Change and the impact of change dictate the contents of this Report. Within the past decade, tremendous improvements and alterations have affected all phases of the Commonwealth's economy, programs of services for the public provided by State government, and the tax structure utilized to finance such programs. Population growth, the shift of population to urban centers, inflation and expanded government activity contribute to a constant pressure on the State's revenue resources.

It has been the task of this Commission to examine these factors and to review the present status of the State's revenue resources to determine basically (1) whether this pattern of· change and: pressure has rendered present resources inadequate to meet the demands upon them and (2) whether the present revenue and tax structure as it has developed under pressure is equitable in nature. These are two fundamental questions among the many assigned to this Commission by the General Assembly in 1968 when it created this Commission by adopting Senate Joint Resolution No. 15.

In examining the fundamental issue raised by this Resolution concerning the adequacy and fairness of our present revenue structure, the Commission was particularly aware of the enactment of the general sales and ·use tax effective September 1, 1966 at the rates of two percent for the State tax and one percent for the local option tax and the increase in the State rate to three percent effective July 1, 1968. Certainly, a prime consideration in any evaluation of the revenue structure must be the impact of this major new revenue source.

While the 1966 and 1968 Sessions of the General Assembly initiated major changes in out revenue picture through adoption of and increases in the sales tax, this action did not mean an end to change. The General Assembly in 1969 again initiated a major alteration in our revenue structure through proposed amendments to our ·State Constitution's provisions on borrowing for capital outlay purposes. The proposed amendments which concern general obligation and revenue bond financing have yet to be finally adopted and must be agreed to by the next General Assembly and approved by the people. While the proposed provisions on general obligation bond financing definitely do not presage a shift to the financing of all capital outlay projects through borrowing, it is anticipated that approval of these proposed amendments would mean that the public has permitted the State government to utilize another new revenue source for the purpose of financing major capital outlay projects of Statewide importance. The impact of the $81 million bond issue authorized this past Session and of the proposed Constitutional amendments on borrowing must be examined along with existing sources such as the sales and income taxes before a full appreciation and analysis of the State's revenue structure can be properly developed and prepared.