan districts . 281,000.00 = 281,000.00 ' 100.0' Total capital outlay . . 1,992,293.55 1,600,793.55 391,500.00 15-1 Interest and Debt .... 3,738,353.44 3,738,353-44 Deficiencies ..... o< 7,217-73 + 7,217-73' Grand Total ..... $35,739,934-45 $34,944,664.22 795,360.23 22.2 By a comparison with the figures presented on page loi above, it will be seen that the ways and means com- mittee of 1 91 9 found it possible to make slightly larger ' Based on p. 168 above ; House Documents 1354 and 1370, p. 32. * Increase. ' Referred to the committee on metropolitan affairs. These estimates repre- sented requests for bond issues for as yet unauthorized projects. Strictly their elimination should not be considered as budget cuts, though they are included here to reconcile the budget and the appropriation act. * At the time of the preparation of the budget no deficiencies were reported. ' Increase. Digitized by Microsoft® 176 BUDGET IN MASSACHUSETTS decreases in the budget than was found possible in 1918. This was largely due to the war conditions. In 191 8 the budget was prepared at a time of sharply rising costs. The price-movement itself squeezed out the surpluses, while in 191 9 the committee was called on to revise after the armistice a budget which was drawn on the basis of pre-armistice estimates. The Bjidget Bill before the House. On February 10, Mr. Young reported for the ways and means committee the general appropriation bill based on the budget. This bill contained appropriations for maintenance and capital outlays, so far approved by the supervisor, both for the state and for the metropoUtan districts. There were 515 numbered items grouped by spending units, except in the case of interest and deficien- cies, which carried a total of $34,944,664.22. An analysis of the bill appears on page 175. The bill follows closely the bill of the previous year, and continues in the main the policy of lump sum appropriations. There are five items of $1,000,000 or more, and 63 items of $100,000 or more. The average item of the bill is $67,000. The corresponding average in 1918 was $46,000. Appropria- tions for the legislative and judicial departments are included. In presenting the budget bill, Mr. Young addressed the house on the finances of the state and the fiscal program for the following year. Since the joint address of the general court to the people of the state on February 27, Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 177 1 781, no comparable statement had been prepared in Massachusetts.^ The Main Points of the Budget Speech. In introducing the budget bill, Mr. Young said : "My remarks will naturally divide themselves under four heads, — "I. An explanation of the constitutional amendment for a state budget recently adopted by the people, and a brief statement of the various modifications in the financial pro- cedure of the house and of the general court which would seem to be made necessary or advisable by its adoption. "II. An explanation of the appropriation biU now reported to the house by the committee on ways and means, and a brief discussion of several of its more important features. This discussion may serve to point out to the members of the house some of the more difficult problems which confronted the com- mittee, those in which the members will probably be most in- terested, and with regard to which they have a right to demand complete, detailed and satisfactory information. It is my hope that before this bUl is passed to be engrossed every question of doubt in the mind of any member may be satisfactorily answered by the committee, and that no member can justly say that he has not been given an opportunity to know and understand every detail thereof. "III. An explanation of the general financial policy out- lined by His Excellency the Governor in his budget recom- mendations (House Document No. 185), and the manner in which the bill now under consideration carries out that policy in part, together with a brief survey of such additional appro- priation biUs as may reasonably be expected to come before the general court after final action on the present bill either through the submission of supplementary budgets by the gov- ernor or otherwise. ' See page 12. N Digitized by Microsoft® 178 BUDGET IN MASSACHUSETTS "IV. A statement of work accomplished by the committee on ways and means, and of the method adopted by it during its consideration of the budget." ^ Following the outline just presented, Mr. Young pro- ceeded with his first point. Though we have outlined the constitutional amendment earUer in oiu: discussion, the following excerpts from the budget speech are worthy of note : "The budget is not a mere document, it is not a mere appro- priation bill. The budget is the plan for financing the state government for the current fiscal year, which has been. pre- pared under the direction of the governor and has been sub- mitted by him to the general court for its consideration. The budget contains an appropriation program, a social program, a revenue program. It is a complete plan for the government of the commonwealth. The general appropriation bill based upon the budget, now before the house for consideration, is merely one feature of that plan." "The statute and the constitutional amendment taken to- gether make the governor, so far as finance is concerned, the actual executive head of the state in practice as well as theory. In place of an irresponsible government by boards and com- missions, each anxious to augment its own importance and its own financial needs, we have lodged full responsibility with the governor, whose viewpoint is not limited to a particular de- partment or to a particular locality, but extends to the entire state government of which he is the responsible head." "Departmental requests for appropriations should be con- sidered by the general court only in connection with the budget, and such requests should not be allowed under the guise of special bills or resolves." ' 1919 House Document 1370, p. i. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 179 "A few departments, however, which neglected to file a por- tion of their estimates in October, have now come to the general court with requests for appropriations embodied in special bills. . . . They have refused to enter the open door of the budget, and now seek to obtain entrance to the public treasury through the back door of special legislation. If the budget system is to stand, these special biUs should not receive favorable considera- tion at this time." "The power of the general court to add items should ob- viously be construed as being limited to departmental esti- mates embodied in the budget, or to other appropriation items properly before the general court under its rules." " If the governor sees fit to make additional financial recom- mendations in a supplementary budget, his requests should again have the right of way, and untU final action thereon should have precedence over aU other appropriation bills." ^ In disposing of his remaining three points, Mr. Young proceeded with equal clarity and force. His discussion of the main issues contained in the general appropriation bill is fuU of information for the legislature, and is entirely free from the all too common "pussy-footing" in the dis- cussion of appropriation matters. When Mr. Young told the house that he hoped that debate on the budget biU would result in "thorough, frank and pertinent dis- cussion of the budget proposals," he was clearly saying what he meant.^ ' 1919 House Document 1370, pp. 5-8. In view of the interpretation con- tained in the last paragraph quoted it should be noted that Mr. Young is him- self a lawyer, and that his interpretation is based on interviews with the at- torney-general and with members of the constitutional convention who were especially well informed on budget questions. Ihid., p. 4. "House Document 1370, p. 25. Digitized by Microsoft® r8o BUDGET IN MASSACHUSETTS With the budget speech was presented a balance sheet as of the end of the fiscal year in question, a table show- ing the individual cuts and increases made by the com- mittee on ways and means, a table showing the recom- mended appropriations compared with those of 1918, and a table of the per capita weekly costs for maintenance of the state institutions. Newspaper Comment on Mr. Young's Budget Speech. When Governor Coolidge presented the 1919 Budget to the legislature on January 8 there was no dramatic incident. There was no "news" to attract attention. The document went to the clerk of the house with a for- mal letter from the governor, the clerk of the house read the title of the report amid the drone of the routine busi- ness, and the document was referred to ways and means and lost from sight. It is surprising that any of the papers mentioned the budget at that time. As a matter of fact few did, and those few failed to get at the meat of the matter.-^ The situation was quite different now. Mr. Yoimg's personal presentation of the general appropriation bill, together with his concise and straightforward discussion of the issues involved, introduced enough of the dramatic element to carry the budget into almost every paper of the state. The Christian Science Monitor, which tends to exclude matters of sectional interest, devoted the better part of a column to Mr. Young's budget speech, quoting ' E.g. Boston Herald, January 9, 1919, p. 7. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 i8i liberally from him, and stressing four of the major issues he had raised.^ The Boston Globe of February lo and the Springfield Republican of February ii cover the inci- dent in their news columns. The following editorial from the Transcript, which had also carried the story as news, deserves reproductioii here. The title was "Loring Young's Contribution," — "The speech which Representative B. Loring Young de- livered in the house yesterday, as chairman of ways and means, clearly advanced the commonwealth's budgetary process one step forward. If the vigorous efforts made in the last general court by the present speaker of the house, Mr. Joseph E. Warner, brought the schedule of appropriations into definite summary early in the session for the first time in the state's history, and if the executive budget submitted this year repeated this useful accomplishment, Mr. Young has held by these gains in proce- dure and also gone them one better. He has associated with his comprehensive view of the state's proposed expenditures a comprehensive view of the state's whole legislative program, thus equating, as it were, problems in the distribution of cash with problems in the distribution of the general court's energies as a state-governing and state-building body. "Obviously this is a proper juxtaposition. The chairman of ways and means has avoided dogmatic pronouncements of approval or condemnation concerning various items of the state's proposed legislation. He has left that work to the judgment of the general court where it belongs. But he has given the general court opportunity to base its judgments as to individual proposals upon a sound sense of their relation to the state's legislative requirements in their entirety, and he has permitted them to see individual appropriations in their due proportion to the total funds which the state has on its hands or dares to expend. This is to add to economy in cash, 1 February 13, 1919, p. 9. Digitized by Microsoft® i82 BUDGET IN MASSACHUSETTS clarity and balance of statesmanlike perspective, and it is to advance our use of the budgetary process one important step forward." ^ Debate on the Budget Bill in the House. Following the presentation of the budget bill and the budget speech, the better part of a week was devoted to the debate on the bill. During this time Mr. Young was continually on his feet explaining the budget bill and answering criticisms. As a result of this discussion and of later information, the ways and means committee itself, through its various members, brought forward a number of amendments to the biU. Three of these were textual amendments, one decreased, while five increased, appropriations in the bill. Nine private amendments were offered to strike out or to reduce items, while two were offered to increase the appropriation for band concerts in the metropolitan district of Boston. All of the amend- ments put forward by the committee were adopted, and of the private amendments five to decrease were accepted by Mr. Young and adopted by the house, while the two amendments to increase were opposed by Mr. Young and were defeated.^ The changes made were as follows : Number or Items Amodnt Increases 6 6 $164,641.25 46,300.00 Net Increase $118,341-25 ' February 12, 1919. * House Journal, pp. 367, 398, 408. