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Governor I.L. Patterson's Administration

Governor's Message, 1929

Source: State of Oregon MESSAGE Of I.L. PATTERSON, Governor To the Thirty-Fifth Legislative Assembly 1929

Members of the State Senate and House of Representatives:

The Constitution of the state of Oregon directs that the Governor shall “from time to time give to the legislative assembly information touching the condition of the state, and recommend such measures as he shall judge to be expedient.” Pursuant to the command of the constitution and in accordance with the usual custom, I meet with you today at the halfway point in my term of office as Governor to place before you a brief statement regarding various state departments and institutions and to submit certain recommendations which, in light of my contact with state governmental activities, I believe promise to promote the welfare of the state.

TAXATION

The matter of taxation and state finance is always of paramount public importance. Never has it been of more vital concern in the state of Oregon than at this time. It is not necessary for me to outline the present financial condition of the state nor to rehearse the circumstances which have created that condition. You are aware that at the last session of the legislature appropriations were made aggregating approximately four million dollars in excess of available state revenues for the biennium. Of these appropriations I vetoed bills provided for one million three hundred thousand dollars, leaving a deficit of more than two million dollars which I hoped might be taken care of by the income tax measure passed by the legislature and referred to the electorate. The income tax measure was defeated, and, as a result, the revenues of the general fund will be insufficient by approximately two million dollars to meet the obligations thereon for the biennium ended December 31, 1928. It is true that moneys originally credited to the general fund and later as state periods set aside for specific purposes may be used to meet current general fund obligations. This, however, does not satisfy obligations against the general fund but only defers the date of final payment of general fund obligations met in this manner.

Chapter 130, General Laws of Oregon for 1927, transferred to the Governor direct supervision over all matters relating to the preparation of estimates of requirements for the various offices, boards and commissions, institutions, departments and activities of the state, public or private, supported or aided in whole or in part from moneys disbursed through the state treasury. The proposed budget for 1929-1930 is in your hands and I trust has had your careful scrutiny. By cutting the estimates of requirements for the various branches of state activity to the lowest figure compatible with the efficient performance of the duties imposed on them, I have been able to balance the appropriations recommended in the budget with the estimate of state revenues available for 1929-1930. I have been able to accomplish this only through the whole-hearted cooperation of the various department and institution heads who have made a most gratifying response to my plea for stringent economy in face of the financial condition of the state.

No provision has been made to liquidate the existing deficit, and it has been necessary to eliminated practically all requests for substantial capital outlay, despite the fact that many such requests were for legitimate and necessary improvements which should be cared for now and which must be provided in the near future if Oregon is to maintain her standing as a progressive and forward moving commonwealth.

In view of this situation, I wish to call your attention to section 2 of article IX of the constitution of the state of Oregon, which reads: “The legislative assembly shall provide for raising revenue sufficient to defray the expenses of the state for each fiscal year, and also a sufficient sum to pay the interest on the state debt, if there be any”; and further, to section 6 of article IX of the state constitution, which reads: “Whenever the expenses of any fiscal year shall exceed the income, the legislative assembly shall provide for levying a tax for the ensuing fiscal year, sufficient, with other sources of income, to pay the deficiency, as well as the estimated expense of the ensuing fiscal year.”

Despite subsequent constitutional provisions qualifying these sections, it is the evident intent of the constitution to place squarely upon the legislative assembly the responsibility not only for providing revenue adequate for discharging the expenses of state governmental activities, but also for eliminating any deficiency which may exist. As I see it, this is the foremost duty which faces you as members of the Thirty-fifth Legislative Assembly. The manner in which you discharge it will affect the progress of the state as a whole and the welfare of each individual citizen. It challenges your businesslike attention, your careful research and your earnest consideration throughout this session.

The importance of providing an equitable solution of the problem of taxation has been recognized by succeeding sessions of the legislative assembly. In 1921 and 1925 committees were authorized by the legislature to investigate the tax situation in Oregon with a view to finding new sources of revenue and equalizing the burden of taxation. Each of these committees made an exhaustive investigation and submitted comprehensive recommendations, none of which, so far as I know, has been put into effect. The report of the tax investigating committee authorized by the 1927 legislative assembly will be submitted for your consideration at this session. I trust that it may prove helpful in your deliberations and fruitful of tangible results. If the legislative assembly should again find itself unable to profit by the researches of the committee appointed to study the tax situation, it would appear that the practice of naming such committees should be discontinued, and the time and money involved in their activities directed into some other avenue of approach to this important and difficult problem.

