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Washington, D.C. The joint subcommittee met at 10 a. m., pursuant to call, in the Senate District Committee room, Capitol, Washington, D. C., Senator Harry P. Cain (chairman of the joint subcommittee) presiding.

Present: Senators Cain, McGrath; Representatives Bates (cochairman of the joint subcommittee), O'Hara, Talle, Smith, and Klein.

Present also: James R. Kirkland, counsel, Senate Committee on the District of Columbia ; Parker L. Jackson, special adviser to the House Committee on the District of Columbia.

Senator Cain. The committee will please come to order. May I ask for your attention, please.

I think that everyone here knows that the two subcommittees, Subcommittees on Fiscal Affairs, of the District of Columbia Committees of the House and Senate, are jointly gathered for the single purpose of being of assistance to the Congress and to the District of Columbia in a full and comprehensive and helpful consideration of the fiscal problems and considerations within the District itself.

This, so far as I know, is the first time, at least in some years, that counterpart committees of the House and Senate have endeavored to cooperate from the very outset of any extended hearing such as this is likely to be.

As one who represents the Senate, I am very grateful for the willingness of Mr. George Bates, who acts as chairman of the Subcommittee on Fiscal Affairs on the House side, to join with the Senate, and the Senate, and I think I speak for its Members, are very grateful to have them with us.

I want it known to those who are present who the Senators and who the Congressmen are who are sitting at this table. Other duties will not permit

all of them to come, but the gentleman on my right is Mr. George J. Bates, the Chairman of the House Subcommittee on Fiscal Affairs of the District of Columbia Committee; his associates are Congressmen Joseph P. O'Hara, Henry 0. Talle, Howard W. Smith, and Mr. Arthur G. Klein. The Senate is represented by myself, Mr. Cain, acting as chairman for the Subcommittee of Fiscal Affairs of the Committee on the District of Columbia ; Senator Ralph E. Flanders, who is not present for the reason that he is out of town; and Mr. J. Howard McGrath, the Senator from Rhode Island, who is expected very soon.

It is our intention this morning to proceed until 10 minutes to 12, at which time we will recess until 2 o'clock, following which we shall reconvene in this room to continue our considerations until 4:30, at which time we will adjourn for the present, announcing at that time, I think, the time and place of our next gathering.

It is the intention of both the House and Senate to encourage a full presentation of what they have in mind, by the three Commissioners of the District of Columbia, together with their technicians and assistants.

I would very much like to think that during the course of the presentations, particularly of the Commissioners, that there would be no unnecessary interruptions of those presentations. It will better serve our joint and individual purposes to listen thoughtfully to what it is they have in mind.

The President of the Board of Commissioners, Commissioner John Russell Young, is encouraged, if he will, to take the chair.

Commissioner Young. Thank you.

Senator Cain. Take the chair, sir, at the head of the table, and proceed as you think best for the benefit of those who are here to listen to your problems.



Commissioner Young. Thank you, Mr. Chairman.

It will be my purpose to summarize and not go into details. I want to say that the Commissioners for whom I am speaking, are very happy to have this opportunity to appear before your joint meeting: and we have with us our principal department heads, to discuss for your benefit the operations of the government of the Capital City, and to explain the need for a new and higher revenue to support a budget that has doubled in the past 10 years in amount.

We are extremely fortunate that the cochairmen of this joint meeting have had personal experience in operating a city government and, therefore, will more readily understand some of the problems confronting us.

First of all, virtually every other city in the United States has the same problem that our principal one is, finances. We can point out that while the local revenues have jumped nearly 100 percent, the Federal Government is paying proportionately less now than it was 10 years ago for its share in running the national Capital City.

Besides this, our break-down will show that despite the increase in our budget over the years our city is far behind in furnishing the vital needs of our citizens and at the same time adding to the beauty and charm of the Capital City.

