Indianapolis Times, Indianapolis, Marion County, 8 January 1937 — Page 18

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FRIDAY, JAN. 8, 1087

CYP re

_ THE INDIANAPOLIS TIMES

PAROS. NE pice

PAGE 17

Text of Governor McNutt’'s Message to Legislature

-

The text of Governor Mc-

Nutt’s message to the Legis-

lature follows:

Mr. President, Mr. Speaker, Mem--bers of the Senate and of the House of Representatives:

State Needs No New Taxes’

A retirihg executive is tempted to 2

turn the performance of his duty of reporting on the condition of the ;state and recommending such measures as he shall deem to be expedient into an accounting of stewardship. I should like to review the notable record of the last four years and attempt an adequate assessment of it, paying full tribute to the General Assemblies for the - great body of constructive work dofie in loyal response to the thought and needs of our people. But all of us stand too near the work which has been done and are ourselves too much a part of it to write its history. It is unlikely that any member of our generation will fully comprehend the meaning of the crisis through which we have lived or be able to appraise properly the methods employed to meet it. - However, the facts are evident. Four years ago the citizens of this State labored under intolerable ‘burdens. There had been such an accumulation of misery and ° fear, that their morale, their confidence in their leaders and their faith in once-accepted policies had been de'stroyed. Thousands were in want of the bare necessities of life. The . public poor relief system was not equal to the occasion. The State budget was unbalanced. Appropriations for the year exceeded anticipated revenues by seven million dollars. The credit of the State and its political subdivisions were seriously threatened. Taxes were oppressive. Our system of public education was imperiled. Financial institutions were unable \to continue normal operation. Public utilities had their hands on the throats of consumers. Small investors and borrowers were at the mercy of finance companies and consumer credit. agencies. Patience had been exhausted and panic had seized the People. We were on the brink of a major catastrophe. Today we can say that the needy have been fed, clothed and sheltered and that the State has carried its full share of the necessary cost. Indiana was the first state to reassume direct relief, after reforming and improving . the system. Pensions for the aged and the blind have been established. Laws have been passed to

promote stability and a decent American standard of living. The | - State's estimated deficit has been | met and the budget balanced, not | only for the last three fiscal years but for the present fiscal years as well. The State has no debts, bonded or current, and on June 30 will have in the general fund an unincumbered balance of at least $17,809,000. : The credit of the State is better than at any time in its history. | Taxes on tangible property have | been reduced more than one-third and the tax burdens more equitably distributed. The total bonded . indebtedness of political subdivisions | has been materially lessened. The total cost of government has been lowered. No school ddor has heen closed. No term has been shorténed below eight months. No school district has been without salary funds to pay its teachers. The soundness of our financial institutions has been restored by proper administration of the best financial institutions act in the country. The rates of public utilities have been revised for the benefit of consumers without injury to the investing public. Small investors and borrowers have been given adequate prp- | tection against the nefarious practies of unscrupulous finance companies and other consumer credit | agencies. i Our people were equal to the occasion and survived the crisis. Calm | analysis clearly indicates that Indiana is in better condition than any other state in the Union. It can and must keep that position of | leadership. : The major legislative program de- | signed to accomplish this end for the present is virtually complete. 1% ‘has had to prove its worth in ac- ! tual practice. You have the duty of making such refinements and improvements as are dictated by experience, 5 |

PUBLIC WELFARE

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| | |

Four and even two years ago the social responsibilities of govrenment were our most pressing problems. They demanded action. They called for the best fruits of our minds and 1earts. The work done was not haphazard. It was the result of careful thought and study directed by outstanding and nationally-recog-nized experts in the field of public welfare.