TEN-YEAR BUILDING PROGRAM

I have previously stated that improvements essential not only to the consistent expansion but also to the proper maintenance of state activities have been eliminated from the proposed budget for the current biennium in order to keep the estimate of requirements within the revenue now available. This will mean an accumulated demand for capital outlay when state finances are in a condition to justify such expenditure. Let me, therefore, repeat the recommendation made at the last legislative session to the effect that anticipated needs of the state institutions and activities should be ascertained for a certain period and a definite plan should be formulated for caring for these requirements in the order of their urgency. To this end I recommend that the Board of Control be authorized and directed to make a survey of the needs of the various state institutions and to draft a well-considered program of meeting these needs over a period of say ten years.

EDUCATIONAL INSTITUTIONS

The high percentage of attendance at the institutions of higher learning in Oregon must be gratifying to every person who recognizes that education is one of the foremost functions of a progressive government. It is regrettable in the face of greatly increases and increasing enrollment that it has been necessary to curtail completely the requests for building appropriations of the educational institutions. Every one of these institutions has building needs which an expanded enrollment makes urgent. In view of the present financial condition of the state the boards of regents have agreed to defer these requests in the hope that the finances of the state will be put on a sound, progressive basis during this biennium.

In the meantime some constructive plan should be worked out for meeting the building needs of the institutions of higher learning when the state is financially able ot care for them. A competent impartial agency should be commissioned to make a thorough survey of all the state institutions of higher learning with a view to determining their building needs for a ten-year period. On the basis of such a survey, the state legislature will, with the improvement of the state’s finances, be in apposition to adopt a consistent policy with reference to satisfying these needs.

The United States Bureau of Education, through its specialists in higher education, ahs made many surveys of state institutions of higher learning during the past twelve or fifteen years. The cost of such a survey, which usually comprises only the traveling and local expenses of the educational specialists conducting the investigation, is comparatively slight, and is ordinarily pro-rated among the several institutions surveyed.

In the interests of an adequate and impartial program for the future department of our institutions of higher learning, I recommend that the United States Bureau of Education be invited to make a building survey of these institutions to form a basis for capital outlay whenever appropriations may be available for this purpose.

CENTRAL PURCHASING DEPARTMENT

In my message to the Thirty-fourth Legislative Assembly, I recommended the centralization of all purchases for state departments and institutions with the Board of Control. The legislature approved this recommendation and designated the Board of Control as central purchasing agency, although no appropriation was made to provide for expansion of the existing department to care for the heavy additional duties imposed by the act. The central purchasing law was put into effect on October 1, 1927. The report of the purchasing department for the period between October 1, 1927, and September 30, 1928, shows total purchases amounting to nearly $3,500,000 for the year, and an apparent saving of over $200,000 has been made as a result of the operation of this department. These figures are conservative, and it is safe to assume that the central purchasing agency will save biennially at least $500,000.

These savings, you will understand, do not accrue to the general fund, but to the separate departments. Many of the branches of state activity making the largest purchases, such as the Highway and Accident Commissions and the institutions of higher learning, are supported by fees or by millage taxes and do not draw their funds from legislative appropriations.

The evident saving effected by the central purchasing agency has, during the first year of its operation, been sufficient to justify the legislature in appropriating funds for the adequate support of the department in the future, and recommendation for the allocation of such funds is contained in the budget.

STATE PENITENTIARY

Upon my recommendation, the 1927 session of the legislature placed under the supervision of the board of control the state penitentiary which had previously been under the sole jurisdiction of the governor. The wisdom of this policy has been amply demonstrated. Upon assuming charge of the penitentiary the board at once placed the prison on the same basis as the other institutions under its care and appointed a superintendent to relieve the warden of details of business management not directly connected with the care and custody of prisoners.