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 183 The total increase, all of which was moved by the com- mittee, amounted to less than one half of one per cent of the total carried by the budget biU, and the net increase was one third of one per cent. It will be seen that the leadership of the committee on ways and means was unquestioned. The Budget Bill before the Senate. The general appropriation bill was received in the sen- ate on March 5. It was immediately referred to the senate ways and means committee. Here it was held tiU March 28, when it was reported with 20 amendments.-^ Of these, five were textual ; one segregated an appro- priation by splitting an item in two ; two decreased items, and the remaining 12 provided increases. The total decreases amounted to $53,000 and the increases to $45,370, leaving a net decrease of $7,630. On April 2, all of these amendments put forward by the committee were adopted. In one case only was a roll called.^ At the same stage, three private amendments were offered to increase items, two of which were to negative reduc- tions made from the floor of the house. The third in- creased the $25,000 appropriation for band concerts in the metropohtan district by $5,000.* These three private amendments were also adopted. As a residt of the action of the senate, the budget bill total was changed as follows : 1 Senate Journal, p. 536. ^ Ihid., p. 536-538. ' $30,000 was the customary annual appropriation. Digitized by Microsoft® i84 BUDGET IN MASSACHUSETTS Number of Items Amodnt Decreases . . Increases Net decrease 2 IS $53,000.00 52,770.00 I 230.00 House Refuses to Concur. After a brief consideration of the senate amendments, the house ways and means committee reported by its chairman, Mr. Young, that the house ought not to con- cur on five of the amendments made by the senate. Two of these increased the appropriation for the bank commissioner's office, two more replaced the amoimts cut from the governor's budget in the house for the bureau of immigration, while the fifth increased the personal service appropriation for the state board of charity. After debate, the house followed the lead of Mr. Young and his committee, and after non-concurring in the five objection- able amendments, accepted the balance.-^ Conference Committee Arrives at Compromise. A conference committee representing both ways and means committees was appointed, and on April 15 the committee reported that the senate ought to recede on two, and the house on three, of the points at issue. This compromise was accepted in both houses without debate, and under a suspension of the rules.^ It is interesting to note that the two amendments from which the senate • House Journal, p. 741. 2 /j,-,;.^ p jgi ; Senate Journal, p. 620. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 185 receded were both private amendments. As a result, there was but one private amendment to increase which became part of the appropriation bill. This added $5000 for band concerts in the metropolitan district of Boston. The bill went to the governor, and was signed by him on April 23 as Chapter 153 of the special acts of 1919. As finally signed it carried $35,060,375.47, or $115,711.25 more than the budget bill as reported by the house ways and means committee. Supplemental Budgets. The budget amendment to the constitution provides, — "The governor may at any time recommend to the gen- eral court supplementary budgets which shall be subject to the same procedure as the original budget." ^ In accordance with this provision, Governor Coohdge sub- mitted two supplementary budgets during the 1919 session. The first was submitted on April 24, the day following the passage of the general appropriation bill.^ It carried the following recommendations : FiKST Supplementary Budget Purpose Amouni Maintenance . , 1359,050.00 Capital outlay 2,479,285.50 Interest and Debt 94,529.60 Total $2,932,865.10 Each item of the supplementary budget was explained in detail by a statement from the supervisor which formed ^ 1918 Amendment 16, sec. 3. ' 1919 House Document 1653. Digitized by Microsoft® i86 BUDGET IN MASSACHUSETTS the body of the governor's supplemental budget. In addition to this explanatory text, the supervisor presented si. balance sheet as of the end of the fiscal year on the basis of appropriations already passed and recommended in the supplemental budget; and a detailed statement of appropriations already passed classified by the budget bill items, analyzed to show salaries and wages, other expenses, and capital outlays, and the amounts by which the various items affected by the supplemental budget would be uicreased thereby. The five appropriations passed in accordance with emergency messages from the governor, totaling $355,000, were added to the total, so that the supervisor's statement is a complete record of appropriations in detail, classified in inteUigible form. It links the supplemental reconamendations up with the original budget, thus making it possible to examine the supplemental recommendations almost as if they had been a part of the original budget. It is to be noted that the first supplemental budget was made up almost entirely of capital outlay recom- mendations. This was due to the tardy submission of estimates and to the need that developed for public works as a help in lessening unemployment. The governor's letter of transmittal is more in accord- ance with the constitutional and legal requirements than was that transmitting the original budget. The success of the original budget evidently made the governor more ready to admit his legal responsibilities, and we find him saying, in this first supplemental budget : Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 187 "In the general appropriation act, based upon my original budget recommendations, approximately $1,600,000 was appro- priated for capital outlay. To this sum I now recommend an addition of $2,479,285.50." * The governor, however, makes no reference to the addi- tional $50,000 requested by the supervisor for the gov- ernor's emergency fund, a fund that is chiefly used as a transfer account. The second supplemental budget is dated July 14, ten days before the prorogation of the general court.^ Its purpose was to make appropriations to meet the new needs created by the laws of the 1919 session — the salary increases, the new investigations, and the new services. The recommendations were as follows : Second Supplementaey Budget PmiposE Amoxini Maintenance (including salary increases, new services, investiga- tions, etc.) $608,350.00 Military allowances 200,000.00 Capital outlays 128,500.00 Deficiencies 1,467.51 Total, State purposes 938,319.51 Metropolitan districts' 80,695.67 Total $1,019,013.18 The document itself followed the lines of the previous budgets. A letter of transmittal from the governor stating, "The sums recommended this time . . . are those suggested by the supervisor of administration," ' 1919 House Document 1653, p. 5. Italics are those of the author. ^Ihid., 1935. ' Of the amount recommended for the metropolitan districts, $5000 was for maintenance. No metropolitan district recommendations were included in the first supplemental budget. Digitized by Microsoft® i88 BUDGET IN MASSACHUSETTS was followed by detailed explanations prepared by Mr. Raymond, a balance sheet, and a detailed statement of ap- propriations and supplemental recommendations as before. A large part of the second supplementary budget may be said to be made up of non-administration matters. The largest single item of this kind is for $120,500 to meet the increase in legislative pay in accordance with Chapter 239 of the General Acts of 1919 which was passed over the governor's veto.^ The next largest item is for $100,000, recommended by the supervisor "in connection with several bills pending for special highway improvements." ^ These were nothing more nor less than the traditional "private road bills" and were opposed by the governor as far as was expedient, though he was not ready to veto the acts authorizing them or to exclude them from his last supplementary budget recommendation.^ The only private harbor bills to be enacted were in the nature of investigations, for which $30,000 was appropriated as recommended in the two supplemental budgets.* The Budget and the Pork-Barrel. Private road bills and private harbor bills are the more notorious forms of "pork-barrel" legislation against which the ways and means committees have been fighting during recent years. The end of the war and the removal ' House Journal, June lo; Senate Journal, June 12. ''House Doc. 1935, p. 15. ^ Road bills : Special Chapters, 232, 233, 240 ; General Chapters, 335, 336, 337, 338, 339, 348, amounting in all to $216,000 of which the state wiU pay $118,833.33. ■• Special Chapters 211, Item 329 b; 242, Item 329 c. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 189 of the necessity for confining all expenditures to objects that would "help win the war" encouraged a renewed effort to raid the state treasury for local purposes. Mr. Young, in his budget speech, enunciated in no uncertain terms the principles that should be adopted to meet this situation. He urged : (i) that no loans should be made for highway purposes; (2) that, except for the $1,000,000 of new construction provided in the budget, all highway expenses be met from motor vehicle fees ; and (3) that no special road bills should be given consid- eration by the legislature, bubthat they be referred to the highway commission. In clinching these points, Mr. Young said : " It should also be pointed out that within the state tax of $11,000,000 recommended by the governor as a maximum, there can be but a small sum, if any, available for special road bills. Bills of this nature serve local and private inter- ests, but have little state-wide value. It would seem proper, therefore, for the general court to consider whether the time has not come for the adoption of a sound policy in respect to such local matters. The highway commission is an adminis- trative board, with expert knowledge of highway needs. Under statutes now in force the commission may allot a portion of its funds to those local projects which have real merit. Many roads have been improved in this way, the wise policy of the commission requiring the town and the county to share in the expense. The chief criticism of appropria- tion bills passed by the federal Congress has been that they serve the 'pork-barrel' instead of the nation. Special road bills are of comparatively recent growth in the general court of Massachusetts, and they should be restricted in every possible way."^ ' House Doc. 1370, p. 160 Digitized by Microsoft® I go BUDGET IN MASSACHUSETTS While Mr. Young was not entirely successful in this restriction of special road bills, it is to be noted that no loans were made for highway purposes and that the special highway appropriations were to be financed from motor vehicle fees and that construction was to be undertaken only after the fees ha,d been collected. Two of Mr. Young's three principles were thus adopted. It is doubt- ful whether this would have been possible without the state budget system. Appropriations Based on the Governor's Special Messages. In addition to the three budgets, Governor Coolidge addressed a number of messages to the general court asking that immediate provision be made for the following emergencies : Purpose AuotTNT Atpkopkiated Chapter or Special Acts Welcome of soldiers Soldiers and sailors commission . . Parade 26th Division Influenza epidemic Suppression of corn borer .... $10,000 10,000 300,000 S.ooo 30,000 I 112 119 I 13s Total $3S5,ooo Private Petitions for Appropriations in iQig. There was no decrease in 191 9 in the number of private petitions, private members' bills and departmental special requests, not contained in the annual estimates, involving a charge against the treasury. In the case of certain departmental requests, this was c^e to the requirement EXPERIENCE WITH THE BUDGET IN 1919 191 in chapter 18 of the Revised Laws that all departments shall file with the secretary of the commonwealth drafts of biUs to carry out the recommendations contained in their annual reports. Where the recommendation would carry a charge on the treasury, the department was thus required to ask for the appropriation in the estimates for special purposes and also to submit a bill through the secretary providing for the appropriation. In other cases, departments that failed to submit all their estimates to the supervisor tried private petitions as a method of securing further appropriations. This practice was severely condemned by Mr. Young as an attempt to "ob- tain entrance to the public treasury by the back door" after a refusal to " enter by the open door of the budget." ^ Following Mr. Young, the ways and means committee refused to consider a dozen or more of these departmental petitions. The table below indicates the number of petitions of one kind or another involving a charge on the treasury. It makes no deduction for those whigh were also included in the budget as explained above. Petitions Involving a Charge on the Teeasuey, 1919^ Relating to Number or Petitions Amount Petitioned State Government Metropolitan Districts 166 46 $35,151,830-95 1,340,034-26 Total 212 $36,491,865.21 * House Document 1370, p. 6. " Based on Mr. Raymond's tabulation. Digitized by Microsoft® 192 BUDGET IN MASSACHUSETTS The actual amount petitioned was more than indicated here, as many contained no specific amount and are not tabulated. Total Appropriations of igig Session. The following table presents the total appropriations, including metropolitan districts, of the 19 19 session of the general court in comparison with the governor's recom- mendations and the revisions of the house ways and means committee. Appropriations of 19 19 Session' Basis Governor's Recommenda- tion Ways and Means Revision Appeopeiaiion Pee Cent OF Total Appropria- tion Chapter Speclai. Budget . . . 