The Bismarck Tribune Newspaper, January 8, 1931, Page 12

‘To the Members of the Twenty-second Legislative Assembly: We meet again at the threshold of a new year and at the beginning of another milestone in the governmental history of the state to tect! tt) a new legislative se: witness the birth of a new executive administration. We \ begin these deliberations under the sanctity of a solemn oath, the obligations of which bind us, with the help of God, to execute to the best of our ability the public trust which the people have reposed in us. This public trust is a most satred one, the serious responsibility of which, I am sure, must grectly impress the mind and conscience of each of us who has assumed it, and the acceptance of it dedicates our labors unreservedly to the service of the state. i ‘ May I begin this message by observing that since the legis- lature last convened, the business of the state, including that of all its departments and institutions, has progressed in a manner most satisfactory. 5 The several executive officers, both elected and appointed, ‘Save co-operated in a most commendable way with each other and with the Chief Executive in the administration of the affairs of the state. My appreciation of this spirit of ¢o- operation, I wish to pub! uly acknowledge and to congratu- late the state upon the g results which have come there- from and upon the tranquility which abides where unneces- sary friction is absent from executive councils. The financial condition of the state is also in good order. Public expendi- tures have been confined to the available funds, future obligations have been rigidly avoided, and we enter the new term without the burden of accumulated debts. We have striven unceasingly to administer the government not only in accordance sound business principles but in harmony with sound political principles as well, with results that, I believe, have been beneficial to the state. Under our form of Liisa the functions and respon- sibilities of making and executing the laws are wisely vested in separate constitutional bodies, each chosen for a specific purpose by the people. It is the province of the legislature to adopt the laws and of the executives to administer them, but experience has shown that the best results in govern- ment are obtained where there is a close and harmonious relationship and a cordial spirit of co-operation existing be- tween the legislative and administrative bodies during the progress of law-making. The most appropriate laws result where the fy ela acts in light of the facts made known to it officially by the several public officers charged with the administ-ation of the functions of government and after due deliberation is d shes to the counsel offered by those whose task it is to deal from day to day with the problems involved. In conformity with the law the heads of the sev- eral executive departments have prepared and filed official reports covering the progress of the administration of their respective departments. These reports, some of which are necessarily voluminous, are intended to inform the public in general and the legislature in particular, not only of the routine facts pertaining to those departme! but also de- i eee problems that have arisen which call for legislative action and to give you the benefit of judg- ment founded upon experience as to the character of legis- lative assistance required. The aggregate of these depart- mental reports tell the story of the. operation of the execu- tive branch of the state government during the past biennium, and the subject matter of these reports is of such impor- tance that I would urge you to provide for their study and analysis by a select committee appointed by each body of the legislature. Such a special committee should serve as a contact body between the departments and the legislature and promote that spirit of co-operation and co-ordination of ef- fort which the situation requires. : Necessarily, I can not in this message do otherwise than touch in the briefest possible manner some of ‘the more im- portant subjects requiring legislative attention, giving you only the most essential information available and outlining the legislative program and policy which to m& appears most appropriate for the needs and welfare of the state. Appropriations Probably the most important single duty devolving upon the legislative assembly is that of providing the necessary appropriations for the maintenance and conduct of the state government and its various departments and institutions. In performing this task you will have before you for your guidance the report and recommendations of the State Budget Board which has made a very careful and painstak- ing study of all the departmental and institutional requests. If these recommendations are substantially followed it will enable the legislature to reduce the total appropriations from the general fund of the state for the next biennium about $835,000 below those granted by the last assembly, and thus make possible a small reduction in general property taxes for state purposes, In order to make this reduction it will not be necessary to curtail the usual operations or impair the normal efficiency of any state departments or state in- stitutions, but it will be necessary to refrain from allowing any requests