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fiscal year and an unobligated balance of $8,790,702 carried forward from the fiscal year 1936.

The total amount to be available for obligation in the fiscal year 1938 under this bill, $44,166,270, compared with the amount available for obligation in the fiscal year 1937, $48,690,702, shows a decrease of $4,524,432.

The following tabulation is a comparative statement by projects and classes of work of the estimated obligations for the fiscal year 1937, the budget recommendation for obligation for the fiscal year 1938, the amounts approved by the committee, and the increases or decreases between the committee's approvals and the budget estimates and the 1937 amounts:

Comparison of estimated obligations

Purpose

Increase Increase

(+) or de- (+) or de

Amounts crease (-), crease (-), Estimated Estimated of the esti- amount amounts obliga. obliga. mated 1938 approved approved

tions, tions, obligations by the com- by the comfiscal year

fiscal year approved mittee mittee 1937 1938 by the

compared compared committee with esti- with esti

matod 1937 mated 1938 obligations obligations

--$125, 428

- 216, 628 - 230, 532 -382, 450

-955, 038

220, 985

51, 903

-3, 134, 850 -3, 134, 850

General investigations projects:

General water-control investigations... $283, 148
Preliminary projects investigations:

$408, 626 $283, 198
Gilbertsville, Ky., dam..

656, 383 742, 439 Watts Bar, Tenn., dam.

742, 439 +$86, 056

216, 628 Coulter Sboals Dam, Tenn.

4,074

230, 532 Other tributary dam projects..

382, 450 Electricity research and development. 226, 567 216, 200 216, 200 -10, 367 General mapping and map records .. 452, 262 318, 500 318, 500 - 133, 762 Total general investigations.. 1, 622, 484 2, 515, 375 1, 560, 337

-62, 147 Structures and improvements: Wilson Dam and Reservoirs, additions and betterments.

45, 000 Norris Dam and Reservoir:

135, 000 135,000

+90,000 Original project

1, 403, 366 130, 399 Additions and betterments.

130, 399 -1, 272, 967 Wbeeler Dam and Reservoir:

73, 149

73, 149

-- 147,836 Original project..

2, 161, 823 137, 264 Additions and betterments..

137, 264-2, 024, 559

197, 485 Pickwick Landing, Hiwasseo, Gunters

51, 903

- 145, 582 ville, and Chickamauga, dams and reservoirs, continuation....

31, 854, 431 38, 197, 032 35, 062, 182 +3, 207, 751 Total, structures and improvements. 35, 883, 090 38, 724, 747 35, 589, 897 293, 193 Electrical program:

Electrical plant and equipment (trans

mission lines, substations, and distribution properties).

5, 375, 000 Electricity operating expenses and do

5, 100, 000 5, 100,000 -275,000 ductions..

1, 548, 639 1, 795, 302 1,795, 302 +246, 663 Total plant, equipment, and operations.

6, 923, 639 6, 895, 302 Less estimated electricity revenues.

6,895, 302 -28, 337

1,821, 000 3,775, 000 3,775, 000 +1,954, 000
Net chargeable to appropriations... 5, 102, 639 3, 120, 302 3, 120, 302 - 1, 982, 337
Fertilizer and soil conservation program.. 3,897, 402
National-defense program.

3, 506, 600 3, 445,000 -452, 402

319, 774 Regional studies, experiments, and dem

225, 734

200, 734 - 119, 010 onstrations.

273, 231 357, 242 Undistributed expenses.

200,000 -73, 231

1, 592, 082 50.000 50,000 -1, 542, 082 Grand total obligations..

48, 690, 702 48, 500,000 44, 166, 270 - 4, 524, 432 Method of financing estimated obligations: Direct appropriations...

1 48,690, 702 Contract authorization in addition to

43,000,000 40, 166, 270-8, 524, 432 direct appropriation..

5,500,000 4,000,000 +4.000.000 Grand total obligations... 1 48,690, 702 48,500,000 44, 166, 270-4,524, 432

-61, 600 - 25,000

- 157, 242

-4, 333, 730

-2, 833, 730

-- 1.500.000 -4, 333, 730

1 Consists of $39,900,000 appropriated for the fiscal year 1937 and $8,790,702 carried forward unobligated from the fiscal year 1936.

The committee has denied the increase of $125,428 for general water control investigations, leaving the amount at the current appropriation of $283,198.

An increase of $86,056 is allowed for continued investigation of the type and location of a dam on the lower Tennessee River in the vicinity of Gilbertsville, Ky., the amount for such purpose being increased from $656,383 of estimated obligation for the current year to $742,439 for the next fiscal year. In connection with this project the committee was urged to include provision in the bill of a small amount for commencement of construction of the project. The Gilbertsville Dam and Reservoir are presently estimated to cost $112,000,000. It is an important project in the program for unified control of the Tennessee River and its influence upon control of floods on the Ohio and the Mississippi. No Budget estimate was included for commencement of actual work and the committee was advised that the project would not be ready for construction for another year. The committee felt that inasmuch as there was contemplated to be expended for the fiscal year 1938 approximately $750,000 for continued investigation that it was not wise to include any funds for actual commencement until full and complete investigation of all phases had been completed. The preliminary data concerning the project indicate a dam 8,300 feet long with a maximum lock lift of 68 feet and a reservoir 184 miles long with a normal area of 148,000 acres.

