USA > South Dakota > History of Dakota Territory, volume III > Part 48
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$ 8,916,100
1888
$ 91,988,981
1880.
11,474,960
1889
97,456,773
1881.
16,153,052
1890
1 36,827,018
1882.
23,533,366
1891
128,328,775
1883.
32,134,068
1892
127,389,992
1884.
46,297,369
1893
1 36,032,840
188
53,560,208
1894
128,046,765
1886
75,725,289
1895
121,751,151
1887.
86,066,923
1896
119,391,156
This includes only counties in now South Dakota.
As a matter of fact the assessment of the state in 1896 was almost exactly the same as it was in 1890. This was true regardless of the fact that the acreage assessed was increased by 3,500,000 and that the value of the land in 1896 was the same as in 1890, about $5.14 an acre. The total assessment on acreage and town lots in 1890 was a little over $100,000,000. In 1896 it was not quite $90,000,000. The total assessment of personal property in 1896 was only $5,389 .- 200. After assessments were made many irregular and illegal abatements and refunds were made. The auditor suggested the enactment of a law strong enough to correct these abuses. He said that the provision for a two mill levy for general state purposes was not sufficient to meet necessary expenses under the present system of assessment and that the amount of interest paid out on funding and revenue warrants annually was a constant reminder of this fault. The plan of levying a deficiency tax every second year was not a businesslike proceeding, he said, and the Legislature should submit to the people an amend- ment to the constitution providing for a change in this method. An act pro- viding for a three mill annual levy and no deficiency tax would no doubt be sufficient except in case of war or other emergency. Revenue warrants had been the mainstay of the state ever since 1890 and were used to keep the ordinary warrants at par. As a matter of fact it was clear now that the small saving in percentage made by placing such warrants on the market was far from equalling the amount that was necessarily expended by placing large issues on the market at $1. The uncertainty of tax collections here and the large sums necessarily required to float these issues caused investors to require them to run for a period
337
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
not less than a year at a time. Therefore money could be saved by the repeal of all revenue and funding warrant acts. He called the attention of the Legislature and the governor to the efforts that had been made to reduce the indebtedness of the state even when the revenue was insufficient to pay the interest thereon in addition to the necessary expenses. The auditor made numerous recommenda- tions calculated to improve the finances of every state department.
In February, 1897, Governor Lee, in a special message to the Legislature, urged action in regard to the revenue question. He stated that all ordinary revenue had been legitimately expended and that the state was in a condition of helplessness unless some such action should be taken by that body. He called attention to the practice of issuing revenue warrants against the tax assessed, but not yet collected. These warrants, he said, were sold in large blocks on Eastern markets and the money thereby derived was used to maintain at par the warrants of the state drawn against the general fund, but the warrants could not be sold except in large blocks and on long time. They drew 7 per cent. 'At the same time Treasurer Phillips announced that there would be a deficiency by June 1, 1897, in the general fund unless some action to relieve the situation was taken. He stated that emergency warrants to the amount of $103,000 would fall due April I and another large sum a little later.
Taxation in 1898 was still very unevenly distributed and unsatisfactory, and state officials on all appropriate occasions took special pains to emphasize this fact and recommend that the evil be remedied. First, the evils were pointed out and then the Legislature was asked to improve the situation. The auditor declared that the entire revenue system was loose, uneven, unjust and needed revision. . There was not one gross inequality of taxation, but large amounts of wealth escaped the assessor wholly. Farm property was taxed highest and far beyond its just proportion. Merchandise paid less than its fair share. Mining interests of the Black Hills were taxed by the acre and paid nothing in propor- tion to the value of the property. The millions of bushels of grain held by elevator companies was taxed almost nothing. The banks managed to escape their just proportion of the tax. In a few counties bank stock was assessed at par and in others at less than 30 per cent. Under the law the state board was unable to separate the shares of banks from the shares of other corporations and conse- quently all were left as they were returned by the county boards. Annually the state lost large sums of revenue through the almost utter failure of the system to reach moneys properly. Of the total assessment of about $120,000,000 in 1898 only about $400,000 was in money. There were other evils similar to these and all constituted a reflection and reproach upon the management of the state and were an insult and a wrong to the inhabitants. The state officials urged the Legislature of 1899 to remedy these unfortunate and unjust conditions of the finances.
