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 property.as 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