We learned many valuable lessons when, early in 1933, we joined hands with Federal emergency relief agencies in a number of programs to alleviate human suffering “and distress. We learned, for one thing, that our State machinery for the administration of public welfare activities was out of date and woefully inadequate. WXile we were finding food, ciothing and shelter for nearly half a million citizens; while we were finding gainful employment for 75,000 heads of families; while we were rescuing our young people from the streets and highways; while we were teaching some adults to read and others to work at profitable trades; while we were attacking the unemployment and relief problems on a hundred fronts we were thinking of what we might do in Indiana in the form of a permanent social program. The Nation and State met the mergency and evolved from that experience a permanent program of social security based on the philosophy that the right to -live implies the right to have the means to sustain life, without which liberty is a mockery and happiness a sham. : In this great humanitarian movement for permanent security, as in the ‘emergency program, Indiana marches in the vanguard of the states. Indiana was one of the first states to adopt a complete, unified program of co-operation with the . Federal government under the Social Security Act. Thirty-four other states and the District of Columbit have joined this company. The! General Assembly acted promptly | and with vision to obtain for the unfortunate of our State the ‘bene- |

fits of the Federal act. ; e I The three acts which make. up

| mane treatment of the social re- | sponsibilities of our State Govern- : ment, ' ment of Public Welfare which, “op-

| . : children and mothers and care of

‘wide public. welfare program in mo-

“Indiana needs no new taxes,” Governor McNutt said today, addressing the 80th Legislature. It was

one of his final

duced its share of these savings. The cost of the operation of state government for the last four years has been $22,400,000 less than the cost of the previous four years. Distributions of state revenues Jo local political subdivisions during the period have amounted to $99,599,559.81, a sum exceeding that distributed ‘in any previous period by over $62,500,000. These grants of state aid have made it possible for local units to meet their obligations and at the same time materially reduce property taxes. The one grave danger arising from such a plan is the increasingly apparent desire of local units to shift responsibility for raising revenue while retaining control of expenditures. The two must not be separated. There can be no proper control without the sobering

sibility. Aside from minor changes in existing laws to correct any inequalities which may arise in practical operation, your real tax problem is that of reducing the cost of government. The most important and effective step in this direction will be the reorgan- . ization and integration of local units of government. In this connection, your attention is invited to the comprehensive report made by the Committee on Governmental Economy to the 79th General Assembly. '

’ PUBLIC DEPOSITORY ACT

Since 1907, Indiana has prided itself in having on its statute books a model public funds depository law. The 1907 Depository Act was amended from time to time un-

| til 1935 when a new act was passed

acts as Governor. He is to be suc-

ceeded Monday by Lieut. Gov. Townsend.

this unified program meet the |

challenge of our dependent and | crippled children, our helpless blind, | our needy aged and our unemployed |

! to remove, so far as a humane gov- |

ernment can do so, the hazards and | handicaps which haye marred their | lives, and to provide them with the security which is their fundamental right. It is estimated that within the year 43,000 dependent aged persons, . 2000 needy blind persons and 20,000 dependent children will be assisted through the Public Welfare Act. Because of the Unemployment Compensation Act the burden and dread of unemployment will be lifted from the shoulders of thousands of our citizens. Because of the third act, the hedlth of mothers and children, especially in rural areas and districts suffering from acute economic stress, will be a direct charge upon the state. Public health work, sanitation and the’ prevention of disease will be raised to higher standards than ever he- | fore, : This program represents a great, forward step in meeting the obli- | gation of government to the unfor- | tunate, the physically handicapped | and those who have suffered under! the lash of economic stress. There is neither partisanship nor politics in the enactment or the administration of this program. The Federal Social Security Act and the State Legislation represent the best thought of our time as applied to these problems. This is the first step toward bringing simple justice to the weak, the helpless and the unfortunate. Grouped under one administrative head, which is the board of our new State Department of Public Welfare, we now have the machinery for intelligent, economical and hu-

It is an integrated Depart-

erating on the merit system for a classified personnel, will supervise the administration of our State institutions, our penal system, our treatment of -the problems of delinquent and neglected children, our grants of assistance to the needy aged, the needy blind, dependent

crippled children throughout the state. Our former methods of dealing with these social refponsibilities were 15 years behind the times, according. to the national authorities who studied our problems and made recommendations for modernization. : Today we have the program and the machinery for advancing Indiana to front rank. It has as-

sumed leadership in considerations}

of institutional and welfare obs jectives of a state. Those who werk trained in the emergency days d who so intelligently administered the works of FERA, CWA, WPA and the Governor's Commission on Unemployment Relief are those who have set the workings of our state-

tion. I commend them for the outstanding work they have done. I wish for them and for our new State Administration the highest degree of success in the administration of one-of the most notable reforms made in the 120 years of Indiana history. ; For the first time in that history