for the construction of new buildings for the charitable, penal and educational institutions. It is the judgment of the Budget Board, in which I fully concur, that, while new buildings are needed at several institutions in order to take care of normal expansion requirements, none are ab- solutely necessary during the next two years, except pos- sibly power plant additions and improvements at the School for the Feeble Minded at Grafton. I believe that every effort should be made by the management of these state institutions to get along some way during the next biennium without cBlling upon the taxpayers of the state to bear the extra burden which the cost of new buildings would neces- sarily impose. < In this connection I am sure that it is unnecessary for me you tl strict economy should be the ruling principle in the making of all appropriations by this assembly, and that the conditions and times demand that not a dollar be appropriated from the general funds of the state for any purpose, however laudable, beyond the sum actually neces- sary for the proper conduct of the government. Such a con- servative policy in the matter of sppenpristons will be in harmony with both the needs and the desires of all our people at this time. This rigid rule need not, of course, be always followed in the case of appropriations made from those cer- tain special funds not derived from real and personal property taxes, for, as I view it, it is the property owner, the farmer and business man, who needs protection in these times from the burden of beavy taxation. . In urging upon you the necessity of economy in the making of appropriations, I am not unaware of the fact that less than 12% of the total annual tax levy is required to operate the state government, and ‘that 88% goes for the support of -the local * units of government. However, I believe that the example of the state in reducing its governmental costs will @ very wholesome influence upon all the political subdivisions and municipalities and it may induce many of them to adopt re- duced budgets for the next two years. Public Debt A considerable part of the cost of government is reflected in the public debt of the state and its political subdivisions. For several years the state has had no bonded indebtedness except for industrial purposes. For the latter purposes, it now has outs! mds in the total sum of $38,357,200, of which amount $4,000,000 is for State Mill and Elevator construction and operating ital, $1,000,000 for Bank of North. Dakota operating capital, and $33,357,200 for state farm loan purposes. During the present biennium, $500,000 of construction bonds for the State Mill and $1,000,000 of Bank of North Dakota capital bonds have been retired by taxation. Until 1929, the annual interest on both-Mill and Elevator bonds and Bank of North Dakota bonds was paid from state tax levies, but during the past two rs the on the Bank bonds in the sum of $75,000 and $50,000, respectively, has been i from earnings of the Bank; while the interest on the Mill and Elevator construc- tion bonds for the current year, in the sum of $172,000, was from earnings of that institution made during the of 1929. Accordingly, while tax levies for industrial purposes have been reduced considerably during the past two years, it will still be necessary to continue such tax levies for many years before the state will be entirely free of this tax burden. ; rest of economy if tl rigidly limit, the amount but the purpo: municipalities and politjeal subdivisions may create public also safeguard all Bea funds raised by oblige the application of i it ng bonds. of Governmental Survey Commission I have long felt that the aggregate amount of taxes im- posed upon real and personal property by the lecal subdivi- sions could be substantially reduced if the entire govern- mental system f- m the town:“ip to the state was thoroughly and carefully studied, overha::led and modern business methods adopted. I am confident that many consolidations could be effected and many expensive methods and func- tions eliminated or curtailed, which would result, not onl ir. a real saving to the taxpayers, but introduce more effi- ciency in the operation of our comnlicated governmental machinery, Believing that much good could be Sere in the direction of both economy and efficiency some agency were created for the purpose of making a study and survey of our whole structure of government, state and local, I shall repeat the recommendation made by 'me two years ago, wherein I advised the creation of a governmental survey commission, which commission should be charged with the duty of making the study herein suggested and report its findings and conclusions-to the next session of the legisla- ture. I earnestly appeal to you to provide ways and means of attacking this problem of high cost of government in an intelligent way and I urge that there never was a time in the history of the state when our taxpayers were in greater + need of relief from property tax burdens than the present. Taxation and Assessments In 1928, Section 179 of the State Constitution was amended to vest in the State Board of Equalization the power to assess all public utility Property in North Dakota. No statute has yet been enacted by the legislature to prescribe the procedure to be followed by the