It is needless for me to say that to properly administer the
fiscal affairs of the State, an operating surplus of a million and
a half dollars is necessary. Therefore, for the State to be in a
proper operating position, the Treasury will be in need of gen-
eral funds in the amount of $3,729,000. To be able to promptly
transact the business of the State this sum should be available
from time to time, beginning not later than February 1st, 1935.

I strongly advocate some method of indirect taxation to meet
this situation and avoid the necessity of increasing direct prop-
erty tax, and such taxes as State sales tax, gallonage tax x>n beer
and probably an inheritance tax on estates should be given seri-
ous consideration. I hesitate to recommend a definite method of
raising taxes until the subject has been thoroughly discussed with
the Executive Department of the State.

I cannot too strongly urge immediate action by the General
Assembly early in the session.

This report will further contain a revised statement of the
estimate of receipts during the fiscal year ending September
30th, 1935, as shown by Statement "P" herein.

I call your attention to statements herein contained referring
to the operations of the License Bureau and the operations of
the gasoline tax collections, both handled through this depart-
ment.

Respectfully submitted,

WM. S. GORDY, JR.

Comptroller.