1st Supplemental 2nd Supplemental Special Messages $35,739,934-45 2i932,86s.lo I,oig,oi3.l8 Indefinite $J4,944,664.22 2,809,802.1s 1,208,736.01 355,000.00 $35,060,375.47 2,713,802.1s 1,208,736.01 355,000.00 89.2 6.9 3-0 -9 153 211 242 Total ., . $39,691,812.73 $39,318,202.38 $39,337,913-63 loo.o It is significant that no appropriations were based on private petition or special departmental request. Every single dollar appropriated was based on the governor's messages and budgets. Of the total amount appropriated, almost 90 per cent is carried in a single bill. The items of the two supplemental bills are numbered to correspond to the items of the general appropriation bill, so that it is a simple matter to tell at a glance the amount appropriated for any service or department. It is to be noted that 97 1 Based on 1919 House Documents, 185, 1653, 1935, 1354, 1732, I95S- ^ See page 190. Digitized by Microsoft® EXPERIENCE WITH THE BUDGET IN 1919 193 per cent of the total appropriation was passed and signed by the governor a month before the close of the session, and that 89 per cent was disposed of soon after the middle of the legislative session.^ The comparative leadership of the governor and the house committee on ways and means is shown clearly by the table above. The governor's budget recommenda- tions were decreased by over half a million dollars by the committee, and the recommendations of the committee were followed with hardly a change by the legislature. '■ See page 114. Digitized by Microsoft® CHAPTER X BUDGET REFORM IN 1919 The most important steps toward a better budget system in Massachusetts taken during the year 19 19 have been described in the last chapter. The experience with the first "governor's budget" is in itself the most notable single fiscal event of the 1919 session. There are, how- ever, a number of exceedingly important changes in the laws of the state which affect the budget directly or in- directly. New Constitutional Provisions. At the November 19 18 elections, at the time of the adoption of the budget amendment, three amendments were ratified by the people of no smaU importance to the budget. Their effect was first felt in 1919. The 15th amendment hmits the purposes for which the commonwealth may borrow money, and requires that loans for any other purposes shall be authorized only by a two-thirds vote of the general court, on a roll caU, and requires the governor to recommend the term of the loan. The 1 8th amendment prohibits the payment of addi- tional compensation to members of the legislature for service on recess committees, with the single exception of a committee appointed to examine a general revision of the statutes, and further provides that a legislator Digitized by Microsoft® 194 BUDGET REFORM IN 1919 195 shall not be appointed to an office created, or made more remunerative, during the term for which he was elected. This amendment disposes forever of the recess committee as a factor in budget preparation. Those who have fa- vored such a committee, or some commission embracing also members of the legislature, are now estopped from any further agitation, it would seem. The 19th amendment requires the executive and ad- ministrative work of the commonwealth to be organized in not more than twenty departments. The rebrganiza- tion adopted by the general court is outlined below. Its effect upon the preparation of departmental estimates and their consideration by the legislature cannot but be important. Among the remaining amendments adopted in 191 8, the following deserve attention in connection with those already listed : I. In the initiative and referendum amendment^ it is provided that no petition may make a specific appro- priation of money from the treasury, but that the general court shall raise by taxation or otherwise and shaU appro- priate such money as may be necessary to carry into effect any law adopted by initiative petition. It is also provided that a law which appropriates money for the current or ordinary expenses of the commonwealth or for any of its departments, boards, commissions or institu- tions shall not be the subject of a referendum petition. ' Amendment No. i. Initiative Article [11, sec. 2 ; Referendum Article III, sec. 2. Digitized by Microsoft® 196 BUDGET IN MASSACHUSETTS The initiative cannot be used to upset the budget pro- cedure of the commonwealth; and the referendum can only be used with "specials" and capital outlays. 2. The 9th amendment allows the governor to return to the legislature for further consideration any act or resolve with his recommendation for its amendment. This would clearly apply to the textual sections of appro- priation acts and loans. 3. The amendment providing biennial elections will perhaps help to stabilize the departments affected and thus help the budget movement along.^ The amend- ment allowing the general court to take a recess for not more than thirty days, might be put to good use as a time for public hearings on the governor's budget.^ Changes in Budget Law and Practice in igig. During the 191 9 session a number of changes in the laws affecting the budget were enacted in the attempt to make the budget system more satisfactory. In order that there might be no seeming contradiction between the budget act of 191 8 and the budget amend- ment, Chapter 52 of the General Acts of 191 9 was passed. The bill was initiated by the house ways and means com- mittee, and amends the law so that the date for the sub- mission of the budget by the governor is "within three weeks after the general court convenes" — the' exact phrase used in the constitutional amendment. The law requiring state departments, boards and com- • AmendmMit No. 17. ' lUd., No. 5. Digitized by Microsoft® BUDGET REFORM IN 1919 197 missions to file with the secretary of the commonwealth those parts of their annual reports which make specific recommendations, together with drafts of acts to carry them into effect, resulted in 1919, as we have seen, in the introduction of a number of departmental requests for appropriations either in duplication of the budget, or supplementary to the budget. In order to prevent this in the future. Chapter 13 of the General Acts was passed, on the initiative of Mr. Young. This act specifically exempts from the law above "those parts [of annual re- ports] which . . . are required to be covered by estimates submitted to the supervisor of administration." This law, together with the example which Mr. Young made of the extra-budgetary requests of certain departments in 1919 will undoubtedly result in the presentation from now on of aU departmental needs through the budget and through the budget alone. Inasmuch as the fiscal year in Massachusetts begins on December i, and the general appropriation act cannot pass much before the following April, some system of "votes on account" is clearly necessary. Up until 1919* this situation had been taken care of through the passage of annual resolves, when the statutory extension of author- ization to spend on account through December and Janu- ary had expired without the passage of the annual appro- priations. On the initiative of Mr. Yoimg, there was passed in 191 9 an Act providing : "Boards, commission, officers and officials having charge of expenditures in behalf of the commonwealth may continue Digitized by Microsoft® 198 BUDGET IN MASSACHUSETTS expenditures in each year at the rate of the appropriation authorized for the preceding year until the general court makes an appropriation therefor or provides otherwise." ^ It is generally understood that a failure to appropriate funds before adjournment would constitute a "provision otherwise," though other interpretations are clearly possible. Section 3 of the general appropriation act of 19 19 pro- vided that the uiiexpended balances of the various war emergency lump sum appropriations granted to the governor and council should lapse into the treasury. Mr. Young stated that these balances totaled $1,292,603.40 out of appropriations of $3,000,000, and said : "This method of appropriating money for any purposes approved by the executive was necessary and proper in the stress of war, when no man can foretell the uncertainties of the morrow. It is not a proper method in time of peace." ^ While this provision is not especially revolutionary, it is indicative of the unwillingness of the legislatiure to let slip the reins of financial control. . The legislative procedure for the reference, reporting, consideration, and enactment of the budget appropria- tions was not materially different from that used in the disposition of other business. No new legislative rules were adopted. This has been left for the future. On the eve of the presentation of the general appropriation bill for debate in the house, the following order was passed, on motion of Mr. Young : * General Acts, Ch. 20. ' igig House Document 1370, p. 21. Digitized by Microsoft® BUDGET REFORM IN 1919 199 "Ordered, That, after the bill making appropriations for the maintenance of departments, boards, commissions, institu- tions, and certain activities of the commonwealth, for interest, sinking fund and serial bond requirements and for certain permanent improvements (House No. 1354) has been read a third time, the various items in section 2 shall be called in order, and those not passed for debate shall stand approved and unde- batable until those which may be passed for debate shall have been disposed of ; and that all items so passed for debate shall be printed, under their respective captions, in the orders of the day for the succeeding session, and shall be considered and disposed of in order." ^ By long established custom in Massachusetts, the orders of the day which no member cares to bring up for discussion are disposed of before the controversial meas- ures. As the presiding ofl&cer aimounces the next matter, or as the clerk proceeds to read the title, a member desir- ing to bring the matter up for discussion calls "pass," and the presiding ofl&cer then "passes" the matter and goes on to the next without calling for a vote at the time. When all matters have either been disposed of or "passed," the latter are considered in order. It will be seen that Mr. Young's order merely took over this procedure for the consideration of the items of the general appropriation bill. The day's postponement also served to give him an opportunity to know what items he would be called on to defend or explain, and the fact that they were printed in the orders of the day made their systematic consideration more possible. 1 House Journal, p. 360. Digitized by Microsoft® 200 BUDGET IN MASSACHUSETTS Reorganization of the Executive Departments. The 19th amendment to the constitution, ratified by the people at the November, 1918, elections, provided for a reorganization of the executive and administrative work of the commonwealth in not more than twenty depart- ments. Governor Coolidge in his inaugural address called upon the general court to enact the necessary legis- lation. "This will require," he said, "much legislation and a careful working out of many details. I urge you to start upon this most important work and complete it this session. It should result in diminishing the ex- penses of administration." ^ The supervisor of administration also urged the matter and presented, in slightly revised form, the consolidation plan which had been drawn in his office and by the joint special committee on finance and budget procedure in 1918. The legislature appointed a joint standing conmiittee on administration and commissions and re- ferred to them the problem of reorganization. This committee held a number of pubhc hearings late in Febru- ary and early in March but did not report its omnibus consolidation bill till June 6.