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The University of North Carolina news letter. online resource (None) 1914-1944, November 17, 1927, Image 1

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The news in this publi cation is released for the press on receipt. THE UNIVERSITY OF NORTH CAROLINA NEWS LETTER Pubtished Weekly by the University of North Caro lina for the University Ex tension Division. NOVEMBER 17, 1927 CHAPEL HILL, N. C. , THE UNIVERSITY OF NORTH CAROLINA PRESS VOL. XIV, No. 3 Editorial Board: E. C. Branson. S. H. Hobbs. Jr.. P. W. Wager. L. R. Wilson. E. W. Knight. D. D. Carroll. H. W. Odum. Entered as second-class matter November 14. 1914. at the Postoffice at Chapel Hill. N. C.. under the act of August 24. 191S. STATE HIGHWAY EXPENDITURES STATE HIGHWAY EXPENSES dollars of municipal taxes, and 40 mil- rp. . , , . , • a.L- • i lion dollars of county and school taxes. Ihe table wiach appears in this issue ' rru: :.4.ij i.- ij i , ' This total does not include federal ex- ranks the states according to the • . u i. j • vt ^ . - j j • c*®® taxes collected in North Carolina, amount of money expended upon their i ^ ^ , ^ u- \ ■ ; for they cannot properly be considered respective state highway systems 1926. About a year ago a similar table was presented showing disbursements in 1926. In that year North Carolina spent $32,688,514 and ranked fifth among the states. In 1926 North Caro lina spent $34,144,768 and ranked third among the states. The only states which surpassed North Carolina state highway expenditures in 1926 were Pennsylvania and New York, both states with several times as much population and wealth. The next states in order of rank, following North Carolina, are Ohio, Missouri, Illinois, California, and Texas. The state high way departments which are spending least are in the mountain states, Nevada, Arizona, Utah, and New Mexico. The Southern states show up well in the table, thirteen states ranking lower than Mississippi, the iowest-raulcing Southern state. Revenue Sources Altogether the forty-eight state highway departments expended last year $664,660,48). Of this amount $77,686,266, or 13.2 percent, was re ceived from the federal government. The sum of $345,600,870, or 69.2 per cent was realized from automobile license and gasoline taxes, hence 72.4 percent of the cost of constructing and maintaining the state highways was realized from current revenues. Nhrth Gaiolina’s contribution from the federal governmentSwaa $1,928,362, or 6.6 percent of its total expenditures. Seventeen states received larger appro priations. Texas received more than any other state. $4,743,693. North Dakota merely duplicated the federal appropriation and Nevada spent less than double the appropriation. The percentage of the total expendi tures realized from auto and gasoline taxes ranged from 2.6 percent in Montana to iOO percent in Washington and Michigan. In fact in these two states the revenues from these sources exceeded the amount of expenditures. There were six states where revenues, including federal appropriations, were in excess of expenditures, the other four being Utah, Kentucky, Florida, and Indiana. In thirty-four states at least sixty percent of the money ex pended was realized from auto licenses, gasoline taxes, and federal appropria tions. This indicates that relatively few state highways are being built from the receipts of a property tax or with borrowed money. Most of the states are to a considerable extent pay ing as they go. Of course, in so far as these expenditures represent main tenance costs only a pay-as-you-go policy would be justified. la North Carolina North Carolina’s receipts last year from license and gasoline taxes'were $17,036,473 or 49.8 percent of the expen-j a North Carolina charge. Neither does it include what North Carolinians pay to the federal government in indirect taxes. He confined his talk mainly to an analysis of the 100 millions collected annually by the state and. its political subdivisions. The sources of these totals in 1926-6, the last year for which detailed figures are available, were as follows: Municipal Taxes Percent Source Amount of total Property taxes $17,697,001... 68.4 Polls 264,264... .8 Fines 1,109,897.. -Licenses 2,204,654.. Public services 8,989,790.. Total 30,166,606...100.0 County and School Taxes Property taxes $3,7,206,362... 91.3 Polls 839,710. Fines 648,966. Dogs 182,660. Licenses 1,866,171. Total 40,733,749...100.0 State Taxes General F^nd: Income taxes $ 6,064,767.. Inheritance taxes 843,469.. Business licenses 1,193,662.. Franchise taxes 1,626,717.. Insurance taxes 1,266,670.. Bus tax 142,436.. Secretary of State 296,933.. Miscellaneous 1,649,661.. Total 12,972,184.. Highway Fund: Gasoline $ 7,138,362.. Auto licenses 7,197,733.. Miscellaneous 10,894... Total '....14,346,989., 3.7 7.3 29.8 . 