Annual Camouflage of the Tax Burden By DEPARTMENT OF RESEARCH, California Taxpayers' Association This is the time of the year when we have the annual camouflage of the tax burdens in the several counties of California. The supervisors of the counties met during the first week in September, as required, and set the tax rates for the coming fiscal year, 1926-27. They either raised or lowered last year's rate, and now the rates have generally been announced, and the customary annual comparing of the several county rates with last year's rate and with rates in other counties, is going on. In these comparisons and discussions, the tax burden which the taxpayer must bear is camouflaged in a discussion of rates which is only a part of the story. In the first place, usually only the general county rate is considered, and the fact stressed that it is lower than last year or lower than some nearby county. Any propaganda which takes into ac count only the general fund rate, neglects to account for the grand total the taxpayer must pay. The taxpayer has not been generally interested in the different items which go to make up his total tax bill, but he is becoming inquisitive, and this previous camouflage does not deceive him as it did. The amount of money which he is asked for by the tax collector, and the advertised tax rates, are so far apart that the taxpayer is becoming impressed with the fact. The rate for the general fund may be as low as a fractional part of a dollar per hundred dollars of assessed values. This may represent economy and efficiency on the part of those administering the general county government. It is commend able when this rate is kept down. But it is camouflaging the issue, if nothing is said about the many special levies and taxes to retire and pay interest on bonds, all of which contribute to make up th staggering total tax burden in some lo calities. It may be true that the general rate is low and less than in the majority of the counties of the State, but that is small comfort when special taxes for the multitude of special improvements, school dis tricts, road districts, sewage and sanitation districts, fire protection districts, drainage districts, boulevard districts, flood control districts, irrigation districts, and the many other THIS AND WHAT NOT DIS. TRICTS, enlarge the total to figures which produced an intolerable burden on the tax payer. ASSESSMENT This is not the full extent of the camouflage in this annual discussion, for the rates are by no means the only thing to consider in determining the comparative tax burden in the several counties. Assessed valuations are as important as tax rates. Counties with identical tax rates may not have the same tax burden, because of the different ratios of assessed values to actual values. We find that the assessed values in the several counties range from 30 per cent to approximately 80 per cent of the true values. Thus, if one county assess at 30 per cent and the adjoining county at 60 per cent and they have the same rates, the tax burden is only one-half as heavy in the first county as in the sec ond. The only way to strip off the camou flage is to adjust all rates before comparison to the basis of 100 per cent actual value. Sometimes a boasted cut in tax rates does not mean in any degree a lessening of the taxpayer's bill, for this lowering of rates, and much ado about it, may be only a smoke screen to cover up a general and blanket increase in assessed valuations. The increase in assessed valuations also carries with it a greater total tax bill, for, although the general rate may be lowered, many special taxes are fixed or tend to remain at the maximum allowed by law. Likewise, any considerable decrease in assessed values in a county automatically places a greater tax burden on the remaining property, unless expenditures are proportionately cut. In the case of bond issues for improvements, the obligations contracted must be met and no reduction of expenditures is possible in this respect. So the question. which should be asked, when assuming the burden of a bond issue, should be not only, can we afford this improvement? but also, can we afford this improvement, and safely assume to carry this obligation, even if times are not so prosperous as at present? Thus every proposal for increased public expenditures should be carefully analyzed. Everywhere the cloak of mystery surrounding the levying of taxes should be torn off. The taxpayer should force the abandonment of the theory we inherited from the time when kings were in vogue, that the best policy for tax-levying bodies, congress, state legislatures, county boards of supervisors, and city fathers, is to cover up and hide from the taxpayer the amount he is called upon to give for the support of government and public improvements. The theory has been and still is held by tax gatherers, and, I regret to state, is still taught in our courses in economics and political science in the high schools, colleges, and universities of this republic and the State of California, that the aver age citizen will quietly submit to a large indirect tax, when he would rebel if required to pay even a fraction of this amount directly to the tax collector. What is more, it has worked in the past and is working today and most likely will continue to work in the future, and to the detriment of the taxpayer, unless he becomes informed concerning the real burden of taxation. Compulsory publicity covering every phase of