the supervision of our public insti-|

tutions, treatment of the wards of the State and administration of the needs of our unfortunates will stand as the highest. duty ot the state—

outside the reach of the spoilman— above the selfish motives of any | man—out of the realm of political | temptations—and abreast the ad-, vances of the social sciences. ! In connection with the Social Security Acts two matters give rise to grave concern. The first has to do with the personnel of county staffs under the Welfare Act, which prescribes no qualifi-

catiops.for local assistants. Given |

a decent

structure, ‘the essential |

problem of good government is almost entirely one of personnel. The most serious losses are those accruing through the ignorance and inefficiency of public servants. Practically all functions of government require of governmental personnel special knowledge and training. This is especially true of welfare activities. I urge the passage of an amendment which will insure competent local staffs. Thé other matter 1s one which may be met by initial Federal action, forecast by the President’s ref-

; erence to his message to the Con- ' gress to the problem of broadening ! the services rendered by the Social

Security system. The Social Security Acts do not cover service performed in the employ of the United States Government, this State, any other state, any town or city, or any political subdivision or = instru-

; mentality of any of them. Govern-

mental employes, as distinguished from elected officials, have as much

right to security as any other group. |

This is especially true of those who

‘fall within the provisions of the merit plan or a civil service system. For many years certain.groups have |

had the benefit of so-called pension plans. Other groups are entitled to like protection. If it cannot be given under Social Security Acts, then it is our plain duty to make adequate provision through other legislation. For this reason I have postponed the appointment of the Survey Commission authorized by Chaper 350 of the Acts of 1935 and earnestly recommend the authorization of a like commission to investigate all laws now in effect governing the pension and insurance funds of all employes of the State of Indiana, its political subdivisions or instrumentalities,J&and report such changes and extensions .as are deemed advisable,

STATE BUDGET, TAXES

The State budget has been balanced every year of this Administration, is balanced today and will be balanced at the end of the fiscal year. The strictest economy consistent

with the proper performance of

governmental functions has controlled budget-making during the entire period. The continuation of such a policy is the only way to prolong and issue stability of state finances. However, the proper performance of governmental functions does not tolerate Tafee economy. ! In our zeal and anxiety to b3lance the budget we have come dangerously close to forgetting some of the human values and social responsibilities which lie behind the budget, and for which, indeed, the budget exists. Unless the interests which have to do with the bodies, minds and spirits of men, women and children are safeguarded, economic recovery will prove a barren achievement. It is quite as important to prevent social deficits for

the future as it is to prevent fi--

nancial deficits for the present. Our educational, benevolent, penal and correctional institutions have borne more than their share of necessary economies during this period of stress. Further delay in providing adequate support is unstatesmanlike. ; This situation of our institutions of higher education is critical. If they are to maintain high standing and continue their invaluable service to the people of the state, substantial increases in appropriations are imperative. Otherwise, they will sink to a level of mediocrity which is not in keeping with Indiana tradition and ideals, and which will last for a quarter of a century. Such an event would be intolerable. The other State institutions have felt the pressure of rising costs, insufficient personal service appropriations and delayed capital ex-

‘penditures. Their needs are press-

ing and must be met. For example,

there is no public welfare problem in the State today so acute as that | relating to the care of the feeble- | minded. Upon its solution rests the effectiveness of the whole classifi- | cation program now being developed | by the Public Welfare Department. ' Both institutions for the - feeble- | minded are crowded beyond the | point of safety. Such a burden is | placed on staff, buildings arid equipment that progress of a constructive “nature cannet be expected. They have a long waiting list. In other state and local institutions hundreds await transfer. The defective delinquents constitute an urgent problem in themselves, a problem which cannot be solved under existing conditions. * Fortunately, the unincumbered balance in the general fund, together with anticipated revenues is ample to take care of all these matters, fulfill all of the State’s obligations during the biennium, meet the State’s proper share of the cost of social security, repay the Highway Commission the two million dollars illegally transferred to balance the budget in 1932, and in addition provide a sufficient working balance without the levy of new taxes. The State of Indiana does not need new taxes and I am unalterably opposed to any proposal to levy them. Our object should be to reduce the load on present sources of revenue rather than seek new sources. An effectice step in reducing the cost of government and, in turn, the load on sources of revenue would be to require by law an effective preaudit of public expenditures. I recommend such action at this session. In view ¢t the possible continuation of Federal grants contingent on proportionate expenditure. by states, 1 recommend the re-estab-lishment of contingent funds for public improvements and equipment to be expended only upon the authority of the Budget Committee and the department concerned with the approval of the Governor. I commend the practice established by the 78th and 79th General Assemblies -and urge that you follow it by considering the budget and passing the appropriation measures at your earliest convenience. For the purpose of facilitating expenditures involved, I suggest that appropriations be made by two acts; one covering funds expended by the State for State purposes and the other covering funds required as a contribution to joint State and Federal enterprises. Despite the extraordinary demands made on government during this period of stress, despite the lowest State property tax rate in the recorded history of the State, despite the great reduction in assessed valuation, despite the tremendous increase in the amount of funds returned to local communities, the State has made an outstanding record in the éfficient and economical management of the financial affairs of government.