2.1 1.6 0.6 4.0 22.1 3.1 4.4 6.0 4.6 0.6 1.1 6.7 47.6 26.1 26.4 A HEALTHY SIGN One of the healthiest signs on the national horizon is that growing-' tendency on the part of the national government and state legislatures to hold further increases in ail forms of taxation to a minimum, and I be lieve that if we will begin working towards a limitation of tax levies and a wise expenditure of public funds, and demand a dollar’s worth of material and service for every tax dollar expended, the tax problem of the United States can be satis factorily solved.—Cecil E. Inman, Chairman of the Mississippi State Tax Commission. 62.6 Grand Total 27,319,073...100.0 School Taxes Heavy In regard to local taxes, Mr. Wager said that he saw no hope for reduced budgets except through more efficient administration, more thorough-going and more equitable assessments, the building up of taxable resources, sound fiscal operations, and a gradual reduc tion of interest charges through liqui dation of debts. The most burdensome charge on many taxpayers is the special school tax. The enlarged equalizing fund goes a long way toward equalizing school taxes, but school taxes will never be fully equalized until they are equalized for a term of eight months instead of six. He said he did not believe that abolishes completely its taxes property should bear the whole cost of ^^eatre admissions, this source might education, and that as soon as we had a j to the state. He expressed state-wide eight months' term, at least : opinion that the present federal $6,000,000 of the school fund should be , „„gbt not to be repealed, raised otherwise than from property | essentially a control measure : rather than a revenue measure. For Property Tax Faulty I the federal government to withdraw The general property tax, he forest land is ruinous to the. state. The ad valorem tax on all classes of realty makes it necessary to tax forest land at market value. This tempts the owner to cut off his timber to avoid paying taxes. Rarely does a board of commissioners meet that someone does not appear and ask for a reduction in valuation because he has cut off bis timber. One of the most necessary tasks before the state is the reforestation of its idle acres. The farmers will not do it, nor can they be expected to, unless we change our methods of taxing grow ing timber. New York has adopted the right plan—exempt the growing timber and then impose a severance tax when the timber is cut. State Revenues After describing the various sources of state revenue, the speaker said that we might as well face the fact that within three or four years the General Fund will need $20,000,000 a year and that the present sources can hardly be expected to yield that much. He based the need for twenty million dollars on the assumption that a state-wide eight months’ school term would be adopted and that the equalizing fund would be increased to at least $5,000,000. He also estimated a need of $4,000,000 a year for debt service. In order that the general fund shall be able to meet: the new demands upon it, it ought to j have one new source of substantial dimensions. Mr. Wager said that it was not the function of the North Carolina Club to advocate things, certainly not to ad vocate any specific form of taxation. He did explain that agriculture and industry were both heavily taxed at present and that we might have to turn to some form of sales tax, in addition to the present sales tax on gasoline. The state’s tax program is somewhat dependent on what the federal govern ment does. If the federal government ex-! ditures of the state highway depart-1 - .... , gn«QUj,ao-e ment. Adding the $1,928,362 of federal “ffduced at a time when ; . from the field 'of estate taxes would certain states to become —- e 1. ... „ i asylums for aged millionaires. He aid, therestillfemained 44,6percentof| ‘“ P P J' ^^ | concluded by saying that he did not the coat to be met from the receipts from i measure of wealth. Before the bond ilsue. Some states are afraitVto ^ Industrial Revolution practically all m- follow North Carolina's policy, but the ! come-producmg property was tangible, overwhelming sentiment in this state | I'®day a scrap of paper may represent millions of dollars and huge incomes is in favor of the borrowing policy, provided a sinking fund is built up ade quate tor etire the bonds during the life time of the roads. Sinking fund pay ments are being made regularly, even in addition to the legal requirements. North Carolina is safe unless the roads wear out sooner than, has been antic ipated. Time alone will reveal whether they last a longer or shorter time than the estimate.