In August, 1898, at a meeting of the State Board of Assessment and Equaliza- tion resolutions to the following effect were adopted : That inasmuch as petitions had been received from various counties of the state asking that railroads should be assessed at not less than five thousand dollars per mile, and inasmuch as the board had not sufficient evidence warranting such an assessment, the petition had been duly and fully considered but had not been acted upon; that the railroad commissioners had reported that in their opinion the companies were Vol. III-22
338
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
assessed at a just rate; that in fact the assessment of the Milwaukee railroad was more than one million dollars in excess of the rates of former years; that the value placed upon railroad property by the board in excess of that fixed by railroad commissioners fairly covered all other railroad property, and therefore the report circulated to the effect that the state petitions were not treated with the respect due them was wholly and entirely false and without cause; that they insisted that the request made by petitioners to the board that they should state the facts upon which the petitions were based was a proper and courteous course to pursue; that they believed and declared that the State Board of Assessment and Equalization should be above partisanship in its official acts and be guided solely in the consideration of all matters within its jurisdiction by its best judg- ment ; that they declared in their opinion it would be inconsistent and unwise for the state to contend through its railroad commissioners that a given piece of prop- erty within the state was fairly worth for purposes of establishing a schedule of rates no more than eight million eight hundred thousand dollars and immediately thereafter to insist through its board of assessment that for the purpose of taxation the same property was fairly worth fifteen million dollars or more was inconsistent upon its face and unwise because it was believed that the tax levied upon such assessment would be excessive and therefor uncollectible, and further because the Board of Railroad Commissioners would be embarrassed in their efforts to secure more favorable railroad rates within the state. This vote carried with three for and two against.
ยท Before 1899 the Legislature had passed an act regulating and limiting the levy of local taxes. The law provided that county levies for all purposes should not exceed 8 mills. This amount, it was provided, should not be exceeded for the "consolidated county tax," as it was called. It was claimed that this law worked a great hardship on many counties that had bonds in circulation and were compelled to pay the special tax. They complained that local officers could not levy enough tax to pay legitimate county expenses and were compelled there- fore to issue warrants, all the result of the special laws of the Legislature. They asked this Legislature to remedy matters by providing for an increase in the assessments.
For the fiscal year ending June 1, 1899, the total state receipts were $1,048,- 979.28, and the total disbursements were $1,011,387.28, leaving a balance on hand of $37,592. At this time the total state debt was $708,300, composed of regis- tered bonds $267,500 and coupon bonds $440,800. On July 1, 1899, the total state debt was $408,300. During this year liquor licenses brought to the treasury $56,752.28.
In August, 1899, Attorney-General Pyle issued the following statement in reference to the power and authority of the State Board of Equalization to increase the aggregate assessment : "The State Board of Assessment and Equal- ization in this state is also a board of assessment of certain classes of property. That is, it is required to place an assessed valuation upon telephone and telegraph lines, express companies and railroads, and it is also required to assess this class of property upon the same basis as the rest of the property of the state is assessed, and it is also required to assess it according to its value. It being the duty of the Board of Assessment and Equalization to assess a portion of the property of the state according to its actual value, and to equalize all the taxable
339
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
property in the state so that it may be assessed according to its true value and proportionate value, I am of the opinion that the board has the power to increase this aggregate valuation of the state, provided that it does not exceed the true value of any class of property in making this equalization and assessment above referred to. If a few counties in the state are assessed according to their actual value in money and a large per cent of the counties are assessed at a much lower valuation, I am of the opinion that it is within the power and is the duty of the Board of Equalization to raise such counties as are assessed below their actual value, so that the same will be assessed in accordance with the true and propor- tionate value. Of course, if all classes of property are assessed according to their true value, then all property will be assessed in accordance with its pro- portionate value." The law provided that the board should "equalize the assess- ment so that all the taxable property in the state shall be assessed at its true and proportionate value; but said board shall not reduce the aggregate assessed valuation on the state, but may increase said aggregate valuation in such an amount as may be reasonably necessary to obtain a just and true value and equalization of all the property in the state."