State Board of Equali- zation in carrying out this vastly important constitutional duty. For three years the Board has assessed heat, light, power and gas properties without statutory guidance. These assessments in 1930 totalled the sum of $11,863,559. It is - imperative that this condition be remedied and I urge this legislative assembly to pass an appropriate law to govern the procedure of the Board in such matters. , ’ Taxation of Express Compéties . I wish also to recommend a change in the manner of taxing the property of express companies doing business in this state. For many years this business has been conducted largely by the American Railway Express Company and its property was assessed by the Board of Equalization on the same basis as railroads, that is, on its tangible property and franchise value. In 1929, this property was assessed at the sum of $892,761. Recently, all express business in the state has been taken oyer by the railroads, which conduct the business through an operating company known as the Rail- way Express Agency, Incorporfted. This company merely acts as an agent for the railroads; it receives no compensa- tion for its services; it has no net income and pays’ no divi- dends. The value of its real and personal property within North Dakota is less than $53,000. In view of the fact that this carey is merely an operating agent for the railroads, it is doubtful whether it can be assessed on its intangible or franchise value. I would, therefore, advise that a gross earn- ings tax be substituted for the present method of taxing this class of business. May I aiso call your attention to the condition of our laws governing taxation of commercial auto transportation busi- ness in North Dakota. This is a new industry which has grown rapidly during the past few years, not only in this state, but throughout the country. There are now 182 per- sons, firms and corporations doing a commercial auto trans- portation business within the state, carrying passengers and freight under licenses issued by the State Board of Rail- road Commissioners. On October 1, 1930, these licensees were operating 280 cars, cabs and trucks. During the year 1930, these licensees have paid fees to the Board of Railroad Com- missioners for regulatory purposes in the sum of $3,282.50, and fees to the State Motor Vehicle Department for high- way purposes in the sum of $9,299.10. It is estimated by the Board of Railroad Commissioners that these motor car- riers transported 148,844 passengers and 24,741 tons of freight during the year 1929, and that they ran a total of 1,958,612 miles. No record for 1930 operations is now available. Inasmuch as registered motor vehicles, including the motor buses and trucks above referred to, are exempt from prop- erty assessment, this transportation industry pays no taxes for general governmental purposes, state or local, except in- come taxes which are negligible. Their tax contributions are, therefore, limited to highway taxes only, paid in the form of motor vehicle registration fees and the gasoline tax. It is my judgment that every commercial enterprise operating within the state, whether large or small, should contribute to the support of the general government on a basis of equality with all other lines of business, whether it be agricultural, commercial, or industrial. I would, accordingly, suggest that you give careful consideration to the question of establishing at this time a fair and equitable system of taxation for this rapidly expanding auto transportation busi- ness, not for the purpose of adding burdens to this new commercial activity, but in the interest of absolute justice in taxation. .For your thought in this connection, may I not suggest the idea of adopting a gross earnings tax in lieu of the present income tax, the proceeds to go into the general treasury, together with an equitable schedule of motor vehicle registration fees for highway purposes. State Highway Department The State Highway Department has made good progress in the building of our Federal Highway System. During 1929 and 1930, it added 805 miles of new graded roads and 1,044 miles of new graveled roads to the State System, be- sides doing 482 miles of re-grading, re-graveling, re-oiling and oil mix surfacing on the old system. This brings our total number of miles graded according to Federal specifica- tions up to 4,710, of which number 3,208 have been graveled. The department is carrying into the new year 752 miles of combined grading, graveling and reconstruction work w i is unfinished, consisting of 388 miles of projects upon which work has been done and 364 miles of projects which were e placed under contract during the fall for construction in 1931. Our Federal Highway System consists of 7,457 miles designated according to law into two systems known as the primary system and the secondary system. The primary system is about 87% completed; the secondary system is about 29<@ completed, and the total system about 53% completed. Preference in the order of construction has been given to primary highways as directed by the state law, which accounts for the fact that up to the present time most of the con- struction work has been done on the primary system. State Mighway Finances _ In financing the construction of this great highway system, the state has, up