Governor Julius L. Meier's Administration
Governor's Miscellaneous Letters, 1933
Source: STATE OF OREGON GOVERNORS' MESSAGES TO LEGISLATURE
To the President and Members of the State Senate:
In connection with whatever revenue raising program you may eventually evolve to lift the state tax from property, provision should be made for the abolition of the millage tax for the World War Veterans State Aid Commission.
The basic law under which the Commission functions is contained in the constitutional amendment adopted June 7, 1921, and subsequent amendment adopted November 4, 1924.
These constitutional amendments have been carried into effect by various legislative enactments.
At the 1921 session, the legislature provided for an annual tax of one mill for the Commission, the proceeds to be derived therefrom to be used presumably to aid in defraying administrative expense and to absorb the loss sustained in making loans to veterans at a less rate of interest than paid on the bonds issued.
In 1925 the legislature reduced the tax to half a mill annually.
Since the creation of the Commission, there has been issued bonds of the State of Oregon amounting to $30,590,000, of which $4,375,000 have been retired, leaving a balance of $26,215,000 outstanding.
As the situation now stands, the Commission is faced with principal maturities of $1,250,000, plus $1,126,307 in interest for the year 1933, which will absorb all of the income for this year and more than deplete the entire sinking fund.
During each of the succeeding nineteen years, the Commission will be faced with principal maturities of $1,000,000 or more a year plus annual interest requirements in a gradually decreasing amount from approximately $1,126,000 in 1933, with no reserve left in the sinking fund and probable annual receipts far below these requirements.
With the hope of aiding you in the solution of the grave problem confronting the taxpayers in connection with this Commission, I have George Black & Company, auditors and counselors, make a survey of its affairs, and their report is now available at the Executive Office.
In this report the auditors attribute the financial condition with which the Commission finds itself confronted to the following causes:
First—Transfers of approximately $5,375,000 from the sinking fund to the special fund for the purpose of making additional loans.
Second—A legislative policy which made no provision, except in the very early years, for the administrative expense of the Commission, forcing the payment of such expenses out of the interest received and thus depleting revenues available for interest on bonds.
Third—A gradual increasing number of delinquents and foreclosures, with certain attendant loss, and no reserve to cover either condition.
“This whole enterprise,” declares the report, “seems to have reached proportions far beyond the most extravagant anticipations of its sponsors. We are informed that the wildest estimates pictured a possible bond issue of $10,000,000, although it has now reached three times that figure.”
Since the creation of the Commission in 1921, taxes totaling approximately $7,250,000 have been collected from the property owners of the state for its administrative expense and to absorb its operating losses.
In this connection, it may be pointed out that this tax was voted by the people of the state when they adopted the constitutional amendment providing for the levy. It constitutes a part of the enormous tax load which has been piled up by the action of the voters of the state in days of prosperity and which now bears so heavily on the overburdened taxpayers.
With the view of giving relief to the property owners, the tax of one-half mill was omitted from the levies for 1932 and 1933.
However, in view of the financial condition of the Commission, the millage levy will have to be restored next year, unless your honorable body can devise ways and means for replacing it with some other source of revenue.
“It is absolutely impossible,” continues the auditors’ report submitted to this office, “to carry this enterprise without an adequate tax levy or some other provision from outside sources.
“The excess of interest paid over a maximum possible interest receivable, plus administration expense, plus inevitable shrinkage, leaves no alternative and any postponement of the tax levy, or substitute, to future years merely aggravates the situation.
“An annual tax levy of one-half mill, or an equivalent revenue would appear to be a minimum
“Furthermore, we understand there is a probability of mandamus proceedings being brought to compel the placing of such a levy on the tax roll and retroactively include levies not made the full statutory requirements in previous years. Should such proceedings materialize and be successful, further postponement of the tax levy means merely pyramiding later on.
