GEORGIA DEFT OF AUDITS AND ACCOUNTS
BIENNIAL REPORT 192829
THE LIBRARY OF
THE UNIVERSITY OF GEORGIAAl
BIENNIAL REPORT
OF THE
STATE AUDITOR
TO
HIS EXCELLENCY
HON L G HARDMAN
GOVERNOR
AND
MEMBERS OF THE
ASSEMBLY
STATE OF GEORGIA

Years 19281929
iKtmmm
UNiV OF GEORGIA LIBRARIESf
BIENNIAL REPORT
OF THE
STATE AUDITOR
TO
HIS EXCELLENCY
HON L G HARDMAN
GOVERNOR
AND
MEMBERS OF THE GENERAL
ASSEMBLY
STATE OF GEORGIA

Years 19281929A
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Honorable L G Hardman Governor
and Members of General Assembly
Detailed audits covering Departments Bureaus Boards
Commissions and Institutions are on file in my office for the
use of the Members of the General Assembly who desire to
obtain financial data concerning the operation of any agency
of the State Government All of these audits are here for
the convenience of the General Assembly and in addition to
that all the facilities of my office are placed at the disposal
of both Houses in order to facilitate if desired the work of
your Committees
Many grave questions face this General Assembly but the
gravest is that of finance A state must have revenue to
carry on the various activities of State Government and ap
propriations must be kept in the limits of expected revenue
We face a large deficit at the end of 1929 and our present
scale of appropriations is 200000000 in excess of esti
mates of expected revenue under existing tax laws For this
reason we should be extremely prudent
PASSAGE OF REVENUE ACTS BEFORE APPROPRIA
TION MEASURE
Under conditions now confronting us it would seem that
business prudence and judgment would demand the passage
of revenue measures fixing our income before deciding how
to spend it In other words if existing tax laws are contin
ued we should cut appropriations to 1000000000 If in
creased revenue is to be given the State then appropriations
can follow revenue It is essential that the income of the
State be determined first and then appropriations match ex
pected income The financial integrity honor and credit of
the State is absolutely in your hands at this session of the
General Assembly
LEGISLATION IN APPROPRIATION ACT
It is very questionable in my mind as to whether any
legislation can be included in a General Appropriation Bill
in this State If laws need amending amend them by proper
3
amendments and not by riders attached to general Appro
priation Bill Legislation of this kind causes confusion
brings on different interpretation of the law is not clear to
agencies of Government and is productive of friction Your
Appropriation Bill should be passed without riders of any
kind
THE
ALLOCATIONS AND APPROPRIATIONS
The power of the General Assembly is supreme and funds
can be allocated to different Departments or appropriated
but it is almost impossible to allocate and appropriate at the
same time because no one knows until the tax is finally col
lected whether it is an appropriation or allocation
ALLOCATION OF FUNDS
Under pressure the General Assembly has established new
activities of the State Government and allocated fees etc
for their support In this way control over income and ex
penditures has passed from the General Assembly as pro
vided in our Constitution Allocations are bad in principle as
they remove legislative control over finance and in practice
they are bad as they tend to promote extravagance We
have allowed this condition to grow in Georgia until last
year the revenue receipts into General Fund were 9600
00000 and allocated funds totaled 1420000000 It makes
almost impossible a clear understanding of State Finance
On December 31 for instance we had a balance in Treasury
of 114700000 but who owned this balance Special Funds
owned 109000000 and the General Fund 5700000 While
we had 114700000 on hand we held in trust 109000000
and only had 5700000 to pay appropriations We are con
fronted with the fact today that if we desired to cut ex
penses 1400000000 of income will escape the cut and only
those departments supported by an appropriation would feel
the cut All activities of the State Government are sup
ported by taxation in some form All taxation should go
into the Treasury without deduction then the Legislature
should assume the responsibility and determine the amount
necessary to support every activity of Government WeI

cannot hope to make a clear presentation of State finance
until this is done Appropriations are paid from the General
Fund of the State Special Funds are trust funds placed in
the Treasury as custodian of these funds from various de
partments bureaus etc Every year activities of the Gov
ernment are trying to get away from the Appropriation Act
and have themselves financed by Special Taxes I do not
blame them but we have reached the point where the Gen
eral Fund is shrinking all the time and Special Funds in
creasing The General Assembly could perform a great serv
ice by discontinuing this practice and support every activity
of Government by a stated appropriation In that way
much criticism could be hushed Fees by which a depart
ment is supported and the balance after supporting a depart
ment turned into the Treasury provoke much discussion
Why not make a definite fixed appropriation and let the fees
without deduction of any kind go into the Treasury
DEFICIT
The greatest problem before you is to raise funds by new
taxes to cover the deficit which will be 350000000 in my
opinion at the end of 1929 under existing tax laws I be
lieve however we ought to pay appropriations made in 1927
for 1928 and 1929 This deficit was brought about by differ
ent constructions of the Appropriation Act relative to School
Equalization Fund which was increased in 1928 by the final
decision of the legal authorities of the State from 1000
00000 to 155900000 and the Common Schools have bene
fited to this extent 40000000 was loss from General Tax
Act consisting of estimated revenue from certain taxes
which are held up by court injunctions notably the chain
store tax 16000000 loss in estimated sale of Cigar and
Cigarette Stamps In 1926 this tax produced 76100000
in 1927 87700000 in 1928 was estimated to produce 900
00000 and produced 73700000 The Neill Act requiring
balances on December 31 1927 to be paid into the Treasury
to General Fund and the 25 clause making 25 of all fees
to General Fund was construed so as to be of no benefit to
the Treasury In addition to these items totaling more than
1007581200000 annually there was no general increase in Taxes
General business conditions have produced some gain every
year since 1921 up to 1928 Inheritance tax showed a sub
stantial gain in 1928 to be offset by losses elsewhere The
normal gain has generally produced about 2 or 20000000
annually This explains to some extent the manner in which
the deficit grew to such a large amount
In justice and fairness I believe we must pay 1928 and
1929 appropriations Contracts have been based on these
appropriations and the institutions will be badly crippled if
this money is not paid and our common school system will
suffer In 1929 the General Assembly have the making of
an Appropriation Act and a Eevenue Act for 1930 and 1931
No matter how urgent the need appropriations should not
exceed estimated revenue The grave problem is first by tax
measures to provide sufficient revenue to pay 1928 and 1929
appropriations The second problem is to determine the
States income for 1930 and 1931 by passing all your revenue
laws early and let us all know the amount we have to appro
priate for 1930 and 1931 The good name of the State and
integrity of Georgias contracts rest with you gentlemen and
I have no fear as to your decision
ADMINISTRATIVE REORGANIZATION
For the sake of economy and efficiency I have urged such
reorganization and the Governor has appointed a Committee
of able distinguished Georgians who will make recommenda
tions
In order to bring the necessity of reorganization to your
attention in concrete form I submit two chartsone the
present organization and one a proposed organization This
is done to stimulate your thought and for you to make a
more careful study of existing conditions and how to im
prove present organization
I desire to thank the Governor for his consideration and
cooperation and my staff for their loyal and efficient sup
port
m
The Legislature has always been considerate I believe
that 1929 will see much constructive legislation and this
Session of the General Assembly can and I believe will
usher in a new day in Georgia if we bravely seek the solution
of our problems with a view solely directed to improving
the service of State Government and plan our program in
wisdom justice and moderation
Respectfully submitted
S J SLATE
State Auditor
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