Texas Almanac, 1943-1944 Page: 238
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State Government Finances.
The Texas state fiscal system has been
built up through a long series of constitu-
tional and statutory provisions beginning
with the adoption of the present State Con-
stitution in 1876. This Constitution provided
both a State Comptroller of Public Accounts
and a State Treasurer but without clear defl-
nition of functions. The Comptroller has be-
come the state's principal fiscal officer He
issues annually the principal report on state
finances. The Board of Control of three mem-
bers, established in 1919 and appointed by the
Governor, prepares a biennial tentative state
budget for submission to the Legislature. Its
recommendations, covering all expenditures
for operations of the state departments and
eleemosynary and educational institutions,
are followed by Legislature in the main The
State Auditor, an adointive officer estab-
lished in 1929, audits the books of all depart-
ments and institutions of the state and makes
i recommendations
Operating Funds.
A characteristic of the state fiscal system is
the large number of funds into which reve-
nues are received and from xhich expendi-
tures are made for state operations There
are approximately one hundred of these
funds, exclusive of the federal funds for ex-
penditures in matching state money, and the
state permanent and investment funds.
The general revenue fund is the principal
state operating reservoir. From it appropria-
tions are made for support of all state de-
partments of government and state educa-
tional and eleemosynary institutions, in addi-
tion to which there are other sizable appro-
priations including the equalization fund for
public schools. Revenues to this fund come
from a wide range of sources. (See table,
sources s of State Revenue-Funds Into Which
Paid, page 241 )
The three other principal funds are the
state highway fund for the expendiLures of
the State Highway Department, the available
school fund through which state support of
the public schools is largely handled, and the
state old-age assistance fund. Having a dif-
ferent status is the state omnibus tax clear-
ance fund, hich was set up by the Forty-
Seventh Legislature in passing the omnibus
tax act This fund is for the purpose of seg
regating revenues received under the omnibus
tax bill and holding them for prior claims for
old-age pensions, teachers' retirement, blind
assistance and dependent children's assist-
ance.
The hundred-odd other operating funds of
the state are those receiving revenues from
specific sources, usually fees and penalties,
for specific functions In the aggregate,
however, they account for a large part of
state finance. During the fiscal year ended
Aug. 31, 1942. aggregate disbursements from
them were about $92.000,000 and the total bal-
ance at the end of the year was about
$94,000,000.
Among these the Texas Unemployment
Compensation Commission trust fund, held in
the Federal Treasury, i the largest, amount-
ing to $77,108,165.70 at the end of the 1941-42
fiscal year. Another large fund with pledged
disbursements was the county and district
road indebtedness fund with a balance of
$2,389.038.10 for counties and $3,923,623.48 for
the state. This fund was set up as a result
of the state's assumption in 1932 of obliga-
tion to service debt formerly undertaken by
local subdivisions to make improvements on
designated highways. The Confederate Daen-
sion fund, after many years of deficit, accum-
ulated a surplus during the 1941-42 fiscal
year, due to the rapid decrease in the number
of Confederate soldiers and their dependents.
The general revenue fund showed a deficit
of $29,243,065.42 at the end of the fiscal year.,
23EAug. 31, 1942. Deficit at the end of the pre-
ceding fiscal year had been $28,665,845.60.
Hence, while the aggregate of revenues re-
ceived for all state operating purposes during
the fiscal year ended Aug. 31, 1942, exceeded
operating expenditures, and while there was
an aggregate net balance in all of the funds
of the state, yet, because of the importance
of the general revenue fund to state opera-
tions, its deficit is source of the frequent
statement that the state "is in the red."
Permanent Funds.
In addition to the operating funds, there
are on the books of the state a number of
endowment funds. Of these the permanent
school fund, having a balance of $72,837,412.30
as of Aug. 31, 1942, was the largest This
fund has been derived primarily from the
large dssrgnments of the original public do-
main of Texas to public school support Sec-
ond largest is the Permanent University fund,
having $31,351,750 as of Aug. 31, 1942, which
was also deri-ed fiom public lands, and the
minerals (largely oil) discovered thereon
Third largest of the investment accounts of
the state at the end of the last fiscal year
was the teacher saving fund of $11,140,000,
endowment fund for teacher retirement Total
of all investment funds at the end of the
1941-42 fiscal year was $119,744,541.15.
Revenues and Expenditures.
The state's reenues for operating purposes
during the fiscal year ended Aug. 31, 1942,
were $229,069,079 44. Operating expenditures
were $205,741,882.21. (See both condensed
and detailed tables of state's revenues and
expenditures on pages 240, 241 and 245.
Principal Taxes.
Under the Constitution, adopted in 1876, an
ad valorem tax on real and personal property
was provided as the principal source of reve-
nue There has been a series of amendments*
altering the original provision for a 50c maxi-
mum tax on each $100 of valuation The
present provision is for a maximum of 35c
on the $100 for each, general revenue and
available school funas, and 7c for the Con.
federate pensiont fund, total of 77c. During
the last quarter century, however, as state
costs have risen, the importance of the ad
valorem tax as a contributor of state revenue
has dwindled. During the 1941-42 fiscal year,
it brought the state less than 10 per cent of
its operating revenues.
The Forty-Seventh Legislature, 1941, in-
creased revenues appreciably by the passage
of the so-called omnibus tax act which raised
gross receipts and franchise taxes in many
classifications and added the excise taxes on
radio, playing card, automobile, cosmetic and
other sales. This act was intended primarily
to raise additional money for the old-age
assistance and other pension funds.
*There has been an ad valorem tax on real and
personal property in Texas each year since the
state was admitted to the Union beginning with
1846. The State Constitutions of 1845, 1861, 1866
and 1869 did not set a limit, but left the tax rate
to the discretion of the Legislature. The Consti-
tution of 1876 placed the maximum ad valorem
rate at 50c on each $100 property valuation. In
1883 an amendment was adopted reducing the
maximum tax rate to 35c and at the same time
providing for an ad valorem tax rate for the
available school fund, having a maximum of 20c
on $100. In 1918 the maximum for the school tax
was raised from 20c to 35c, simultaneously with
the adoption of the free textbook amendment. An
ad valorem tax not to exceed 5c on the $100 valua-
tion for Cor.Iaderate pensions was authorized by
amendment *.0 the Constitution in 1912; in 1924 it
was raised co 7c maximum.
tBecause of the passing of Confederate veterans
and their dependents, it is anticipated that this
tax will be abolished, lowered or diverted to other
purpose min the near future.
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Texas Almanac, 1943-1944, book, 1943; Dallas, Texas. (https://texashistory.unt.edu/ark:/67531/metapth117165/m1/240/: accessed April 27, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting Texas State Historical Association.