Messages to the Legislature and proclamations of Emanuel L. Philipp, Governer, 1915-1921.

I. Messages To The Legislature

1915 SESSION.

Regular Session Began January 13, 1915; Ended August 24, 1915.

Extraordinary Session Began October 10, 1916; Ended October 11, 1916.

Madison, January 14, 1915.

To the Senate and Assembly:

Pursuant to law and established custom I submit to you a statement of conditions in our state government such as would seem most important for your consideration at this time. The printed reports of the several departments, giving detailed information, will be submitted to you without delay.

The most important problem that confronts us at this time is to introduce economies in the management of our state affairs that will produce substantial reductions in state expenditures and make a reduction in state taxes possible. The people demand retrenchment.

In the year 1900 the cost of the state government reached the sum of $4,000,000. In the political campaign that was carried on in that year this amount was claimed to be excessive, and much criticism was indulged in by the press and from the stump of what was termed an extravagant use of the public funds. Economies that would bring about a substantial reduction in expenditures were promised. However, instead of reduction there has been a steady increase until at the close of the fiscal year 1913-14 the state's expenditures had reached the sum of $15,138,051.99.

The following table of total expenditures for the period in question shows the large and steady increase:

Statement of Net Expenditures of the State of Wisconsin for Each Fiscal Year Ending June 30 :

1903 $ 6,046,565.06

1904 5,855,446.80

1905 6,349,800.94

1906 6,793,912.53

190? 7,206,058.58

1908 8,612,289.95

1909 10,195,031.83

1910 10,459,978.14

1911 10,194,291.50

1912 11,332,874.51

1913 13,786,766.07

1914 15,138,051.99

These vast expenditures are partly due to a policy of expansion of the state's activities far beyond what was formerly conceived to be the proper function of government, to a lack of business system in organizing these activities, and to the further fact that the legislatures have been too generous in their appropriations for the support of the several public institutions. This, together with the rapid rise in local taxes, largely affected by our state policy, has created a demand for a thorough reconsideration of our aims and methods, and has made some measure of relief imperative.

From the report of the Tax Commission, which I now have before me, I learn that the total amount of taxes for local and state government for the fiscal year ending June 30, 1914, aggregates nearly fifty-two and one-half million dollars. The following table shows the amount derived from each source classified according to the system of taxation which produced it :

General property tax $41,596,960.00

Corporation taxes 8,437,906.00

Inheritance tax 458,903.00

These figures show why the people are complaining of high taxes and are clamoring for a change in the policies that have produced such enormous expenditures. The results of the recent election justify the statement that there is a general demand among the people for a substantial reduction in taxes, and I regard it as my plain duty to recommend to you a policy of strict economy.

Public institutions that have been the recipients of too liberal appropriations may not be willing to have their financial support cut down, and we may reasonably expect strong opposition to any effort to inaugurate a financial policy that will conform to the demands of the people. However, I regard my election as governor as a contract with the people to reduce the expenditures of the state government to a reasonable basis, and I propose to fulfill that promise so far as it is within the power of the executive to do so.

The people have expressed a demand for a closer adherence to constitutional government, and to the use of sound business principles in government. This demand for economy, as I interpret it, does not mean that we should oppose those things that make for human progress ; on the contrary, successful government, like all other successful institutions, must move forward and increase its usefulness to man. The people of Wisconsin want a government that is humane in its tendencies, truly progressive and responsive to the demands of a more complex civilization. In meeting these demands, however, we should not allow our zeal to lead us into costly fads, nor should we forget that a waste of the people's substance is not helpful to the cause of human progress.

Boards and Commissions

One of the tendencies of our state government in recent years has been to create a large number of commissions or bureaus to which has been delegated a large part of the functions of government. While some commissions are useful and, therefore, indispensable, quite a number can be abolished and others consolidated, greatly reducing the number of employes and in that way effecting a substantial saving. It should be our purpose to retain every service rendered by the state at this time that is useful to the people and is worth what it costs. But in rendering this service care should be exercised so as to prevent duplication of employes, and their duties should be so arranged as to enable them to give the maximum service.

