What They Say...

Retail buyers in Waukegan have put the city on a "balanced budget" system of operations and will be saving the city $2,000 a year in interest previously paid on tax anticipation warrants that were annually issued at about this time every year.

City Council action has funneled the first $100,000 received by the city in its half-cent city sales tax into the city's working cash fund so, for the first time in a quarter-of-a-century the city will not have to issue tax warrants to pay for its operations until the general tax money is received some time after Sept. 1.

Edward R. Holmberg, city clerk, reports that up to now the city has received about $90,000 in sales tax revenues since the tax went on the books last August. The next payment from the state, which collects the tax .and refunds it to the cities, will more than fill the need for the $100,000 working cash fund. All the remaining sales tax income is to be set aside until the council decides how the money shall be used. Originally it was declared that the additional revenue would be used for capital improvements.

With the $100,000 windfall in the working cash fund, the city should be able, by judicious handling of funds, to keep a balanced budget and work on a pay-as-you-go basis.

Under the tax anticipation warrant system, the

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* Waukegan News-Sun, February 9th, 1956.

city was always spending its general tax money at least six months before it was received, and when the first tax distribution was made by the county treasurer along about mid-September, the first general tax money due the city had to go to retire the tax anticipation warrants and the interest charges which amounted to about 2 per cent of the whole. Now the city will be able to continue operations without borrowing, and in September when the tax distribution is made, the general tax revenue will be applied to the working cash fund at once.

Putting the city on a cash basis can be of great benefit to the city and the taxpayers. City operations can be paid for as they come due and a saving of $2,000 in interest charges is important. But the big danger is that the city might get right back into its previous borrowing condition unless city officials use extra care and excellent judgment in spending. The fact that the city is on a cash basis may become a great temptation for additional and unnecessary spending.