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རིགས མ ལ བ ད སྨྲ ས་ལུ་གྲས་བ་ལ་ངང དང་མ་དུག་ལྭ་ཡ། ཡུ་གུ་

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linquent leases besides making report on harbor and other leases and sources of state revenues.

The Industrial Insurance Department is another large department receiving and disbursing several million dollars each biennium, which was given an audit and general survey, the effect of which is a considerable saving in eliminating unneces sary records and details.

Several other miscellaneous boards came under the supervision of the state since the last session of the Legislature, such as the Barbers', Dental, Medical and other examining boards, necessitating considerable supervision and audit.

It is needless to say that supervision and audit to be effective and do the greatest amount of good must be done thorough and often.

Incorporated at the back of this report will be found several pages covering a compilation of property and other assets made up in the form of a general assets and liability statement. A study of these will prove interesting. The several groupings or classifications give the value of all such property in each institution or department, together with the number of acres owned.

In the matter of recommendations for the more economical operation of state affairs, we urge your careful consideration of the following:

SPECIFIC APPROPRIATIONS OR BUDGET SYSTEM.

Appropriations should be made for specific functions or purposes. Only in this manner can the State Auditor check with any degree of certainty expenditures made. Appropriations should be made for specific items, things or purposes, in either of the generally recognized groups of activities called, operation and maintenance, or capital outlays. In calling for estimates at the request of the State Auditor from the several departments and institutions, request was made that they, in submitting their estimates, distribute the proposed expenditures according to the above. While the majority of the departments complied, as also did three or four of the institutions under the

Board of Control, these last estimates were valueless for the reason that they were not the revised estimates as finally to be recommended by the Board of Control. In preparing the budget for the ensuing biennium, the Bureau of Inspection attempted to classify these requests according to the operating functions. All of the items not so distributed should be revised in this respect so that they cannot be used indiscriminately for both outlays and maintenance.

Overdrafts: In examining the State Treasurer's office, we found that overdrafts had been carried in some of the funds, but could find no authority of law for such practice. We believe it good business policy to carry such overdrafts, and would therefore endorse the request of the State Treasurer to have an overdraft bill passed by your Honorable Body authorizing him to create such overdrafts with the consent and advice of the State Board of Finance to an amount not exceeding 75 per cent of delinquent taxes.

Revolving Fund: We also found in examining the office of the State Auditor, that warrants for revolving fund, had been issued to enable the institutions to meet immediate payments covering same with vouchers at a later date, the auditor taking a bond of the officer handling the revolving fund sufficient to protect the state. We found no law authorizing this practice. We believe that authority should be given the State Auditor to make such temporary advances when it is for the best interests. of the state's business.

The legal work in connection with passing on the validity of contracts and payments of every description, the examining and approval of bond issues, and the carrying into effect the findings of the Bureau of Inspection, has so increased, I would respectfully recommend that sufficient appropriation be made the Attorney General to provide for a special assistant to be assigned to this work and that the Attorney General be empowered to begin criminal actions direct when in his opinion same are for the best interests of the public.

INDEBTEDNESS OF CITIES AND TOWNS.

Indebtedness of municipal corporations has been increasing by leaps and bounds, and when constitutional limits have been reached, interested bodies have come to the Legislature in the past, and had measures adopted creating new municipal corporations either within or embracing other municipal corporations, by which they could again increase their limit of debt, and when this source failed, they have resorted to the ingenious device of issuing bonds against the revenues of their public utilities. We believe the time has come when the brakes should be set, an effort made to pay off the debts and current expenses limited to current revenues. Of this more anon.

The total debt of cities and towns in the State of Washington on January 1 was $70,000,000. So long as this debt is outstanding, so long will it be impossible to materially reduce the tax levies. We believe it would be for the best interests of all cities if we were to return to the provisions of Section 6, Article 8 of the Constitution relating to debt, and in future prohibit the incurring of indebtedness against revenues of departments or utilities, and require the fixing of rates and charges of such utilities sufficient to meet their operation and maintenance; the capital investment to be met from general taxation.

Better have a privately owned, regulated public utility working on its own capital and paying taxes, than a publicly owned one which does not pay when the public have supplied the capital, and no taxes.

When bonds are issued for any purpose, the terms for which they are to run should be regulated by the life of the function for which they are issued, and payment provided for so that those using the function should pay for it. We have no moral right to pass these "dead horses" on to posterity and require them to pay in many instances for public structures long since extinct.

Bonds issued for real estate, for park, public building sites, power and water sites, could well be extended over a period of over 30 or 40 years redeemable after 5 years, payments gradually increasing until the entire debt was paid.

We would also recommend that each city or town prepare detailed estimates showing the needs of every department, office or officer, and institution, also the amount of estimated revenue from different sources, then after a public hearing adopt the budget for the ensuing year, deducting the estimated revenue from the amount of the estimated expense and levying a tax to meet the remainder. A severe penalty should be imposed on any officer, board or council creating any debt in excess of such budget and any such attempted incurring of debt should never be grounds for a claim against the city or county. This would obviate the issuing of bonds to pay current expenses. “We should pay as we go."

We have provided uniform systems of accounting for all cities, water, light, park and municipal railroad departments, and we are installing same as fast as possible. We received uniform reports from each city and town for the year 1913, but our printing appropriation being exhausted, same have not been published.

was:

COUNTIES.

The total debt of the counties of the state January 1, 1914,

Bonds
Warrants

.$7,334,500.00
2,473,529.84

A law passed by the Session of 1913, placing in the assessor the discretionary power to arbitrarily fix any rate percentage of the actual valuation which he saw fit not to exceed 50 per cent, has caused consider ble injury to some of the municipal corporations in the State of Washington.

The Legislature should fix the ratio, and not leave the power in the hands of the assessor to destroy the credit of municipalities within their respective counties.

The road law passed by the last Legislature limited the expenditures for road purposes to 80 per cent of the revenue unless the cash was in the treasury, has worked well and the present year will close with almost every road district in the state on a cash basis, and the road debt of a million and a half entirely paid off.

We would recommend, 1st, That all county operating and maintenance expenditures be limited to the current revenue, and heavy penalties provided for creating deficiencies. 2nd, That court houses and other buildings and permanent outlays be made from bond issues.

Respectfully submitted,

C. W. CLAUSEN,

State Auditor.

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