We can not proceed by a mere policy of abolishing commissions ; we must retain certain ones in view of the fact that there are now certain lines of service which this form of administration is best

S Messages to the Legislature

suited to perform. Government was not originally planned to engage in business. Its formal methods of procedure were hardly suited to meet and dispose of the multitude of details which come up in a business institution. In certain modern developments of governmental activity this freehanded efficiency came to be needed. Commissions, whose powers are to a large extent a mixture of the legislative, the executive and the judicial, form this more flexible arm of governmental administration; and insofar as this freehandedness makes for efficiency and dispatch, without the assumption of unsafe powers, they are wholly to be commended.

However, along with this new-found advantage, there have developed certain dangers and disadvantages. It seems to be inherent in the nature of such bodies to run into extravagance. This is partly due to the fact that while they are virtually engaged in running a business they are not held back by the business man's consciousness that it is his own profit and loss which is at stake; and partly to the system of organization which enables them to proceed with too little check. The commissions and boards that are now carrying on a large part of the functions of government are entirely independent of any control by the constitutional officers of the state who are elected by the people, and who are directly responsible to the people. It may be said that in Wisconsin the major part of the state government is carried on by bureaus that are independent of the people. The commissioners, being appointed by the governor, are authorized by law to appoint such assistants as they see fit. They regulate the salaries of their own employes and audit their own bills. The commissions are numerous, each line of activity being vested in a separate board with its own set of employes. This system has led to much duplication of service and great extravagance.

The agencies of government should at all times be kept under the control of the people and made responsible to the people. It was so intended in our original plan of government, and whenever we depart from that, as we have in this instance, we deprive the people of the power of self government.

The people wish to hold the governor responsible for carrying out a large part of their governmental policy. This, I believe, is particularly true in the matter of expenditures, for it is in the nature of his office to act as a check upon other branches of the government. I believe it to be right, therefore, that the chief executive should be held responsible, so far as is possible, for the administration of government, and particularly for any extravagance that may be connected therewith. Such responsibility naturally devolves upon him, for as he is elected by the people, he can be made immediately responsive to their will.

However, under the system of commissions and bureaus as established under our present law, the governor is without power to influence the expenditures of such bureaus except so far as he may exercise his veto power over appropriations made for their use. Once they have received their money there is nothing to influence them toward a policy which will make their expenditures any less than this maximum amount. Their whole nature is to expand.

That the people wish to rely upon the governor to exercise a better control over public expenditure, will, I believe, not be questioned by those who understand present day public sentiment. It would, however, be manifestly unfair to hold the executive responsible for expenditures that he can in no wise control, and I recommend that the laws creating commissions be so amended as to give the governor some measure of supervision over the expenditures of these bodies.

In the work of consolidating some commissions and discontinuing others I wish to lay emphasis upon the necessity of retaining all those features of each that have proven useful to the people. The Eailroad Commission is performing a useful service and deserves to be liberally, though not extravagantly, supported. This body is conducting investigations of railroads and public service corporations, much of which information is of like nature with that needed by the Tax Commission and the results of which can be made available for the Tax Commission so as to relieve that body of the necessity of duplicating the work of the Eailroad Commission. In the interest of economy the field work of the Tax Commission should be cut clown as much as possible, especially where it can be covered by the investigations of the Eailroad Commission. I recommend as a further economy that the services of income assessors be dispensed with and that their duties be transferred to ■ the local assessors and tax-collectors. If local assessors can be trusted with the assessment of real estate and all other taxable property, I fail to see any good reason why they should not be trusted with the assessment of incomes. The matter of securing full returns of taxable incomes is achieved by the penalties provided

10 M ESSAQ ES TO T 1 1 E L E< 1ISL A T C RE

by law more than by any activity upon the part of the income assessor. This rule would also hold true in the assessment of personal property for which the income tax is a substitute. Inasmuch as 90 per cent of the income tax goes back to the counties and municipalities in which it is collected, it is safe to assume that i be local assessors will not lack in energy to get a full return. The Tax Commission reports the cost of collecting income tax for the fiscal year ending June 30, 1914, as $99,207.59. This amount can be largely saved to the state by the change in system which I have suggested.

During the short time that I have been in office I have not been able to examine the present organization of commissions and boards in sufficient detail to enable me to make practical and specific recommendations as to the consolidation of some and the abolishment of others. It is, however, the business of this administration to abolish all that are useless and to greatly reduce the number of those institutions, and as far as it is practical to bring the government back to the constitutional officers of the state. I, therefore, recommend that you make a thorough investigation of the entire subject with a view to meeting the public demand.