^ In the interim a great deal of "negotiation" was of course inevitable. The various state officials were, however, conspicuously absent from the lobbies and committee rooms, due, it is said, to a state- ment from the governor that any attempt by departments to influence the reorganization plans would necessitate drastic action on his part. 1 igig Senate Document i, p. 19. ^ j^jg House Document 1830. Digitized by Microsoft® BUDGET REFORM IN 1919 20i The consolidation and reorganization bill of the com- mittee on administration and coromissions was amended in the house and again in the senate, but its main out- lines remained unaltered. It was finally enacted and signed by the governor as Chapter 350 of the General Acts of 1919 on July 23, the day before prorogation. The Reorganization Act. As it was beyond the power of the legislature to reor- ganize the constitutional ofl&ces, httle change was pos- sible in the ofl&ces of the secretary, the treasurer, the auditor, and attorney-general, except in the reassignment of certain minor functions governed by law. Among the remaining departments, boards and commissions, however, the reorganization was more thorough. Of these hundred odd independent units, 33 were abolished outright and their duties transferred to the newly estab- lished departments. Of these 33, 21 were boards and commissions, and 12 were single-headed ofl&ces. The remaining organizations were carried bodily into the new departments as bureaus, divisions, or sections. As a result of the new bill the following departments are created : The Governor and Council. Department of the Secretary of the Commonwealth. Department of the Treasurer and Receiver General. Department of the Auditor of the Commonwealth. Department of the Attorney-General. Department of Agriculture. Department of Conservation. Department of Banking and Insurance. Department of Corporations and Taxation. Digitized by Microsoft® 202 BUDGET IN MASSACHUSETTS Department of Education. Department of Civil Service and Registration. Department of Industrial Accidents. Department of Labor and Industries. Department of Mental Diseases. Department of Correction. Department of Public Welfare. Department of Public Health. Department of Public Safety. Department of Public Works. Department of Public Utilities. The Metropolitan District Commission. The organization of these different departments varies radically. The first five including the council are elected biennially, under the new amendment. The balance are all appointed by the governor with the approval of the council. The governor and council also appoint 19 bureau chiefs directly, thus breaking through the control of the department heads. The department of banking and insurance is divided into three separate departments and the department of civil service and registration into two, each with a head appointed by the governor and council. In each case the component departments are instructed to "act as a board in all matters concerning the department as a whole," a phrase intended to save the face of the consolidation act, it would seem, by mak- ing it possible to count the five departments as two, thus keeping the total down to 20, as required by the consti- tution. The terms of the heads of the departments, counting the department of banking and insurance as three and the Digitized by Microsoft® BUDGET REFORM IN 1919 203 department of civil service and registration as two, arc as follows : Teem 2 Years 3 Years S Years 7 Years Number of Department Heads 6 9 8 I Salary rates are similarly diversified. They are as follows: Salary Rate Number op Department Heads ' $ i,SOO 1 S,ooo 9 6,000 4 7,000 I 7,500 6 8,000 I 10,000 I Of the twenty-four departments, the predominant type of organization is that of a single-headed ofi&ce. In re- organizing certain of those which were previously boards or commissions, however, the type of organization se- lected has been that of a commissioner with a board attached. The number of departments organized in each way is as follows : Method of Organization Number of Departments Single head Single head, advisory unpaid board . Single head, paid board Commission 12 S S 2 'No salary specified for Commissioner of Savings Bank Life Insurance. Digitized by Microsoft® 204 BUDGET IN MASSACHUSETTS The organization of the governor's department deserves attention. The miUtary departments are put directly under the governor and council. The supervisor of administration is left as at present theoretically under the governor and council while a miscellaneous group of small independent offices are "placed and shall hereafter serve under the governor and council." These include the armory commission, the art commission, the state ballot law commission, the trustees of the state library, the board of appeal from the decisions of the tax com- missioner, the commission on uniform state laws, and the commissioner of state aid and pensions. This "plac- ing" departments "under" or "in" certain departments without requiring any real reorganization is typical of many sections of the consohdation law. An example of a genuine reorganization is the creation of the new super- intendent of buildings under the governor and council to be a central purchasing agent for the furniture and supphes of all state departments and to administer the state house. The Effect of Reorganization on the Budget. In spite of the failure of the reorganization biU to make the governor the real "chief executive" or to estabhsh less than 20 independent administrative and executive units or to satisfy most reformers, it is a marked step forward in the governmental machine of Massachu- setts. The very fact that many related tasks are to be brought together in a single grouping will be of material advantage. Digitized by Microsoft® BUDGET REFORM IN 1919 205 Among the general provisions of the reorganization act is the following : "All reports required by law to be made by any office, board, commission or other governmental organization or agency affected by this act shall hereafter be made by the executive and administrative head of the department in which such governmental organization or agency is placed or to which its rights, powers, duties or obligations are transferred." ' This paragraph can mean but one thing so far as the annual estimates are concerned. The estimates of the various bureaus, divisions, sections and independently dangling ofl&ces must be approved, signed and defended by the executive and administrative head of the depart- ment. According to the law, there will thus be annual estimates from but 21 departments. If the department heads take no interest in revising the requests of their subordinates — and in budget preparation the ofl&ces are clearly subordinate however independent they may be otherwise — the situation can be no worse than it now is. If, on the other hand, they study their estimates and bal- ance the needs of their subordinates, it wiU make possible a more satisfactory budget revision by the supervisor, the governor, and the legislature. The great success which has attended the careful and eflBicient work of Dr. George M. Kline, director of the commission on mental diseases, in the revision of the estimates of his 14 state institutions during recent years, is evidence of this. The creation of the oflSce of the superintendent of buildings 1 Part I, sec 8. Digitized by Microsoft® 2o6 BUDGET IN MASSACHUSETTS will also simplify the work of sifting departmental esti- mates for furniture and supplies, and may lead to other central purchasing efforts. The supervisor of administration is to "continue to be under the governor and coimcil, as now provided by law." ^ While this does not require, it leaves ample room for the development of that ofl&ce as the governor's per- sonal staff agency for the preparation of the budget, the standardization of salaries, the control of departmental printing, and as a general investigatory body. Since the supervisor is appointed for three years, it is of course possible that a new governor will find a hold-over super- visor of the opposition party a difficult man to deal with. What may happen to the budget procedure under these circumstances cannot be foretold. Taken all in all, however, the consolidation act will make the administration of the budget system more effective in Massachusetts. The ideas of administrative organization and executive control which the consolida- tion act partially embodies may, in the end, produce far- reaching and beneficial results, especially in the field of financial administration. ' Part II, sec. 15. Digitized by Microsoft® CHAPTER XI CONSTITUTIONAL CONFLICT OVER THE BUDGET IN 1920 The budget for 1920 was prepared by the supervisor of administration under the direction of Governor Coo- lidge, and was submitted to the general court on January 16, 1920. The budget was not presented in person, but was transmitted with the following brief letter : ^ Executive Department, Boston, January 16, 1920. To the Honorable Senate and House of Representatives. In compliance with the provisions of the Constitution, which provides that "within three weeks after the convening of the General Court the Governor shall recommend to the General Court a budget." I submit herewith my budget recommen- dations, showing probable requirements for the expenditures of $39,300,000. The total estimated available receipts fall short by $13,313,720.16 of meeting this amount. I recom- mend a State tax of not more than $12,000,000. Any addi- tional revenue necessary through requirements of this bud- get or by action of the legislature on its own initiative should, in my opinion, be provided by special taxes upon present tax- able sources other than cities and towns, or by levying such new taxes or excises as the General Court may deem advisable. CALVIN COOLIDGE. Governor Coolidge's recognition of executive respon- sibility for the budget in the phrase "my budget recom- 1 1920 House Document looo, page 5. 207 Digitized by Microsoft® 2o8 BUDGET IN MASSACHUSETTS mendations " is a clear advance over the irresponsible atti- tude indicated in the letter of transmittal of the 1919 budget. This recognition of responsibiUty is entirely vitiated, however, by the concluding sentence of the letter in which the entire revenue problem is passed on to the legislation for solution. The lack of pubhc interest in the presentation of the governor's budget is indicated by the notice given it in the press. The Boston Transcript, for example, which later manifested such a genuine interest in the budget problems, had no editorial comment to make. The only news item is relegated to the last four inches of the next to the last column of page 8. Even this brief notice con- tains a number of serious inaccuracies due to the misin- terpretation of the budget.^ The ig20 Budget. The 1920 budget follows the form of the 1919 budget. Fifteen pages are devoted to a text explanation of the more important problems with which the governor and the supervisor were forced to deal in preparing the budget. This is followed by tabular material as in 1919. The balance sheet as of the end of the 1920 period is an im- provement over that presented the previous year. It is to be noted that the 1920 budget is considerably more inclusive than any previous budget. The act of 191 9 preventing the presentation of departmental and insti- ' January i6, 1920. Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 209 tutional requests outside of the budget has served its purpose.