to the present time, operated on a strictly cash basis. No debts in the form of bonds or otherwise have been created against the state for highway construction or maintenance purposes, The highway. department has operated under a departmental budget and has confined its expendi- tures each year to the estimated income for that year. In making its annual budget the highway commission has acted carefully and conservatively and has been successful in lim- iting the department’s obligations to the actual income and assets of the department. During the latter part of 1930, the department borrdwed $200,000 from the Bank of North Dakota to enable it to promptly pay all estimates due on construction work, but this loan was made against cash ad- vances previously made by the state to the ‘Federal Govern- ment in a sum in excess of the loan, which advances will be returned to the state as a matter of course during the next few weeks. Accordingly, the department begins the new year in an entirely solvent condition and prepared to dis- charge all financial obligations now due against it. a While the Highway Department has so far avoided finan- cial difficulty, it is now confronted with a most serious financial problem, which I wish to lay before you in a frank, and I trust, clear manner. *s As you may know, our Federal Highway System is being constructed under a sort of a partnership arrangement with the United States Government under the terms of which the Federal Government provides 50% of the cost of construction and the state 50%; the state’s portion thereof being shared by the counties in which the work is done on the basis of one-half by the state and one-half by the counties, The annual Federal allowance for North Dakota for the past three years and until July 1, 1930, was $1,200,000. Under the provisions of a Federal Aid Authorization Act passed y Congress last spring, our annual allotmént was incréased Zrom $1,200,000 to $2,000,000 beginning July 1, 1930. So far, however, our state has rot availed-itself of any part of the additional $800,000 authorized, because of Jack of State funds with which to match such Fed- era} pilotment. In preparing our construction and mainten- ance’ budget for both 1920 and 1980, the department has had available sufficient funds, which, when matched by the coun- ties, enabled the state to use most of the Federal Aid allowed on the basis of $1,200,000 annually, but owing to conditions which have recently arisen, this program of’ Federal Highway construction ean no longer be carried on with state funds unless additional highway revenues are provided by this session of the legislature. f For the purpose of giving you definite inf tion as to the amount, source and disposition of State lighway reve- nues, I am setting forth herewith a summary of the High- way Department’s construction and maintenance budget for the year of 1930 and also a similar summary of the budget recently for the year "Yoni: 1930 Budget for Highway Construction and Maintenance Estimated Income, State Funds — < Auto license fees, State’s share.. oes Gas taxes, State’s share. Miscellaneous receipts . Total eoeeee Estimated Expenditures, State Fi General road maintenance ........., Snow removal, equipment and labor .... « 174,737 Preliminary and construction engineering..... 258,000 Balance available for new construction and reconstruction in 1980 .. Total ...... teense cee tesesenseecens -SEiOT In making the estimate of income for 1930, the dey it anticipated an increase of about $150, in gasoline taxes and motor vehicle fees above that col in the previous year. This estimate proved to be too libera!, however, and instead of an increase of highway revenues, the collections for 1930 actually seayred more than $150,000 below those of 1929. The net aoe ine tax collections were $140,000 less, and the motor vehicle fees (State’s share) were $12,500 less than collections for 1929. In making its budget for 1931, the department has used as a basis the actwal revenues received. by the state in 1930 without any anticipated increase in our gasoline tax payments or motor vehicle registrations. Under present conditions and under the same laws we have no rea- son to expect any ater highway income in 1981 than we received in 1980, ponding, the 1931 budget is as follows:. 1931 Budget for Highway Construction and Maintenance ++ Estimated Income, State Funds Auto license fees, ‘State's share . Gasoline taxes, State’s share . Miscellaneous receipts .. Total ......0+.0000 Estimated Expenditures, General road maintenance Snow removal, equipment and labor Preliminary and construction engineering... 192,000.00 Amount required to complete, unfinished projects under contract . +++ 460,000.00 Amount available for recon . 