—Paul W. Wager. NORTH CAROLINA TAXES The North Carolina Club at the Uni versity held its second meeting of the year October 31. As a preliminary to the series of tax studies which the club is undertaking this year, Mr. Paul W. Wagev described the present tax sys tem. He pointed out the fact that North Carolina’s total annual tax bill is now approximately 120 million dollars, of which 20 million dollars represents income and inheritance taxes paid to the federal government, 30 million dol lars of taxes paid into the general and highway funds of the state, 30 million may be realized without any visible property. Yet we cling to property as the main basis of taxation. We ought tb recognize that taxes are paid out of income, not out of property. We have made a beginning in taxing income, but only as a supplement to the property tax. We consider it confiscatory if the government takes more than a mod erate share of one’s income through the income tax (it is unconstitutional to take more than 6 percent in this state), yet we often exact thirty, forty, or fifty percent of the income from property through the property tax. At the next general election an amendment will be submitted to the people which, if ratified, will permit in tangible personal property to*be classi- fiedjay the General Assembly and a uniform rate of tax throughout the state prescribed for each'class. The speaker expressed the opinion that the amendment ought to have"gonei|further and permitted the classification of tangible well. For in stance, the present method [of taxing look for very large federal reductions, for the big navy enthusiasts were clamoring for more battleships. He conceded that there ought to be at least one battleship for each admiral and that ^Vashington, society would not consent to a reduction in admirals for it had to have its lace and gold braid. 12. EQUALIZING FUNDS The necessity of some type of equal ization fund coming from state sources is becoming very generally recognized. Twenty-four states now provide state equalization funds in varying forms and in varying amounts. • It is now becom ing generally recognized that the even ing out of inequalities within the com ponent parts of state school systems can be done only through equalization funds or through state support of mini mum school programs. The amount and method of distributing equalization funds is a problem which must be care fully worked out in each state on the basis of its school needs and conditions, I administrative organization, methods 1 of taxation for support of public insti- I tutions, and the like. While the source from which state I school funds should come and the pro portion which the state should contrib ute toward the' maintenance of its schools are important questions in the welfare of a state school system, the essence of equalization of educational i opportunity lies in the method of dia-1 tribution. Undoubtedly there are j many states now contributing enough i from state funds to the support of schools to go a long way in the direction of equalizing educational opportunities if the funds were scientifically distrib uted. Distribution of funds on the school-population basis is the oldest and still the prevailing method of distribution. It was, at the time of its adoption, believed the fairest possible method, and it was hoped that it would assist in equalizing educational op-' portunities. The fact that general development, concentration of wealth and population, centralization of natural resources, and other influences have | resulted in changing conditions to such | an extent that the method is no longer an equitable one is responsible for its i being discredited at the present time j as a method unscientific and inequita- i ble. Progressive states are adopting: more effective methods of distribution | for all or part of their state funds. ' Progress in this direction is retarded in | many states by the fact that the census-, enrollment basis of distribution is pro-1 vided for in the state constitution and ! is therefore difficult to change. Various Methods The most common methods of dis tribution of state funds among the different states are: (1) Per pupil basis, either school census, average daily attendance, aggregate attendance, or enrollment. Forty-five states distrib- ' ute some or all of their funds on one of these per-pupil base.s. (2) Per teacher basis, including number of teachers, graduated grant proportioned to salary basis, graduated grant proportioned to qualifications basis. Sixteen states use one or more of these in distributing some of their state funds. (3) On some specifically equalizing basis. Twenty-four states now have equaliz ing funds. (4) Miscellaneous bases or combinations of different bases. Of these different methods, distribu tion on the census basis is considered least equalizing in effect. School en rollment basis, average daily at tendance or aggregate attendance basis, number of teachers employed, dis tribution of state money in inverse ratio to the tax valuation