sembly was authorized to charge certain fees that assist in paying the expenses of that department. The policy that obtains in many states, in my judgment, should obtain here, namely, that in all cases where the nature of the business requires inspection or supervision by the state, fees will be charged by the state for the service rendered to cover at least the cost of the department. I recommend that the laws be amended so as to fix fees for the inspection of mines, factories, dairies, bake shops, boilers and the various other activities inspected and supervised by the state so as to cover into the treasury a sum at least sufficient to pay the entire costs of maintaining such services. STATE LEVY. When the Board of State Tax Commissioners met in September, 1920, to fix the levies for all state purposes, it was ascertained that the fees collected by the various departments and the earnings of the state institutions would be more than sufficient to pay all the ordinary expense of the state government and that it would not be necessary to make a levy for that purpose. The Presidents of the state's schools appeared before the Tax Board and requested that the levy of 2.8 cents for these institutions be increased one cent. It was the opinion of the Board, in which the executive concurred, that the General Assembly never intended to confer on the Tax Board the power to appropriate money, which result would have followed any increase of the state school levy. After giving careful consideration to the situation, the Board of Tax Commissioners decided to add one mill to the tax levy. The proceeds of this extra mill, amounting to $550,000 will be paid into the general fund during this year and subject to appropriation by the General Assembly, if in its judgment, the state schools need additional funds to carry on their work. STATE PURCHASING AGENT. In 1917 Governor Ralston recommended to the General Assembly the abolishment of the separate Boards of Control of the various institutions and centralization of control together with the purchase of supplies in a central Board of Control. Believing, as I did, that all of the advantage of centralized purchasing could be accomplished without losing the great advantage arising from the non-partisan management of the institution by separate Boards, I recommended to the General Assembly of 1917 the creation of a Purchasing Committee to be made up of a member designated from the Board of Trustees of each state institution. After two years trial this was found to be cumbersome and unworkable. The General Assembly of 1919, upon executive recommendation, authorized this committee to employ a Secretary or Purchasing Agent. The results accomplished have justified the statement by Governor Ralston that $250,000 could be saved in the purchase of supplies. The committee has standardized a large number of articles used by the institutions and centralized the purchase of these articles in a purchasing agent who acts with the advice of a small committee of the trustees. This arrangement has obtained the efficiency of a centralized purchasing agent. It has cut out the middle-man's profit, bringing the state as a consumer and the manufacturer and producer together. it has left the general conduct of the institution in the hands of its Board of Trustees, thus preserving all the advantage of separate control. Yet The Joint Purchasing Committee has filed its report which shows a saving in a single year of $247,010.44. The Purchasing Committee is gradually taking over the purchase of additional supplies. In addition to the above, by co-ordinating the work of the various institutions and arranging for one institution to supply all the others with certain needed articles, the Purchasing Committee has been able to effect other savings not indicated in their report. I earnestly urge that the present arrangement be continued. INHERITANCE TAX. The inheritance tax in Indiana has proven a source of considerable revenue. This money goes into the highway fund to be used in building and maintaining the highways. The amount of taxes collected is not in line with levies by many other states. I recommend that the present rate of taxation upon the devolution of estates be increased. AUTOMOBILE LICENSE. The tax levied upon automobiles in this state is entirely inadequate, is below the average collected throughout the country and very much less than the amount collected in the states adjoining us. The tax on trucks is particularly low. The truck lines of the state are handling each year an increased amount of freight and express. They are operated exclusively for profit. The tax on trucks should be greatly increased so that they would to some extent contribute to the support of highways in proportion to the use they make of them. We are paying $30,000 to $40,000 a mile to build hard surface roads and furnish the rights of way for these commercial truck lines to pursue their business. While the construction of these roads is of great benefit to the state, in addition to that it is of peculiar and special benefit to the owners of automobiles and trucks. I recommend that the tax upon trucks be increased heavily, and that the automobile tax generally be increased, and that the funds so derived be used for the construction and It has been suggested maintenance of the highway system of the state. that data on the gasoline and oils be prepared for submission to the Several states have enacted General Assembly. This I have had done. laws levying taxes upon gasoline, the proceeds of which is used for the construction of highways. These states make but a nominal charge for automobile license plates. This would make the tax directly proporIt is worthy tionate to the use of the roads by automobiles and trucks. of the careful consideration of the General Assembly. PRISON CONTRACTS. Under the law passed in 1917 the prison contract system was abolished. On the first day of October, 1920, all of the contracts made during the two previous administrations expired. Through negotiations with the various prison contractors we were able to cancel the last of the contracts March 1, 1920. Since that time the State Prison, the Reformatory and the State Farm have all operated on state's account. The advantage of this arrangement has been demonstrated since that time. The State Farm last year earned every dollar appropriated by the General Assembly for its maintenance, repairs and buildings and turned a balance of $35,466.28 into the treasury. The State Reformatory paid into the state treasury during the fiscal year ending September 30th, $191,024.01, or only about $40,000 short of its operating expenses. The State Prison reports that after paying all of its expenses, it showed a profit of over $40,000.00. From the reports of the operation of these three institutions for the months of October, November and December, the General Assembly may be sure that the penal and correctional institutions will not this year cost the taxpayers of Indiana a dollar. There is no reason why they should not continue to be self-supporting. The last General Assembly provided in the appropriation bill that, with the consent of the Governor, penal institutions should have the right to apportion PROFITS among prisoners. If the law is not now broad enough to cover this, I urge that a law be passed giving to the trustees of the State Prison and the Reformatory the right, with the approval of the Governor, to apportion part of the EARNINGS regardless of profits