80,102.20 Amount ai ible for new .Fede contracts .. None ~ ~ Total .. « ««$2,165,000.00 By comparing these two budgets, it will be observed, first; that the estimated thway income for 1931 is $310,000 less than that set up in the budget for the previous year; and, second, that there is nearly 100,000 more required for gen- eral highway maintenance and snow removal purposes in 1931 than in 1980, due to the fact that nearly 500 miles more of improved roads have been added to the system requiring wna maereeaaibs Gh tbat jing analysis is simply this: net foregoing an: ly 3 while there will be ample state funds available in 1981, 5 Perhaps, in 1982 under present revenue laws to adequately maintain our present 4,710 miles of Federal highway system and to complete the 752 miles of unfinished projects now un- der construction, there will be no state funds available for any Federal Aid contracts for letting in 1931. This means that in order to carry on the work of completing our Federal highway system, we must either provide more highway revenues, or require the counties to furnish all the money necessary to match Federal Aid allowances, or borrow from the Federal Government under the Emergency Act recently passed by Congress. . While state funds for’ new construction work have dimin- ished, the demand for new highway construction is greater than ever.. On January 1, 1930, the department had on file official requests from the several~counties for more than 2,500 miles of new grading and graveling; and even after we have since completed 890 miles this last year, the depart- ment now has on file requests for more than 2,100 miles of new tes fall construction for 1931. The demand of the people for the early completion of the Federal highway sys- tem is overwhelming from all parts of the state, and the highway commission has been subjected to a constant bar- rage of petitions, resolutions and delegations from at least - 40 counties in the state, all urging and pleading for a speed- ing up of highway construction work, What is the remedy for this situation? Shall the state discontinue highway construction, or shall it proceed to com- plete the, Federal system? I am sure that the people of* North Dakota desire that highway construction shall pro- ceed without interruption until the system is filly com- pleted. If this is to be done, how shall new construction work be financed? If no additional state revenues are available, no doubt many counties will furnish the entire amount necessary to meet Federal Aid. Several western counties have already issued bonds in order to speed up con- struction within these counties. Other counties have made advances to the state deggrtment in the form of temporary + loans during the past year in order to secure work on im- : carefully scrutinize the present and portant highway projects. Should the counties furnish all the funds necessary to match Federal Aid, it would, no doubt, result in a considerable share of the cost being placed on real and personal property, which it not, in my opinion, the most desirable method of financing highway work. In my judgment, the proper way to solve the problem is to provide for an increase in highway revenues on motor traffic en- ‘tirely, and to that end I would advise the following legis- lation: First: ‘ise the State gasoline tax by 1 cent per gallon, the collection to go to the state highway construction fund after deducting the usual refunds for gasoline used in tractors and stationary engines. , Second: Provide a moderate increase in motor vehicle registration fees. Third: Correct, 'if possible, the defects in the present sys- tem of allowing refunds, in order to reduce the frauds that it seems certain are being practiced against the state, and ee save to the state a larger share of gasoline tax collec- ions. 4 Bs ‘ In considering the foregoing suggestions, please bear in mind that a gasoline tax is the only means by which we can place a part of the cost of road construction and mainte! ance on foreign cars which now use our roads by the.thou- sands each year, and it is the only tax which is levied and paid in direct proportion to the use which the motor vehicle operator makes of the highways. I would also have you know that our present schedule of motor vehicle fees is the lowest in the.United States. 1 _ It would seem that a combination of the foregoing ‘sugges- tions, if enacted into law, would give the Highway Depart- ment at least an additional million dollars each year which is necessary in order to match the Federal Aid in the sum of $2,000,000 now annually available to North Dakota, and it would enable the state to entirely complete our Federal sys- tem within four or five years as well as do some necessary innpied highway surfacing, including oil mix surfacing and a limited amount of paving. In this connection, may I re- mind you that if the state does not use, within three years, the Federal Aid allotted, it is forfeited, and the amount transferred to the other states that are prepared to use it. Federal Emergency Fund Pending an increase in State Highway funds, we will be able to with construction work by taking advantage. ps of the provisions of the new Federal appropriation adopted by Congress on December 20th. Under the terms of this Act comporary sarapers, will be made to any state that is without funds sufficient to match Federal Aid, such advances to be deducted later from s1 ent Federal allowances. Under this lew, North Dakota been allotted the sum of $1,298,000 which it may draw_on under the conditions stated. This emergency. Federal assistance is only temporary and will not relieve the state of the necessity of providing other funds to carry on construction after September 1, 1931, The untimely destruction of the highway. Fecoeds by the recent fire will make it very difficult for the department much of this Federal advance as it otherwise might. _ In making