The following was the assessment in Yankton County for 1898 and 1899. Similar changes were made, up or down, in all the counties of the state:
What Taxed
1898 $2,137.775
I899
Land
$4,832,130
Town Lots
885,775
1,506,310
Merchandise
87,035
194,100
Horses
83,740
215,000
Cattle
104,053
299,380
Swine
15,004
67,720
Money and Credits.
16,185
131,085
Bank Stock
37,320
110,425
In August, 1899, the State Board of Assessment and Equalization changed the assessment in the various counties so that the total was $146,333,912 instead of $118,126,593, as returned by the county boards. The per cent raised or lowered is shown in the following table, together with the totals of each county as equalized :
County
Equalized Assessment
Per cent Raised
Aurora
$2,024,510
25.
Beadle
3,852,200
20.4
Bon Homme
4,018,765
21.7
Brookings
4,671,792
55.
Brown
7,566,160
23.4
Brule
2,458,169
93.1
Buffalo
375,008
16.6
Butte
1,537,286
.8
Campbell
1,170,932
II.8
Charles Mix
1,617,919
26.1
Clark
2,955,906
29.8
Clay
3.709,995
38.1
Codington
3,673,408
32.8
Custer
824,870
22.9
340
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
County
Assessment
Per Cent Raised
Davison
2,273,354
IO.I
Day
3,771,669
70.4
Deuel
2,753,063
40.2
Douglas
1,646,154
9.I
Edmunds
1,524,373
13.7
Fall River
1,171,544
20.3
Faulk
1,384,905
II.7
Grant
3,173,254
57.1
Gregory
179,137
6.9*
Hamlin
2,321,204
49.6
Hand
2,240,718
10.4
Hanson
2,155,584
25.8
Hughes
2,170,167
2.
Hutchinson
5,161,661
41.3
Hyde
925,009
14.8
Jerauld
I,II3,474
17.6
Kingsbury
4,049,387
38.3
Lake
3,738,398
48.8
Lawrence
5,258,003
24.
Lincoln
4,836,210
36.2
Lyman
593,476
63.2
Marshall
1,727,282
23.4
McCook
3,564,657
75.1
McPherson
1,725,081
17.6
Meade
1,836,698
15. *
Miner
2,055,644
4.4
Minnehaha
8,375,452
32.3
Moody
3,494,012
37.9
Pennington
2,719,978
I. *
Potter
1, 176,660
8.7
Roberts
1,843,633
30.3
Sanborn
2,137,173
19.9
Spink
5,988,33I
4I.
Stanley
1,056,773
2.I
Sully
1,383,31I
1.4
Turner
4,547,575
23.3
Union
3,743,902
30.2
Walworth
986,016
17.1
Yankton
5,073,800
34.5
* Means reduction.
Equalized
In the summer of 1901 Judge Carland of the United States Court filed his decision in the celebrated rate case at Sioux Falls. His decision said: "The schedule of maximum rates of charge for transportation of freight and pas- sengers adopted, fixed and established by the Board of Railway Commissioners of South Dakota is held to be in violation of the Constitution of the United States in this regard, to-wit: That the schedule if enforced would operate to take the property of the railroad without just compensation, without due process of law and would deprive it of the equal protection of the law. It is held that the schedule adopted by the railway commissioners would not afford the railroad company reasonable compensation for the services performed. The railroad com- missioners and their successors, agents, etc., are perpetually enjoined and re-
341
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
strained from putting into effect or attempting or claiming to put into effect, the schedule of freight or passenger rates adopted by the board. It is ordered that the railroad company recover of the commissioners its costs to be taxed together with its disbursements necessarily incurred." At this time the total railroad valuation of the state was $12,929,003.
The bill in the Legislature in 1901 relative to taxing the products of the mines in the Black Hills kindled a great deal of indignation among the residents of that portion of the state. It was declared by newspapers there that the bill was unjust and would be extremely detrimental to the prosperity and interests of the Hills. Mines were taxed at the present time as well as the hoisting plants, reduction works and all the appliances used in the mining and milling of ores. The farmer, it was argued, paid taxes on his farm, buildings, live stock and large implements, and it would be no more than fair to tax the farmer on his wheat or corn or other products than to tax the Black Hills people for the products of the mines.
