The Researcher’s Digest: November Newark Research Bureau discovers a paradox in cash basis law and a method of curing it.

A M O N G the various kinds of attempts to rescue municipalities from their de-

pression difficulties and to prevent the re- currence of such difficulties, New Jersey’s pioneering efforts with mandatory cash basis have attracted a great deal of atten- tion. The question is not only whether cash basis is a useful principle, but also whether the New Jersey law may be taken as a model to guide other states and localities.

A new pamphlet of the Newark Bu- reau of Municipal Research, called A New Measure of Cash Basis, therefore takes on greater importance than might ordinarily be given to a study of local application. The bureau has studied the “operating cost” of cash basis in Newark during the past five years, in the light of the experience with tax delinquency and the budget reserve established to offset such delinquency. Under the cash basis system, it will be remembered, the muni- cipality is required to add a “reserve” to the current tax levy so that collections in cash will equal the amount needed, thus avoiding any need for borrowing against uncollected taxes. On the other hand, delinquent tax collections are permitted to be included as a receipt in the budget, as an offset to the aforementioned reserve, because no commitments or loans are out- standing against such taxes. The bureau points out that the “net cost” to cash basis is zero if delinquent tax collections equal delinquency on the current levy-in which case the amount of delinquent taxes out- standing must remain unchanged ; that there is a “net credit” from cash basis if delinquent tax collections exceed delin- quency on the current levy-in which case the amount of delinquent taxes outstanding must decrease; and that there is a “net cost” to cash basis if delinquent tax collec- tions are less than delinquency on the current levy-in which case the amount of delinquent taxes outstanding must increase.

But these “cash basis rules” did not seem to apply to Newark, the bureau found. For although the delinquent tax collections were less than delinquency on the current levy, delinquent taxes out- standing had decreased, not increased!

Seeking the reason for the apparent paradox, the Newark bureau discovered that “the operation of cash basis under present statutory requirements provides a reserve not only for uncollected taxes but also, automatically, for assessment abate- ments. If taxes are levied in one year on values which prove to be false-through assessment reductions and remission of taxes-this experience is automatically re- flected in the reserve requirement for the following year. Assessment abatements, after the levy has been fixed, reduce the amount of the levy actually collectible, and also reduce the ratio of collections when related to the full levy. As a result, tax collection estimates in cash basis budgets automatically provide not only for anticipated uncollected taxes, but antici- pated assessment abatements as well.”

The remedy? “If a change were made providing that the city should include an appropriation for abated taxes, as was done formerly, then the city should be permitted to estimate current tax collec- tions on the basis of actual experience in relation to the amount collectible. With abatements provided for, there would be no reason to require the city to estimate only on the basis of collections from the total levy. Unless this is done, and with a fluctuating amount of assessment ahate- ments, erratic trends in tax collection ex- perience, and in the amount of reserve required, will continue.”

Calling the present method “definitely misleading, and unfair to the principle of cash basis operation,” the bureau says that it is prepared to draft legislation to give its suggestions effect.

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War and Research

NATIONAL MUNICIPAL REVIEW [November

An ominous reminder of the effects of war on this continent is contained in the September 20th White Paper o f the Toronto Bureau of Municipal Research. A note on the first page of the article, de- voted to “The Trend of Development in Police Administration,” says: ‘‘This White Paper was drafted before the outbreak of war. I t is evident that the pressure of work on the force in discharging its duty of protecting the lives and property of citizens will be greatly increased.”

Government Workers in Kansas City The Kansas City Civic Research In-

stitute issued two bulletins on September 21st and 28th dealing with “City Em- ployees-1928, ’38, ’39,” and “County Employees-1928, ’39.” Four out of nine city departments had less employees in July 1939 than in December 1938, and the grand total for July 1939 was almost a thousand less than in 1938. A similar decline in number of employees has oc- curred in the county government.

“Dollars and Sense” The Governmental Research Institute

of St. Louis inaugurated a new series of one-page releases on October Sth, to be called “Dollars and Sense in Government.” To supplement the institute’s periodical, Mind Your Business, the new bulletins will constitute a capsule of facts of local interest for local citizens, and will appear as often as material warrants. The second issue of the new series also appeared on October Sth, comparing the bonded debt of St. Louis with that of twelve other American cities.

Research Bureau Reports Received

Finance A New Measure of Cash Basis. Bureau

of Municipal Research, Newark, N. J. October 1939. 14 pp.

Public Revenue, Expenditures and Debt. Citizens’ Research Institute of Canada. Canadian Taxation, September 30, 1939. 3 PP.

Trend of Local Costs in N. Y . State. New York State Bureau o f Governmental Research. Bulletin, October 2, 1939. 2 pp.

Parking Meters Parking Meters. Buffalo Municipal Re-

search Bureau, Inc. Just a Moment, Octo- ber 19, 1939. 3 pp.

Personnel “City Employees--1928, ’38, ’39.” Civic

Research Institute. Kansas City PubEic Af’airs, September 21, 1939. 5 pp.

“County Employeesl928, ’39,” Civic Research Institute. Kansas City Public Afairs, September 28, 1939. 4 pp.

Local Government Employees Per 1,000 Population. New York State Bureau of Governmental Research. Bulletin, Septem- ber 25, 1939. 4 pp.

School Enrollment and Personnel. Civic Research Institute. Kunsas City Public Afuirs, October 5, 1939. 5 pp.

Public Safety The Trend of Development in Police

Administration. Bureau of Municipal Re- search, Toronto, Canada. White Paper No. 242, September 20, 1939. 4 pp.

War How to Keep Out of War. The Dayton

Research Association. Facts, Bulletin No. 66. September 25, 1939. 1 p.

Water and Sanitation Water and Sewage-A Community Prob-

lem. The Citizens League of Cleveland. Greater Cleveland. September 21, 1939. 4 PP.