The committee has also rejected requested Budget allocations of $216,628 and $230,532 for further investigation of dams on the upper Tennessee River at Watts Bar and Coulter Shoals, respectively, both in Tennessee, and has also disallowed the sum of $382,450 for preliminary investigations of possible sites for dams and reservoirs on the major tributaries of the Tennessee River--the French Broad, the Holston, and Little Tennessee—and upon the Duck and Elk Rivers, minor tributaries, in connection with the possibilities of navigation for the transportation of phosphate rock.

Under the heading of structure and improvements there is made available an allocation for obligation of $35,589,987, which is $293,193 less than the current year's estimated obligations and $3,134,850 less than the requested allocations for the next fiscal year. This latter sum consists of $1,500,000 of contract authorization and $1,634,850 of direct appropriation. An increase of $90,000 is indicated for additions and betterments at Wilson Dam. Decreases of considerable size are shown for the Norris and Wheeler Dam projects due to completion of construction.

Four major projects on the main river are now in process of construction-Guntersville Dam and Reservoir, Alabama; Hiwassee Dam and Reservoir, North Carolina; and Pickwick Landing Dam and Reservoir and Chickamauga Dam and Reservoir, both in Tennessee. The amount recommended for these four projects is $35,062,182 as against $31,854,431 for the current year, an increase of $3,207,751, and $3,134,850 less than the budgeted allocation for the fiscal year 1938. The decrease of $3,134,850 consists of $1,634,850 decrease in the direct appropriation and $1,500,000 reduction in the amount requested in the contract authorization for these four projects. By the end of the current fiscal year it is estimated that Pickwick Landing project will be 75 percent completed, the Guntersville project 33 percent completed, and the Hiwassee and Chickamauga projects each 25 percent completed.

For electrical plant and equipment, which comprises additional transmission lines, substations, and investment in distribution properties, the allocation is approved in the amount of $5,100,000, which is $275,000 less than the current figure. The lines and stations proposed to be established are to be selected from a list of desired extensions set forth in the hearings and totaling approximately $8,500,000.

The operating expenses in connection with sale of electricity are expected to increase from $1,548,639 to $1,795,302, or by $246,663. As against this increase in expense, revenues from the sale of electricity are expected to increase from $1,821,000 for 1937 to $3,775,000, or in the sum of $1,954,000. This difference between estimated operating expense and estimated revenue produces an excess of revenue for 1938 of $1,979,698 which will be available to apply against the estimated cost of the navigation, flood control, and hydroelectric program for 1938 and has been taken into consideration in framing the 1938 Budget request for appropriations.

The committee has included $3,445,000 for the fertilizer and soil conservation program which is the amount of suggested budget allocation less $61,600. This reduction is effected by reducing from $138,600 to $75,000, the sum suggested for research and development in farm equipment. The committee believes that too large a sum was proposed to be expended for this type of investigation in proportion to the other projects of the Authority.

The amount for the national defense program is approved in the sum of $200,734, which is $119,040 less than the current allotment and $25,000 under the budget figure. In this instance the proposed allotment for mineral investigations is reduced from $50,000 to $25,000.

The entire allocation for regional studies, experiments, and demonstrations is decreased from the Budget figure of $357,242 to $200,000, a cut of $157,242 under the estimates and $73,231 under the current allotment. The committee has made this decrease in the belief that while most of these investigations are desirable in connection with the social aspects of the development of the valley and the improvement of the condition of a segment of its population, they may proceed at a lower financial level for the entire group. If special emphasis needs to be stressed for some particular phase of the work the Board may decide to drop some investigation entirely and concentrate the funds on some more important aspect.

The allocation for undistributed expense is set at the Budget figure of $50,000 which is a decrease of $1,542,082 under the current amount.

In the decrease of $2,833,730 in the direct appropriation and $1,500,000 in the contract authorization the committee does not indicate any hostility to the purposes and intent of the Tennessee Valley Authority Act. They do believe that the work can be carried on in the coming fiscal year with the funds allowed and with suitable progress in the several lines of endeavor by the exercise of proper economy and curtailment of unnecessary expenditure. In making this decrease the committee has also in mind that there was an unallotted balance of approximately $500,000 in the Authority's funds as of a recent date and there is also a fund of $1,000,000 which the Authority has reserved as a continuing fund derived from revenues for emergency expenses and to insure continuous operation.

In indicating approval of various allocations as submitted in connection with the 1938 estimates, the committee wishes it understood that should the Authority feel that it is necessary to divert some of these amounts to the construction of Guntersville, Pickwick Landing, Hiwassee, and Chickamauga projects there is that flexibility in the funds.

