tion the fact that, because this city is the seat of the Government of the United States its costs of operation, maintenance, and development are necessarily greater than those of other cities of comparable area or population. It does, however, present a reasonably equitable temporary solution of the present problem of finding sufficient revenues to meet the present costs of the municipal government.

The Federation of Citizens' Associations therefore urges the prompt enactment of S. 215, entitled "A bill to fix the amount of the annual payment of the United States toward defraying the expenses of the government of the District of Columbia."

Respectbully submitted.

FEDERATION OF CITIZENS' ASSOCIATIONS,
By KENNETH P. ARMSTRONG,

Chairman, Committee on Fiscal Relations and Taxation.

Mr. ARMSTRONG. Now, with respect to the question which has been raised here about the apparent lack of interest of the citizens because they do not appear at these hearings, I would respectfully call attention to the fact that those of us have to work for a living and we are not able to take the time out.

In normal American practice, the city officials are the representatives of the citizens before legislative bodies. Of course, here the city officials are neither selected by nor responsible to us, and then again, under normal American practice, the citizens have their own representatives in the legislative bodies. The city officials and the representatives, of course, are paid for doing that kind of a job.

Here we have to do it on our time, and appear without compen

sation.

With respect to the necessity for wanting the additional revenue, as I said before, the citizens have no means other than second-hand, of finding out because they have no local government here. There have been many investigations made of the set-up here; there have been reports submitted to Congress over the years as to the working of the local government, whether economies can be achieved or not. They have been rather uniform in stating that the local government is rather a maze of bureaus, I might say, which are not connected or coordinated, and it is very difficult to pin down the responsibility for the things that go on.

I think that the members of our local government are doing the best they can under the circumstances.

I would, perhaps, call attention to the fact that it is not very often that we get a civilian Commissioner who has been before his appointment active in civic affairs. We had one such back in President Coolidge's time, Mr. Daugherty, but he did not get appointed again. The Engineer Commissioners are generally quite able men, and some of them of the type that would be qualified to be city managers. think our present Engineer Commissioner is of that type. But that is a little different story.

The city manager is not a person who makes policies. The policies are made by the legislative representatives of the people in the city council, and the manager is a businessman, usually an engineer, who carries out those policies.

With respect to this complicated set-up which we have here. I might call attention to the fact that it was reported in the press the other day that Mr. Auchincloss, the chairman of the Home Rule Subcom

mittee of the House District Committee said that this District of Columbia government is so complicated that he wants a breath of fresh air whenever he looks at this governmental maze. He says that the District has the most complicated system of government ever seen, with Federal and local government messed up together. Well, a report some years ago said the same thing, but nothing was done about it.

One of the basic difficulties that we have here, which makes it almost impossible to achieve proper economies in the local government is the fact that the local government does not, like other governments, have the say as to the allocation of the tax money of the citizens; and furthermore, they do not know how much the Federal Government is going to put up as its share. So, when they make up the budget, they can only make a guess as to what the over-all amount can be, in view of the total resources, and the budget is, of course, made up from the requests of the various departments of the government, and since these various departments have no certain knowledge as to what particular items they put in will eventually be approved, the tendency is quite natural for them to put in about everything they think they ought to have, with the result that the budget goes up to the Commissioners and eventually to Congress much larger than is really necessary, and the paring down which is done, is done not so much by the people who are acquainted with the need, but by others, such as members of the House and Senate District of Columbia Committees, whose knowledge of such needs is only what they can obtain from their own investigations or public hearings.

Mr. BATES. Mr. Armstrong, we have been all over that many times during the last 2 or 3 weeks, and what we are trying to do now is to find out how the citizens stand in regard to the proposed tax bills. Mr. ARMSTRONG. Well, that is why I put in

Mr. BATES. Your evidence here is helpful, but we are already familiar with it, as you well know. But we have a large number of witnesses here, all of whom would like to be heard, and their time has been allocated pretty well, and we would like to hear your comments, if you have any further comments, in respect to the bills which are now presented relating to the developing of new sources of revenue. Mr. ARMSTRONG. Those comments are in writing and have already been submitted, Mr. Bates.

I will say, however, with specific reference to these recommendations of the Federation, that apparently, for one thing, Congress is beginning to recognize its moral obligations to make payments in lieu of taxes, not only in the District of Columbia, but elsewhere in the United States.

I notice that there are a number of bills introduced for that purpose, and I call specific attention to H. R. 2725, S. 959, H. R. 593, H. R. 14, and so forth.

It is the position of the Federation that while this O'Mahoney bill, S. 215, represents a reasonable start toward fiscal equity, that may not be the final solution; in other words, being based simply upon land areas, with certain exceptions, it may not represent the

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actual moral obligation of the United States Government as to payment for municipal services which it receives. However, in view of the apparent urgent need of additional revenue, we specifically endorse that particular bill.

With respect to the income tax, may I say that municipal taxes, of course, are levied to raise revenues to provide municipal services, and, therefore, they should be levied on all who benefit from the municipal services.

The mere fact that a number of people who are here by some means or other managed to retain the right to vote back where they came from, has nothing to do with the benefits which they receive from municipal services. They receive those benefits, and they should pay for those benefits. Therefore, any income tax law which uses that domicile is an unfair law, and also we do not think it is fair that the people who actually live here should be excused from paying the tax because they pay a tax back in the State of their domicile. If they wish to pay such a tax back in their State, that is their privilege. They perhaps realize something from it in the way of maintaining a voting right, which they would not otherwise have. But it has no relation to the expenses which necessarily are incurred by the local municipal government.

May I say further, that this matter of insufficient revenues, as I said before, is not particularly new here in the District of Columbia; it has occurred a number of times in the past. That is also true with respect to the way in which the local budget is handled, with the result that many items in the budget get there which, while they may improve what you might call the facade of the District of Columbia, the thing that people see, sometimes includes items at the expense of the things which the people do not as readily see, which are hidden behind this facade, but which are vital to the interests of the people of the District of Columbia. If there is only so much money, and we spend some of it, as we did one year on a new reptile house in the National Zoological Park, you were not able to build a schoolhouse that was necessary with the extra capital one year.

We were told when we appeared in behalf of including in the budget an item for the construction of a new schoolhouse that we do not have enough money, but that budget did contain that new snake house for the National Zoological Park which is under the complete control of the Department of Interior, and it only-well, it may be used as an amusement place by the people who happen to live in the District, but it is equally used by people who do not live here.

I would like to submit for the consideration of the committee, although not necessarily to enlarge the printed record, a copy of a radio talk which I made 11 years ago over Station WMAL, on a subject which shows the difficulties that we are up against every year. Senator CAIN. Mr. Bates and I would like to read it, and it will be filed with the committee.

Mr. ARMSTRONG. I will just submit it for your information.
Senator CAIN. Yes.

Mr. ARMSTRONG. And I say that the remarks which I made at that time with respect to the activities of the Bureau of the Budget have,

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 1/2-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 is as follows: Fixed expenses, $1,758,500; maintenance and operation,

$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 to the 21st of February, but I am sure that the motorists of the Greater