Wednesday, February 6, 13
HKRAI.D AND NEWS, Klamath Falls, Orf.
In The Legislature
By GFORGF. C. FI.I1 CRAFT
Unquestionably, the biggest
problem facing the 13 legisla
ture is the matter of h-ilnncins the
budget. In order that thif may be
put in its proper perspective,
it is in order that we review re
cent fiscal history.
On July 1, 1957, the surplus on
hand in the stale's general fund
was 52 million dollars. By July
1, 1959. this had been reduced to
ahout 32 million. During the 1959
61 biennium, the surplus re
mained constant and again on
.July 1, 11, we still had over 32
million dollars on hand.
During the current fiscal period
i.luly 1, 11, to June 30, 19fi.1l,
latest estimates show that we
shall spend a total of $358,000,0xi
and that on June 30, lflii.1, we wi
have consumed the entire 32 mi
lion dollars, leaving us with no
surplus on hand!
These figures apply only to the
general fund and do not include
"dedicated" funds such as the
gasoline tax money alli.cated to
the highway department.
During the current biennium,
our taxes will total about 260 mil
lion dollars with the revenue for
the balance of our expenditures
coming from other sources (li
quor revenue is one example) and
using the 32 million dollar sur
plus we had.
Reduced to its simplest terms,
we have been spending more than
we have been collecting and now
our "savings" are ill gone.
1 think you can see that if we
are to maintain our pnsent level
of state services and support edu
cation with state funds to the ex
lent considered necessary, we
have no choice except to raise
taxes.
Although the federal government
is able to spend more than it col
lects, our state constitution for
bids deficit financing ;.nd 1 be
lieve that this is as it should be.
1 cannot subscribe to the theory of
constantly spending more than
you earn.
It appears then that ours is not
a choice of whether or not to pass
tax legislation, but rather how
much and which method.
At the time 1 write this, two
major tax proposals h:ie been in
troduced into the House, and there
are at least two more scheduled
to make their appearance soon.
01 these four, three concern in
come taxes and one is a sales
tax measure.
Within the limits of space per
mitted for this column, I want to
discuss with you the important de
tails of each of these tax plans.
We here at the legislature are very
much interested in yn.ir thoughts
on this important subject Letters
from constituents are carefully
read by all of us.
Comparing various tax hills is
not a simple chore. Each measure
is calculated to raise a different
amount of revenue, based to some
extent on the sponsor's idea as
tn how much is really needed for
the state. Therefore, a direct com
parison between two plans as to
effect on any specific individual
is not always fair. In my descrip
tion of these tax plans, 1 shall at
tempt to set forth the basic phil
nsphy involved, indica'e the total
amount of revenue anticipated
and give a few specific examples
tn demonstrate the principles of
the measure.
House Rill Ills,.
This is the governor's income tax
bill, frequently called the "net
receipts" tax. Its sponsors indi
cate that it will "broaden" the
tax base by requiring many peo
ple who now pay no income tax
lo contribute to the stale's gener
al fund. It is estimated that it w ill
bring about 240 million dollars
inlo the state coffers during the
next two-year period.
It should be noted here that
Reds Protest
Friendship
MOSCOW UTI' - The Soviet
I'nion handed lenghty protest
notes today to the West ("lerman
and French ambassadors here
'containing a toughly worded at
tack on the recently concluded
Bonn-Paris friendship pact.
Soviet Foreign Minister Andrei
Iiomyko summoned both envoys
In deliver the notes. Thee was
no otticial information on their
content.
But diplomatic sources said they
weie lengthy, running to 20 type
written pases, and contained pas
ssses worded in "very strong
terms."
The notes were believed lo con
centrate on the military aspects
of the Taris-Bnon accord which
prnvtn for exchange of military
research data, joint military train
ma. and regular joint general staff
consultations.
Since West German Chancellor
Knnrarl Adenauer and French
Trfident Charles rie Gaulle con
cluded the aareement. Russia has
nppnvd it as a revival of WeM
Oeiman militarism and a military
threat in Kurnr.