“However, even a tax levy, unless it be a very substantial one, will not solve the problem presented by annual interest and bond maturities of over $2,000,000 with income of $1,200,000, following the exhaustion of the sinking fund in 1933.”
The Commission has foreclosed on properties in the sum of approximately $2,434,362 and it is expected that by the end of 1933, the delinquency will reach forty per cent.
It is my earnest recommendation that you make a thorough investigation of this Commission with a view of not only of substituting some other source of revenue for the present property tax, but also with a view to reorganizing the Commission and reducing its operating losses to the lowers possible minimum.
In this connection, I suggest that you give consideration to the possibility of consolidating the functions of the World War Veterans State Aid Commission with those of the State Land Board for the purpose of cutting down the present heavy overhead and reducing the administrative costs of both departments.
JULIUS L. MEIER,
January 20, 1933
To the Honorable Speaker and Members of the House of Representatives.
In my message addressed to the Special Session of the Thirty-seventh Legislative Assembly, I called the attention of your honorable body to the urgent necessity for providing relief for the many thousands of Oregon citizens who are in distress because of unemployment.
I want again to remind you that the provision of aid for the unfortunate victims of the world-wide economic depression is one of the most important problems which confronts this assembly.
In the summer of 1931 I appointed unemployment relief committees in every county of the State and cooperated with them in their activities through the Highway Department and other state agencies.
Realizing the increasing serious ness of the unemployment situation and the urgent need for relief measures if dire want and suffering were to be averted during the present winter, I last June called together representatives of the various counties of the State and the several agencies engaged in the administration of unemployment relief.
To carry out the program formulated at that meeting, an Executive Committee wa appointed consisting of the following persons:
Raymond B. Wilcox, Chairman
Paul V. Maris, Secretary
Mrs. W.W. Gabriel
Ray W. Gill
Victor P. Moses
Alex G. Barry
Ben T. Osborne
The members of this committee have served without compensation and without statutory authority. Their actual expenses have been paid out of a balance which remained in the fund raised by contributions of state employees for unemployment relief.
I want to take this opportunity of expressing my appreciation for the able, tireless and public-spirited service they have rendered.
They have maintained constant contact with the Executive Department and have given invaluable assistance in meeting the many problems attendant upon widespread unemployment. They have worked with the county relief committees; they have coordinated and assembled accurate information from reliable sources as to the extent and seriousness of unemployment and destitution and have promoted the conservation and distribution of food, clothing and fuel; they have aided the counties in preparing and presenting applications for loans for relief funds from the Reconstruction Finance Corporation and have assisted the Executive Department in checking on the disbursement of these funds and submitting the exhaustive reports required by the federal government. The report of the Committee, which is in your hands, merits your careful study.
The fact that no application from Oregon has been rejected by the Reconstruction Finance Corporation is evidence of the careful work of the Committee and the confidence reposed in their responsibility.
Loans totaling $980,738 have now been made to twelve counties of Oregon by the Reconstruction Finance Corporation. Indications are that additional applications will be made by a majority of the counties of the State.
As Governor I am personally responsible to the Reconstruction Finance Corporation for the proper disbursement of and accounting for funds received from that body. The federal government imposes strict regulations and demands detailed reports regarding all funds.
The situation has grown to such magnitude that it cannot longer be adequately handled by volunteer service. It is, therefore, recommended that legislative provision be made for a State Relief Commission of seven members to serve without pay, the Commission to be dissolved by Executive Proclamation when the present emergency shall have passed.
It is further recommended that a fund be placed at the disposal of the Governor to take care of necessary administration, supervision and accounting, and also to provide for a survey of the unemployment situation in the State to the end that our own resources may be conserved and properly utilized.
Loans made by the Reconstruction Finance Corporation to the various counties are deductible from future federal aid highway allotments unless other arrangements are made for they payment. Every county which has received a loan from the Reconstruction Finance Corporation has entered into an agreement to reimburse the State from its general fund or form its share of the motor vehicle license fund in the same amount and at the same time as federal aid highway funds are withheld from the State by Congress.