taxation with the resultant education of the taxpayer, and a stripping off of the camouflage cast over tax matters. will have a salutary effect. Merely letting every taxpayer know that when he votes for any public expenditure he can be assured that the money will come out of the pockets of the taxpayer, will help. Also. if he knows that, when he votes to borrow money on bond issues, it means he must pay out in interest charges at least one dollar and frequently more for every dollar borrowed, he will act more wisely and not be so apt, in prosperous times, to assume obligations which in the future may be burdensome to meet. "An Orgy of Spending" William Mulholland Warns Against Careless Issuance of Bonds The world has become immersed in an orgy of "reckless expenditure" such as has never before been experienced, F. S. A. Scott, actuary of the Savings Bank of Glasgow, Scotland, told the world meeting of savings bankers. The bankers are attending the annual conference of the National Association of Mutual Savings Banks, which is meeting jointly with the International Thrift Institute of Italy.-Recent Associated Press dispatch from Philadelphia. A significant statement was issued by William Mulholland, chief engineer of the Los Angeles Municipal Water Bureau. printed in the Los Angeles Times, and warning against indiscriminate issuing of bonds. Mr. Mulholland referred to the aqueduct which will be constructed to convey water from the Colorado River as likely to cost from $150,000,000 to $200,000,000. He said: To the Honorable Board of Water and Power Commissioners: As you are aware, the engineering department of the Bureau of Water Works and Supply for the past year has been actively engaged in the making of comprehensive surveys with the view of obtaining a water supply from the Colorado River for the City of Los Angeles and neighboring communities. The distance being so great and the topography intervening between Los Angeles and the Colorado River being so extremely complex, it naturally requires a great deal of time to analyze thoroughly all of the data and properly to estimate the ultimate cost of such a vast project. In the meantime, the people of Los Angeles city and county have had no preparation in anticipation of the probable tremendous cost of this vitally important work. Because of this condition and because of an alarming tendency toward a perfect orgy of projects involving huge expenditures of bond moneys, I deem it highly important at this time that the people be apprised of the rapidly approaching necessity of undertaking construction of the Colorado River aque duct and other allied projects. It is of the highest importance that the people have in mind the necessity and the great cost of this Colorado River project before they decide to give unlimited and unrestrained approval to all the costly projects now being laid before them. Otherwise there is grave danger that the city's and county's bonding power will be completely exhausted in advance and to the exclusion of the most vital project of all-the project to provide them with the absolute necessity of domestic water. Peril to the Southwest Up to the present time we have deemed it imprudent to issue anything that might be considered as an alarmist preview of the bonding situation confronting this city and county. But the board will remember that this county has been experiencing such continued and persistent droughts that our failure to fully appreciate every phase of this situation might prove fatal to the prosperity and welfare of the entire South west. It was originally thought that we should wait until our engineering department has completed its surveys and cost estimates on the Colorado River aqueduct project before issuing such a document as this. We now find that it will require at least two more months to complete this work. In the meantime, within a few weeks, L. A. CITY COMMITTEE OPPOSES The proposed $26,000,000 bond issue for Los Angeles County Flood Control is opposed by the Los Angeles City Committee of California Taxpayers' Association. Voters are recommended to vote "NO" in a statement issued by the City Committee, countersigned by Joy A. Winans, chairman. Two years ago $35,300,000 of bonds were voted for flood control. Some of the work provided for by these bonds has already been done, and the actual cost is over-running the estimates given to the public when the bonds were voted, as illustrated by the following: Original there will be presented to the people the question of voting bonds to very large amounts for other purposes. With this situation confronting the people, it is imperative that they be put in possession of all the facts before they decide to approve the very great expenditures provided for in these bond issues. It is certain that the Colorado River will require an expenditure of at least $150,000,000. It may require the investment of $200,000,000. This work must be pushed forward within the next few years, even though we are favored by periods of normal rainfall. It is my conviction that the situation just set forth is of the gravest import to our city and county, and should be brought to the people's attention without further delay. $26,000,000 FLOOD CONTROL BONDS the above trend be maintained, voters may expect it to cost $40,000,000 or more. Were the flood control projects covered by the $65,000,000 of bonds already voted and asked for-$35,300,000 two years ago and $26,000,000 proposed on the Nov. 2 ballot to overrun