Show BABSON'S I i. i t AUTHENTIC Tl REPORT I. I T TAmer In Amer W. W Dab State Finances The tre tremendous m growth our nation has enjoyed since the end of world war II poses new fiscal and other challenges for the states On the one hand their role has been dim diminishing in 1 s hi n g steadily as the federal government government govern govern- men ment has gathered unto itself more power On the other hand the prestige prestige prestige pres pres- tige of many states has been deteriorating deteriorating de deteriorating de- de steadily as their largest metropolitan areas have expanded to great size and com com- THE SHADOW OF UNCLE SA SAM 1 The decline of our states and of their effectiveness in government government government gov gov- has been a long time coming It is traceable to pre- pre world-war-I world years when the federal income tax law was first enacted But it was not until the great depression of the that the ball really got rolling roIling With the coming of the federal social security system and o oth oth- h- h er broad social welfare programs programs programs pro pro- grams enacted by Congress administered by the President and financed by taxes collected by Washington the shadow cast over the states by Uncle Sam grew longer Then came world war II a protracted and costly conflict from which America emerged as banker and creditor to both victors and vanquished The re rebuilding rebuilding rebuilding re- re building of shattered European nations and their economies of ofa a badly beaten Japan and the servicing of our own deferred needs together needs together with the fi financing financing financing fi- fi of a long and very ex expensive expensive expensive ex- ex pensive cold war put new pressures on our fiscal and natural na natural natural na- na tural resources Federal government costs soared ECLIPSE OF THE STATES During these two decades that have followed world war II we were to discover the high price that must be paid for defense for the type of social progress which the majority of our people had chosen and for the leadership leadership leadership leader leader- ship of the Free World to which we had fallen heir We were to discover also that the federal government had grown so much and so fast fast and was taking in so large a percentage percentage percentage per per- of the country's total tax dollars that the states were hard put to carry carryon on their own functions with what was left Pushed by rising costs of ad admi administration administration ad- ad mi ministration labor and materials materials mafer- mafer mater mater- and by the expanding need for services triggered by the postwar population explosion the states which states which had hitherto relied mostly on fairly nominal personal and corporate income levies levies greatly greatly increased these taxes on income in addition they turned more and more to sales taxes as revenue sources And the end is not in sight CHALLENGE OF THE CITY STATES CITY STATES Our prosperity of the past 20 years has compounded the problems problems problems lems of the states There is too much reliance on federal grants and too great a disposition to let an eager federal government monopolize planning and control I the administration of social i welfare programs of highway development and of the expansion expansion expansion sion of some types of educational educational educational facilities Also by and large the states have not faced up to the fiscal i problems of their cities Often state legislatures have imposed intolerable fiscal burdens by I making the cities assume re responsibility responsibility re- re for the cost of programs programs programs pro pro- grams they had no part in en en- en acting This has forced many cities some cities some of which are as I large as or larger in population I than certain states to seek I more and more direct federal aid Thus is our birthright of home rule and local government I being whittled away THE FISCAL FUTURE Tax Foundation Inc ing compiler of or data in its field and noted for its careful evaluation evaluation evaluation evalu evalu- of such data reports data reports that the fiscal future of state and local governments is much better than generally realized Tax Foundation believes the states can finance their expandIng expanding expanding expand expand- ing programs during the next decade without extensive tax In In- In creases However we are not so sure For the n next year or two at least you would be wise to expect and prepare for mounting state taxes spending and debt And you would be smart to take more interest in your state government government government gov gov- and arouse public opInIon opinion opinion ion to demand that your state officials grapple squarely and persistently with these fiscal problems |