LEVIES ARE ORDERED

Property taxes levied for the last four years were one hundred seventy-two million dollars less than for the four-year period immediately preceding, a decrease of over 30 per cent. Property taxes paid were one hundred eighty million dollars less, a decrease of 33 per cent. During the last four years new sources of revenue have produced less than sixty-four million dollars. Deducting this sum from the amount by which property taxes have been reduced, gives a net reduction of .the cost of government of one hundred eight million dollars on a basis of taxes levied and one hindreg Si%ioen million dollars on a S ol taxes paid during this ad- | ministration. 8

The state government. (fas pro-

which is known as the Depository Act of 1935. The principal sections of the 1907 act were re-enact-ed in the 1935 law, the major revision being a changeable rate of depository interest and creation of

® | a Board for Depositories whose duty

it is to fix the interest rate each six months. Rates cannot be more than 2 per cent per annum or less than ,% of 1 per cent per annum, payable monthly on the minimum daily balance. The State Sinking Fund Law was passed in the special session of 1932 and provided, in general, that all depository interest paid by public depositors be diverted to the sinking fund for the purpose of protecting municipalities against Joss from bank failures. to 1932, banks had to furnish either corporate, collateral or personal bonds to protect municipalities against loss. The cost of corporate surety bonds arose in 1931 because of the 1930 bank difficulties, causing most banks tq file personal surety with proposals to local municipalities and collateral surety with the State. Personal surety proved unsatisfactory and inadequate protection, therefore the

passed. : During the 1933 bank holiday approximately 125 public depositories were closed permanently or ‘temporarily for reorganization. With good management and the issuance of warrants, the sinking fund was able to pay all claims as soon as they were definitely determined. Only funds deposited after Jan. 1, 1933, were protected by this fund. Many inconsistencies were found in this law, causing its repeal in 1935 and a new, sinking fund law was made a part of the 1935 Depository Act. In August of 1935, Congress amended the Federal Reserve Act prohibiting member banks from paying interest on public. funds after August, 1937. Consequently the sinking fund: will not be allowed to collect interest on public funds after next August, and will be of no protection to public depositors. The Federal Deposit Insurance Corporation, which insures all deposits of $5000 or under, adopted a rule whereby all banks, members of the F. C. I. C., are prohibited from paying interest on public funds after August, 1937. This rule prohibits the acceptance of public funds by the majority of banks.

The Board for Depositories has prepared a bill for an act creating a public deposits insurance fund.

The proposed law contains the same provisions as the 1907 and 1935 acts regarding the designation of depositories by Boards of Finance, and the deposit and withdrawal of funds. The assessment rate is to be not more than 2 per cent and not less than one-half of 1 per cent until a fixed reserve shall be accumulated, when assessments may be discontinued. After the reserve has been accumulated, any earnings from investments, etc., are to be returned to the banks in the form of dividends. The next award of depositories will be ‘made on the third Monday in February, 1937. The act as now proposed contemplates designation of depositories in February, 1937, for a two-year period, to continue under the insurance plan after July 1, 1937. The short time remaining and the importance of the matters covered justify immediate consideration of an early action on the proposed 1@gislation.