Under the new administration repairs and renewals were immediately instituted. No special appropriation was available for such purposes and the capital outlay has been very small, all work being done by the prisoners. Although the buildings and equipment are old and inadequate, a great improvement has been effected in the physical condition of the prison plant. Roads have been rebuilt and graded. The entire inside premises have been renovated and cleaned, and additional lights have been installed. New doors and floors have been built in all guard towers. Valuable records dating back to 1853 have been placed for the first time in a fire-proof vault which was constructed at a remarkably small cost to the state. A new vegetable storage building has been erected, also at small expense, and many other necessary changes and improvements have been instituted.

The appropriation for the penitentiary for the past biennium was based on an estimated average population of 590 whereas the daily population has averaged 625 and has been as high as 713. The penitentiary is spotlessly clean, the prisoners have plenty of clean, wholesome, plain food; they are well and warmly clad, and the per capita cost of maintenance has been lower than since 1916, having been reduced from $27.32 per month during the years 1925-1926 to $24.74 during this biennium.

Although the institution is crowded far beyond its capacity, making segregation impossible and necessitating improvised quarters to take care of the surplus population, only three prisoners have escaped during the past biennium, all of these being trusties working outside the walls. One of these has been apprehended and returned, another is in custody in Texas, and only one remains at large.

For the first time in the history of the institution, every man who is physically able is at work every day. This fact is undoubtedly reflected in the excellent discipline and morale which prevail.

It is absolutely essential that additional quarters be provided immediately to care for prisoners. Under direction of the Board of Control, the Boys’ Training School has abandoned the old training school property near Salem. The board has authorized the superintendent of the penitentiary to take charge of these lands and farm them. I have recommended in the budget an appropriation of $35,000 for the purpose of remodeling the former training school building to house forty men and also to care for the women prisoners, with the hope that in a reasonable length of time this plant can be used for the purpose of segregating prisoners. Should this proposal be approved, it is contemplated that the dairy herds, swine, and poultry will be transferred to the training school lands thus giving room at the present institution for “wigwaming” the flax which must be spread out after retting. Otherwise it will be necessary to rent land and haul the flax for some distance in order to complete the processing. The budget also recommends funds for the completion of a much needed two-story garage at the penitentiary, the second story to be used as quarters for trusties. This will take care of one hundred men and relieve the present unsafe congestion.

FLAX INDUSTRY

A careful inventory and audit was made at the beginning of the biennium to ascertain the exact condition of the state flax industry conducted at the penitentiary. Resulting data showed that since the beginning of flax operations in 1915 up to January 1, 1927, there has been an actual loss of more than $107,000, the major portion of this deficit having been incurred during the four years immediately prior to January 1, 1927.

The Board of Control has been greatly pleased with what has been accomplished in the flax industry during this biennium. In 1927 the flax acreage under contract to eh state was 2,000 acres. This was increased in 1928 to 3,000 acres. For 1929 the Board has authorized contracting for 4,500 acres and will be able with the present revolving fund to care for this substantial expansion. Since April 1,1927, the industry has shown a profit of approximately $97,000 and has financed from its profits the installation of permanent improvements costing in excess of $84,500, which have resulted in improved efficiency in operation and increased production.

Flax-pulling machines have been manufactured at the penitentiary which have not only proved more satisfactory than the purchased article but have effected a substantial saving to the state. Two of these machines have been sold at a handsome profit and shipped abroad. Twenty-five have been bough by local growers and eleven more are in the process of sale.

No appropriation will be requested from the legislature at this session for the revolving fund for the flax industry. The industry will not only finance itself but will, from its profits, provide additional equipment and improvements to take care of increased tonnage of flax. The Board of Control feels justified in taking an optimistic view of the future development of this industry which has provided employment for state prisoners, which is now more than self-supporting and promises increased profits in the future, and which will be of great agricultural and industrial benefit to Oregon.

BOYS’ TRAINING SCHOOL

At the beginning of the present biennium there were 201 boys in the State Training School. Since the new buildings near Woodburn are insufficient to accommodate this number, two organizations were being maintained, one at the new school and one at the old building near Salem. This involved an expensive duplication of staff and activities. Certain essential operations such as laundry and baking were being carried on at the Salem branch and the products transported by truck at considerable expenditure of money and effort to the Woodburn school.