^ The Expenditure Program. The controlling poUcy of Governor CooHdge's 1920 budget is one of rigid economy. For the maintenance of the state departments and institutions two million dollars more is recommended for 1920 than was spent in 1919. This is to aUow primarily for much needed salary increases and for higher material costs. In the field of capital out- lays the governor is exceedingly strict. His policy is to eliminate "all projects except such as appear to be particu- larly urgent or will undoubtedly produce economy in maintenance. ' ' The application of this policy has resulted in recommendations for new buildings and projects of but $2,946,000 as compared with recommendations of $4,319,000 in 1 91 9. These figures exclude the metro- politan districts, which are covered separately in the budget. Among the largest requests rejected after con- sideration are the $2,000,000 railroad project of the de- partment of public works, the $1,000,000 pier develop- ment, and the $593,500 laboratory for the department of health. In the case of one institution a request for coal handling machinery is refused, but in its place a smaller allowance is made for the experimental installation of oil- burning instead of coal-burning apparatus. This in- dicates the extent to which the supervisor of administra- ' General Acts of 1919, Chapter 13. Though a considerable number of re- quests were filed as usual in addition to the budget recommendations, they were returned to the departments by the house committee on rules. p Digitized by Microsoft® 2IO BUDGET IN MASSACHUSETTS tion has gone in revising the estimates and gathering data for the governor's budget. The recommended appropriations for highway main- tenance, improvement and construction amount to $3,916,650, all of which is to be financed without the issu- ance of bonds. The decision as to where and how this large appropriation will be spent is to be left with the de- partment of public works in accordance with the sound poUcy of the immediately preceding years. Nothing has done more to abolish "log-rolling" and the "pork-barrel" in Massachusetts and to inaugurate a consistent high- way policy than the provision in the budget of a lump sum appropriation for highway purposes to be expended under the direction and control of the highway commission, which since the consolidation of 191 9 has become a bureau of the department of public works. The continuation of this policy which makes private road bills superfluous is indicated by the governor's budget for 1920. One item of the expenditure program demands serious criticism. A sum of $1,036,046.51 is "reserved for recom- mendations in the Governor's inaugural message and for supplemental budgets." The governor's budget, it is to be noted, was presented a week after his inaugural message. It would seem essential that he should in- clude in his budget, at least in round numbers, the amounts which he thought should and could be appropriated for the projects he recommended in his inaugural. An execu- tive budget presupposes that the executive, no less than the departments and institutions, shall include all finan- Digitized by Microsoft® CONSTITUTIONAJ;. CONFLICT OVER THE BUDGET 211 cial plans in the budget. The budget should be as com- plete a financial program as the governor can make it. Indefinite allowances for unspecified purposes have no place in the budget. The Revenue Program. The governor and his budget makers faced a serious situation on the revenue side of the budget. The gover- nor's letter of transmittal, reproduced above, calls atten- tion to the fact that the budget carries appropriations of $39,300,000 with only $38,000,000 of revenues in sight. The balance of $1,300,000 is to be provided by "special taxes," or by lev3Tng "such new taxes or excises as the General Court may deem advisable." With these words the governor declined to put forward a program for meet- ing the situation and attempted to shift the leadership and the responsibility to the legislature and to its com- mittees. This refusal of the governor to advance a revenue pro- gram to finance his expenditure program is especially significant in view of the provisions of the budget amend- ment to the constitution and the 1918 budget statute. The constitution provides that "the governor shall recom- mend to the general court a budget which shall contain a statement of all proposed expenditures of the common- wealth for the fiscal year, including those already author- ized by law, and of all taxes, revenues, loans and other means by which such expenditures shall be defrayed." ^ 'Amendments of the Constitution, Art. LXIII, Sec. 2. Digitized by Microsoft® 212 BUDGET IN MASSACHUSETTS The budget act of 1918, which, under the constitutional provision, is binding on the governor, specifically states, "The budget shall also include definite recommendations of the governor as to the financing of the expenditures recommended and the relative amounts to be raised from ordinary revenue, direct taxes, or loans." ^ The revenue recommendations of the 1920 budget can hardly be termed "definite recommendations" or a statement of "all taxes, revenues, loans, or other means" for financing the appro- priations recommended. The revenue shortage forced the governor and the super- visor to search every source for additional funds. The first step taken was to revise upward the auditor's esti- mate of revenues from present taxes. How much more revenue was "discovered" by this process it is impossible to ascertain from the budget, because the budget revenue estimate is classified by departments while the auditor's estimate, as printed in the budget, is arranged by sources and each contain items omitted by the other. This pro- cess of "raising" more revenue merely by revising the estimates is not entirely unknown in American finance. The supervisor is not to be criticised, however, for making these upward revisions unless the actual revenues prove to be less than his anticipations. The fact that the supervisor has refused to accept the auditor's estimates as final must be taken as a point in the supervisor's favor. The auditor's estimates have frequently been a milHon dollars or so too conservative. In 191 8 the extent 'General Acts igiS, Ch. 244. Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 213 of this underestimate was some $4,400,000 and in 191 9, $2,715,000.^ The revenue estimates also contain an item of $3,100,000 to be realized from the sale of the great drydock constructed at public expense in Boston harbor. The justification advanced for placing these capital funds in the general firnd* is that at least an equivalent amoimt is to be appropriated from that fxmd for other capital outlays and for debt service. A similar trans- action is recommended in taking from the sinking fimds of the commonwealth an alleged surplus of $800,000 and adding this to the general fund to be used in meet- ing maturing bonds. The budget contains no detailed statement in support of this estimated surplus of the sulking funds. The Budget Before the House Committee on Ways and Means. The governor's budget, on receipt in the house, was re- ferred immediately to the house committee on ways and means. The usual hearings were imdertaken as in 1919, though it is to be noted that the senate and house com- mittees sat together for the first time in Massachusetts budget experience. Representative Frank E. Lyman was now chairman of the house committee in place of Repre- sentative Benjamin Loring Young, who though remaining a member of the committee, became th'» Republican majority floor leader. * 1918 House Document 300; 1919 House Document 300. Digitized by Microsoft® 214 BUDGET IN MASSACHUSETTS The ways and means committee found itself in a diffi- cult position. The governor's budget made no provision for a revenue deficit of over a milUon dollars. It recom- mended also the placing in the general fimd of the pro- ceeds from the sale of the drydock and the alleged surplxis in the sinking funds. The wisdom and constitutionahty of such action was not clear. This cast a shadow of doubt on a further estimated revenue of almost $4,000,000. In the face of this perplexing situation, the ways and means committee, imder the leadership of Mr. Young, began a quest for information. On January 20 an order drawn by Mr. Yoimg was offered in the house and subsequently adopted calling upon the treasurer and the auditor to "investigate and report to the House forthwith upon the financial condition of all sinking fimds estabUshed to extinguish any bond issues of the Commonwealth." ^ This was followed on January 29 by the passage of an order to the auditor to furnish the general court fuU information on the port of Boston fund and the financing of the drydock.^ Toward the latter part of February, the attorney-general was asked for his opinion as to "whether and to what extent the $3,107,366.93 which will be received from the Federal Government as the purchase price of the Boston Dry- dock may legally be considered a receipt into the general fund of the Commonwealth, and so be available to meet current appropriations made by the General Court." ' ' 1920 House Journal, January 20. ' Ibid., January 27. ' 1920 House Document 1342. Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 215 Results of Financial Inquiries. As a result of the inquiries directed to the auditor and to the treasurer the joint ways and means committee was placed in possession of certain very illuminating in- formation. The sinking fund study appears to bear out the gover- nor's statement that a large surplus exists in the sink- ing funds of the direct debt. Computing at 4%, the direct debt sinking funds show a surplus of slightly over $900,000. At 3-|-%, however, this becomes a deficit of $70,000, The contingent debt sinking funds, which the governor's budget does not mention, computed at 4% shows a deficit of $4,430,000. These computations are as of November 30, 1919, and are based on the assumption that all securities held in the various sinking funds will ma- ture and be paid to the commonwealth at par in time to discharge the indebtedness against which they are held. This assumption is unquestionably unsound. Only a part of these securities will mature in time, and the fact that many millions of dollars of these securities are far below par in the market would indicate a serious shrinkage. It is to be noted also that the estimated surplus becomes a deficit if sinking fund requirements are computed at 3-|-% instead of 4%.^ The drydock study shows that the project was financed from bonds to the extent of $2,000,000 and from the other funds to the extent of $1,100,000. The bonds • 1920 House Document 1339. Digitized by Microsoft® 2i6 BUDGET IN MASSACHUSETTS issued were part of a nine million dollar loan for port de- velopment, of which $7,700,000 is still outstanding,^ The Opinion of the Attorney-General. The question of the legahty of the appropriation for general purposes of the proceeds of the sale of the dry- dock rendered by the attorney-general is an unusual docu- ment. He points out that "a certain portion of the price received from the United States for the drydock is the proceeds of bonds which are still outstanding and impaid." After considerable computation this amoimt is fixed at $1,992,213.85. He then cites Article LXH of the amend- ments to the constitution which provides in section 4: "Borrowed money shall not be expended for any other purpose than that for which it was borrowed or for the reduc- tion or discharge of the principal of the loan." And on this basis concludes that the $1,992,213.85 "may not be used save for the purposes for which the money was borrowed or to repay the loan." After completely disposing of the legal and constitu- tional question, and after indicating the extent to which the fimds in questions may be used, the attorney-general proceeds to outline a suggested financial policy for hand- ling the entire matter. This is the unexpected feature of his opinion. His recommendations are (i) that $250,000 be used to meet maturing obligations of the port development loan, (2) that $600,000 be appropriated from this resource for port development instead of from ^ 1920 House Document 1273. Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 217 other permanent funds as recommended in the gover- nor's budget, (3) that $1,000,000 be used to purchase highway bonds which it is suggested should be issued to finance the highway construction program which the governor's budget provides for from current revenues, and (4) that the remaining $142,213.85 be used for port development or held to apply on the maturing port de- velopment bonds of 1921.