It again became necessary for the Legislature in 1903 either to increase the total taxation or to increase the total assessment. Accordingly that body pro- vided again for a deficiency levy of 2 mills to be added to the regular constitu- tional 2-mill tax. At this time the total assessment was in round numbers $200,- 000,000. A 4-mill levy on this assessment would yield $800,000. This sum with the other receipts was sufficient to increase the total revenue to over $1,000,000 for the biennial period. The law required assessors to value property at its true worth, but they still did not do so. The amount needed for all state expenses of every description for the biennial period was at this time about $1,275,000.
"The State Board of Equalization was obliged to increase both the valuation and the levy to meet the extravagance of the last Legislature. Senator Johnson said last winter in a letter to the writer from Pierre that it would be better if the state institutions were all located at one place so that the towns could not combine and sandbag the other members into granting extravagant appropria- tions. The force of that utterance will be more fully realized when the time arrives again to pay taxes. The legislators representing state institutions com- bined and scratched each others backs to a fare-ye-well, granting about every- thing asked for in the way of appropriations while the people grin and look pleasant."-Armour Herald, September, 1903.
In the fall of 1903 the total moneys and credits found by the assessors of the state amounted only to $686,620, while the estimate made of deposits in all the national and state banks of South Dakota was placed at $32,000,000. This disparity between the assessment and the actual valuation was so great that all realized the assessment of such property was merely a farce.
Mutual insurance companies in 1903 were not disheartened nor seriously injured by the refusal of the Legislature to exempt them from the operations of the anti-compact law. They even felt themselves in better condition, because they would not be hampered by its provisions and restrictions. The contracts issued by the state mutuals did not contemplate the establishment of a fixed rate, nor was the rate established at all until the end of the period for which the insurance was written, and even then it was established under the definite and reasonable contract that so much of the original amount of the premium as was not required to carry the risk would be returned to the holder. Every joint stock
342
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
company which did business in the state in 1902 was required to secure a cer- tificate of authority to do business in 1903. Several insurance companies were organized under the new law. This signified that the law was neither unjust nor burdensome. Even the old companies continued doing business in the face of every threat of the previous winter that if the valued policy law were passed they would be forced to withdraw from the state. These facts were borne in mind when the old companies took a similar stand at later sessions of the Legis- lature. By the first of June, 1903, three new mutual insurance companies had been launched at Sioux Falls alone in spite of the recently passed valued policy law. One was the Mutual Cash Surety Company.
The assessed valuation of the state in 1903 was $211,035,192. On July I, 1903, the bonded debt was only $289,000, but there was outstanding $215,000 in revenue warrants that had been issued, as was the custom in anticipation of the coming tax. On June 30, 1902, the total state debt was $677,500, of which $427,500 was bonded and $200,000 floating.
In 1903 the State Board of Equalization raised the assessment materially all over the state. The result was a great outcry at the enormous valuations from the counties. However, in 1904 it was shown that the tax rate had been reduced in forty-four counties. The assessed valuation was $214,239,028. On July I, 1903, the new banking law had gone into effect with excellent results to the financial interests of the state.
The bonded debt of the state in 1904 was $289,000, but the state had on hand ready means to pay this entire amount if such a step was deemed advisable. As the state progressed in population and wealth and as expenses became higher, the old schedule of taxation and assessment under the constitution was found to be wholly inadequate to meet the changed conditions. The state authorities continu- ally resorted to all expedients to overcome the difficulty. One was to take advantage of the constitutional deficiency provision of 2 mills and the other was to increase the assessment roll, a difficult thing to do in view of the outcry and opposition. It was estimated early in 1904 that by the end of that year the deficit would amount to $380,000 unless measures to meet the increase were adopted. It was concluded to meet this deficiency the same as had been done every two years before by the deficiency levy. This was the saving clause of the constitution and in the end the salvation of the state. The total assessment in 1905 was $126,686,261.
"South Dakota presents the spectacle of a state continually hard up in the department of current expenses, though able to wipe out its bonded indebtedness by a single small levy. During a considerable period of each year the treasury is empty and interest-bearing warrants are afloat. This is not because the state is poor. The condition arises from the inability of the legislative talent of the state to frame and enact a revenue law such as would produce business results." -Sioux Falls Daily Press, August 10, 1904.
