This chart shows the percentage changes in assessed valuations of the four major

The foregoing figures were taken from official records of the State Board of Equalization and are available to the public.

Tais chart shows the changes in assessed valuations of the four major railroads

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The foregoing figures were taken from official records of the State Board of Equalization and are available to the public.

Notra Bona:

It should be pointed out that part of the reduction given to the Chicago and North Western Railroad was due to the fact that said railroad abandoned some 84.03 miles of track, and the Court should take judicial notice that this railroad is now renting CB&Q track for their needs in this area (see 13th biennial reports of the State Board of Equalization, 1943-1944)

STATEMENT OF THE DEPARTMENT OF REVENUE, STATE OF SOUTH DAKOTA

BACKGROUND

In 1957 South Dakota State Legislature enacted a law whereby real estate and personal property would be assessed at 60 percent of its market value rather than, as formerly at full and true value or 100 percent. This procedure has been followed by the majority of the counties and has been retained by them with a reasonable degree of success. Inasmuch as the ad valorem tax is entirely delegated for the support of primary and secondary education and the support of local government, the State government of South Dakota does not rely on the ad valorem tax in any way for the support of State government.

Although the State government is not direct recipient of the ad valorem tax, yet it is the State department of revenue that has the responsibility of assessment and apportionment of railroad and public utilities valuations.

OBJECTION

Although the ratio of assessment of all property in South Dakota has remained at a fairly static condition from 1955 to 1965, the actual gain in dollars of taxable value has been an increase of 72.87 percent. In spite of this increase our ratio of assessments to true and full value has remained about the same due to creeping inflationary economy. Railroad company assessments, however, have been reduced by 35.34 percent during this same period. This has resulted in a reduction of the railroad companies valuations for 1955 of $35,077,035 to $22,679,714 in 1965 of a decrease of 35.34 percent. This decrease of 35.34 percent on railroads, as compared to the increase on all other property of 72.87 percent, clearly indicated that the State of South Dakota has recognized the problem of equity in arriving at the taxable valunations pertaining to the railroad problem.

In South Dakota once the initial assessments on railroads are made then the State board of equalization reviews these valuations and then proceeds to equalize these assessments to the end that all railroads are assessed equitably one to another. The State board of equalization has established very generous factors of obsolescence to compensate for any disparities.

This proves, beyond question, that the alleged discrimination against railroads as far as South Dakota assessment procedure is concerned, is unfounded and untrue.

Any injunctive procedure, provided for H.R. 4972, in the Federal courts would not accomplish any more beneficial results for the railroads than is now accomplished by a careful yearly analysis each year as made by the department of revenue and when deemed necessary by the State courts.

Knowing how greatly there is an overcrowded docket in the caseload of Federal courts, it could be a number of years before cases could be decided. This would mean that the anticipated revenue in local taxing districts could be impounded for such long duration, and that it could result in a chaotic financial situation for all districts affected.

A decision from the State Board of equalization of South Dakota can be taken and tried as a single case to the circuit court. The decision on a single county court case could be applicable to all counties in the State without the necessity of further appeal to all other counties.

A decision by the circuit court may then be followed by an appeal to the South Dakota Supreme Court.

CONCLUSION

In conclusion, it is our belief that the discrimination in assessment of common carriers is grossly exaggerated and that it stems from the selfish interests of certain railroad companies who are not honest enough to recognize the true effort which the several States have made and are making to solve this very enormous problem of equity.

STATEMENT OF EUGENE W. Ward, GENERAL COUNSEL, TENNESSEE PUBLIC SERVICE COMMISSION

Chairman Staggers and honorable members of the Committee on Interstate and Foreign Commerce, I appreciate this opportunity to present my testimony to this committee.

I am Eugene W. Ward, general counsel for the Tennessee Public Service Commission, Cordell Hull Building, Nashville, Tenn. My testimony is presented in opposition to H.R. 4972 and the 12 other bills dealing with discriminatory property tax assessments against common carriers.

The Tennessee Public Service Commission is the agency in the State of Tennessee designated by the legislature with the duty to assess for ad valorem tax purposes the property of the various railroads, motor carriers and public utilities.

I can say to you without the least hestitation or equivocation that the Tennessee Public Service Commission does not now, nor has it ever engaged in discriminatory practices in assessing the property of any motor carrier, railroad, or public utility subject to the jurisdiction of that commission.

Tennessee Code Annotated, section 67-901, charges the Public Service Commission with the duty of assessing the property of all the public utilities in odd years at its actual cash value. The commission distributes these assessments to the cities, counties and taxing district where they apply their tax rate and collect the taxes.

The commission assesses the interstate common carriers by the same formula and by the same criteria that it assesses the property of intrastate common carriers. The commission has no jurisdiction over the assessment of the property of any other citizens and residents of the State other than the public utilities, railroads, and motor carriers.

It has never been alleged that this commission has taxed differently the property of intrastate and interstate carriers.