It will require action by this legislature to bring these arrangements within the State Constitution and make them enforceable. You are, therefore, urged to give this matter consideration with a view to formulating a definite policy which shall govern past loans and those which may be made in the future.
Every receipt for funds advanced to the State by the Reconstruction Finance Corporation carries the statement that the advance is made subject to the condition “that the State of Oregon and the Governor of said State shall give consideration to the possible need of providing funds by or within the said State or by or within the municipalities or political subdivisions or other communities of the said State.” This clearly places upon the State the obligation to utilize its available resources through action of the legislature.
The counties, all harassed by constantly mounting tax delinquencies, cannot assume additional obligations. Unless the State makes a bona fide effort to meet its responsibilities in this connection we cannot look for further aid from the federal government.
I am, therefore, again urging upon you the necessity of including in your plans for raising revenue for the State the provision of a fund of not less than $500,000 for unemployment relief.
This problem is immediate and urgent. It involves the welfare of sixty thousand registered unemployed citizens of Oregon who, with their dependents, will suffer need during the coming months unless prompt action is taken by your honorable body.
The great majority of those in distress are self-respecting, worthy citizens, eager to work, who find themselves in their present situation because of conditions over which they have no control.
The State of Oregon will be remiss in its duty if provision is not made during this legislative session to safeguard our distressed citizens from want and hunger.
JULIUS L. MEIER,
January 23, 1933
To the Honorable Speaker and Members of the House of Representatives.
Financial and industrial conditions demand a material reduction in Oregon’s motor vehicle license fees.
In conjunction with whatever decision you may finally reach in the matter consideration must be given to five major factors entering into the highway situation:
First. Outstanding State Highway bonds and the conditions under which they are issued.
Second. The one-third share of the license fees paid to the counties.
Third. The annual allotment of moneys from the State Highway fund for secondary highways.
Fourth. Proper maintenance and betterment of the State Highway system.
Fifth. Federal aid and cooperative funds provided in connection therewith by the Highway Commission.
The present State Highway bonded debt totals approximately $27,516,750. If no further bonds are issued the last bond will be retired in 1956.
With reference to the bonded debt you have, of course, no discretion. Its retirement must go forward in a businesslike and legal manner, without recourse to the general property tax.
With respect to the second item, namely the one-third of the license fees allocated to the counties, it must be borne in mind that many counties have issued road bonds to be retired with funds received form this source. Other counties depend on this fund for county road purposes.
The annual allotment from the State Highway fund for secondary highways was provided for by the 1931 legislature in lieu of the one mill tax levy theretofore made for this class of highways.
It is, of course, within your province, if you deem it wise, to relieve the State Highway Fund of this allotment, but until you do so the Highway Commission, under the law, must make provision for it.
The question of proper maintenance and betterment of our highways is wholly within your discretion.
Necessarily for the safety of our highways and the protection of the investment involved, adequate provision must be made for maintenance and there must also be something in the way of an annual betterment program.
Since 1926, Oregon has received Federal Aid of more than $11,000,000. During the years 1931-33 the State also received Federal Emergency Unemployment Relief funds aggregating more than $3,000,000.
Without going into detail it is sufficient to state that if Federal Aid is to be continued, Oregon must provide cooperative funds, but whether this shall be continued is a question for your honorable body to determine.
In your deliberations as to the extent motor vehicle license fees shall be reduced your objective, in my opinion, should be to provide sufficient revenue to meet the fixed expenses of the Highway Department and to maintain and preserve the highways already constructed at great cost to the State and counties.
I recommend that you give study to the advisability of carrying on a modest construction program so that small gaps in the present highway system may be completed, thereby making available to the public the full advantage of the large expenditures which have already been made.
In addition there is the ever increasing necessity of widening narrow pavements which now carry heavy traffic. I believe that a modest program of this character should be approved.