^ Though the attorney-general has attempted to guard himself against the suspicion of entering the field of financial policy in this opinion, the following paragraph indicates the true purport of his suggestions : "In conclusion, I may suggest that the determination of the question submitted to me by your committee must de- pend ultimately upon the principles of sound finance rather than upon the legal principles involved. By that, I mean, that whether the Commonwealth has or has not the power imder the Constitution to transfer money borrowed for the capital account to the income account and to use it for cur- rent expenses should not determine the course to be pursued by your committee. The General Court has power under the Constitution to raise the entire amount required for the expenses of the year by a bond issue, making any state tax unnecessary and passing on to future taxpayers the burden of paying the budget for the current year. To use money received from the sale of the property of the Commonwealth, which property has not yet been paid for, is an indirect way of ac- complishing the same result. If the principle of using the proceeds of the sale of the drydock for current expenses is sound, a sale of the Commonwealth Pier to the Federal Govern- ment for $5,000,000, and of other property acquired by the 1 1920 House Document 1342, page 4. Digitized by Microsoft® 2i8 BUDGET IN MASSACHUSETTS port development loan would make it possible to do away with the state tax altogether or reduce it to an inconsiderable sum. The motive which has constrained the General Court to make provision for current expenses from current income is as cogent to prevent passing on the burden to future taxpayers indirectly by a sale of the property of the Commonwealth acquired with borrowed money as directly by means of a bond issue." ^ The nature of the attorney-general's opinion and his specific reference to conferences with members of the joint committee on ways and means lead to the conclusion that members of that committee had no small part in determin- ing the opinion of the attorney-general on the broader questions of pubUc finance. Public Criticism of the Governor's Budget. The attorney-general's opinion of March i made it clear that the governor's budget recommendations were not only unsound financially on certain matters, but that the recommendations concerning the drydock were un- constitutional. On March 3 the Boston Transcript in its leading editorial discusses the alleged sinking fimd surplus as well as the constitutional limits on the use of the proceeds from the sale of the drydock, and observes that the state faces a "crisis of twofold nature" in which the choice lies between a sacrifice of the established cus- tom of utilizing capital funds for capital purposes alone or the increase of the tax burden. The editorial concludes : "This choice is so serious and so critical for the State that we believe the governor will not hesitate to take his recent ' 1920 House Document 1342, pages 4, 5. Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 219 budget recommendations newly under advisement in the light of the fresh information which has been brought to bear upon them, and to revise them after a fashion which will not only make a sound solution of the present difficulty but also com- prise an adequate discharge of the responsibility which the constitution now imposes upon the governor to recommend to the General Court a fully workable statement of ' all taxes, revenues, loans and other means' by which the expenditures of the year shall be defrayed." TJie implications of the phrase "an adequate discharge of the responsibihty which the constitution now imposes upon the governor" is worthy of note. The Boston Herald, under the heading "Budget and Dry dock, " also comments editorially on the unsatisfactory position in which the budget was placed by the attorney- general's opinion, and observes, " Governor Coolidge will not be able to fulfil his hope of keeping the state tax at the $12,000,000 level." ^ Committee Requests Budget Revision. , On receipt of the attorney-general's opinion, the com- mittee on ways and means addressed the following letter to the governor, the significance of which is readily ap- preciated in the light of events : March 3rd, 1920. His Excellency Calvin Coolidge, Governor of the Commonwealth. Sir: I am directed to transmit to you the following vote, which was unanimously passed at a meeting of the Conunittee on Ways and Means held yesterday afternoon : ' March 4, 1920. Digitized by Microsoft® 220 BUDGET IN MASSACHUSETTS Voted, That in view of the opinion of the Attorney-General relative to the funds received from the sale of the Boston Dry Dock and the Report of the Treasurer and Receiver- General and the Auditor relative to the financial condition of the Sinking Funds of the Commonwealth, a letter be trans- mitted by the clerk of the committee to His Excellency, the Governor, requesting him to submit to the General Court a supplementary budget containing a statement " of all taxes, revenues, loans and other means " by which the expenditures recommended in his original budget message shall be defrayed. Respectfully yours, H. L. Shattuck, Clerk, Committee on Ways and Means. The Governor's Revised Budget. The attorney-general's opinion, the studies of the audi- tor and the treasurer, the public criticism and the vote of the committee on ways and means brought the governor to a significant revision of his budget. On March 4 he wrote to the general court submitting a "new balance between estimated receipts and recommendations for 1920." ^ The new recommendations eliminated the fol- lowing items : Sale of the drydock $3,107,366.93 State tax 12,000,000.00 The indefinite " Special taxes " 1,313,720.19 Total $16,421,087.09 and inserted in their place : Receipts from the sale of the drydock to be devoted to paying port development bonds maturing in 1920 $250,000.00 Additional levy on inheritances 171,087.09 Additional levy of corporation income tax 2,000,000.00 State tax 14,000,000.00 Total $16,421,087.09 ' 1920 House Document 1350, page i. Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 221 The revised recommendations thus call for a state tax of two millions more than the original budget, and in place of the indefinite suggestions of the budget with regard to "special taxes," the governor recommends a substantial increase of the levies on inheritances and on corporations. The troublesome receipts from the sale of the Boston drydock are disposed of as follows under the revised bud- get plan : To meet port development bonds maturing in 1920 .... $250,000.00 To the port of Boston fund, to replace appropriations from that fund in 1918 to complete the drydock 778,805.34 To a special fund to be used to purchase and cancel port de- velopment bonds under favorable conditions, and pending such disposition to be available for investment in other bonds or notes of the commonwealth 2,078,561.59 Total sale price of drydock $3,107,366.93 It will be seen that this disposition not only conforms with the constitutional requirements as interpreted by the attorney-general, but that it also meets the criticism of the press and of the members of the legislature. Restoration of the Constitutional Principal of Executive Responsibility. Though the financial recommendations of the revised budget are by no means unimportant, the truly significant feature of this revision lies in its restoration, at least in outward form, of the constitutional principal of executive responsibihty for the budget. In the original budget, the governor dodged the issues involved in the revenue Digitized by Microsoft® 222 BUDGET IN MASSACHUSETTS shortage and passed on to the legislature and its com- mittees the solution of the financial problems of the state. In the words of the Boston Transcript, the 1920 budget did not "comprise an adequate discharge of the re- sponsibility which the constitution now imposes upon the governor to recommend to the general court a fuUy workable statement of 'all taxes, revenues, loans and other means ' by which the expenditures of the year shall be defrayed." As a result of inquiries and pressure by the joint committee on ways and means, the governor was induced not only to revise certain objectionable finan- cial features of his budget, but also to recognize his re- sponsibility for the budget and to recommend specific methods of raising the revenues to finance his expendi- ture program. Seen in its proper light this conflict between the gover- nor and the legislature over the 1920 budget is a consti- tutional struggle of real importance in the evolution of the Massachusetts budget. It was a real crisis. If the position of the governor in his original budget had been allowed to stand unchallenged, and the conception of executive irresponsibihty there evinced allowed to con- tinue, the executive budget system of Massachusetts would have been gradually destroyed. The leading editorial of the Boston Transcript of March 5 indicates that the more serious newspapers appreciated the fundamental nature of this constitutional precedent. After approving of the fiscal policy adopted by the gover- nor in his revisions, the editorial concludes : Digitized by Microsoft® CONSTITUTIONAL CONFLICT OVER THE BUDGET 223 " And the governor's decision involves something more even than this. It upholds and supports the new principle of execu- tive responsibility for the management of the finances of Mas- sachusetts which was proclaimed by a recent constitutional amendment. It sets a standard for future governors to ob- serve in the assiunption of this new responsibility. It squares with the best modern concepts of good practice in govern- ment." \ Digitized by Microsoft® CHAPTER XII CLASSIFICATION OF THE MASSACHUSETTS BUDGET SYSTEM What kind of budget system does Massachusetts have ? This is a question that may well be asked at the close of the story of the development of the budget system in Massachusetts. There are those who have said it was really a "legislative budget," others have called it an "advisory executive budget" or a "governor's budget," and still others, an "executive budget."^ It is clear that such a difference of classification must rest primarily on a difference of definition of terms. To clear up this confusion, the following classification of budget systems is suggested as a means of placing the Massachusetts system. Classification of Btidget Systems. A budget system is a system of finance in which expendi- tures are made and revenues provided in accordance with a plan. If there is no plan, there is no budget system; if there is a plan, there is at least the first essential of a budget system. An examination of the various budget systems indicates that there are four important stages through which each budget must pass. These are : 'A. E. Buck, Natioiml Municipal Review, August, igig; 1918 House Doc. 1 185; Joseph Walker, Convention Debates, Vol. 107, p. 130; F. W. Powell, Municipal Research No. 91 ; Report o£ New York Reconstruction Commission, 1919, p. SOS. Digitized l^^Microsoft® CLASSIFICATION OF THE BUDGET SYSTEM 225 1. Preparation of the plan. 2. Authorization of the plan. 3. Execution of the plan. 4. Audit of the execution of the plan. Each of these activities may be entrusted to various authorities of the government. An examination of the state budget systems shows a wide variety of methods used in the preparation of the budget. In some states the governor is responsible, in others it is a legislative committee, an administrative board, or a commission of legislative and executive offi- cers. The authorization of the plan laid down in the budget is always entrusted to the legislature, though in a few cases restrictions are placed upon the legislature in order to prevent any radical reorganization of the bud- get plan by the legislature. Responsibility for the execu- tion of the plan, after authorization by the legislature, depends entirely upon the structure and organization of the executive branch of the government. Where the executive is composed of a hundred or more independent boards, departments, commissions, trustees and officers, the responsibility for the execution of the plan is divided among as many entities. Where the executive depart- ment is unified under the chief executive, he becomes responsible for the execution of the plan. The audit of the execution of the plan is either entrusted to an ofiicer responsible to the governor, or to an executive ofl&cer independent of the governor, or to an officer responsible to the legislature. Digitized by Microsoft® 226 BUDGET IN MASSACHUSETTS It is thus evident that budget systems classified by the preparation of the budget may be of the executive, leg- islative, administrative board, or administrative-legis- lative board type; while if classified by the agency of ratification, they are legislative, or restricted legislative ; or when classified by execution they are of the multiple executive or unified executive tj^es ; and finally if clas- sified by the audit of execution, they are of the executive, legislative, or independent auditor type. Classification of the Massachusetts Budget System. The Massachusetts budget system, as it now stands, is not classified easily. The legal provisions may be clear enough, but the execution of those provisions leaves