The fiscal relationship between the District of Columbia and the Federal Government is a long and complex story. Briefly, though, it can be shown easily that in 10 years the Federal Government has increased its holdings of tax-exempt property by more than 18 percent in our city during the past 10 years, and taking into account what the District loses in taxes from all this land owned by the Federal Government as well as the cost of the various services, we furnish to the Federal Government, and paid for by local taxpayers, an itemized break-down will show something like $14,000,000 last year. This fact last year.


and figure, gentlemen, is taken from a statement made to the Congress by a member of the House subcommittee on District appropriations

The government of the District of Columbia is a creature of the Congress. It partakes of the characteristics of a city, a county, and State, and renders services on that basis to the people living here.

The measure of such service is determined by the number of people living here. Even at the time of the last official census in 1940, the population of our city was on an upward trend, from 660,000 at that time, the population increasing by leaps and bounds, to an estimated 938.000 on VJ-day.

This, of course, required proportionate increases in the services, with consequent increased costs.

During the war years, many services were necessarily curtailed, and the cost somewhat reduced, therefor. However, with the resumption of insistent public demand for full-scale municipal service, following the cessation of hostilities, it early became clear to the Commissioners that a review of the tax structure of the District of Columbia should be undertaken, and, therefore, in May 1945, they appointed a committee of District officials to make such a review, and to submit recommendations for such changes as might be required to enable the District of Columbia to meet the increased costs occasioned both by the mounting population and the higher costs for personnel and materials.

The committee I just mentioned was made up of the Corporation Counsel as chairman, the Assistant Engineer Commissioner, the Assessor, the Budget Officer, the Assistant Superintendent of Schools, the Auditor, and the Director of Highways.

After this committee had made preliminary studies of the subject, and before any final conclusions were arrived at, the Commissioners felt that it was desirable to secure what we looked upon as a crosssection of public opinion, and accordingly, appointed a number of representative citizens to serve on the committee also.

It might interest you to know the personnel of that augmented committee. They were Ben M. McKelway, president of the Board of Trade at that time, and editor of the Evening Star; Claude W. Turner, vice president of the Merchants and Manufacturers Association; Bruce Baird, president of the Bankers Association; Wilbur S. Finch, president of the Federation of Citizens Association; Woolsey W. Hall, president of the Federation of Civic Associations; Fred S. Walker, publisher of the Trades Unionist; Edward Carr, president of the Home Builders Association; J. M. Heiser, president of the Federation of Businessmen's Associations; James C. Wilkes, Bar Association; and Robert V. Fleming, president of the Riggs National Bank.

Now, the full committee gave very careful consideration to the sources from which additional revenue might be obtained. They studied almost every conceivable method of taxation, and selected those they believed would produce the greatest amount of revenue, distributed in the most equitable manner.

After this committee had made its report, but before any action was taken, the Commissioners held a public hearing to which were invited all the interested citizens, as well as representatives of various civic and trade organizations, all of whom were given an opportunity to express their opinions on the tax program.

It would, of course, be putting it mildly to say that the revenueraising recommendations of the commissioner's tax committee did not meet with the entire approval of all in attendance at that meeting.

The 1948 budget for our city, amounting to $85,082,500, is now pending before the Congress. The revenues of the District of Columbia

under existing law fall short of meeting the charges in that budget by some $17,000,000.

Our budget officer, Mr. Walter Fowler, will explain the financial details of the budget, and our over-all fiscal condition, with special emphasis as to the reason for the constantly increasing expenditures with which the District of Columbia has been faced during the last 10 years.

The financial plight of the District is largely due to the failure of the Federal Government to recognize its full duty, and what it owes the Capital of the Nation. When the present system of government for the District was created in 1878, Congress, in section 3 of the organic act, provided that it would appropriate moneys to pay for 50 percent of the expenses of the District. This ratio was preserved

, until the appropriation act for the fiscal year 1922, wherein it was provided that the United States should pay 40 percent of the expenses of the District, and the District itself paying the remaining 60 percent.