Workmen's Compensation

The Workmen's Compensation act is correct in principle and should receive the attention of the legislature with a view to further perfecting it. The basic idea of the law is that the injured workman shall be compensated as soon as possible and without litigation. The definite schedule of injuries enacted by the legislature has enabled the employer and employe, in a large number of cases, to decide between themselves what the verdict will necessarily be. This has not only relieved the workmen of the expense of litigation but has to a considerable extent relieved the state of the expense of sending inspectors to assist in settlement.

Nevertheless, the cost of conducting the affairs of the Industrial Commission has grown to a large sum. For the fiscal year ending June 30, 1914, the cost of the commission was $104,973.00. It seems that a large item of this cost is due to the expense of sending out inspectors on individual cases, and the ultimate perfecting of the law will result in materially reducing this part of the cost of administration. With a view to making settlements easier for the workman and his employer, and for the purpose of reducing the cost of administration, I recommend that the schedule be perfected, either by amending it where the commission has found it inequitable and unsatisfactory or by enlarging it to cover a greater variety of cases. I suggest for your consideration that the initial service in each case shall be performed by the county judge in the county where the injury occurred.

The law now provides that all appeals from orders of the commission shall be taken to the circuit court of Dane county. This provision makes litigation under the act unnecessarily expensive and is inconsistent with the spirit of the law. I would suggest that the law be changed so that cases appealed to the circuit court may be tried in the circuit where the claim originated.

Legislative Reference Bureau

The legislature of 1903 created a legislative reference library. Its purpose was to furnish information to members of the legislature upon such subjects as related to legislation. It has since been converted into a bill drafting institution where proposed laws are furnished upon application without any further effort upon the part of the legislator. This system has had the effect of greatly increasing the number of bills introduced and has resulted in the passage of a great many useless laws. The legislature of 1913 passed 778 bills.

The purpose of the original act creating the library was good. However, we must now judge its value by the record it has made, which I believe to justify the statement that it has exercised an undue influence upon legislation. It has resulted in outside preparation of bills for legislative action, superseding individual legislative study, and greatly impairing legislative efficiency to act as the result of that individual judgment which members of such a body should devote to the work they were elected to perform. Originally projected as a library, it has in every sense become a bureau. I therefore recommend that the law creating the bureau, as it is now known, be repealed. This will have the effect of saving about $21,000 per year.

State Printing

The cost of state printing has grown to an enormous sum. Each year has shown an increase. In this connection the following table is interesting:

Fiscal Year.

1900-1901 $ 42,138.69

1902 60,413.05

1903 53,948.87

1904 84,916.27

1905 60,650.08

1906 109,959.58

1907 108,998.98

1908 162,045.21

1909 103,448.75

1910 163,351.88

1911 123,312.25

1912 204,427.11

1913 217,047.08

1914 259,665.50

The State Board of Public Affairs has recently investigated this matter and strongly criticises the lack of system. The following statement appears in its report: "Evidence of waste and inefficiency are to be found on every hand resulting largely from practices which have been passed on to each succeeding administration. Such costs of waste as this study has disclosed are evidences of the inefficient past." The report would indicate that printed matter is ordered in too large quantities. It says : "Too many volumes are issued and there are too many pages in the volume/'

A large quantity of printed matter that is now worthless has accumulated. The report states that 786,390 books and pamphlets are now stored in the south wing of the capitol building. It appears that one of the sources of expenditures is the cost of printing a large number of Blue Books, the last legislature having authorized the publication and distribution of 37,500 copies. Indiana issues 1,700 ; Ohio 8,000 ; Illinois 10,000 ; Minnesota gives fifty copies to each member of the legislature, and Iowa gives sixty copies to each member. Members of the last legislature in our own state received 250 copies each.

The number of Blue Books authorized and printed is evidently too large and should be cut down to such a number as can be distributed among the people with profit to them.

The entire subject of printing deserves consideration and I recommend that some better supervision be established by law over the matter of public printing in order that useless publication may be eliminated and that some regard be had for the probable demand, thereby substantially reducing the expense.