I'ntil the CimI War. peanut
frowinp 8"d eating in the I niter!
Sta'ej was confined to a mal;
: of eastern Virginia.
PAGE 7-A
(he present income tax law is ex
peeled to produce 19 million dur
ing the current biennium. The
tax people here in Si.lem esti
mate that if iiq change is made
in the present incomj tax law
we could anticipate about 209 mil
lion during the next fiscal period
ilftt)-65, assuming thit Oregon's
economy continues to grow at an
average rate and there is no ma
jor economic reversal. By sub
tracting 209 from 240, we arrive
at the 32 million dollar increase
that the proponents of the plan
anticipate it will produce.
A major change in Oregon in
come tax practice embodied in
H.B. 1085 is the levying of a one
per cent tax on total "net"
come. (The bill makes no change
in the method of determining
"net" income -the1 usual business
expenses are deducted i. However
there are no credits against this
portion of the tax.
Another striking change is the
elimination of "personal deduc
tions" such as interest, residential
taxes, federal income taxes, cas
ually losses, gambling losses.
medical expenses and charitable
contributions.
In lieu of the personal $K00 ex
emptions and deductions, a credit
of $20 against a portion of the tax
allowed for the taxpaver. a
spouse and each dependent. This
$20 credit cannot be taken
against the basic one per cent
tax.
The credits for old-age, blind
ness and contributory support are
also repealed.
Since personal deductions and
exemptions have been eliminated,
the "bracket" rates have been ma
terially lowered. Here is the com
plete schedule:
1 per cent of the total ret income
PLUS
2 per cent of tire first $2500 of
net income
3 per cent of the second $2500 of
net income
4 per cent of the third $2500 of net
income
per cent of all income in ex
cess of $7500
The advocates of H.B. 1085
point out that in addition to broad
ening the base of stale support.
it is a simple plan, easily under
stood.
The opponents of the measure
object to taxing the students and
others with low income., claiming
that in some cases, the tax will
not be sufficient to offset the cost
of processing them.
At the state capitol this week
were Inland Cheyne, Ed Geary.
rrancis Mathews and Con Bor-!
sting.
Among those attending the Gov
ernor s iTaver Hreaklast were
Dr. Donald Bauer, Bill Grimes.
Judge Robert Kerr, Reuben Iar-
son. Iiren 1'almertnn, Alex Smith
and Bill Sweetland.
OUR ANCESTORS
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'DENNIS THE MENACE"
HEY. IW HIM UNDER THERE ! HES HIBSSNATML
Grazing Fee Increase
Supported By Official
WASHINGTON (UPII- An as
sistant secretary of interior told
congressional committee today
that western farmers would not
be "pushed off the brink" if fees
for grazing on public lands were
increased by 50 per cent.
John A. Carver Jr. testified that
"we must not go into the 19S3
grazing season with 19fi2 rates."
He apeared before the House In
terior Committee, which is con
sidering public land problems fac
ing the new Congress.
Another official, Director Karl
Landstrom of the Bureau of Land
Management, said a new schedule
of grazing fees probably would be
approved by Secretary Stewart L.
Udall in a few days.
Currently, grazers pay 19 cents
a month per cow, 19 cents a
month for five sheep, and 38 cents
a month per horse for the pnvi
lege of grazing their animals on
public lands.
The big complaint about raising
fees. Carver said, is its effect on
smaller owners.
But an operator with a hun
dred cows and five months use
now pays less than $100 (or the
privilege; one w-ith a thousand
pays less than $1 a head for
five-month season now.
Neither one of tnem is going
to be pushed off the brink by an
increase as moderate as 50 per
cent.
"And we can't ask Congress for
10 or more million dollars for soil
and moisture and oilier range im
provement programs while the
users are paying in only $3 mil
ion. . .." Carver said.
by Quincy
Landstrom testified that 30 per
cent of the 142 million acres of
public lands in organized grazing
districts was in poor or depleted
condition. He said the bureau had
organized four multiple use im
provement projects to show what
could be done.