The waste and inefficiency entailed were so apparent that the Board of Control determined to consolidated the two institutions. To this end a new policy was instituted with reference to the parole of boys committed to the training school. Release had previously been determined by length of time spent in the institution, credits earned, and other features arbitrarily fixed without consideration of individual cases. The Board authorized the appointment of a parole officer whose duty it is to investigate suitable and desirable homes in which boys may be placed and to supervise and follow up all boys released from the institution under parole. By this practice the number of training school charges has been so materially reduced that the school at Salem has been vacated and all the boys are housed at Woodburn.

The present parole policy has fully justified itself. During the years 1925 and 1926 when a parole officer was not employed, the percentage of parole violators whom it was found necessary to return to the school was 28 per cent. During the present biennium, with an increased number under parole, the percentage of boys who have not made good has been reduced to 17.5 percent. There are at present nearly four hundred boys out on parole and the number in the school has been reduced from 201 to 144. In order to supply the individual attention, which is essential to successful parole, it has been found necessary to employ an assistant parole officer.

Through the consolidation of the two institutions and through the enlarged parole system, the Boys’ Training School will be able to return to the state treasury at the end of the biennium an unexpected balance of over $40,000. This financial return is, however, the least important feature of the parole policy. The great saving lies in boys restored to normal home life and given wise and friendly encouragement to rehabilitate themselves as good citizens. This has a value to the state not measurable in dollars and cents.

EASTERN OREGON TUBERCULOSIS HOSPITAL

The new State Tuberculosis Hospital authorized by vote of the people and located at The Dalles is nearing completion and will be ready for occupancy in about three months. The site selected by the Board of Control has proved satisfactory and well adapted to the needs of the institution. There is at present a waiting list at eh State Tuberculosis Hospital of seventy-five persons, which represents only a part of those actually desiring admittance, since many afflicted persons when they learn that they must wait four or five months for a vacancy become discouraged and withdraw their applications. The new hospital will furnish bed for ninety-five patients which it is hoped will care for the present waiting list and eliminate the delay which often makes recovery unduly difficult of impossible.

OTHER STATE INSTITUTIONS

I shall not take time to make a detailed report regarding each of the other institutions which care for state wards. They are enjoying the same efficient adiminstration under which they have operated for some time past. The report of the Boar do fControl contains full information concerning their conduct. Each one will have an unexpended balance to return to the general fund for the past biennium. Per capita costs for such institutions in Oregon are lower than the average throughout the United States. My experience on the Board of Control has convinced me that our state institutions are ably conducted at a cost which is as low as is compatible with efficient and progressive administration.

WORLD WAR VETERANS’ STATE AID COMMISSION

I take pleasure in calling you attention to the fact that the World War Veterans’ State Aid Commission has reduced its deficit from $2,034,256.344 on September 30, 1926, to $648,663.92 on September 30, 1928, a reduction of $1,385,592.42 during the past biennium. The Commission has instituted a system of field inspection which ahs greatly increased the efficiency of its operations. Field inspectors report on all loans considered doubtful by the examiners or the commission and on all applications for loans where the applicant is not satisfied with the amount allowed. They investigate all cases of delinquency and give advice and assistance to borrowers on avoiding or overcoming delinquency. Periodic inspection is made to all property covered by loans with a view to keeping it in first-class repair, clearing up delinquent taxes and correcting other conditions which might impair the security of the state. Under this system the percentage of loans which will have to be foreclosed will be much smaller than in the past. Profits on sale and rental of rural and city properties have, during this biennium, more than paid the expenses of field inspection.

STATE MARKET AGENT

The State Grain Inspection Department was created by the legislature in 1917 and an appropriation of $7,500 was authorized to carry the act into effect with a provision that this amount should be returned to the general fund of the treasury when sufficient fees were collected to justify its return, the act providing that the department should be self-sustaining.

The amount originally appropriated proved inadequate for carrying out the provisions of the law, and on November 15, 1917, the Emergency Board made an additional allowance of $5,000. On November 25, 1919, the further sum of $10,000 was appropriated by the Emergency Board. Out of these sums a total of $21,828.30 was expended by the Grain Inspection Department without reimbursement to the state.

