338 MISC. PUBLICATION 218, U. 8. DEPT. OF AGRICULTURE 
because loans were ill-timed or badly negotiated, and losses through 
defalcation because officers were not adequately bonded. Less visible 
and less measurable are the losses that result from employing incompe- 
tent bookkeepers and treasurers. Other intangible losses are those 
which result from the failure to adopt and adhere to a balanced budget. 
A balanced budget implies not only that income shall equal expendi- 
tures, but that the appropriations for each function or service shall be 
commensurate with the need. When governments operate without a 
budget there is frequently a lack of balance in both respects. The way 
in which local governments have abused the funding privilege and the 
loose and extravagant methods which have been employed i in financing 
capital improvements illustrate the need for drastic control over local 
bond issues. Even where there is no suspicion of political motive or 
fraudulent intent, there is wisdom in having a proposed bond issue 
reviewed by a disinterested agency. A proposed improvement may 
be legitimate but not expedient. 
It must be admitted that the supervision of local finance involves a 
burden upon the State, but it is not necessary that the State assume 
the whole cost. The local unit could quite properly be asked to bear 
the cost of an audit performed by State auditors. The cost would 
probably be less than if the audit were made by private accountants, 
especially if the State audit were performed periodically and as the 
capstone to a system of simple and uniform accounts. In such case, 
every dollar added in State taxes is likely to result in several dollars 
saved in local taxes. 
It is generally agreed that local self-government is desirable and 
should not be unnecessarily limited. Butit should be recognized that 
lack of State supervision may be as destructive of local self-government 
as too much supervision. Not infrequently the policies of local gov- 
ernment are shaped by officeholders in their own interest, and the 
citizens are purposely kept uninformed. Even when information i is 
not purposely withheld, it is often presented in a form that is meaning- 
less to the taxpayers. Sometimes bookkeeping is so crude that 
officials themselves do not know the true financial condition of the 
government which they are trying to administer. Thus if the local 
officials are unwilling or unable to supply the voters with information 
to help them in shaping policy, intelligent local self-government is 
impossible. To the extent that the State helps assemble reliable 
statistical data or furnishes expert advice, it is bolstering up local 
self-government rather than interfering with it. 
State supervision over local finances does not guarantee economy ; 
it does not insure against malpractice. If it discourages local vigi- 
lance, if it creates a false sense of security, if it weakens local civic 
interest, already alarmingly feeble, it is bad. And this can well be 
the result if the State pretends to do more than it can do thoroughly, 
or if it fails to enlist local participation and sanction in its endeavors. 
Neither is supervision by a State administrative agency necessarily 
the last word in the fiscal control of local units. Any plan which would 
secure more effective citizen participation in local government or more 
speedily develop a capacity for intelligent home rule would be prefer- 
able. But where the relationship between State and local authorities 
is one of cooperation and mutual respect, and where the State agency 
considers itself a teacher and counselor rather than a dictator, no 
violence is done to local self-government, and the local unit should 
profit from the contact. 