FINANCIAL INSTITUTIONS

The continued success of the operation of the Indiana Financial Institutions Act has been most gratifying. Minor additional amendments are indicated. These have been prepared by the department. The most important problem is to remove unnecessary comspetition between state -and Federal financial institutions. One competitive disadvantage of State institutions arises from the provisions of Section 6 of Article 11 of the State Constitution, which

holders. There is widespread feeling that the banking business has been so hazardous that there no. longer exists a good Treason for imposing double liability on those engaged therein. Congress recoghized this and eliminated the requirement of double iiability ch stockholders in National Banks in the Banking Act of 1933. The removal of this disadvantage to stockholders in State institutions can come only from a Constitutional amendment. Other competitive > may be removed by legislative action. One other provision in the State Constitution deserves serious con-

sideration.

{ re: sons for such a provision, if any

and restraining influence of respon--

Previous*

inki of 1932 was Sinking Fund Law I by | asoline tax and motor vehicle

| spelt ! alor 2,

*orde;

provides for double liability of stock-

disadvantages

Section' 10 of Article’

11 requires every bank or bankin: company to cease all banking op rations within 20 years of the tit e of its organization. The valid

ev, r existed, no longer prevail. I re: ommend the institution of a Consti utional amendment to strike Se tion 10 of Article 11 from our ful damental law.

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STATE EDUCATION

1 /ducation is the pride of Indiana. Wi must continue to support a syster 1 of learning consistent with the ne: ds of our generation. The maintet ance of an adequate program of ed! cation is a very definite function of the State. We committed to a dis ribution of State funds to the se! 2ral communities to insure a unt form system. The amount of thi. annual State distribution this ye: r will approximate 13 million do! ars. It is recommended that as gel eral economic conditions impri ve this amount be increased. 1 ’e have come to recognize that ou: schools belong to everybody in eve 'y community and that the doors of earning should never be closed ag: Inst people of any age who want to pursue courses which will lead to. a higher level of citizenship: Th ‘re is a national movement in thi: direction. Communities desiriag to add adult education: to the r regular school programs sht ald be permitted by enabling leg slation to use funds for this pu: rose.

HIGHWAYS AND SAFETY

For the first time in Indiana, a coll plete study has been made of our highway system, both State and Cot nty, and we are now in a positit n to deal with this problem on the basis of the actual facts.

Tie Highway Survey Commissict | authorized to a joint resolutio? of the last General Assembly, foul d in a two-year study of the roe = situation in Indiana these per nent facts: 1. That highway improvement. is not keeping up with the increase in hotor transportation. * 2. That there are a great many bri¢ zes. well into the thousands, ‘whi h are too narrow for modern traf ic and unsafe structurally for mot 2rn loads. | 3. That existing revenues will not periait highway improvement to keel pace with the development of mot rr transportation. 4, That funds returned to counties, cities and towns are not equi ;ably distributed according to trai ic and motor car registrations. 5, That all citizens appearing at the hearings of the Highway Survey Commission are firm in their coni'ictions that all money raised

lice! ses and motor vehicle taxes be on highways, and highways

7 his Highway Survey Commissic 1 will make recommendations to! this General Assembly which wi! correct these situations withou! increasing the gasoline tax or lev ‘ing any property tax. To keep In: iana’s highways in condition to handle the motor transportatio: , which is of great convenience ant necessity, I urge your serious cor: sideration of the recommendatio: s of the Highway Survey Co! mission.

T! = pride we have taken in the dev: opment of highways

devt opment has left death in its! wak . Life is the most precious thin = in the world. It is the one thin;© which cannot be replaced. The death toll from traffic accideni : has become greater than our losst ; from battle casualties during the World War. The reduction of the death rate from traffic accideni ' is one of the most important prob ems of both public and private agen ies. In. order to co-ordinate and to facil fate all efforts in this direction. the Governor's Committee on Pub! © Safety was organized several mont as ago. The members of this comi littee have rendered a voluntary public service of the highest and deserve official commen ation for their efforts. Their activ ties have been in the fields of edu¢: tion, enforcement and engineeri 1g. As a result of their experienc >, they have made carefully cons: lered recommendations to your hori¢ able bodies. These recommeng ations deserve thorough study and | \ppropriate action. Du ing the past four years we have ; the :onservation of natural re-