If the amounts made available in this bill are approved, there will have been available to the Authority for obligation, from appropriations and revenues, a total to June 30, 1938, of approximately $196,000,000. The program of the Authority, as outlined to the committee at the last session, indicated a total cost of all projects and development of $479,000,000. The total cost as revised at the present session is $520,000,000.

BUREAU OF INTERNAL REVENUE

Titles IV and VII of the Revenue Act of 1936 authorized the consideration of claiins and the refunding of processing and related taxes collected under the Agricultural Adjustment Act. Title IV claims for refund are claims filed by exporters and by persons delivering to charitable institutions and by certain holders of floor stocks as of January 6, 1936, or the date that the processing tax was held invalid. Title VII claims for refund are claims filed for the refund of floor stocks taxes, compensating taxes, and processing taxes. The title provides that taxes shall be refunded only to the extent that the burden of the tax was borne by the claimant and not shifted to others.

The date for filing claims under title IV expired on December 31, 1936, and the filing date for title VII claims closes on June 30, 1937. No interest is allowable on title IV claims but title VII claims, when approved, bear interest at 6 percent from the date of payment of the tax to the date the claim is scheduled for allowance.

The Revenue Act of 1936 made available to the Bureau of Internal Revenue from funds transferred from the Department of Agriculture, a total of $33,000,000 for use up to June 30, 1937, in the payment of administrative expenses only in the case of title VII claims and for both administrative expenses and the making of refunds in the case of title IV claims. The sum of $33,000,000 was divided—$10,500,000 for administrative expenses under both titles and $22,500,000 for the making of refunds under title IV.

The Budget estimate considered by the committee proposed to make available for the payment of administrative expenses in the fiscal year 1938, for both classes of claims, the amount of the unexpended balance estimated to exist in the $10,500,000 allocation; namely, $6,000,000. With this fund the Bureau estimates that it will need to employ 1,078 persons in the District of Columbia and 1,204 in the field, a total of 2,282, and make provision for necessary traveling and other expenses of the organization to handle these claims. The committee recommends the reappropriation of this balance.

The unexpended balance estimated to exist on June 30, 1937, in the $22,500,000 allocated for payment of title IV refunds is $12,000,000. This amount was proposed to be reappropriated and an additional sum of $30,000,000 requested to refund both title IV and title VII claims, a total of $42,000,000. The committee recommends the reappropriation of the $12,000,000, but has cut the $30,000,000 to $15,000,000, making a total recommended to be available for these refunds of $27,000,000.

Under the provisions of title IV approximately 36,000 claims involving $38,000,000 have been filed. Of these, approximately 6,000 involving $600,000 have been allowed. The Bureau estimates that 12,000 more of these claims will be adjusted by June 30, 1937, leaving 18,000 claims involving $33,000,000 to be adjusted in the fiscal year 1938. On the basis of past experience the Bureau estimates that $13,000,000 of the $33,000,000 remaining for adjudication in the fiscal year 1938 will be rejected, leaving claims in the amount of $20,000,000 estimated to be paid in that year.

The total collected on floor stocks and processing taxes under the Agricultural Adjustment Act was approximately $963,000,000. The Department estimates that, in view of the inability of many claimants to meet the burden of proof that they did not pass on the tax, not more than $96,000,000 will need to be refunded. The Bureau estimates that there are over 800,000 potential claimants under title VII, of which approximately 75,000 paid processing taxes, 700,000 paid floor stocks taxes, and 25,000 paid compensating taxes. The number of claims estimated to be filed before the closing date, a pure estimate, is 100,000. The amount estimated for payment of these claims in the fiscal year 1938 is $22,000,000. A number of factors operate to make indeterminate and very difficult any sort of a guess as to what refunds may come up for approval in that fiscal year. The constitutionality of the procedure for the refunds under title VII is in litigation in the Supreme Court; in some classes of cases the Commissioner has 18 months in which to act upon a claim and after that period the claimant has the right to seek redress in the Court of Claims or a United States district court, and in the processing tax claims the Commissioner has 3 years in which to adjust the claim and after the end of that period the claimant may seek redress from the Processing Tax Board of Review specially created to handle these cases.

In making available the total of $27,000,000 the committee has in mind that it is altogether probable that $20,000,000 of title IV claims may be adjudicated in the fiscal year 1938 which would leave $7,000,000 for title VII cases. However, with a total of $27,000,000 there should be more than enough to carry operations under both titles until early in the coming session when there will be available more definite and specific information as to the number, status, and likely requirements for refunds in the instance of the title VII cases.

The undertaking under title VII is realized as a laborious and difficult task involving a vast amount of detail and careful consideration of the involved facts and procedure which must of necessity surround many of the larger claims that may be filed.

ADJUSTED COMPENSATION PAYMENTS

The committee has approved an estimate of $1,682,000 for expenses of the Treasury Department for the remainder of the current fiscal year and in the coming year for expenses of the Public Debt Service, the Treasurer's Office, the Secret Service Division, and the Post Office Department in connection with the administration of the Adjusted

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