The present State Market Agent took charge of the Grain Inspection Department in February, 1927. By reorganization of the work in the interests of greater efficiency and economy, he has not only been able to pay from fees collected during this biennium all the expenses of the department but in addition has returned to the general fund $21,828.30 which repays the total amount previously advanced by the state for the support of the Grain Inspection Department.

AUDIT OF INDUSTRIAL ACCIDENT COMMISSION FUNDS

In accordance with the direction of chapter 413, General Laws of Oregon for 1927, an annual audit has been made of the receipts and disbursements of the Industrial Accident Commissions which ahs revealed an entirely satisfactory condition fo the funds of that Commission as well as an efficient method of carrying on the accounting incident to its large volume of business. ANNUAL AUDIT OF STATE FUNDS

I wish to recommend that the Secretary of State as State Auditor be authorized and directed to audit the fiscal records of each state officer and state institution at least once each year, the expense of such audit to be allocated to the respective departments.

PORTLAND OFFICE BUILDING

The Thirty-fourth Legislative Assembly authorized and directed the Board of Control to leases quarters and concentrate all state departments maintaining Portland branches in one building. The Board of Control has rented space in the Oregon building and practically all state offices in Portland are now housed there. The board believes that this will prove to be in the interests of economy and public convenience and will also permit a closer coordination between the departments, which it is hoped will result in eliminating some duplication of activity.

OREGON NATIONAL GUARD

In furtherance of a plan to center the federal training of national guard troops within our own state, the people of Clatsop county two years ago leased the necessary camp area on Clatsop plains. Based on a ten-year lease of the grounds by the state, the government has spent $100,000 in developing this tract, and contemplates further expenditures greatly in excess of that amount. It does not appear to me equitable that the lease cost should be paid by the citizens of Clatsop county, inasmuch as the activity is state-wide in scope and the financial and other benefits of such a camp in Oregon accrue to the state as a whole. Until such time as state finances will permit the purchase of this land, under an existing lease and option, I recommend that the state take over the lease upon same.

RESTORATION FUND

The law at present provides for a restoration fund to be built up at the rate of $50,000 annually to replace or rebuild any property of the state or any of its activities that may be damaged or destroyed by fire, flood or other casualty, the contribution of each branch of state activity to his fund being based on the appraised value of its buildings, equipment and other property subject to destruction. Demands on this fund during the period of its duration have been less than one-third of the amount of the contributions thereto. In view of the present financial condition of the general fund, I recommend that the law be amended reducing the annual contribution to $25,000.

PILOT COMMISIONERS

The State Board of Pilot Commissioners has heretofore received an appropriation of $2,400 for the biennium. Other similar agencies and activities are made self-sustaining through the imposition of sufficient fees to cover administrative expenses. It is my recommendation that the present nominal license fees exacted from pilots be sufficiently increased to return a sum which will absorb the expenses now provided by biennial appropriation and relieve the state of this expense.

CHAMPOEG

There is at present a bill before congress providing funds for the erection of a memorial building at Champoeg, such federal appropriation to be contingent upon the appropriation of an equal sum by the state. Congress has agreed to credit moneys already expended by the state at Champoeg toward matching federal funds. It is to be hoped that through the development of new sources of revenue state funds will be available for an appropriation for this purpose should the bill be passed by congress.

BLUE SKY LAW

Believing that omissions and defects exist in the present law regulating the sale of securities in Oregon, I recently named a committee to draft a proposed new blue sky law for this state. The members of this committee are outstanding business and professional men, who have carefully investigated the subject in an effort to formulate a measure which will afford adequate protection not only to the investing public but to legitimate brokerage firms. This is a subject which merits your very careful attention, taking into consideration the report of the committee and all other available data.

REFORESTATION

In my message to the 1927 of the legislature I called the attention of the members to the importance of reforestation. During the past two years it has come to my attention that the taxes against thousands of acres of logged-off lands are not being paid and the lands may revert to the counties, which are not organized to give adequate fire protection, nor should they lose the tax revenue from this class of property. The major portion of our logged-off lands will reforest themselves if protected from fire, and the state will be assured of a sufficient timber supply for the future. It is extremely important that legislation be enacted which will give that assurance and at the same time in no way deprive the state and its several subdivisions of the tax revenue which should be derived from this source.