State Insurance

It has been the policy of the state since 1903 to assume the fire risk on its own buildings. The insurance carried on state property by the state is reported by the commissioner as $17,670,- 000. In addition to this there is on the statute books of the state a provision that all property of cities, counties, villages and school districts, after favorable vote on the part of boards or councils having charge of such public property, may contract for their insurance protection with the commissioner of insurance. The amount of insurance carried under this provision is reported to be $1,595,359, making a total of insurance carried by the state of $19,265,359. The insurance commissioner under date of December 18, makes the following statement concerning the condition of this fund:

ASSETS

Cash in hands of state treasurer $62,701.91

Premiums in process of collection 68,936.69

$131,638.60 LIABILITIES

Unearned premiums $41,194.55

Due to general fund 78,137.99

$119,332.54

Surplus over all liabilities $12,306.06

The Board of Regents of the normal schools have recently brought an action in court to compel the insurance commissioner to turn over to the normal school fund an additional sum of $106,800 in settlement of a loss caused by the destruction by fire of the state normal school at Superior. It is evident from this that if the courts finally order the payment of this amount the insurance fund will show a deficit, either in case the state sustains a loss of the amount involved, which means that the premiums accredited to the insurance account in the past ten years have not accumulated a fund that protects the state against loss either by fire or tornado; in fact the state has lost a substantial sum of money by not insuring its property. If any considerable loss should occur at this time of the property of the counties, towns or villages now insured with the state it would be necessary to pay it out of the general fund, and this raises the constitutional question whether the insurance commissioner has a right to use money out of the general fund to pay losses occurring to county or municipal property.

The present condition of this fund after an experience of ten years demonstrates conclusively that state insurance on the basis on which it has been carried on is a failure. I believe this to be due to the fact that the value of the units insured bears too large a proportion to the total risks carried. Losses seem to occur frequently, and the amounts are uniformly large, which seems to make the project unsafe and therefore undesirable. I therefore recommend that the present system of state fire insurance be discontinued, and more reliable insurance be substituted therefor.

Highways

The state now is engaged in what is generally conceded to be an extravagant system of highway building. There is annually appropriated out of the general fund $1,200,000 for state aid, and $100,000 to the highway commission with which to carry out the purposes of the act. It must be borne in mind that in addition to this the towns and counties which ask for state aid must each furnish an equal sum to that provided by the state. If the appropriation for 1914 is used the total amount expended on state aid roads for that year would be $3,600,000, exclusive of the expense of the commission and whatever the towns and counties might have expended for supervision. This amount is generally regarded by the people as excessive and burdensome to the taxpayers. The people generally wish to continue to improve our highways, but there is a widespread feeling that we should be more conservative in the use of public funds for that purpose.

It would seem that the first step necessary in proceeding with this project is to organize, under the supervision of a competent highway engineer, a staff of practical road-builders, and this, it is generally conceded, is difficult to secure. Furthermore, there still is much doubt in the minds of practical men as to the best material to be used in the construction of highways. These facts, together with the opposition to high taxes, make it imperative to proceed on a more conservative basis.

The project presents an engineering feature which should be supplied by the state. There must be uniformity in the plan of building roads. Furthermore, state aided work should be carried on in accordance with the requirements of the state. This, however, does not make it necessary that the state should carry out the work of actual construction. It is generally conceded that county authorities being familiar with local labor conditions, are able to produce greater results for the money expended.

The condition of many state roads that but recently have been built proves conclusively that it is necessary to make better provision for their maintenance. It will be a waste of money to go on with these great expenditures for highways unless suitable arrangements are made to keep them in repair.

State Forestry

In 1903 the legislature created the department of forestry, and began the project of reforesting cutover timber lands in the northern part of the state. There is annually appropriated $35,000 to pay the salaries and carry out the provisions of the act. The legislature of 1911 made an appropriation of $250,000, distributed over a period of five years, for the purchase of additional lands, and the law further provides for an annual appropriation of $10,000 which can be expended by the state land commissioners for the purchase of lands that have reverted to counties for taxes and for other lands. This appropriation has been used each year since it was authorized. The total appropriation available to the forestry department is $95,000 per annum.

The state set aside all swamp lands that were left north of town 33 and the department has the use of the income from these lands derived from the sale of dead and down timber, from trespass and from sales of scattering and agricultural lands that are not suitable for forest reserve. The state forester reports that the income from this latter source has been large, the total being $435,476.13. Of this amount $381,706.88 has been expended or reinvested. He reports the following investments in lands :

Appropriations for lands expended $146,027.48

Income from swamp lands reinvested in other lands.. 272,781.22

Amount due on lands remaining unpaid (because of

question pending before supreme court) $130,817.35

There has been expended for improvements $121,522.60, making a total investment for the state of $671,148.65 since the organization of the department, exclusive of the cost of supervision and planting.