considerable doubt as to where the real responsibility hes. The preparation of the Massachusetts budget is in the hands of the governor. Both the law and the constitution are clear on this point. During the first year xmder the new system, however, the governor cer- tainly accepted little responsibility. It was shifted to the supervisor of administration, and then shouldered by the chairman of the house ways and means committee. This tendency toward a disintegration of executive responsibility for complete budget recommendations was checked by the legislature in 1920, so that it may be said that in 1920 the governor was responsible for the prep- aration of the budget, though the policies adopted in the budget were largely those of the legislative leaders. The ratification of the budget is entrusted to the legis- Digitized by Microsoft® CLASSIFICATION OF THE BUDGET SYSTEM 227 lature with the restrictions that the budget recommenda- tions shall be embodied in a single bill to have precedence over aU other appropriations and that appropriations not based on the governor's recommendations shall be self-financing. The execution of the financial plan will be largely in the hands of a score of department heads as soon as the recently adopted reorganization of the executive branch becomes effective. Heretofore it has rested with over a hundred independent departments, boards, commissions and institutions. The only effective control over the department heads is the supervisor's control of salaries and appointments. The reorganization fails to place the executive responsibility upon the governor through its failure to make the terms of ofl&ce of the department heads coincide with the governor's, and through its con- tinuation of the elected governor's council. This failure was intentional so far as the constitutional convention was concerned. The audit of appropriations and revenue collections is entrusted to an elected auditor who is thus independent of the governor and of the legislature. The present Massachusetts budget system may there- fore be classified somewhat as follows : In the prepara- tion it is an executive budget system, though the leader- ship is legislative ; in the authorization of the plans it is of the restricted legislative type ; in the execution of the plans it is of the partially unified executive type ; and in the audit of the execution it is of the independent auditor type. Digitized by Microsoft® CHAPTER XIII OUTSTANDING FACTS IN THE EVOLUTION OF THE MASSACHUSETTS BUDGET In Massachusetts the evolution of the present budget system has extended over a long period. The origins of many of its fundamental principles stand recorded in the documents and laws of colonial, provincial and pre-Revolutionary days. The "budget system," how- ever, was never the aim of reformers in Massachusetts xmtil within the last decade, and whUe the chief financial reforms of the past have laid the foundations for the pres- ent system, there is no evidence to show that there was any conscious movement toward a budget system imtil the legislative session of 1910. The following paragraphs summarize briefly the more significant events in this long development. Evolution of Estimates. The first general coiut imder the Massachusetts con- stitution of 1780 issued to the people of the state a financial program and appeal containing an estimate of the prob- able needs of the civil and military departments of the state government. The next evidence of estimates of financial needs is soon after 1800, when regular annual estimates, are submitted to the legislature by the treasurer. The duty of preparing the estimates was transferred to the newly created auditor in 1849. I^i 1858 a very im- Digitized'Bf Microsoft® OUTSTANDING FACTS 229 portant change was made by the requirement that each administrative ofi&cer should make his own estimates, instead of leaving this task to the auditor. These esti- mates were sent by the departments directly to the speaker of the house, and by him to the committee on finance. From this time on, the estimates had the advantage of representing the estimates of the men who were doing the work, but they had the disadvantage of ceasing to repre- sent a unified plan of expenditures. In 1872 the secretary of the coinmonwealth was made recipient of the estimates and was required to publish them "in one document." This task was next entrusted to the auditor, beginning with 1885. In igio the governor was required to receive the departmental estimates and to submit them to the general court together with his recommendations. This first attempt to secure the sifting of the estimates by the governor — the first in aiiy state of the Union — failed in operation, and the law was repealed in 191 2, when the commission on economy and efficiency was created and authorized to report to the legislature with regard to de- partmental estimates. The commission was replaced by the supervisor of administration in 1916. In 1918 the budget system was adopted, following the presentation of the budget for 191 8 by a recess committee of the legislature. Authorizations. The authorization of appropriations and revenue meas- ures has always been a function of the legislature. The Digitized by Microsoft® 230 BUDGET IN MASSACHUSETTS annual voting of direct taxes goes back to colonial days, though the annual voting of appropriations was not made all inclusive till 1859, when continuing appropria- tions were abolished. The freedom of the legislature in voting money bills has been gradually quahfied. Special legislative rules were passed to guard against ill-considered action on money biUs and tax measures as early as 1808; in 181 6 a date was fixed early in the session after which no motion for the grant of money might be entertained; in 1858 the house rule was adopted, requiring the reference of all appropriation measures to a single committee; during the same year the rule was estabhshed that appropriations might not be passed except for objects or purposes aheady authorized by law; and finally, in 1918, it was determined by constitutional amend- ment that appropriations based on the budget should be gathered together in a single bill with precedence over all other appropriations, that private appropriation meas- lures should be self-financing, and that the authoriza- tion of loans should be restricted. Audit of Expenditures. Until 1849 the audit of expenditures and revenues was handled by a committee of the legislature and though the office of auditor was established at that time, it was not until 1855 that he was made independent of the legis- lature and the governor by direct election. In 1858 the auditor's position was materially strengthened ; and in 1908 he was given power to require the departments Digitized by Microsoft® OUTSTANDING FACTS 231 and institutions to install uniform accounts and records. The actual audit of institutional expenditures was unknown until 1908. Execution. In 1780 a large part of the funds spent by the common- wealth were entrusted to conunittees of the general court. Under the new constitution, however, this practice was soon discontinued. In 1785 the governor by veto put an end to the "Committee to Receive, Concur and Pay Accounts," thereby terminating the last important executive committee of the legislature. In 1855 the nation-wide wave of democracy carried an amendment to the constitution making a number of executive officers elective, thereby splitting the executive at the source. The habit of independent commissions and overlapping boards next had its vogue, and in spite of clear and out- spoken attacks on the lack of executive responsibility, the first efforts at reform were made within the last decade and the first results achieved in 191 7, 1918, and 1919. These dates serve merely to mark the more important steps in the development of the present Massachusetts budget system and to call attention to its gradual evolu- tion. It has been a slow and unbalanced growth. First one part of the financial process and then another has been recognized as faulty, and has been improved. The Dynamic of Budget Reform. The most important single force lying back of the im- provement of financial procedure and of the adoption of Digitized by Microsoft® 232 BUDGET IN MASSACHUSETTS the budget in Massachusetts has been the effort to keep expenses and direct taxes down. In the history of Massachusetts since 1691, there have been three distinct efforts to estabUsh financial planning. The first of these came to a head in 1733. It was the direct result of the "calculating and parsimonious charac- ter" of the people's representatives. It was foimd that a unitary financial system formed an effective means of limiting expenditures and controlling executive action. In 1858, the second effort was made as a means of decreas- ing direct taxation. The final constitutional establish- ment of the budget in 191 8, following eight years of direct agitation, was the result of an effort to curb the state tax and to control the "tremendous increase in govern- mental expenditures." ^ Legislative Leadership. In each of these movements to establish a budget system the legislature itself has taken the lead. In 1733, unitary financial planning was a method of legislative control over executive acts. In 1858, the governor was emphatic in his demand for economy, but it was the legislature which attempted to establish a unitary financial system as a means of securing that economy. In 1910, the first efforts toward a budget were made by the legislature, and the constitutional amendment of 1918 was little more than a ratification of the budget system already 1 Representative Benjamin Loring Young, in 1919 budget speech, House Doc. 1370, Digitized by Microsoft® OUTSTANDING FACTS 233 inaugurated by the legislature. In 1910, 1918, 1919, and 1920, the prime movers were members of the house com- mittee on ways and means. The Limits of Public Interest. The discussion in the legislature of 1918 and in the constitutional convention, and the vote on the budget amendment, show that there is no great popular interest or enthusiasm in budget reform. What interest there is cuts across both political parties and appears to be that of the more progressive public servants and the business men of the cities. Their influence was enough to write the budget system into the Massachusetts state constitu- tion, though the convention was extremely antagonistic to any expansion of executive powers. The Influence of the Budget Environment. In 1910 Massachusetts tried to make the executive responsible for submitting a financial plan to the legisla- ture. The attempt was a failure, and served only to preju- dice the legislators against any future increase of the governor's powers. This failure was the direct result of the personal and political elements and forces which formed the setting and environment of the new fiscal venture. The governor had no knowledge of budget methods or principles and he and the legislature were of opposite political parties. This initial breach was widened by the energetic and bellicose character of the chief executive. The result was a bitter conflict, a conflict Digitized by Microsoft® 234 BUDGET IN MASSACHUSETTS the solution of which the Massachusetts constitution does not provide. Though the governor was reelected, the state was so districted and so organized politi- cally that the legislature was each time increasingly antagonistic. In 1 91 8 the attempt was renewed to make the governor responsible for the preparation and presentation of a plan for financing the commonwealth. The personal and pohtical environment proved more favorable on this occasion. No controversy developed between the execu- tive and the legislature, in fact the "silent" nature and tactful policy of the governor transferred the real respon- sibility for the budget to the chairman of the house com- mittee on ways and means, an officer recognized neither by the constitution nor by the laws of the state. In 1920 the governor was forced, after a constitutional strug- gle, to reassume responsibility for a complete budget, but as in previous years the real financial leadership, as reflected in the budget, is that of the house committee on ways and means. The personal and pohtical forces involved have again exerted a powerful influence on budget evolution. Three Years of Budget Experience. Three years of practice is unquestionably too short a time on which to base any very weighty conclusions. This is all the more the case as the 19 18 budget was the work of a legislative committee. Then, too, 1918 and 1919 were war years, and war years, even where there Digitized by Microsoft® OUTSTANDING FACTS 235 is an established budget, have a tendency to derange the fiscal system. Nevertheless, the following facts stand out clearly in the recent experience of Massachusetts. 