Hearings

The committee, in its original report, stated:

The methods recommended will in the aggregate produce a greater return, we trust, than will be necessary, but we included them all in our recommendations so that the Commissioners may have an opportunity for selection.

The Commissioners subsequently held public hearings upon these proposals, but they made no selection, as suggested by the committee. They simply sent them all up here to you gentlemen and cast upon you the obligation of making the selection.

As a matter of fact, when they sent these bills up, they sent up appropriation estimates which not only would use all of the money which might be raised by the enactment of all of the bills, but estimates which would make it necessary for you to find other sources of revenue. It is a matter of relief to the residents of the community that you gentlemen are giving so much of your time to making the selections which the Commissioners decline to make.

I do not believe that it has ever been the purpose of Congress to be "cheap" with the National Capital. I do not believe that purpose is in your minds now. But to enact these bills, adding to nuisance taxes now in effect, and creating additional nuisance taxes, would have that result.

I point out to you that there has been a steady decline in the share which the Federal Government, under the organic act, pays toward the upkeep of the District, and the maintenance and development of the National Capital. In doing so, I am not whining; I simply state the fact. Whereas, under the Organic Act of 1878 the Federal Government acknowledged an obligation of 50 percent of all the costs of the city, it has been paying less than 10 percent.

If you gentlemen believe that to be the proper policy of the Federal Government toward its Capital, it is unquestionably within your right to continue along those lines. I do not believe that the people of the country feel that way about this beautiful city which has been created for them along the banks of the Potomac.

To adopt the revenue program which you are now considering can nave only the effect of driving people who naturally would live in the District into nearby areas, and the additional effect of preventing people from your districts from coming here to enjoy the beauties created here in large measure because this is the National Capital.

Let me mention especially the proposal to double the tax on alcoholic beverages in which I am particularly interested. It is my belief that many people, when they come to the District, want to enjoy, without paying exorbitant prices, a moderate consumption of the "cup that cheers."

It is true that many of us do not want to drink at all; I do not do so myself. But to double the tax on such drinks locally, unquestionably would detract in some measure from the pleasure which many get from their visits here, whether those visits are made purely for pleasure or for a combination of pleasure and business.

The same thing applies to the proposed sales tax which is designed to take $9,000,000 annually from the pockets of our residents and our visitors. The cigarette tax of $800,000, the amusement tax of another $1,000,000, follow the same line of thinking, namely, to soak the visitor.

I do not believe we are permitted to have residence in the National Capital with that objective in view.

The local citizen can readily avoid most, if not all, of the taxes proposed. He will do so by continuing the unfortunate trend of recent years of moving into neighboring areas where such taxes arę not levied. We will, therefore, create instead of the beautiful city which is our objective, a slum area existing around the beautiful buildings which the National Government has built or is building in this specially designated area.

I ask you to believe that I speak in all sincerity when I plead with you not to foster this growing condition.

The fact that my personal business would be adversely affected may admittedly color my views as to the alcoholic beverage tax increase; but I feel the same about the other measures.

I think it would be unfair for me to come here and attack this revenue program without leaving with you gentlemen some suggestions as to how the condition may be met. I realize that the suggestion which I shall make may already have occurred to you or may have been submitted by others. It seems to me to be readily apparent.

In the first place, I do not believe that an increase of approximately $25,000,000 over 1947 in the expenditures for the District is justified. I realize that costs have gone up because they have gone up in my own business, and in my own living.

Nevertheless, this seems to me to be an exorbitant increase in the cost of our local government. Particularly is this so, when we realize that both of the political parties are committed, and are striving, and will probably succeed, in curtailing the cost of the National Government by some four or five billion dollars. Certainly, it does not seem consistent with the decrease in Federal expenditures to make this tremendous increase in the local budget.

Of course, that is not a matter which comes in detail before this committee, but certainly it could well be recommended by your committee to the joint subcommittee of the Appropriations Committee on the District budget.

I do not believe that the burden for specifying where these economies can be found in the local government should rest upon the citizens. It is the duty and obligation of the officials of our city government to find where these curtailments of expenditures can best be made.

In addition to the curtailments of local expenditures, it is my firm belief that a broad view should be taken of the share which the Federal Government can properly bear of the cost of the operation of the National Capital.

When we consider that only a few short years ago it was provided by substantive law that the division of costs should be on a basis of 60 percent to be met by the local revenues, and 40 percent as being a proper share for the Federal Government to pay, it cannot be accepted without study that the Federal Government should now pay less than 10 percent as its share of the cost of its Capital.

Much depends upon the view which you gentlemen take of our National Capital. The entire burden can be left, if you wish, to the

local citizens. If that is your desire, we will have a Capital City of which not much can be said in praise.

If, on the other hand, it is your desire that we have here a city worthy of the people, which represents a great people doing a great work throughout the world, then you will deal with it in a proper and just and broadminded manner.

Senator CAIN. Mr. Kronheim, thank you for your statement.
Mr. KRONHEIM. Thank you, sir, for listening to me.

Senator CAIN. It is a pleasure to listen to you. I think you suffer and share the same confusion that this joint committee shares and suffers. We want to continue to expand, do we not, services and facilities and things beautiful about this District; while, at the same time, we do not want to impose upon the people additional tax-raising methods from which will come revenue sufficient to do this job.

Outside of your contribution, and it is a sturdy one, that the Federal Government should return to an approximate division of contribution, as was true some years ago, you rather maintain that we should not encourage any considerable portion of this tax-revenue program. That is about it, is it not?

Mr. KRONHEIM. At this time.

Senator CAIN. Well, I think you are perfectly within your rights to make that statement. It helps our thinking.

Mr. KRONHEIM. I would have gone more into detail on the alcoholic side of the question, but Mr. Donahue, counsel for the liquor dealers, will make a more detailed statement.

Senator CAIN. You had a gentleman who, I suppose, represented your association the other day, but who spoke very ably

Mr. KRONHEIM. No, he represented the retailers on that one group. Mr. Donahue represents another group.

Senator CAIN. Both the retailers and wholesalers.

Mr. KRONHEIM. That is right.

Senator CAIN. It is sort of surrounding tactics.

Mr. KRONHEIM. That is right. He will be here at the proper time. Senator CAIN. We enjoyed your remarks, Mr. Kronheim.

Mr. KRONHEIM. Thank you, Senator.

Senator CAIN. Mr. Kenneth P. Armstrong, we would very much appreciate it if you would come to us. He is the chairman of the Committee on Fiscal Relations and Taxation of the Federation of Citizens Associations of the District of Columbia.

If you will merely, sir, confirm that title as I have read it, and then proceed in your own way, we will be grateful.

STATEMENT OF KENNETH P. ARMSTRONG, CHAIRMAN, COMMITTEE ON FISCAL RELATIONS AND TAXATION, FEDERATION OF CITIZENS ASSOCIATIONS OF THE DISTRICT OF COLUMBIA, WASHINGTON, D. C.

Mr. ARMSTRONG. That is correct, sir. My name is Kenneth P. Armstrong, and I live at 1840 Shepherd Street NE. I have resided in the District of Columbia for 31 years, and for substantially all of that time I have been active in civic affairs.

I do not believe we are permitted to have residence in the National
Capital with that objective in view.

The local citizen can readily avoid most, if not all, of the taxes proposed. He will do so by continuing the unfortunate trend of recent years of moving into neighboring areas where such taxes are not levied. We will, therefore, create instead of the beautiful city which is our objective, a slum area existing around the beautiful buildings which the National Government has built or is building in this specially designated area.