your study of our highway problem there will’ be available to ae all the information and data in the pos- session of the Highway Department, and you are invited to it operations of the department and to command the stance and counsel of the members of the highway Geperement staff. Ba 4 : The last session of the legi: bal = be prove oes the storage grain cates ma: co} 8 on farms cea hy the inspection and seal of the state. Immediately after the Act went into effect on July 1, 1929, a state farm Sarees. department was established at Fargo and it has been in operation some eighteen months. During the.crop season of 1929 farm ‘storage certificates were issued by this the storage of 1,546,018 bushels Gas to 1,506 persons. It is estimated. that over a million was loaned to farmers on such farm storage certificates, mostly by the Federal Intermediate Credit Bank through the Farmers: Union Terminal Association and’ other agricultural es eee attttihed. ith or anim. bovine, fi ugh the banks and investment companies. §o far in the crop season i the reyenue front’ f grain placed under storage, y JOP Nes woud Entirely maintain the Genarraiene. ey "To facilitate the operation of the law, 4 ye] ive Pe bs be desirable to repeal the provisions require ras wien nado insurance to be placed on teh eh we ‘i dition to the issuance of warehouse cet Fea nr jad has shown that credit agencies require 3 i inst rance ‘on farm-stored grain, some less eee se some mor etn “i f ig lr ‘companies i be the part of wi n ti ane: their own Fosurence requjrements without statutory regulations. ‘eaciaaniuilk it Stored Grain From Asse! Iwould tse BaeEEDA that all stored grain, whether ayer in elevators or on farms, be exempt from assessment an ation. * hi Butter Substitutes and Dairying i 3 At the present time dairying is the mainstay of pated! ud North Dakota. The dairy cow oad rag? iad pts i ‘inancial life-line to our farmers, t Hesation would undoubtedly be tuet bok a A Me prreagl A vast i nce to our agricultural | r focdon beetle be given to the dairy industry. Prices of dairy products have slumped considerably during the past two ce due in part to the increased use of butter substitutes, such as oleomargarine and other similar prodycts, throughout (ee country. Every effort should be made to aid the bee Dairy Council, the State Dairy Department, the Gaia College, the several farm organizations and other agencies in their campaign to increase the consumption of butter and de- crease the use of butter Lita ite means of protection to i of the agricultural industry. bots “A of hack eopeali of protection, as well as a matter of fairness in taxation, I recommend the adoption of a tax on all oleomargarine and other butter substitutes sold in North Dakota. Our dairy industry now carries a large share of the cost of the state government, while the butter substitute industry, being located wholly outside the state, contributes nothing. This inequitable condition should be remedied at ab of our state penal and charitable institutions have heretofore used oleomargarine as a matter of economy and maintenance. From the standpoint of economy, the practice ; is undoubtedly justifiable, but as a matter of state policy it is now a doubtful practice. Under the direction of the Board of Administration, all state institutions have long since dis- continued the use of butter substitutes, except the Penitentiary. This institution cannot do so without incurring a considerable increase in the cost of maintenance until butter-making equip- ment is provided to eriable it to convert its cream production into butter for institutional use. In order to do this, it will be necessary for the legislature to provide an additional appro- priation in the Penitentiary budget in the amount of about $1,200 for that purpose. Bureau of Criminal Identification . The last session of the legislature authorized the establish- ment of a state bureau of criminal identification at the Peniten- tiary. This bureau has rendered excellent service in identify- ing criminals and thus aiding in their speedy apprehension. The Superintendent in charge, who is a fingerprint expert, has aided in the solution of several murders, robberies and other es during the past year, and has established a very exten- and complete record of identification data relating to criminals. It is apparent, however, that this bureau can not function as it should unless and until it is given some general police powers and has the service of two or three officers who are experienced and efficient in the art of identifying and ap- prehending criminals. We must not forget that with the aid of automobiles and improved highways, our state has become the playground of the transient criminals of America who wan- der Thto and through the state at will, committing rob- beries, burglaries and sometimes murders, as may suit their fancy. This transient triminal problem is one of the most ser- ious problems in our country today, the successful solution of which challanges the ingenuity of our public officials. I am satisfied that it can not be successfully solved except through the co-operative and co-ordinate efforts of the police authori- ties of the several states. Such co-operative and co-ordinate efforts can only be secured through central state agencies and such agencies must have police powers. I am aware that an addition to the staff of this bureau would increase the cost of - maintenance of that department and I hesitate to burden the general treasury even for this important purpose; accordingly, to provide the necessary additional funds for this bureau, if given enlarged powers, I would suggest that funds be trans- ferred from the fees collected by the Licensing Department of the Attorney General’s office, which are now remitted to the municipalities. These remittances amount to s0 little for each of the 100 municipalities receiving them that they are of no practical value as local police funds and in most cases are not in fact used by the municipal authorities for that purpose. The Attorney General joins me in this recommendation. 