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Public Ownership and Tax Replacement by the T.V.A.
Published online by Cambridge University Press: 02 September 2013
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The state and county governments in the Tennessee Valley area, particularly in Tennessee, completed 1940 with one of their most pressing financial problems solved or well on the way to solution. The threatened loss of taxes to governmental units, resulting from the program of public ownership of power and the purchase by the Tennessee Valley Authority and the municipalities of the properties of private electrical power companies, had been serious to many counties facing bankruptcy, curtailment of services, or exorbitant taxes. Besides the financial effects, the situation strikingly demonstrated the need for reforms in local government, mainly the consolidation of counties and the introduction of better budgeting and accounting practices. Moreover, the problem has also been significant because of certain issues resulting from the venture into public ownership. Should proprietary agencies of the national government engaged in competition with private business and acquiring existing taxable facilities be responsible for the taxes thereby displaced and replace them as a matter of policy? Are proprietary functions of the national government subject to state and local taxing authority? These issues have demanded widespread consideration not only in the Tennessee Valley area but also in other sections where public power programs are being tried on a large scale. A bill was introduced into Congress on September 30, 1940, to provide for payments to governmental units affected by displacement of taxes arising from the Bonneville Power Project, and a more recent bill applies to the proposed Arkansas Valley Authority Project. The passage of the Norris-Sparkman amendment by Congress in June, 1940, whereby payments in lieu of taxes are being made by the T.V.A., has answered these questions and relieved the pressing financial aspects of the situation. The tax replacement provision has now been in operation more than six months, and an analysis of the period affords an interesting insight into its effects on the various governments concerned.
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- American Government and Politics
- Information
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- Copyright © American Political Science Association 1941
References
1 For the companies affected and the taxes formerly levied on the properties purchased, see the Independent Offices Appropriation Bill for 1941, Hearings before the Subcommittee of the Committee on Appropriations, House of Representatives, 76th Cong., 3rd Sess., Part 2, p. 1713.
2 S4390, 76th Cong., 3rd Sess.
3 Arkansas Valley Authority Act of 1941, H. R. 1823, 77th Cong., 1st Sess., introduced Jan. 10, 1941.
4 The contract is given in the hearings on the Independent Offices Appropriation Bill for 1941, op. cit., p. 1668.
5 These figures are from the Tennessee Valley Authority Release of Sept. 17, 1940.
6 These figures are from the Report on Tax Replacement Requirements in Tennessee, Necessitated by Sale of Private Electric Utility Property to Various Public Agencies, Tennessee Tax Replacement Commission, by White, Stanley J. and Eakle, E. H., Exhibit D, p. 16.Google Scholar (Hereafter referred to as the Tennessee Tax Replacement Commission Report.)
7 Chap. 106, Private Acts of the State of Tennessee, 1939.
8 Chap. 455, Private Acts of the State of Tennessee, 1935; and Chaps. 538 and 611, 1939.
9 Fannin county, Georgia, was second highest in the whole list of counties, losing 24 per cent of its revenue.
10 These figures are from the hearings on the Independent Offices Appropriation Bill for 1941, op. cit., p. 1719.
11 See the testimony of Harry J. Schaeffer, county attorney of Polk county, Hearings before the Committee on Military Affairs, House of Representatives, 76th Cong., 3rd Sess., on Bills to Amend the Tennessee Valley Authority Act of 1933.
12 The text of the bill is given in the Tennessee Tax Replacement Commission Report, p. 83.
13 Nashville Tennessean, Feb. 12, 1939.
14 See statement of Attorney General Beeler, Roy H. of Tennessee, Chattanooga Tribune, Apr. 29, 1940.Google Scholar Various suggestions were made to amend the state constitution. For the likelihood of this, see Combs, W. H., “An Unamended State Constitution: The Tennessee Constitution of 1870,” in this Review, Vol. 32, pp. 514–524 (June, 1938).Google Scholar
15 Florence (Alabama) Times, Mar. 6 and May 16, 1939.
16 New York Times, Dec. 8, 1939.
17 Chattanooga Free Press, Mar. 31, 1939.
18 New York Times, Dec. 9, 1939.
19 Public Resolution No. 88, 76th Cong. (Chap. 432, 3rd Sess.), Sec. 39.
20 Acts and Resolutions of the General Assembly of the State of Georgia, 1939, Part 1, Title III, Nos. 202 and 203.
21 Knoxville Journal, Dec. 21, 1939.
22 New York Times, Dec. 9, 1939.
23 See the Chattanooga Free Press, July 30, 1939; Chattanooga Times, July 31, 1939; and Knoxville News Sentinel, Aug. 3, 1939.
24 Chicago Herald-Tribune, Apr. 2 and Aug. 2, 1939; and Journal of Commerce (Chicago), Apr. 6, 1939.
25 Letter of H. A. Morgan, chairman of the T.V.A. board of directors, to the New York Times, Dec. 20, 1939, and testimony of W. C. Fitts, Jr., T.V.A. counsel, at the hearing on the Independent Offices Appropriation Bill for 1941, op. cit., pp. 1705 ff.
26 Louisville Courier-Journal, Jan. 4, 1940.
27 May 18, 1933, Chap. 32, Sec. 13, 48 Stat. 66.
28 Sec. 39 of the Emergency Relief Appropriation Act for 1941 (Public Resolution No. 88, 76th Cong., 3rd Sess., Chap. 432).
29 News Release, Sept. 17, 1940.
30 Public Acts of the State of Tennessee, 1939, Chaps. 224, 225, and 226.
31 See Satterfield, M. H., “Tennessee Counties Stand Pat,” National Municipal Review, Vol. 29, p. 26 (Jan., 1940).CrossRefGoogle Scholar
32 See Read, W. H., Accounting Manual for the Counties of Tennessee (University of Tennessee, July, 1938), p. 8.Google Scholar
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