and | tray portation facilities has been | dim: ied by the realization that such g

made a notable advance in

sour¢:s and in the enjoyment of

these resources by our citizens. I commend to you the conservation program initiated by this Administration, a program which enjoys the support and participation of thousands of men and women, and urge favorable consideration of such measures as will contribute to the continued advancement of that program. Our activities and progress in conservation have received favorable national attention and have served to stimulate interest in natural resources in other states. The improved fishing and hunting and the added attraction of our parks, resulting from our conservation program, are paying dividends in additional outdoor recreational opportunities. In the furtherance of our conservation program we have enjoyed the close co-operation of the Federal Government and its agencies. I urge a continuance of that cooperation in order that our conservation program may be advanced as rapidly "as possible.

LABOR INQUIRY URGED

An important obligation of government, is to protect the worker

and to guard his rights both as:

wage earner and consumer. Recognizing this obligation the State Administration has caused to be adopted much necessary and constructive legislation for the benefit of the laboring man. The social hazards of age and unemployment have been removed. Many physical hazards remain and require action on your part. It is just as important to prevent injury as it is to provide compensation. In this connection, I wish to report delay in appointing a commission to investigate the operation and safety of coal mines employing less than 10 men in order to secure your approval of a proposal to enlarge the scope of the inquiry. Coal mining is one of our most important industries and has created many difficult and constantly changing problems during this period of economic stress. There are evidences of present stability which justify a - careful investigation to determine what steps can be taken to assist the industry and to protect those employed in the operation of the mines. Nothing is more important than

| the efficient administration of jus-

tice. No effort should be spared in improving the legal process. In keeping with this theory, I submit with approval the recommendations of our Commissioners on Uniform Laws for the adoption of the following: 1. Acts relating to evidence. (a) Uniform Business Records as Evidence Act. (b) Uniform Composite ports as Evidence Act. (c) Uniform Judicial Notice of Foreign Law Act. (d) Uniform . Official Reports as Evidence Act. 2. Uniform Trustees’ Accounting

Re-

. Criminal Law Acts. (a) Uniform Criminal Extradition Act. (b) Uniform Act to Secure the Attendance of Witnesses From Without a State in | Criminal Proceedings. . Commercial Acts. (a) Uniform Partnership Act, (b) Uniform Limited Partner= ship Act. (c) Amendments to Uniform Sales Act. and Warehouse" Receipts Act.

The four acts relating to evidence are especially recommended. They have been prepared by the conference to assist the development along uniform lines of certain statutory improvements already undertaken in numerous states. These statutes concern cases in which counsel have to seek evidence from other states or have to cross the state lines with evidence obtained in their own state. These topics not only yield to uniform treate ment, but: demand it in the inter= est. of saving the time and expense

‘| of the litigants.

I also recommend for special con= sideration the Uniform Trustees’ Accounting Act. No comparable statute exists in Indiana, and the need for it both in the interest of the beneficiary and the trustee is recognized by those who are constantly in touch with the accounting problems of trustees. The Criminal Law Acts are recom= mended for consideration, although they are revisions of acts similarly titled and covering almost the ident« ical subject matter of Chapters 21 and 49 of the Acts of 1935. : Since the first quarter of the 19th Century we have been committed to the popular nomination and election of local judges. This has been called by some “Amerjca’s most colossal blunder in statecraft,” and has been seriously questioned by leaders of bench and bar. It is the subject matter of the first report and recommendation of the Judicial Council and deserves your careful consideration. We have the treasure of the law, as Saint Paul said of the light of the glory of God, “in earthen vessels.” Our high enterprise must be to make these vessels the best the land affords. \. Next Monday I relinquish my duties as executive and resume those of a private citizen. Through the storm and stress of - the last four years I have been sustained and heartened by those with whom I have had the high privilege of co-operating in a common service to the State, members of the General Assembly, officers and emse ployees, citizens of my native State, All have shared the only reward which comes from public service, which is the satisfaction of worthwhile accomplishment. I am pro=foundly grateful for their sympathetic counsel, their friendship, the manifestation of their confidence and their loyal support which I bespeak in the same full measure for my successor. May God bless and prosper Indiana, you and all our people in the years which lie ahead is my earnest prayer.

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