The Ypsilanti daily press. (Ypsilanti, Mich.) 1928-1962, 1942-03-30
STATE FINANCES

STATE FINANCES
= The average state treasurer today
doesn't know whether his next step
will lead 10 triumph or disaster.
At present he seems 10 be IN
clover Nearly all the states nave
lust finished Two highly prosper
Gus years. Some, like Ohio. VIZ
ginia. Illinois, Indiana. Washington
New York, and Colorado. have Dig
SURPRISES.
But there are clouds on the hori'
ION. Loss OF major portion OF the
motorists annual tribute will leave
the biggest hole in the state treas
uries. The motorists are a vanishing
race. as war sweeps away ihelI
tires gasoline and automoolles'
And they are the nation most I'M
bortant tax producers. yielding IN
gas taxes and license fees alone
more than one-fourth OF all state
tax reyenues-Sl, 33l,600,000 in
1871. They also pay big sums INTO
the state trea suries when they buy
their cars and equipment.
Without gas rationing, the "hole
issue hangs on the life OF tires until
substitutes are ready Many viii
soon be using retreads.
The bright side OF this picture IS
that most OF the revenue which VII!
be lost would be needed anyw ay.
About half the states receipts from
highway imposts are spent on con
struction Of new roads. and the War
Production Board isn't allocatine
scarce materials for the building OF
new highways except those needed
for military purposes. On many OF
the access roads-leading 10 defense
plants or military bases-the led
eral government is paying from 20
10 100 per cent OF the cost.
Looking elsewhere. the fiscal
officers face other uncertain lac
tors. State sales tax collections in
1871 increased 1873 per cent over
1870. and income tax collections
rose 1s.4 per cent.
Many OF the things subject 20
sales tax are being partially or en-
tirely eliminated. Manufacturers
OF refrigerators, washing machines
radios, vacuum cleaners, type~riters
and other durable consumer goods
are curtailing production and con-
verting their plants into war indus
tries. Liquor distillers are discon-
tinuing their liquor making and tui n
ing 10 the production Of industrial
alcohol for war purposes-inyolying
l.. ~ ~
II the pending Cochran bill is
passed, states would lose all sales
taxes on goods purchased by de
Tense contractors In a period when
half the national income is being
spent on defense, that would be a
major loss.
Here again there IS a compensat-
ing factor. States are being forced |
to curtail expenditures for construc- |
tion OF buildings and other public |
works. The same priorities systems |
which prevents them from building |
non-defense roads also prevents |
their getting any scarce materials
for other non-defense construction. |
The financial outlook is further
confused by wartime expenses.
Large sums are needed for state
guards and home defense; for de-
tense councils and civil defense;
fire-dissster programs unemploy-
ment compensation benefits 10 ner.
sons out OF work through CONVEX
sion OF factories from peacetime 70
wartime work: differentisl pay 70
state employees who have volun-
teere for the Army and Navy. sal
airy increases for teachers and state
employees 10 meet the high cost OF
living; sanitary. police and other
facilities particularly in communities
such as IN Ypsilanti where there
are new defense plants.
In the World War the states we're
not faced with the same fiscal IN
certainties. because they then OBJ
tained most Of their revenues from
property taxes. These were not az
fected by the factors which are now
giving trouble. State income taxes
were rare; the first general sales
TAX wasn't imposed until 1923, and
the first gas tax was levied Ia 1919.
Now property taxes rank sixth
among state income producers;
that source Of revenue is left large
ly 10 the counties and cities.
The danger involved in loss OF
state revenues Is greater now be-
cause the states are performing
more functions In 1915 state taxes
yielded s3.75 per capita. compared
to 1854 in 1899 states are uslrg
the money largely for public sersic-
es. such as relief education. high
way improvement and unemploy-
ment compensation. As expenses in
crease. public services may be i'm
proved. but taxes must continue up
ward TO pay the bill. President
Roosevelt appears 10 have been
right when he recently declared
that "the plush days are all over"
especially for industry.
--O----