The state forester reports that approximately 1,000 acres of land have been replanted and that the average cost is $4.98 per acre, and that the output of the state's forest nurseries will be sufficient to plant about 1,000 acres per year, the cost of which will approximate $5 per acre. The validity of certain purchases of land for this department, and the question as to whether the state has the authority to place any of the school fund lands including lands set aside for school purposes out of the swamp land grant, university fund lands or agricultural college lands in the state forest reserve and the further question whether the using of revenue raised by present taxation to promote production or improvement for the benefit of future generations is using money for a public purpose within the meaning of the constitution, are now pending before the supreme court. Whether the state can proceed with the project of reforestation as now planned will depend upon the judgment of the court. Even though there were no legal obstruction I believe it to be a questionable project. .' ■

It can be urged to' be a moral obligation to future generations to replace this valuable natural resource with which our state was so abundantly supplied. However, it seems perfectly clear that that obligation rests upon the national government. The virgin forests of our state provided a timber supply for a large part of the country. It would have been morally wrong to attempt to confine its use to our own state. For the same reason it would be morally wrong to attempt to confine the use of the timber supply of the future to the people living within the state. Inasmuch as the product must always be available for all the people it is clearly the duty of the United States government to provide for the future supply. I believe it would be manifestly unfair to tax so small a political unit as the state of Wisconsin for the purpose of producing a resource that will in the end be for the benefit of the people at large.

As a business proposition it should not appeal to us. We have had sufficient experience to convince us that the annual cost is large and that the investment which has already reached a large sum will continue to grow rapidly in sums that will burden the taxpayers. There is a diversity of opinion among experts and practical men as to the time required to produce a tree that can be converted into merchantable timber. The estimates run from fifty to 100 years. It should not require much argument to convince anyone that a business proposition which cannot possibly pay any returns for a period of from fifty to 100 years is not attractive, and is, as a matter of fact, an unwise investment. Furthermore, the property is subject to destruction by fire or storm; therefore it is not exempt from the ordinary business risk.

The project is open to the further objection that it removes so large an acreage from the tax roll of sparsely settled counties in the northern part of our state as to make local taxation burdensome to the remaining property. It is open to the further objection that any large and contiguous tract of land in Wisconsin must necessarily contain a considerable amount of land that is suitable for agriculture. The time is coming, and judging by agricultural development for the past fifty years it is not far away, when every acre that will produce a crop will be demanded by the people. Everywhere in the country the forest tree has been obliged to yield before advancing civilization, and the northern pait of our state, which is rich in soil, will not be the exception. When that time comes your legislature will yield to the demands of the willing settler, and your forest reserves will be converted into farms, regardless of what it costs the state to plant the trees.

In view of these many objections I recommend that there be no further expansion of the policy of reforestation, and that agricultural lands in the forest reserve be thrown open to settlers, in lots not to exceed 160 acres for each applicant, and that further appropriations be cut down to what may be necessary to protect the property that the state now owns.

State University

The people of our state have been generous in their support of public education. While it is clearly their purpose to build up an educational system that will give equal facilities to all the people, it appears that in recent years a tendency has grown up under which higher education receives a rather disproportionate amount of the money available for educational purposes. This state of affairs has directed the attention of the people to our educational institutions and has subjected some of them, and particularly our state university, to severe criticism.

The people wish to maintain the university as a first class institution of learning; however, the amount of money needed to meet its demands is so large that the people have come to regard it as being unnecessarily extravagant and there is a general demand for a substantial reduction in the appropriations.

As a result of this growing feeling, the state board of public affairs ordered a survey, a report of which, covering a year of investigation, will soon be submitted to you. The discoveries of the investigators are many, and cannot be discussed in this message. No doubt there is sufficient information in the report to enable you to correct the faults of the institution, whatever they may be.

There are certain features of the report to which I desire to call your especial attention. I have been informed that the report will show that there is now sufficient room, if economically used, to meet the demands of all departments, and accommodate all the students in attendance. If this is true it should put an end to building operations until it can be demonstrated that additional buildings are absolutely necessary, and appropriations amounting to $650,000 which were made available on March 1, 1915, and any other appropriations for building purposes the contracts for which have not yet been approved, should be promptly repealed.