of the unit to which it is distributed and direct ratio to the tax rate, are other methods of distribution which are considered better. In some states combinations are employed with advantage. Any state considering changing its system of support and its method of distribut ing state funds should provide that a careful study of the whole situation in the state be made in order that the distribution adopted may be an equaliz ing one, combining the best elements of methods used in the most progressive states. Another distributive plan extensively used in a number of states is that of encouraging progress in individual com munities by rewarding through state funds special effort on the part of local districts. Frequently the state matches dollar for dollar a certain maximum amount raised by a local district. This system was inaugurated because it was believed it was a good method to promote progressive practices. Recent studies indicate that state funds cannot be satisfactorily used both to equalize opportunity and to encourage progi^ess in individual communities by rewarding effort unless two different funds and systems of distribution are practiced. This, has led to a reexamination of state-aid systems. Reward for effort, while an administrative device for encouraging progress, has not the same claim as a state responsibility as that of equalization of educational opportu nity. Of the two the latter is of great er importance. New York, Massachusetts, California, Maryland, Nor^^Oarolina, Minnesota, Delaware, and a number of other states have worked out methods of distributing their funds wldch are equalizing in effect. These methods are not alike. Each has some strong and some weak characteristics. They are, however, well worth studying by states considering changes in distribution of funds. —U. S. Bureau of Education. GASOLINE CONSUMPTION The United States Bureau' of Pub lic Reads reports that North Caro lina motor vehicles cunsuraed 194,- 661,826 gallons of gdsoline during the calendar year 1926. That means that every motor vehicle in the state con sumed an average of 496.6 gallons of gasoline during the year. Figuring 12 miles to the gallon, every motorist was due a 6,000-mile ride. That’s enough gasoline for one North Carolina automobile driver, getting 12 miles a gallon, to make more than a dozen trips back and forth between the earth and the sun and all highway maps show that distance as 92,897,400 miles. Figuring 20 cents as the average price for gasoline in the state, the 1926 consymption means an invest ment in motor fuel by North Caro linians of nearly forty million dol lars a year.—News and Observer. EXPENDITURES OF STATE HIGHWAY DEPARTMENTS, 1926 The following table, based on figures compiled by the U. S. Department of Agriculture, ranks the states according to total expenditures of their respective state highway departments in 1926. Total expenditures amounted to $584,560,481, Pennsylvania leading with expenditures of $63,004,361. North Carolina ranked third, with expenditures of $34,144,767. All the southern states rank well, the lowest-ranking being Mississippi which is thirty-fifth among the states. North Carolina, Florida, Georgia, Louisiana, and Mississippi each expended more last year than the previous year. All the other southern states reduced expenditures. In pro portion to wealth and population North Carolina expended far more in 1926 than any other state. These figures do not include expenditures by counties and other local units. 'Paul W. Wager Department of Rural Social-Economics* University of North Carolina Rank State State highway expenditures Rank State State highway expenditures 1 Pennsylvania .... $53,004,361 25 Kentucky $9,403,897 2 New York 37.276,327 26 Kansas 8,769,832 3 North Carolina ... 34.144.757 27 Oklahoma 8,726.493 4 Ohio 29,319,681 23 South Carolina ... 8,587,884 6 Missouri 26,641,364 29 Georgia 8,440,293 6 Illinois 24,267,208 ^30 Nebraska ..... 7,781,810 7 California 20,874,346 31 Maryland..-. 7,468,201 8 Texas 19,198.110 32 Washington 7,458,019 9 Minnesota 18,006,362 33 Colorado 6,694.212 10 West Virginia ... 17,492,263 34 Arkansas 6,629,977 11 Wisconsin 16,103,-246 36 Mississippi 6,822,600 12 New Jersey 16,063,119 36 South Dakota 6,210,142 13 Iowa 16,760,272 37 Montana 4,991,936 14 Florida 13,667,012 38 Vermont 4,884,301 16 Michigan 13,619,503 39 Idaho 4,413,028 16 Massachusetts.... 13.066,303 40 North Dakota 4,346,838 17 Indiana 12,136,496 41 Rhode Island 3,788,183 18 Tennessee 11,702,463 42 Delaware 8,469,189 19 Virginia 10,818,824 43 Wyoming 3,165,197 20 Louisiana 10,664,446 44 New Hampshire.. 3,016,989 21 Connecticut 10,603,714 46 New Mexico 2,636,116 22 Maine 10,164.266 46 Utah 2,369.124 23 Oregon 10,021,149 ' 47 Arizona 2,222,470 24 Alabama 9,602,267 48 Nevada .... 1,667,124

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