Imperial Valley press., 1935-06-03

comparing municipal and private
rates is the tax differential. With
out an adjustment for taxes no fair
comparison can be made between
municipal and private company
rates. The privately-owned utility
today pays from u to Is per cent
of its gross revenue as taxes to
various district, county, state and
national taxing bodies. On the other
hand, the publicly utility
pays no taxes whatsoever. These
taxes paid by the private company,
while necessarily included in it's
rates, do not represent revenues to
the company, but are simply moneys
collected by the utility as tax
agent for various governmental
bodies.
If public operations displace pri-
vate operations, while electric rates
may be reduced in the amount of
such taxes, yet the same burden will
have to be carried by the public.
Instead of paying the tax in the
form of rates, they will have to
meet it by direct levy. 1t follows
that in any comparison of municipal
and private company rates an ad-
justment should be made for the tax
item. To illustrate "a private
utility which is serving a COM
munity at the same rates as a
publicly owned utility is actually
supplying current at net cost to
the public of from II to IS per cent
below that of the latter
The full force of this situation
was not realized by local communi-
ties under our old method in Cali
fornia of taxing public utilities
where per cent of the gross
revenues of the utility were paid
directly to the state. Under the
plan now in force and which be-
comes first effective for the coming
fiscal year, whereby privately own
ed utility property is taxed on ar
ad valorem basis for the direci
benefit of cities and counties, the
result will be very apparent to yor
in increased tax bills, if public tax
free operation of your utilities i:
substituted for private operations.
Taxes-Menace TIC Business
It is the cost of taxes, not elec-
trical service, that menaces tht
future of business. Since 1913 elec.
trio rates in the United States
have decreased 80 per cent, and il
Imperial Valley over 40 per cent
whereas curing the same perioC
there has been an increase in take.
levied by local and state govern
ments in California of SO per cent
per capita and of taxes imposed b!
the national government of 1894
per cent per capita.
Notwithstanding this great in
crease, taxes have failed to keel
pace with the ever-mounting cos
of government, resulting in enorm
Gus governmental deficits which
ultimately must be met by still
greater increases in taxes than W
have yet witnessed. To illustrat
the gravity of the situation-toda,
our national taxes would have t
| be more than doubled in order t.
show a balanced budget.
There is a very definite relation
between taxes and the undertaking
of projects such as the irrigation
district now proposes. 1t is jus
such ventures that are building III
our national, state and municipa
debts to their present staggering
figures. The fact that the none,
comes in the first place from tn,
national government does not re
lieve the situation. In the end i
will have to be paid by the peopl,
of the several states and largely by
business men.
ConclusiOns--Issue Not To Be
Decided In Haste
l believe it to be obvious that TIL,
issue of public versus private own
ership of utilities is one that in
wolves many complex questions anC
is not to be answered in haste. Thi!
is particularly true with a propose
that will commit a community o
10000 people to an investment o
$12,000,000 to duplicate adequate
facilities already existent for theil
service.
The Imperial Irrigation Distric
today has a bonced and warrant
indebtedness of close to $15,000,000
To this there will be added some
s33, 100000 for the construction o.
the All-American canal and now i
is proposed to add another S12,000,'
600 for a power system which viii
bring the total indebtedness of tht
district up to S60,000,000, or a PEI
capita indebtedness of $1,000 fol
every man, woman and child in tn,
district. This will be four time.
the existing indebtedness of th,
irrigation district, the carrying
charges on which the valley ha.
been unable to meet. Is it not time
for the business men of the valley
to consider where they are head
ing?
You are told that the districts
power project will be self-liquidat.
ing, yet you know that you are al
ways told this concerning a new
public project and in the light Of
practical experience this otter
proves not to be true.
1t was only a few years ago that
the district was proposing to spend
around 100000 for the contraction
of 5 hydro plants on drops in its
water distribution system which, il
built, would represent money thrown
away when the All-American cana.