As long as the cut-over lands are held in private ownership the state can compel proper fire protection. The time required for maturing timber is such that revenues therefrom are long deferred. I express the hope that legislation will be enacted which will provide for a fair taxation of this property during the growing period of the timber and will provide, in addition to a fair annual tax, a yield tax when the timber is cut.

STATE RECLAMATION COMMISSION

The State Reclamation Commission was created by the last session of the legislature to perform all the duties of the former Desert Land Board and the Irrigation and Drainage Securities Commission, and in addition was charged with the duty of investigating the physical, financial and economic condition of these districts. Based on its findings, it has the problem of bringing together all interests with a view to the formulation of a definite plan under which the affairs of the district may be successfully worked out.

There are 12 irrigation districts in Oregon with certified bonds outstanding in the amount of $6,791,100, which have defaulted either in the payment o principal or interest on their bonds. They owe the state $1,945,844.12. Apparently there is no chance that these districts can succeed under present conditions, as their debts are prohibitive. The bonds were issued under laws which give little protection either to the investor or to the settler after trouble develops.

The commissions has examined nine projects, having an irrigable area of 74,642 acres and a total indebted ness of $8,793,000. The economic reports indicate that before these districts can be successful, a write-off of present debts against the districts of amounts varying from 30 to 80 per cent will be necessary. The present financial condition of the districts offers little hope for the recovery of interest paid by the state on irrigation district bonds. The members of the Reclamation Commission, therefore, believe that for the purpose of settlement, they should be authorized to remit to the districts in whole or in part the amounts advanced by the state in payment of interest on bonds. I recommend that such authority be given the State Reclamation Commission. Such remission should be made only in those cases where it is necessary for the financial reorganization of the district and where concessions to accomplish this end are made by other creditors.

In this connection I also suggest that the legislature submit to the electorate a constitutional amendment repealing article XI-b of the state constitution which authorizes the payment by the state of irrigation and drainage district bond interest.

The bonds are widely scattered and there is no accurate record of their ownership. Yet, before reorganization can be completed, these bondholders must be located and an organization representing them must be created. We have cooperated in assisting committees to organize bondholders, and six projects now have committees representing from 70 to 85 per cent of the bondholders on each. The work of organizing and obtaining their acceptance of a plan of reorganization, which will reduce the district’s debt to eh amount it can pay, is slow and tedious, but it seems the only sound solution. The present work of the commission should be continued for at least two more years, in the hope that reorganization can be effected that will allow the districts to stand alone and eliminate the necessity for further state aid.

WATER POWER

Oregon has one-sixth of the potential hydro-electric power of the nation, most of its undeveloped, which means immeasurable industrial possibilities for the future when electric energy will be applied to every branch of commerce, industry and transportation. It is natural and proper that the people of the state should be vitally interested in the conversation, development and control of this valuable natural resource.

The Oregon Water Code is regarded as one of the most progressive in the nation. It is based on the theory that the water belongs to the state---that it may be appropriated for beneficial use as provided in the code, and not otherwise. The beneficial use of water is true conservation. It has always been the policy of he state to encourage the development of its water resources through intelligent appropriation and use. The courts have reiterated time and again that beneficial use shall be the measure of right. No water right is perfected until the water is put to the proposed use, and this must be done within a reasonable time after the right is first initiated or the priority is lost.

The last legislature did much to shut out speculative filings on water rights. The state engineer now has authority, and it is the policy of the department, to hold no applications in incomplete form for more than six months except on large projects where extensive investigation are required. After a permit is issued, the appropriator must begin actual construction work within one year or the right will lapse, and it must be completed with in a reasonable time thereafter. It is not possible under the code for any power company or other appropriator of water to monopolize the state water resources. Rights can be acquired only through development and use.

Applicants for permits to appropriate water for power purposes may be required to furnish satisfactory proof of their ability to finance and construct the proposed project and of intention in good faith on the part of the applicant to construct the project with due diligence. In the great majority of cases they must make application to the Federal Power Commission for preliminary permit within six months after applying to the state engineer for permit, and the time fixed by the state for completion of the works is the same as that fixed by the Federal Power Commission. It is therefore possible for appropriators through filings in the state engineer’s office to hold a water right only temporarily while investigations are being made for its further development.