1. The Value of the Btidget System. The budget system is worth while. It has already resulted in an understanding and a discussion of the fiscal problems of the commonwealth both in the general court and in the public press that was previously impossible. It has resulted in a more systematic and sounder financial poKcy, and is to be credited with having prevented an unnecessarily large increase of state expenditures during the unsettled war years. It has been the decisive factor in broadening the financial policy of the state, thus mak- ing it practically impossible to secure, by the familiar tactics of log-rolUng, the passage of private appropria- tions for projects of no advantage to the state as a whole. 2. The Need of a Btdget Staff. A permanent staff agency responsible for the routine work of gathering and sifting estimates is indispensable. The experience with the sifting of financial plans and esti- mates in 1910 as well as the experience in 1918, 1919, and 1920 is evidence of this need. WTiether the preparation of the budget is vested in a recess committee, the gov- ernor, or the ways and means committee, the administra- tive and clerical work of preparing the budget must of necessity be entrusted to a permanent staff agency. Digitized by Microsoft® 236 BUDGET IN MASSACHUSETTS 5. The Failure of Massachusetts Provisions to Make the Governor Responsible for the Budget. The budget provisions of the Massachusetts constitution and law were intended to make the governor responsible for the budget, and to require him to assume the financial leadership in the affairs of the commonwealth. In ^his they have failed. The legal and constitutional provisions have not created an environment conducive to the de- velopment of executive responsibility for the budget, nor has it been possible to fix leadership upon the governor by law, when as a matter of fact the real leadership of knowledge, experience and ability was to be foxmd in the legislature. The governor's control of the executive departments, even with the consolidation, is spasmodic and subject to the approval of the independently elected council, with the result that he neither executes the budget, nor has the working knowledge necessary to stand sponsor for a well-balanced, rock-bottom plan for financing the commonwealth. He is not required to present his budget in person and thus to make his responsibihty dramatic and personal. He has no right to enter the legislature and debate his proposals, nor can he be required to appear in their defense. And finally the only budget that is publicly advocated before the legislature, under present procedxure, is the revised plan of the house committee on ways and means, and its explanation and defense are in the hands of a member of the legislature. While the constitutional precedent of 1920 has forced the governor to assume the outward form of budget responsibihty ; it has not in Digitized by Microsoft® 'OUTSTANDING FACTS 237 reality shifted the financial leadership to him. Under present conditions, with present men and present problems, the constitutional and legal provisions of Massachusetts have not developed a responsible executive budget system. The Permanency of the New Btidget System. Inasmuch as the present financial system of Massa- chusetts is the result of many years of experimentation and progress, it is certain that still further developments are ahead. An evolutionary view of the past requires an evolutionary view of the future. What course these future changes will follow can only be conjectured at the present time, but one thing appears reasonably certain : whatever happens, the budget system has come to stay. It is a step forward that will not be retraced. The gen- eral court of Massachusetts will never again proceed to the consideration of appropriations and taxes without first requiring some responsible agency to present a plan for controlhng and financing the work of the common- wealth. Digitized by Microsoft® Digitized by Microsoft® APPENDICES APPENDIX I THE BUDGET AMENDMENT OF THE MASSACHU- SETTS CONSTITUTION RATIFIED NOVEMBER, 1918 Section i. Collection of Revenue. — AU money received on ac- count of the commonwealth from any source whatsoever shall be paid into the treasury thereof. Section 2. The Budget. — Within three weeks after the con- vening of the general court the governor shall recommend to the general court a budget which shall contain a statement of all proposed expenditures of the commonwealth for the fiscal year, including those already authorized by law, and of all taxes, rev- enues, loans and other means by which such expenditures shall be defrayed. This shall be arranged in such form as the general court may by law prescribe, or, in default thereof, as the gov- ernor shall determine. For the purpose of preparing his budget, the governor shall have power to require any board, commission, oflScer or department to furnish him with any information which he may deem necessary. Section 3. The General Appropriation Bill. — All appropria- tions based upon the budget to be paid from taxes or revenues shall be incorporated in a single bill which shall be called the gen- eral appropriation bill. The general court may increase, decrease, add or omit items in the budget. The general court may provide for its salaries, mileage, and expenses and for necessary expendi- tures in anticipation of appropriations, but before final action on the general appropriation bill it shall not enact any other appro- priation bill except on recommendation of the governor. The governor may at any time recommend to the general court sup- 239 Digitized by Microsoft® 240 APPENDICES plementary budgets which shall be subject to the same procedure as the original budget. Section 4. Special Appropriation Bills. — ■ After final action on the general appropriation bill or on recommendation of the governor, special appropriation bills may be enacted. Such bUls shall provide the specific means for defraying the appropriations therein contained. Section 5. Submission to the Governor. — The governor may disapprove or reduce items or parts of items in any bill appropri- ating money. So much of such biU as he approves shall upon his signing the same become law. As to each item disapproved or reduced, he shaU transmit to the house in which the bill originated his reason for such disapproval or reduction, and the procedure shall then be the same as in the case of a bill disapproved as a whole. In case he shall fail so to transmit his reasons for such disapproval or reduction within five days after the bill shall have been presented to him, such items shall have the force of law unless the general court by adjournment shall prevent such trans- mission, in which case they shall not be law. Digitized by Microsoft® APPENDIX II AN ACT TO ESTABLISH A BUDGET SYSTEM FOR THE COMMONWEALTH OF MASSACHUSETTS Chapter 244 of the General Acts of 1918 as Amended by Chapter 52 of the General Acts oe 19 19 Section i. Every oiScer or board having charge of any de- partment, institution or undertaking which receives an annual appropriation of money from the treasury of the commonwealth, including annual appropriations to be met by assessments, shall annually, on or before the fifteenth day of October, submit to the supervisor of administration statements showing in detail the amounts appropriated for the current fiscal year, and estimates of the amounts required for ordinary maintenance for the ensuing fiscal year, with an explanation of any increased appropriations recommended, and with citations of the statutes relating thereto, together with such other information, from time to time, as may be required by the supervisor of administration. The said esti- mates shall not include any estimate for any new or special pur- poses or objects not authorized by statute. The officer or board submitting the estimates shall file on the same date duplicate copies thereof with the auditor of the commonwealth. Section 2. Officers, heads of departments, boards, commissions and trustees of institutions who, in their annual reports or other- wise, recommend or petition for the expenditure of money from the treasury of the commonwealth from any source of revenue, includ- ing expenditures to be met by assessments or the issue of notes or bonds, for any purpose or object not covered by the estimates required to be submitted under the provisions of section one of this act shall, on or before October fifteenth of each year, submit esti- R 241 Digitized by Microsoft® 242 APPENDICES mates thereof in detail to the supervisor of administration, together with such other information as he may require from time to time. Section 3. The auditor of the commonwealth shall annually, on or before the twenty-sixth day of December, prepare and file with the clerk of the house of representatives and with the super- visor of administration statements of state accounts setting forth in comparative tabulations the estimates filed under the provisions of section one of this act and estimates of all claims and other ex- penditures authorized by the statutes, including interest, sinking fund and serial bond requirements, the appropriations for the pre- ceding year and expenditures for all state purposes for the preced- ing three years. The auditor shall further prepare and file with the said clerk and supervisor, on or before the said twenty-sixth day of December, his estimates for the ordinary and other revenue of the commonwealth in comparative tabulations with the actual revenue for the preceding three years, together with a statement of the free or unencumbered cash balance and other resources avail- able for appropriation. Section 4. The supervisor of administration shall study and review all estimates and requests for appropriations and other authorizations for expenditures of state funds filed with him as provided in this act, and shall make such investigations as may be necessary to enable him to prepare a budget for the governor, setting forth such recommendations as the governor shall deter- mine upon. The governor may call upon the department of the auditor for Laformation relative to the finances of the common- wealth and for assistance in the preparation of the budget. For this purpose the auditor may appoint a deputy in his department at an annual salary not to exceed thirty-five hundred dollars. The budget shall be submitted by the governor to the general court annually within three weeks after the general court convenes, and it shall embody all estimates, requests and recommendations for appropriations or other authorizations for expenditures from the treasury of the commonwealth. The budget shall be classified and designated so as to show separately estimates and recom- mendations for : (o) expenses of administration, operation and Digitized by Microsoft® APPENDIX II 243 maintenance; {b) deficiencies or overdrafts in appropriations of former years; (c) new construction, additions, improvements and other capital outlay; (d) interest on the public debt and sinking fund and serial bond requirements; and (e) all requests and pro- posals for expenditures for new projects and other undertakings; and shall include in detail definite recommendations of the gov- ernor relative to the amounts which should be appropriated there- for. The budget shall also include definite recommendations of the governor as to the financing of the expenditures recommended and the relative amounts to be raised from ordinary revenue, direct taxes or loans. All appropriations based upon the budget to be paid from taxes or revenue shall be incorporated in a single bill to be designated the general appropriation bill. With the budget the governor shall submit to the general court such messages, state- ments or supplemental data with reference to the budget as he may deem expedient, and from time to time during the session of the general court he may submit supplemental messages or recom- mendations relative to appropriations, revenues and loans. Section 5. Sections three and four of chapter seven hundred and nineteen of the acts of nineteen hundred and twelve, as amended by chapter two hundred and seventy-eight of the General Acts of nineteen hundred and seventeen, and all other acts and parts of acts inconsistent herewith, are hereby repealed. Section 6. This act shall take effect on the first day of July in the year nineteen hundred and eighteen. Printed in the United States of America. Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft®