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of course, been remedied since, because the late Harold Smith took the sensible stand that the Bureau of the Budget should not pick the local budget to pieces, but the responsibility should rest upon the municipal officials, and he simply gave it the over-all scrutiny. Thank you, gentlemen.

Senator CAIN. Mr. Armstrong, thank you. Both of us will read your observation very carefully.

Mr. ARMSTRONG. Thank you.

Senator CAIN. Mr. Washington I. Cleveland, manager of the District of Columbia division of the American Automobile Association is the next witness, if he will join us at the table.

STATEMENT OF WASHINGTON I. CLEVELAND, MANAGER, DISTRICT OF COLUMBIA DIVISION, AMERICAN AUTOMOBILE ASSOCIATION, WASHINGTON, D. C.

Mr. CLEVELAND. Good morning, gentlemen. My name is Washington I. Cleveland, and I am manager of the District of Columbia division of the American Automobile Association. I appear before you in behalf of this organization which is the largest civic organization in the Greater Washington area, with a local membership of over 40,000 motorists, and in behalf of the District of Columbia division of the American Automobile Association, I wish to express my appreciation for the privilege of presenting the views of this organization at this hearing.

The proposal to increase the District of Columbia gasoline tax from 3 to 4 cents per gallon has been carefully studied by the District of Columbia advisory board of the American Automobile Association. At its meeting on Monday, October 14, 1946, the board voted unanimously in favor of the 1-cent increase in the gasoline tax. In reaching this conclusion the board considered the following facts:

The gasoline tax in Maryland is 5 cents per gallon; the gasoline tax in Virginia is 6 cents per gallon; as of October 1, the national average is 6.09 cents, including the 11/2-cent Federal gasoline tax.

With the 1-cent increase in the District of Columbia tax, that is proposed, the local tax would be less than the Virginia State tax, less than the national average, and less than the present Maryland tax.

All motor vehicle revenues collected in the District of Columbia are covered into the highway fund, and are used solely for highway purposes. There is no diversion of highway funds in the District of Columbia.

The only basis on which an increase in the gasoline tax could be justified is that of need. Expenditures from the highway fund may be divided into five categories, as follows: (1.) Fixed expenses, which include the cost of the Department of Vehicles and Traffic and a percentage of police expenses. (2.) Maintenance and operation. (3.) Minor capital improvements. (4.) Major capital improvements. (5.) Matching funds for major capital improvements financed from Federal aid.

For the 1948 budget, the allocation of funds for these five categories

$1,904,149; major capital improvements, $1,650,000; minor capital improvements, $1,510,000; major capital improvements, including Federal aid, $2,125,000; or a total of $8,947,725-practically $9,000,000. The total revenue expected for the fiscal year 1948, including the proposed 1-cent increase in the gasoline tax in the District of Columbia, is $8,356,000 Added to this, is the balance from the prior year of $66,377, making a total of $9,017,377 available for appropriations. Deducting the total appropriations for the fiscal year 1948 of $8,947,725, there will be a balance of only $69,562.

It should be noted that included in the 1948 budget is an item of $2,125,000, which will be required to match a similar fund provided by the Federal Government in the form of Federal aid. Unless the increase is granted in the gasoline tax, it will be impossible in 1948 for the District to match the Federal-aid funds granted by the National Federal Aid Act of 1944. This would imperil the completion of the South Capitol Street Bridge.

It should be noted that in order to provide sufficient revenue to meet the obligations of the highway fund, it has been proposed to increase the motor vehicle inspection fee from 50 cents to $1. When the Motor Vehicle Inspection Service was established by act of Congress, it was understood that this service would be self-supporting.

At the present time it is not self-supporting. Even if the fee were increased from 50 cents to $1 it would not be self-supporting unless registrations materially increase, and the work is carried out with the present force at the presently anticipated cost. For this reason, the District of Columbia advisory board of the American Automobile Association unanimously approved the 50-cent increase in the motor vehicle inspection fee.