The present law provides that all applications for permits to appropriate water for beneficial use shall be approved by the State Engineer when made in proper form, unless the appropriation will constitute a menace to the safety and welfare of the public. In that event the State Engineer may deny the application if after full hearing, the public welfare demands. His authority to deny applications under this statute has not been passed on by the courts, but in order to protect the public interests, this section should be amended in a manner which will more fully define the duties of the State Engineer and the grounds upon which applications may be denied. Authority over appropriation of water for beneficial use similar to that of the Federal Power Commissioner elative to leasing public lands which are used in power development, should be given.

The statute should also charge the State Engineer with the duty of taking into consideration the value of the stream for other purposes. The construction of dams which will destroy the scenic or recreational value of our streams or which will destroy or injure commercial fishing should not be allowed, unless sit can be clearly shown that the proposed use of water is of higher value to the general public.

With slight amendment giving more authority over the appropriation of water and with the provision for an appeal in important cases from the decision of the State Engineer to the State Reclamation Commission, the rights of the public can be protected and the highest development of out water resources can be obtained.

I believe that the right to the use of water should be obtained through a lease from the state with fees based on the value of the right obtained, considering its use, location, proximity to market, cost of development, etc. The state should continue to encourage the development of its water resources, but its should not part with the title to this great natural resource.

MOTOR VEHICLE LICENSE FEES

The heavy vote cast last November in favor of a measure proposing a cut in motor vehicle license fees so drastic as to menace the highway system of Oregon shows that there is strong public sentiment in favor of a revision of the automobile license schedule. When this measure was before the public I promised, in the even of its defeat, to lend nay aid in my power to bring about a change in our license fee schedule, and I expect to keep that promise. Unless such a reduction is made here in the legislature, carefully and scientifically, and in a manner which will maintain existing roads to the highest degree of efficiency and raise enough money to complete the roads already authorized, there will be constant danger of the initiation and enactment of radical measures which may imperial our splendid highway program and place upon real property the burden of paying the principal and interest on $32,000,000 worth of outstanding highway bonds.

It is my firm belief that the people of this state want a reduction of license fees for old or used cars. I have in the past advocated a plan whereby the present fee scale would be maintained for the first and second registrations and reduced by a certain percentage each year thereafter, reaching a minimum at the fifth registration. Careful research into the matter may disclose some plan better adapted to accomplish the same purpose. I therefore make no specific suggestion other than an urgent recommendation for the early relief of owners of used cars.

The attitude of the public toward the activities which the Highway Commission is performing with outstanding efficiency has always been one of confidence and support. These activities are too vitally connected with the progress of the state to be retarded or curtailed as a result of public dissatisfaction with the motor vehicle license fee schedule.

STATE BOARDS AND COMMISSIONS

The reports of the various state boards and commissions will be placed before you during this session, and it is not necessary for me to duplicate the information contained therein. I have been gratified by the fact that all departments have functioned efficiently and with a minimum of friction during the past biennium.

The Corporation Commission and the departments under the Insurance Commissioner have returned substantially increased revenue to the state with a small proportionate increase in administrative expenses. The Fish and Game Commissions show a satisfactory financial condition and have, during the past biennium, enjoyed a fuller degree of cooperation than heretofore, which operates to the best interests of the state.

The State Prohibition Commissioner has cooperated efficiently and harmoniously with federal and local officers, with the result that Oregon has recently been commended as one of the most effective states in the nation in the enforcement of the prohibition laws.

I sincerely appreciate the uniform response which has been made to my plea for economy and efficiency on the part of every state department.

CONCLUSION

On the subjects discussed in this message or on any other matters pertaining to state governmental activities I shall be happy at any time to confer with the members of the Thirty-fifth Legislative Assembly. My experience during the past two years has strengthened my deep interest in the welfare of the state of Oregon. Recognizing that a progressive body of laws is a vital factor in the development and prosperity of any state, I offer to you my fullest cooperation and support in all undertakings which promise to promote the best interests of our commonwealth and the well-being of her people.

Oregon Secretary of State • 136 State Capitol • Salem, OR 97310-0722
Phone: (503) 986-1523 • Fax: (503) 986-1616 • oregon.sos@state.or.us

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