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priations has always occurred the legislative year as compared with the following year. Excluding bond purchases and redemptions and the costs of sessions of the Legislature, we have the following comparison of state expenditures during each of the past three years: 1909.

$995,799.09 1910.

888,132.26 1911

934,740.64 From the foregoing it is clear that the present deficit in the General Fund is not attributable to any abnormal increase in state expenditures. On the contrary they indicate that at the conclusion of the present fiscal year the expenditures of the two years will possibly show some reduction over the previous biennial period.

The receipts of the General Fund during each of the past three years are as follows: 1909......

$451,489.46 1910.

451,463.95 1911.

448,639.25 The figures for 1911 are misleading in this respect, that during such year the sum of $73,945.80 was transferred from the Prison Building Fund to the General Fund, which swelled the actual receipts of that fund to that extent. On the other hand, the receipts from counties into the General Fund the same year was less by $58,307 than in 1910. Approximately $30,000 of this decrease is due to the deflection of all poll-tax receipts to the counties, instead of one-half coming to the State as formerly. Other items of decrease bring the falling off of receipts by the General Fund in 1911 over former years to approximately $75,000.

The net cash balance in the General Fund at the beginning of each of the past four fiscal years was as follows: January 1, 1909

$451,082.20 January 1, 1910.

241,398.18 January 1, 1911

175,020.50 January 1, 1912 (constructive).. 44,514.16

There was an apparent overdraft of the General Fund at the beginning of the present fiscal year of $20,305.42 which arose from the fact that on January 1, 1912, a total of $107,488.20 was still due from delayed county settlements, $64,819.58 of which belonged to the General Fund, thus leaving for comparison purposes the constructive net balance stated.

It is clear from the foregoing that the reduction, in 1909, of that portion of the state tax rate which goes into the General Fund, from 47 cents to 39.6 cents, on each hundred dollars' valuation of taxable property, together with the defilection of all poll-tax receipts to the counties, is responsible for the existing deficit. Moreover, that had there not been a surplus in the General Fund at the beginning of 1909, the deficit would possibly have occurred two years sooner. A comparison by years of the warrants drawn against the General Fund with the receipts of the General Fund for such years shows the following net excess of disbursements over receipts : 1909 (legislative year)

$209,888.12 1910 (non-legislative year) 66,377.68 1911 (legislative year).

195,325.92 By reference to the table previously given of the receipts of the General Fund, it is shown that for the three above years they were practically constant, yet this constancy was maintained in 1911 by the transfer mentioned from the Prison Building Fund, which practically overcame a decrease of about $75,000 from the ordinary receipts of the General Fund.

It is conclusive from the foregoing table that, on the basis of the present receipts of the General Fund and after making due allowances for the biennial sessions of the Legislature and the variation in expenditures the year of such sessions with the alternate years, the General Fund must be increased by at least $150,000 per year to balance income with normal disbursements.

Merely to borrow a sum sufficient to tide over the present emergency would but advance the day of a most serious reckoning—when the General Fund would be depleted and the State would have exhausted its Constitutional borrowing power. It is therefore imperative that the Legislature readjust the state tax rate adequately to increase the receipts of the General Fund.

The situation involves choice between two modes of procedure: One, to let the existing system of taxation continue and increase the state tax rate by 15 cents, applying the increase to the General Fund. The other, to increase the state tax rate by 10 cents for the benefit of the General Fund and, coupled with which, the Legislature to provide for the creation of a State Tax Commission to readjust and equalize property valuations throughout the State; depending on such commission to bring about a substantial increase in the aggregate value of the taxable property of the State through such readjustment and equalization.

I need not more than call attention to the fact that taxation is distinctly a business proposition, and that the alignment of the public for or against any existing or proposed system of taxation is not on political lines but very pronouncedly accordingly as it affects the pocketbook of each citizen. The last session of the Assembly showed no division on party lines in the consideration of a proposed taxation measure, and had it not been for the lateness of the session when the bill was finally perfected by the House and transmitted to the Senate, so that its consideration for such reason was prevented, it is fair to assume that the honorable Senate would unquestionably have so treated it.

I shall make no effort to persuade any member of the Legislature as to what course he should take in this matter. With this presentation I submit the subject to your honorable bodies in the firm belief that you

will be guided by what you believe to be for the best interests of the State.

In conclusion, I have only to wish for and anticipate the same patriotic cooperation by both houses of the Legislature and all political parties therein, with the Executive, in solving the problems presented, that so signally characterized the last extraordinary session of your honorable bodies.

TASKER L. ODDIE,

Governor.

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