5 State Hail Insurance Tagain call your attention to the operation of the State Hail Insurance Law. At the last session of the legislature I rec- ommended a change in the crop listing features of the present law so as to eliminate the compulsory requirements in coun- ties where a large majority of land owners regularly withdraw their lands from state hail insurance, and substituting therefor an optional system of listing in such counties. Bills designed to enact this recommendation failed of passage. May I now invite your attention to the recommendations of the Insurance Commissioner contained in his Annual Report of the Hail In- surance Department for the year of 1929, wherein an optional system of crop listing is recommended for the whole state in lieu of the present compulsory method, which recommenda- tion is made subject to certain conditions and limitations there- in set forth. It is the desire of the Insurance Cémmissioner to adopt a system of operation whith will substantially reduce the loss now resulting from the nonpayment of hail indemnity taxes on insured lands subject to mortgages or other prior liens. Some of the new features recommended by the Insur- ance Commissioner are not, in my opinion, practical, but many of his suggestions are, I think, feasible, and if adopted would both strengthen as well as facilitate the operation of the law. I thoroughly sympathize with the desire of the Insurance Com- missioner to devise a method which will protect the fund from the loss of hail indemnty prentiums ral from the burden of carrying hail insurance upon certain lands free of cost to the ipepeen satan the pesaent eee pernills. I believe that a er hail insurance Jaw can be evolved from the suggesti contained in the Insurance Commissioner's report. pian Ts Inmadiate rayne af Hail Jomaranes ims ere is another defect in the method of administe: the State Hail Taina Law, that should, if possible, ering, he Under the present system, hail insurance claims although filed and adjusted during the summer months, are not paid until the following December. This delay causes the farmers who suf- fer losses much incorivenience, and expense. 1 believe that a method can be worked out whereby these claims ean be paid in cash as soon as allowed. The State Hail Insurance Depart- ment has at the present time a surplus of ovet $4,000,000 col- lected from hail taxes, from which immediate payments of hail losses could readily be made, if the law was janged to permit it. I recommend such amendments to the Hall In- surance Law as will remedy this condition. About a year ago I corneas tary banki: J appointed a voluntary code com- mission and charged it with the duty of making a study of the laws of the state governing state banks, banks, sa) . and investment companies, and building and loan associations, with the view of suggesting improvements in these laws. This commission has done considerable work on this task and has filed a report which I shall transmit to you for your in- focraatiin an considera ton. sh particularly to urge your favorable acti following matters recommen ed by such commission: on be The code framers cory commission entirely new code of lawe ganenion: js Aeeecaiceid g eration of building and loan associations. I res; tfully com- mend this proposed new code to you. The existing laws relat- ine pa foe G Joan business, which has many features of Iness, are ent inade stantial revision asa pratection te the taventore ae Bias a . General Revision of Banking Laws ‘The code commission also advises a rather complete revision of the general statutes relating to the operation of state banks, and the supervision thereof by the state, The Proposed changes Suggested are too numerous for detailed reference here.-A bill for such revisign will be submitted to you for your considera- tion and approval. sh Banks and Agric Credit he present penkiag facilities in the state are entirely inade. ~ ‘ credit accommodations for those farmers and ranchers who need ‘or lives: is Zeoding purposes. Many Jocal bane lo not bare eae A pital with which i Tegal limitation Adve ake ie ceric, cane, a4 existing counting Hiventoct loca eine ater eee ceed eee: able to grant to mate bones nce baler it wold be ai mr ptr pean celts vent& liaited ax redincorntiee ata coutzolled by such banks and to serve Bank and other banks and credit companies: ine hd enable local banks to avail themselves of mach ered cot ible to them without incurring that rok Tinict ditect borrowing involves, bank ine wee idiom ina ition to fai ‘ly care for the usual ee q a