The District of Columbia advisory board of the American Automobile Association has urgently recommended a number of important highway projects, such as the new Fourteenth Street Bridge across the Potomac River, the South Capitol Street Bridge, the Dupont Circle underpass, the Barney Circle underpass, the K Street improvements in Georgetown, and so forth. Without the increased revenue for the highway fund these projects cannot be provided.

The real question involved in this proposed tax increase is: Shall we have the highway improvements endorsed by the motoring public and pay a 1-cent increase in the gasoline tax and a 50-cent increase in the motor vehicle inspection fee, or shall we eliminate some of these needed projects, and keep the tax at its present level.

The District of Columbia advisory board of the American Automobile Association was unanimously in favor of the full highway program financed by the increased taxes.

Mr. Chairman, there has been one rather interesting development in connection with the proposed increase in gasoline tax. It grows out of the fact that since the 21st of February, the cost of gasoline has been raised twice, three-tenths of a cent on the 21st of February, and one-tenth of a cent on the 1st of March. I have seen very little publicity about this. I doubt very much whether the average motorist knows that he is paying more for gasoline today than he was prior

Washington area would be much more interested in paying a 1-cent increase in the gasoline tax to assure providing appropriate highways and bridges and facilities than to just pay 113 cents-110 cents more for gasoline, as such.

I mention this merely because the chief and principal opposition to the increase in the gasoline tax has come from the same people who have increased the cost of gasoline twice since the 21st of February.

Senator CAIN. Your members. Mr. Cleveland, are consumers of gas for both pleasure and business?

Mr. CLEVELAND. That is right.

Mr. BATES. Did that same increase occurring in the case of the States you mentioned-did it take place here in the District?

Mr. CLEVELAND. Mr. Bates, it is my understanding, and probably there are other people here who can correct, this if I give you false information, that the price of gasoline in the Greater Washington area is regulated by the dealers over the line absorbing some of the tax and keeping the price to the consumer at the same level. About the only comment I can make is that at the last session of the Maryland General Assembly, which ended last March or the 1st of April, the price of gasoline in Maryland was increased 1 cent per gallon.

Mr. BATES. That is a tax?

Mr. CLEVELAND. Yes, sir; I mean the tax.

Mr. BATES. The reason I asked the question is because you mentioned the fact that the tax both in Virginia and Maryland is higher than what it is here in the District, and I was wondering whether or not the increase in gasoline price by the dealers was larger in the District than what it was in the State of Maryland or in the State of Virginia at the same time.

Mr. CLEVELAND. Well, I cannot answer that.

Mr. BATES. Do you not know whether the price of gasoline went up in Virginia or Maryland at the same time it went up in the District? Mr. CLEVELAND. Well, the price has remained the same; yes. It has gone up formally, as I understand it, in all three jurisdictions in the Greater Washington area.

Mr. BATES. Does that include the whole State of Virginia or just a part of it and the State of Maryland or just a part of it, or was it a sort of general increase all over the State?

Mr. CLEVELAND. I cannot answer that. I will be glad to get that information for you.

Mr. BATES. You do not think there is any attempt on the part of the Washington area just to equalize the costs to the consumer by jacking up their price so as to take advantage of the increased tax in each of these States? There is no such attempt; is there?

Mr. CLEVELAND. No, sir.

Senator CAIN. Thank you very much, Mr. Cleveland.

Mr. CLEVELAND. Thank you, sir.

Senator CAIN. We shall now be delighted to hear from a spokesman of the Washington Board of Trade, represented this morning, I think, by Gen. David McCoach, Jr.

STATEMENT OF MAJ. GEN. DAVID McCOACH, JR., CHAIRMAN, MUNICIPAL FINANCE COMMITTEE OF THE WASHINGTON BOARD OF TRADE, WASHINGTON, D. C.

General McCOACH. My name is David McCoach, Jr., and I am chairman of the municipal finance committee of the Washington Board of Trade, consisting of 7,600 members, including membership in every, practically every line of business in the District of Columbia. In accordance with the committee's wishes, I will discuss today the District's general fiscal problems. Detailed comment respecting the tax proposals which have been submitted will be given when the committee receives testimony concerning the bills which have been introduced at the request of the Commissioners.