to the inmates of these institutions for their own use or for the support of their dependent families. The division of earnings already made has resulted in an improved morale in the penal institutions, in greater efficiency upon the part of men and a larger interest in their work. REMOVAL OF THE REFORMATORY. I recommended to the General Assembly of 1919 that the Reformatory be removed from its present site at Jeffersonville to a more central part of the state. It is clearly in the public interest that this be done, but a false local pride, coupled with a personal interest, prevented its removal at that time. The Reformatory's present location interferes largely with the discipline of the inmates and makes impossible the acquirement of land in close proximity to the institution. Seventy-five per cent of the inmates of this institution come from Indianapolis or north of Indianapolis. Every county in that part of the state must pay the expense of transporting its prisoners to the extreme southern part of the state. I can see no reason, in view of the rapidly decreasing population at the State Farm, why the Reformatory could not be moved there, the two institutions consolidated and operated under the management of one superintendent and Board of Trustees. If this were done at once. the buildings could be constructed almost wholly by the labor of the inmates and a large amount of material necessary for construction could be made at the State Farm. The State Farm at this time is not only paying all of its expenses, but is earning a handsome return upon every dollar the state has invested. If consolidated with the State Farm, there is no doubt that the Reformatory would in like manner, as soon as it was constructed, pay the entire cost of its operation. Such a result is impossible under present conditions. The land purchased for the Reformatory east of Jeffersonville three years ago can be sold for more than double its cost and the Reformatory building and grounds could be sold to some manufacturing concern and the money used toward paying the cost of the new institution. INCREASE IN SALARIES. It is apparent at this time that many demands will be made upon the General Assembly for the increase of officials' salaries and for the support of the various state institutions. Every one of these demands should receive the closest scrutiny. It is evident that increased appropriations will be needed for some of the state institutions, but at a time like this when prices are rapidly declining, when the incomes of the taxpayers of the state are decreasing, when the purchasing power of the dollar is growing greater month by month, and when the dollar is becoming more difficult to acquire, great care should be exercised in adding to the burdens of the people. However easy it may be in private business to meet the decreased prices and the increased value of the dollar by adjusting wages, salaries and expenses to meet changing conditions, it has never yet been found possible to decrease the statutory salary or compensation of any one engaged in the public service. While the state should not ask any of its citizens to serve it for less than the same talent or ability would command in private life, yet every step taken in the direction of an increase in compensation should be with the fact ever before you that an increase, once made, will stand as unalterable so far as any reduction is concerned, as the law of the Medes and the Persians. An active organization of public officials is being perfected to bring before the General Assembly various requests for the increase of salaries and wages. In the past years much of the time of the General Assembly has been consumed in fixing the salaries of county, township and city officers, the compensation to be paid to laborers, clerks, stenographers and bailiffs in the various communities of the state. We talk much about Home Rule and yet the General Assembly from time to time is called upon to deal with these matters that are purely of local interest and the burden of which falls alone upon the various local communities. In order that this General Assembly and those in the future may be relieved from this pressure. I believe that it would be the part of wisdom to pass a law authorizing the Board of County Commisioners and the County Council in joint session prior to the election every two years to fix by proper resolution the compensation to be paid the various local officials. These organizations are elected by the people and immediately responsible to them. If they fix the salaries too high, they are answerable to the people of their own community for it. If they cast an unnecessary burden upon the people they have full recourse at the next election to put out of power the party which has abused its trust. I recommend that instead of the General Assembly fixing the compensation of all these local officials, that a law be enacted vesting such authority in the above named official boards. LEGISLATIVE RECORD. It is with some degree of pride that we refer to the legislation enacted during the past four years. A mere reference to the more important matters of legislation is sufficient to advise the General Assembly of the far-reaching steps that have been taken in this state. Among the legislative accomplishments are: Laws prohibiting the sale of intoxicating liquors, Ratification of the woman's suffrage and prohibition amendments, Laws creating the Department of Conservation, Department of Banking and Insurance and the Live Stock Sanitary Commission, The State Year Book law which put an end to the great waste of printing useless department reports, The State Highway Commission Law, The Blue Sky Law, The Tax Revision Laws, The Coal Commission Law, The passage of joint resolutions authorizing the submission to the people of sixteen amendments to the constitution-among these the budget system. These amendments, if adopted will give the Governor the right to veto separate items in the appropriation bill; will give the General Assembly power to apply the registration law only to the larger counties of the state; will prohibit increases in salaries; will extend the term of all state and county officers to four years, and provide for an income tax and other amendments of vital importance to the people of the state. DEPARTMENT OF CONSERVATION. The Department of Conservation entered upon its duties April 4, 1919. It has been in existence only twenty-one months. Its development, both as to organization and results achieved, has exceeded the hopes of those who favored the creation of this department. It has won the confidence of the people. Much of its success is due to the carefully prepared plans for its operation; much to the organization. The supervision is in the hands of an able commission. The director selected by the commission, and the officers chosen by the Director with the commission's approval, have shown marked ability. The division of Geology, co-operating with the State University, at an expense of $5,541.45 has secured the help of twenty-one scientists and experts in relation to the work performed by this division. The General Assembly should take such action as will enable the department to arrive at a similar understanding with Purdue University in the direc tion of an engineering division to have charge of the many demands made upon the department for surveys and the investigation of lake levels, purification of streams, prevention of flood damage and many other related subjects. |