as indicated above, the total amount would be close to $120,000,000 and it is officially announced that still more bonds are to be asked for. It is known that the Los Angeles City Committee was moved to its action of opposing the $26,000,000 bond issue because Per Cent or Original Actual Cost San Dimas Dam.. Devil's Gate Dam... Sawpit Canyon Dam.. Big Santa Anita Dam..... Estimate Revised Estimate Estimate 216% 156% 187% No revised estimates have yet been made on the great San Gabriel Dam, the original estimates for which were $25,000,000. If of indubitable evidence that there had been a lack of preliminary engineering, hydrographic and economic studies. ENGINEERS AND ARCHITECTS OPPOSE PROPOSED $26,000,000 FLOOD CONTROL BOND The Los Angeles Chapter, American Association of Engineers, and the Los Angeles Chapter, Engineers and Architects Association, have issued this report opposing the $26,000,000 flood control bond issue proposed on the Nov. 2 ballot: The Board of Directors of the Engineers and Architects Association, Los Angeles Chapter, American Association of Engineers, fully appreciates the importance of further flood control work in the County of Los Angeles, but we wish ISSUE to express our disapproval of the present proposed bond issue in the amount of approximately $26,000,000.00, for the following reasons: (1) We are convinced, from a perusal of the report of the Flood Control Department on this bond issue, that there has been no careful analy sis of the various projects proposed, and it appears that the amounts stated for expenditure are the result of political compromise to influence the election in favor of the total amount of the bond issue. (2) We find that the proposed flood ch 1 in the west end of San Fernando Valley is designed with earth banks and with such gradients that the banks cannot be expected to resist flood erosion. (3) We find that the May Canyon project in the east end of San Fernando Valley contemplates the transportation of flood waters across Pacoima Creek into the Tejunga Wash, and that this plan ignores the Los Angeles City Engineer's plan and present measures for the storm drain relief in this area. We believe this diversion of storm water to be illegal, illogical, unnecessary and not economical. (4) We find the plans proposed for the Ballona Creek Channel and outlet to be entirely inadequate for the combined requirements of the upper area and the run off from Venice and Centinella Creek. (5) It appears that the plans under this bond issue have not been coordinated with the carefully prepared plans of the Los Angeles City Engineering Department, and an attempt to carry out the work as planned will result in a positive waste of money. (6) We believe that, before any further moneys are voted for flood control purposes, carefully prepared plans for these purposes should be prepared in correlation with the plans of the various municipal storm drain requirements, and with the proposed structures in connection with the Colorado River water supply. (7) In view of the City of Los Angeles bearing approximately 70 per cent of the cost of the Flood Control, all further plans and estimates in connection with this work should either have the approval of the Los Angeles City Engineer and the chief engineer of the Public Service Commission, or at least an honest attempt should be made to prepare these plans and estimates in conformity with the work of these depart ments. Engineers and Architects Association, American Association of Engineers, 408 South Spring Street, Los Angeles, California. A Uniform Budget Law for California To Be By VANCE H. EVANS Executive Secretary, California Taxpayers' Association At a regular meeting of the Board of Directors, California Taxpayers' Association, held October 13, discussion was had relative to the state proposals that are being presented to the taxpayers and voters on the November 2 ballot, and also the desirability of having in California a uniform budgetory law applicable to counties, cities, school districts, and other political subdivisions. Mr. M. D. Lack reported on the progress of the study that had been made relative to improved budget requirements for state units. He outlined to the Directors the limitations on the powers of the Legislature to make necessary and desirable changes in budget procedure. He reported that a complete draft of improvements in that procedure, which he felt sure would be entirely acceptable to all subdivisions, would be prepared, and, when completed, would be taken up with revenue officials for the purpose of securing their suggestions and approval in order that it might be in final form for presentation to the 1927 sessions of the Legislature, providing it meets with the approval of the Association. The findings as to the effect of the ballot proposals were presented to the Directors by the Vice-Chairman and Tax Counsellor. M. D. Lack, and by Professor Rolland A Vandegrift, Director of Research, who had been making a study of the effect of the proposals during the past month. It was the opinion of the Directors that certain of the measures pertaining to reve nue should be given consideration and a recommendation based on findings made for the guidance of the voters. Proposition No. 1, which is additional bonds for disabled veterans, was approved as self-supporting and not affecting taxation. Proposition No. 5, having to do with an increase in salary for state officials, and to some extent increasing the fixed charges