The only problem this commission has had with interstate carriers are those carriers that do not maintain any local property in Tennessee, but who use the highways of the State of Tennessee for the sole purpose of pickup and delivery in the State or traverse the State, and these interstate carriers maintain that they do not have a situs in the State. This matter has been litigated a number of times in the courts of the State of Tennessee, and the irregular route interstate carriers have been found to have a situs in the State of Tennessee for ad valorem tax purposes. I refer you to the cases of Jack Cole v. Buford Ellington, Howard Soher v. Frank Clement and E. & L. Transport v. Ellington.

In the recent case of Burnham Van Lines, v. Pentecost, the Supreme Court of the United States on November 15, 1965, dismissed an appeal by the petitioners from the Supreme Court of Tennessee for the want of a substantial Federal question. This case held that the taxing for ad valorem tax purposes of the property of these interstate carriers and the distribution to the various cities, counties, and special taxing dstricts was not a burden on interstate commerce. H.R. 4972 proposes an amendment to the Interstate Commerce Act, to permit the U.S. district court to assume jurisdiction upon a complaint that an interstate common carrier is being discriminated against by the assessment of a property tax at a value which bears a higher ratio to the true market value of such property than the assessed value of all other property in the taxing district subject to the same property tax levy bears to the true market value of all such property.

These interstate common carriers already have this remedy of applying to the State courts or the Federal courts whenever adequate remedy is not readily available in the State courts when they feel they are being discriminated against by being taxed at a higher value than local citizens.

In the case of Southern Railway Co. v. Clement, chancery court of Davidson County, Tenn., the chancellor held that the assessment of local tax assessors in Hawkins and Loudon Counties assessing property of local citizens at less than actual cash value was illegal and void. That there was no provision for assessment of less than 100 percent of value.

Also the case of Louisville & Nashville Railroad Co. v. Public Service Commission and State Board of Equalization, civil action No. 4310, the U.S. District Court for the Middle District of Tennessee held on February 11, 1966, that the assessment by the Tennessee Public Service Commission of the property of the Louisville & Nashville Railroad Co. at actual cash value was illegal and void since other private property in the cities and counties through which the railroad operated was assessed at approximately 30 percent of value. The Tennessee Public Service Commission was made a defendant in that case so it could be enjoined from distributing the assessments to the various cities and counties. There was no allegation that the commission assessed the Louisville & Nashville in excess of 100 percent; in fact, the commission alleged that the assessment for the current biennium amounted to approximately 65 to 70 percent. The Federal court held even this amounted to discrimination.

The Louisville & Nashville did not even have to argue that the assessments were a burden on interstate commerce. The only issue determining whether the Federal court could assume jurisdiction or not was whether the railroad had "an adequate remedy in State courts." The Federal court found there was no such remedy in Tennessee at that time.

Since then the chancellor of Davidson County chancery court issued his ruling in the Southern Railroad case.

These cases are a step in the right direction, and it is my opinion that the situation is being corrected and is being corrected as expeditiously as if these bills were passed.

On February 24, 1966, the parties entered into an agreement whereby the Louisville & Nashville Railroad Co. would pay, under protest, its ad valorem taxes for 1965 on the basis of 85 percent of the final assessment of the State board of equalization.

A number of similar cases have been filed in other States with similar results (Kentucky and Florida).

The interstate common carriers already have an adequate and speedy remedy available to them without the adoption of H.R. 4972 and other similar bills. There is no burden in the State of Tennessee on carriers engaged in interstate commerce, but if these bills were adopted it would most certainly be a burden on the Tennessee Public Service Commission and the State board of equalization. In other words these carriers would be holding this commission responsible for the conduct of the local tax assessors even though the commission has taxed the properties of all carriers under its jurisdiction at actual cash value. To require the commission to take into consideration the tax ratio and tax rates of approximately 425 cities, counties, and special taxing districts in the State, in arriving at the amount of the tax to be distributed to these taxing bodies, would require employment of triple the personnel employed by the tax department.

Thank you for the opportunity of expressing the views of the Tennessee Public Service Commission.

STATEMENT OF NORTH DAKOTA TAX COMMISSIONER LLOYD OMDAHL, SECRETARY, STATE BOARD OF EQUALIZATION, STATE CAPITOL, BISMARCK, N. DAK.

On behalf of the political subdivisions of the State of North Dakota, I wish to express my objection to passage of H.R. 4972 as it appears before your committee.

In 1963, the North Dakota Board of Equalization, which has the responsibility for assessing public utility properties in the State, recognized that North Dakota had been leving discriminatory and unconstitutional assessments against the utilities and railroads. This became very apparent to the board when a series of court decisions were issued upholding the public utilities in cases relating to unfair assessements in other States.

The State board initiated a program in 1963 that would gradually bring all properties in the State to a common level. As a part of that program, utility assessments have been gradually adjusted.

On February 17 and 18 of this year, we held a series of conferences with the various utilities-including common carriers to discuss the progress of this equalization program. There was unanimous agreement that the equalization program in North Dakota would be reasonable and acceptable if continued to its stated conclusion.