May I also suggest that in dealing with the problems of highway finances you guard against too great optimism in estimating the revenues which various plans may produce, as the present trend in both license fees and gasoline consumption is downward.
To aid you in your deliberations I last spring appointed a committee consisting of:
Dr. E.B. McDaniels, Chairman,
Mr. J.E. Smith,
Mr. M.C. Glover,
Mr. Ralph Hamilton,
Mr. B.F. Osborne,
Mr. A.B. Robertson,
Judge R.W. Sawyer,
Mr. Lafe Compton,
Mr. B.E. Harder,
As members, to make a thorough study of motor vehicle fee revision.
I wish to express my appreciation for the good work performed by this committee
Its report, which will be placed in your hands, deserves your careful consideration, along with material which has been made available by the Highway Department.
In conjunction with your study of the highway situation you will naturally have to give consideration to the motor transportation problem, both freight and passenger, which is in an unsettled condition and demand legislation.
The underlying cause of this situation is attributable to the unregulated operator.
The present motor transportation act is weak and deficient in many respects and must either be extensively amended or a new law enacted.
I trust with the data at your disposal you will arrive at a constructive plan which will offer needed relief to motor vehicle owners and at the same time safeguard the credit of the State and protect the vast investment already made in our splendid highway system.
JULIUS L. MEIER,
February 13, 1933
To the Honorable Speaker and Members of the House of Representatives.
Oregon’s total property tax approximates $41,500,000 annually.
Of this amount only $3,000,000 is for state purposes. The remaining $38,500,000 represents taxes levied by the 2,753 local tax levying bodies of the state.
In other words, more than 90 per cent of the entire property tax load is made up of local levies.
To me it seems entirely illogical that these twenty-seven hundred local subdivisions, which derive their existence and power form the state, should enjoy the right to levy on the taxpayers of the stat burdens of destructive proportions and to incur indebtedness that threatens bankruptcy and confiscation.
On the contrary, it seems to me entirely logical that, when powers and privileges conferred by general law on these political subdivisions are exceeded or abused, other laws may be enacted restraining and controlling the exercise of such privileges or powers for the benefit of the people as a whole.
While it is a theory of democracy that each local community may decide for itself how much money it will spend and what obligations it will assume, the fact nevertheless remains that such an expression of democracy is frequently the expression of a tight little bureaucracy, as the controlling few are often those in official positions or small groups of interested propagandists having ulterior objects in view in levying exactions on taxpayers and in directing expenditures of public funds.
Without some control over local taxes and indebtedness, home rule, in my opinion, is merely a vain theory which frequently results in home ruin.
With proper control, however, there may be provided the processes of law and the practical means whereby the real substance of home rule may be preserved and protected, not only for the benefit of the local governments but for the best interests of the state as a whole.
A number of states have enacted legislation controlling local tax levies and bond issues, which has resulted not only in savings of millions of dollars to the taxpayers but in placing the various local governments on a sound financial basis. Until similar legislation is enacted in Oregon no appreciable reduction in taxes can be achieved. I therefore respectfully recommend that during your deliberations you give this subject earnest and serious consideration.
May I suggest as an initial step in this needed program of rigid retrenchment in local government that you enact legislation extending the salary reduction schedule ranging from 5 to 30 percent, which you have adopted for state officials, to the salaries of the officials and employees of our counties and cities. It should be so extended not only as economy measure in the interest of the taxpayers but also as a matter of fairness and justice.
The members of your honorable body are pledged to a program of tax reduction which can be achieved only by the reduction of the expenses of government. You have made an earnest effort to reduce the cost of state government and to reduce state taxes, which represents only 10 per cent of the tax load on property. If the taxpayers of the state are to have any real relief it must come from a substantial reduction of local tax levies, which represent 90 per cent of Oregon’s annual tax bill.
JULIUS L. MEIER,