A necessary prerequisite to an intelligent discussion of additional revenue requirements and sources is a determination of the amount of money which will be required to efficiently operate the municipality and provide for essential improvements.

Your committee has already received from District government officials rather detailed information about departmental needs and explanations of increased costs during the last 10 years. To eliminate great duplication in the record, I will comment only on broad, over-all trends and requirements.

We have consulted with the appropriate District of Columbia officials, charted costs since 1920 until the present, and projected them through 1955 on chart 1 which I will now briefly review.

The red line on this and other charts to follow, shows the population. Through the year 1946, this population curve was constructed from official Census Bureau figures, figures released by the District of Columbia Bureau of Vital Statistics, and information assembled by the Washington Board of Trade.

The population projection for 1946-55, shown by the solid red line, is an estimate prepared by the Postwar Planning Committee of the Washington Board of Trade.

In January 1946, it was estimated that 930,000 persons resided within the District of Columbia, and that that figure would have shrunk to 880,000 by 1950, but expanded to 950,000 by 1955.

However, I am now advised by our city planning committee that revised figures will soon be released by them and by the Census Bureau. They are not yet ready for release, but we know approximately what they will be, and they have been indicated by the broken red line on the chart.

First, rechecks indicate that figure of 930,000 for January 1946, was too high. Secondly, we believe that as of January 1, 1947, the District's population was at the level previously forecast for 1950, 880,000, or even a little less. Thirdly, we now anticipate a slower increase in future years, and doubt that the population of the District of Columbia will against exceed 900,000 before 1960.

Mr. BATES. General, what was the population as of the 1st of January? You say you have revised it somewhat now?

General McCOACH. Yes, sir; our original figure was-January 1946,

Mr. BATES. Yes.

General McCOACH. And then, as shown on that chart, we showed that a decrease was anticipated to 880,000 by 1950, but expanded again to 950,000 by 1955.

Mr. BATES. What would you say the peak was now on your revised figures? I would like to get that in this part of the record.

General McCOACH. 930,000 was the peak; is that correct?

Mr. WILLIAM H. PRESS (executive secretary, Board of Trade). That was overestimated. Mr. Black, chairman of our city planning committee, can answer that question for you.

Mr. BATES. Then you say, on the basis of the census report, that some information which you have, that you are revising that.

Mr. FISHER BLACK (chairman, city planning committee, Board of Trade). It looks as though that was a little too high; that is being revised as of this year.

Mr. BATES. What is the revision?

Mr. BLACK. And the current estimate is 860,000 for this year, and we do not know just how much population we lost during the year; there was some loss, so, it was higher than 860,000.

General McCOACH. About 930,000 was approximately the peak. Mr. BLACK. Yes; it was too high.

Mr. BATES. You mean the estimate was too high. What is your estimate now based on the revised estimate?

Mr. BLACK. The revised estimate as of the first of the year was 860,000.

Mr. BATES. What was it the first of '46?

Mr. BLACK. It was estimated at 930,000.

Mr. BATES. That is by somebody here in the District?

Mr. BLACK. Yes, sir.

Mr. BATES. What does the census estimate?

Mr. BLACK. The Census Bureau estimate as of the middle of '45, was 938,000.

Mr. BATES. I see.

Mr. BLACK. And that was estimated to go down to 930,000 as of the first of '46, and then they are coming out with another estimate that is to be submitted shortly, and we understand that is going to be down in the neighborhood of 860,000.

Mr. BATES. January 1, this year.

General McCOACH. These revised figures, which I am sure will be available in final form before this committee concludes its deliberations, indicate the population now requiring service from the municipality is less than we thought.

For our purposes, we assume that the District's population for the next 10 years will remain nearly constant at a little less than 900,000. This, we believe, is an important factor in estimating future municipal costs and revenues.

Through the year 1946 the curve marked "Maintenance and operations, general fund," is constructed from figures furnished by the Auditor of the District, except that in order to provide more comparable figures we have eliminated street and highway appropriations which were included in the general fund in the twenties, prior to

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