This legislation was temporary, being only for 1 year; but in the appropriation act for the following year, it was made permanent. However, in the appropriation act for 1925, Congress, disregarding the mandate of the statute, appropriated for the expenses of the District a lump sum of $9,000,000 which was approximately 29 percent of the total expenditures.

The annual lump-sum payment continued to be reduced until the fiscal year 1937, when it reached the low ebb of $5,000,000, where it remained until the fiscal year 1940, and then, the $5,000,000 for each of these years amounted to over 12 percent of the annual expenditures.

For the fiscal year 1940, the lump-sum payment was increased to $6,000,000, and in the present year it was increased to $8,000,000. The sum of $8,000,000 represents only a trifle over 8 percent of the estimated budget for the next year.

The Commissioners wish to impress upon the committee the duty the United States owes to the District, as stated in S. 215, which embraces what is known as the O'Mahoney formula, and will correct to some extent the existing inequity, and the Commissioners trust that this bill will be given favorable consideration.

Now, gentlemen, Commissioner Mason is here, but I do not think he can add anything, particularly to this, but unless you have an agenda to follow, Mr. Chairman, I would suggest for details that you call on Mr. Fowler.

Senator Cain. Thank you. We have an agenda, Commissioner, on which his name follows yours.

Let me ask one question, which may not be very important. Were you here at the time when the Federal Government appears not to have been fulfilling what appeared to be its obligation to the District, financialwise?

Commissioner YOUNG. Was I Commissioner at the time?


Senator Cain. Not necessarily Commissioner, but were you a part of the conversations that took place at that time?

Commissioner Young. I do not quite get that question, sir.

Senator Cain. Well, apparently the Federal Government was guaranteeing to the District so many dollars per annum, but they did not produce the dollars, and I am just curious to know why the Federal Government was so far behind in its promises and its promised cash contributions to the District.

Commissioner YOUNG. Well, that is rather a long story. I was not in office then; I was a newspaperman myself, but I recall-it was due to the then chairman of the Subcommittee on Appropriations for the District of Columbia, and also the chairman of the Senate District Committee. I think they had a little petty dislike for the city; I am not positive, but it is a matter of record. It was before my time, and I only have a faint recollection of it.

Senator Cain. It was a rather important dislike, if your contention is correct.

Commissioner YOUNG. Thank you, sir.

Mr. Bates. Commissioner, the reason back of this discussion relative to the over-all situation confronting the District of Columbia is perhaps the same as you, in your own words at the outset, stated, that it is a condition that is confronting all the communities in the United States; it is the result of postwar conditions due to many factors, and we are just trying to get into all the basic facts in order to determine just what the cause has been for this doubling up of the expenses of running this District, and the same thing may be said for many other communities in the country during the last 10-year period, and particularly, this year, when we are asked to increase the expenditures, say to $95,000,000 against expenditures of only a year ago of $72,000,000, or, in other words, we have an increase in 2 years of $23,000,000, which in itself is a substantial increase, and I think the people of the District, through us, in whom the responsibility lies, will expect us to go into the facts to find out just wherein the difficulty lies, in the administration of this District, and which results in this tremendous increase of the costs taking place.

We have no desire to embarrass anybody in the District; we do expect to get the facts, and from those in authority we feel that they should give us the facts.

But it is our responsibility to authorize the raising of taxes in this District; right or wrong, it is here; it is in our hands, and with that responsibility of authorizing the levying of more taxes ought to go the responsibility of investigating where the money is now going; how well it is being spent, whether or not the District officials are on the job; they know what is going on, and they can readily answer questions that members of this committee can ask in regard to the administration of the affairs of the District.

In your discussion, you laid particular emphasis on the Federal contribution. Whether it should be increased or not, it is a minute part, that increase, of what you actually need, in addition to what you now already have to meet the growing expenses of the government that you say that you do need, and that subject matter of Federal appropriation or Federal payment, with other considerations, ought to be thoroughly

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