Much of the trouble over financial affairs in the state was due to the fact that farmers who numerically controlled the Legislature opposed at all times any increase in taxation, any change in the constitutional provisions regarding taxa- tion, and any advance in assessment valuation. As the Legislature was the authority by which such relief could be obtained and as the farmers opposed any
A DRUG CO.
ALHALL GGISTS.
WL
GAR.
-
LAYING THE CORNERSTONE OF THE NEW MASONIC TEMPLE, SIOUX FALLS, OCTOBER 10, 1905
343
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
reform in these particulars, the state for nearly twenty years was annually in serious financial condition and at times its credit was gravely jeopardized.
In January, 1905, Samuel H. Elrod, the new governor, called attention in his message to the escape from taxation of many important industries of South Dakota. He insisted that something should be done to remedy this unjust and unfortunate condition. He declared that within a short time, unless the Legisla- ture should act, real estate and the homes of the common people would be paying all the taxes. He called attention to the fact that no tax whatever was paid on 75 per cent of the personal property of the state, and showed that moneys and credits often were not listed because assessors failed to find either of them. He insisted that the Legislature as a matter of simple justice should at once take steps to equalize taxation, because of the gross inequalities that existed. He asked the members of the Legislature to put aside their political schemes and combines to make larger appropriations, because the institutions of the state required no such improvements. He pointed out that an immediate and efficient tax law was very essential, if not absolutely necessary, for the development of all departments of the state government, and insisted that taxation and revenue was the most important question, not excepting any, for the Legislature to consider at this time.
He called attention to the fact that the constitution provided that all property should be assessed "at its true full value in money," and that this course had not been pursued at any time since the state was organized. He showed that while the state assessment for 1904 was a little over two hundred and fourteen million dollars, the actual valuation of property within the state was about one billion dollars. Should the law be complied with and should the assessment be made according to the wording of the constitution, the two mill taxation authorized would be amply sufficient to conduct the affairs of the state, pay at once the entire state debt and provide an abundant fund for any annual deficiency that might occur. He denounced in unmistakable language the practice of the state authorities, particularly the Legislature, in making special levies to cover defi- ciencies, or to borrow large sums of money at high rates of interest with which to carry on current expenses. He declared that the frauds revealed from the records of assessment of the state were outrageous and should be prevented by the Legislature. He noted that in Yankton County the returns in moneys and credits in 1903-4 was $122,025, which sum was within $1,541 of being as much as the same itemis reported from the combined counties of Lawrence, Minnehaha, Union, Lincoln, Brown, Spink, Codington, Roberts and Grand, but he noted that the next year Yankton County, probably to get even for this conspicuous inequality, reportd in moneys and credits only $2,880. A certain piece of prop- erty there was sold for $6,500 but had been assessed at only $800. He insisted that scores of similar instances in all parts of the state could be pointed out. The state board of equalization was powerless to remedy this striking inequality, because names of those who had been omitted were not on the rolls. He asserted that no assessor did his duty, but admitted that no doubt he was influenced by men who did not want to be assessed and who were strong enough politically to get their particular friends appointed or elected as assessors.
At this time also Governor Herreid recommended that the annual meetings of the state board of equalization be held in January and February of each year,
344
SOUTH DAKOTA: ITS HISTORY AND ITS PEOPLE
that the board should be given power to appoint a state tax commission, and that annual meetings of all county assessors should be held in order to make uniform assessment methods of all descriptions. He did not believe that the Legislature would necessarily have to pass a mass of new laws, but did believe that there should be an effective and uniform administration of existing laws. He stated that the estimated deficit for 1904-5 and 1905-6 would be about $410,000 and that a deficiency levy of two mills for 1905 would pay off the existing deficit, but that a levy of one mill for 1904 would be necessary to pay off the bond interest and maintain the accumulation of the sinking fund. He said: "I earnestly hope that not a dollar will be appropriated by this Legislature in excess of the revenues of the state." Evidently the governor, like many others, had become tired of the annual deficit and wanted something done that would remedy matters from the foundation up. He called attention to the fact that in spite of the miserable system of taxation in the state the bonds were being rapidly paid off and that nearly all the state institutions had saved nearly twenty-six thousand dollars from their annual allowance.
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