He said special emphasis was
placed on range rehabilitation in
these projects:
Make Work
Plan Okayed
By British
LONDON (UPli-Prime Minis
ter Harold Macmillan used a par
liamentary vote of confidence to
day to help pump new life into
Britain s sagging economy.
Macmillan's Conservative gov
ernment, in a pre-election move.
announced Monday it would spend
$57.4 million during the coming
months to boost employment in
the work-starved northeast and
Scotland.
The Conservatives easily defeat
ed a censure motion by the oppo
sition Labor party on Macmillan's
economic policies. The vole,
along party lines, was 3I7-23A.
The victory was the second for
the Conservatives in recent days.
Last week they defeated a I.abor
motion attacking the Nassau
greement by which Britain
scrapped Skybolt missiles in fa
vor of U.S. -supplied Polaris mis-
ilcs.
In the face of a commanding I
government majority in Commons j
the Laborites had no hope of win
ning the votes, but the motions
.ere part of a series of pre- j
lection gestures by which they
hope to regain control of the gov
ernment. Kmpty steel drums are much in
demand in the Virgin Islands.
Cut to various lengths, they wind
ip as musical instruments, in
teel bands.
Penney's
ALWAYS FIRST QUALITY
Veterans'
fhdilort note: , new look at
some of Oregon's nn4 respected
money programs has been pro
posed In a report Issued by the
legislature's own fiscal officer.
Last of three articles.)
By ANN' H. PEARSON
United Press International
SALEM (LTD - From a mod
est start in 1945, Oregon's veter
ans loan program nas grown in
to a money-maker that is turning
a handsome profit each year
Legislative Fiscal Officer Ken
neth Bragg says the legislature
now may want to take another
look at the program this time
with an eye to siphoning some of
the profit back into 11k- slates
general fund.
Voters passed a constitutional
amendment authorizing tax mon
ey to slart the progra.n in 1945.
The legislature appropriated $a.-
017,903 in general fund revenues
from 1945 to 1950 to get it going.
With the initial appropriation as
a floor, the veterans agency start
ed selling bonds to get ti e money
In lend lo veterans for homes and
(arms.
Since then, the agency has
loaned $335 million lo 41,538 vet
erans.
The agency pays just over 3
per cent interest on the bonds it
sells. It gets back at least 4 per
cent on loans tn veterans.
$10 Million Reserve
The difference has enabled the
agency tn huild up a reserve ot
about $10 million. The prolit
liscal l!Hil-(2 was $1.3 million.
The legislature might wish to
consider a constitutional amend
ment which would permit the or
derly transfer of surplus funds
from tlie war veterans' bond sink
ing fund to the genet al fund,"
Bragg says.
At present the revenues are just
piling up in the loan fund.
Bragg said sutticient reserves
should be left in the fund tn in
sure the continuing financial in
tegrity of the agency's bonds.
Bragg's proposal would, in ef
fect, put the state into the money
lending business on a profit-mak
ing basis.
It could provide a biennial
source of revenue.
His suggestion is in addition to
a separate proposal for the gen
eral fund to recaptu.v the re
maining $5.5 million of the monev
it gave the agency to gel started
in the first place. That is a one-
shot proposal. Its legality is being
studied.
Both Bragg and Veterans' Af
fairs Director H. C. Saallelri note
the veterans' loan program is
booming business.
When the program started,'
says Saalleld, "it look a year to
TRY IT
AT THE
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loan $1 million. Now we do it in
less than 2 weeks."
The profit now amounts lo be-
Iween $2 and $3 millio.i per bi-
ennium. Bragg says, "and will
increase substantially in I
Penney's
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the years ahead."
The agency last month sold $25
million in bonds to give it money
to lend this year. So far, only
slightly more than 20 per cent of
the eligible World War II and
if.J.'.Si'jir
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lean War veterans in Oregon
have borrowed from the fund.
leaving more than 154.000 eligible.
In support of his suggestion,
Brass notes that many other
Ko-lvctcrans programs no.v are being
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