of the state. was approved on the ground that it would probably bring to these positions more outstanding individuals, and thus increase the efficiency of the several branches of government to such an extent that savings, far in excess of the increase, might be obtained. Proposition No. 8, providing that $5,000,000 a year for a five-year period be taken from the general funds of the state for the purpose of constructing highways, was disapproved, in the belief that the funds of the state would be in sufficient to meet the recommendation of the act. and that it would necessitate either increased tax rates, new sources of revenue, or an ad valorem tax on all the property within the state. Proposition No. 10, providing $8,500,000 for state buildings, including administrative and edu cational, in San Francisco, Sacramento, Berkeley and Los Angeles, received the approval of the Board upon the basis that the improvements proposed were necessary, and, if provided at this time, would no doubt be the means of bringing about added efficiency in University work and save much in rentals now being paid for state offices. Proposition No. 11, to exempt from taxation certain secondary schools, was opposed by the Directors, as an extension of an already objectionable practice of exempting property from taxation. Proposition No. 18, proposing to issue bonds to the extent of $500,000,000 for the acquisition of water and power rights and the development thereof by the state, is opposed, upon the ground that this amount of money is not necessary, the policy as advanced is unsound, and that there are no plans or safeguards worked out to protect the taxpayers. Proposition No. 19, which permits the pensioning of judges, met with the approval of the Directors, for the reason that it would have a tendency to call to the bench a higher type of official, and warrant continuance in such service. Proposition No. 22, exempting forest trees from taxation until forty years of age, received the approval of the Directors, for the reason that it does not represent an exemption of property now in existence from taxation, but rather will encourage and bring about added property values and also be the means whereby California may protect her forests, and conserve, for the use of her people, the maximum of yearly rainfall. Proposition No. 24, proposing to permit irrigation districts to use their funds for purchasing bonds of other subdivisions possessed of water rights, installations and further to transfer funds from one account to another, to be returned from taxes subsequently collected, was opposed by the Directors, on the ground that it would open the way to abuses, and while in part was rightly intended, the good it might accomplish is outweighed by danger of abuse. Proposition No. 25, proposing to exempt property used for cemetery and burial purposes from taxation, was approved by the Directors, upon the ground that it merely legalized a practice that is now in effect. With the exception of these proposals specific ally mentioned, no action was taken by the Board on the other proposals on the ballot, it being the general opinion that these measures do not come within the purview of the purpose of this Association. An Idaho Legislator Favors a Light Tax on Growing Timber By LLOYD A. FENN, Kooskia, Idaho Mr. Fenn, a native of Idaho, is an alumnus of the University of Idaho in Forestry, and of the University of Montana in Law, the publisher of the Kooskia Mountaineer, and writes from experience in the Idaho Legislature.-THE EDITOR. Experience has shown the people of Idaho that its present method of taxing immature timber is wholly inconsistent with a perpetuation of the lumber industry and that it is not conducive to the planting of forests for commercial purposess by private industry. Endless examples throughout the state prove the fact that unless a decided change looking to the proper method of conserving immature timber is made, the whole theory of maintaining a continuous crop of lumber will be defeated. The reversion of deforested areas, which are in truth potential timberlands, to the several counties, under our present law regarding the passing of title for non-pay; ment of taxes, is constantly growing and the condition is becoming an alarming one. Cut-over land is not alone involved in this reversion of potential timber areas. It includes as well the hundreds of acres of burned over timberlands which will not provide rentals, even for grazing, to meet the minimum tax. Here we are confronted with the problem of placing in the hands of the state or its legal subdivisions a large acreage of purely timberland, agreed to be of value for nothing else, which did not yield the former owner a return equal to the minimum tax imposed upon the lowest class of taxable land, yet it is a land capable of producing a wealth subject to taxation, if properly fostered and reasonably taxed for the purpose for which it is to be used. Some say that this method (imposing an unjust tax) is a good way to secure timberlands for the state. However, it is well known that such a subterfuge is unworthy of patriotic citizenship, contrary to good morals, and is an attempt to override our constitutional guaranty of property rights. However, those who view the matter solely in the light of a taxation problem feel safe in assuming that the state cannot afford to undertake or rather assume an enterprise which is financially impossible under private management, much less ac |