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taken that figure. We did not think it was a fair figure to take, however.

Now that is on the revenue side.

There is another point at which we disagree with the Highway Department's report, and that has to do with the estimated expendi

tures.

Now for the 1946-47 fiscal year, the Congress has already approved an increase of 42 percent in the projected operating expenditures for the Highway Department.

In the Highway Department's report, they come along and ask for a 69.4 percent increase for 1947-48, and shoot it up to a 74.9, actually. It really does not show there-71.9 increase for 1948-49.

In order to come out with what we would like to call a bald budget and what we think is a sound highway plan for the District, we are asking the Highway Department for these next 2 years to see what is going to happen with these increased revenues, and at the same time to hold to this expenditure program what they have said they could get along with in 1947-48. If that is the case, I will show you where we will come out in the end and it is a very promising figure and is something I think is worth working for and worth trying to attain if we possibly can.

In order that you have the details before you, Mr. Chairman, I have the chart, and this is taken from the Highway Department's report, in which they show the various stories of these operating expenditures.

Now the Highway Department has said before this committee that a lot of them are as a result of an operation of the law. That is very true but I want to make it perferctly clear that all of these things are not by operation of law and all of them are not justified.

Here, of course, if we take a minor item like an increase in the pay for the policemen, and we have to pay our proportionate share of that, that, of course, is by virtue of another law and we will not question that.

I do not even question any increases, Mr. Chairman-a modest increase in the revenues of the Department of Vehicles and Traffic, but their report points out that they are proposing 135 percent increase in the budget for that particular office.

Now no kind of business and no kind of sound Government program can absorb that kind of a shock. When you are increasing your expenditures at the rate they are increasing them here, and when you come out with any kind of an expenditure that you want to make and you put it on paper and then say, "We have to have more money in order to do it," of course you have to have an increase in the gas

tax.

These are the percentages from the Highway Department's own statement that have been put in that chart which I have just shown

you.

I have another point to make here, Mr. Chairman, having to do with the statement that during the war years there was a holiday, as it was called, on minor capital improvements and on maintenance

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This is a page from the Highway Department's own report, and if you will note the various headings, let us take under "Maintenance and operation" here, we have for the years 1939 to 1948, in 1939, 1940, and 1941 the maintenance operations were at the rate of about $1,100,000 a year, average. The figures are right here. I do not have the specific figures.

If you will take the figures for the rest of these years, the war years of 1942, 1943, 1944, 1945 and 1946, average them out, you will find that they are almost exactly the same rate as they were in prewar years.

There is no holiday, therefore, in that particular situation.

Let us take "Minor capital improvements." We go over here into ditto, the same thing holds true. Here is one million four, one million one, one million two. We come along to 1942, however and we are up to 2,000,000 and almost 211⁄2 million.

We come to 1943; we were spending at the rate of $1,440,000; 1944, we dropped down to $198,600, and this is on the chart.

I do not want to get away from that figure at all but what I am speaking of is an average.

Now let us take "Major capital improvements." In 1944 and 1946, there were no major or capital improvements made, it shows, during those 2 years, but do not overlook the major capital improvements made with Federal-aid funds which appear in the last column.

If you will average those figures in 1941, we had $2,500,000 in Federal aid. Add those to the figures in here, and I think that any fair person would say that the same thing was true, that there might have been a somewhat reduced operating rate and a somewhat reduced program of major or capital, and minor or capital improvements, but it was nothing like a holiday, and that therefore the District is not going into a postwar period with a tremendous backlog of improvements.

I think this chart fairly shows that.

Now this is what I think is the attractive thing. This is the goal that we have been working for, a sound operating program and a sound and ample budget for the District of Columbia.

Here we have the final chart, and that appears in the last page in your particular report there. You will note we have a title "Highway Department fund," fiscal years 1947-49.

We have projected revenues here which we have set forth showing $21,442,000. That is the figure which I gave you at the start of my testimony.

In addition to that we must add "Highway balance including lapsed balances from appropriations as of June 30, 1946," of $1,893,830 for a total of $23,335,830.

Now the projected revenues of the Highway Department are shown in the next group of statistics. You will note that they have statistics there for maintenance and operation, trees and parking, vehicles and traffic, metropolitan police, miscellaneous expenses, minor capital outlays, major capital outlays other than federal-aid projects. You will note the changes that are made in each year reflecting the increase in

For instance, the question of vehicles and traffic: take those statistics. They have now an appropriation in 1947 of $586,000. In 194 they stepped that up to $800,000, and in 1949 to $900,000.

That represents, as shown in the statement, 135 percent increase. Now if we subtract these figures, therefore, of the projected expenditures of the Department from the revenues, and account for the federal aid, which of course we want to match, we will come out with a deficit of $1,820,822.

However, if we will look at the last chart, and-the last part of the chart, under "Projected expenditures," and those are extended 1947 budget allowances for operating expenses and minor capital outlays through 1948 and 1949-in other words, hold constant those revenues for those 2 years, we will find that we can provide fully for Federal aid, for major capital outlays, for minor capital outlays as they have been proposed by the Highway Department, and come out with a surplus of $564,474.

I want to point out to you, Mr. Chairman, that in taking the Department's figures of $153,000, and carrying them through we also took all of the other figures for the Department.

Take, for instance, the miscellaneous expenses of $204,900, which are shown here for 1947.

In 1948 they dropped that down to $82,000 in here.

I did not want to be unfair about it. I did not want to be in a position of having anyone say that we had taken the highest and the lowest and thrown them together in a pot and come out with a figure.

I have carried the $204,000 figure all the way through, even though they had proposed a reduction of $282,000 to $125,000 a year, approximately, or $120,000 for that particular time.

If we were to add that to it, we would have another quarter of a million dollars to add to that particular fund.

Now we think that a program of sound highway financing is fully the goal of this committee, it is the goal of industry, the goal of the petroleum industry certainly.

We want adequate streets, but we do not want fantastic things or things that are impossible, or things that are not fully justified by the facts. We have tried to be completely factual, we have tried to show this committee how they can come out with a reasonable approach to a thing, and match Federal aid entirely. I think that is a possible point to make.

There has been much ado here about matching Federal aid. Certainly we want to match Federal aid. We agree it is good business to do it, because in matching Federal aid, the Government is getting $1 for every dollar it puts up.

We feel that it is an important thing and something that we want to follow very carefully.

I would say in summation, therefore, Mr. Chairman, that on the basis of the careful analysis of the Highway Department's report insofar as revenue and expenses are concerned, it is our considered judgment that funds available to the Department will be more than sufficient, if economically spent, to carry on the Highway Develop

We submit that there is certainly an area of reasonable doubt as to the ability of the Department to make such an expenditure. And I say that with good cause, because, for instance, just this week, the Highway Department has admitted that the cost of the Dupont Circle underpass has increased over $1,000,000 more than they expected it to be when they started out.

Now, in our personal life, we do not go out and buy things and make improvements on our homes when things are at their peak prices. Prices will never come down if we buy at those prices.

I say again that the wise thing to do is to wait until this widely inflationary period is over when we get dollar-for-dollar value for our Highway Department's spending.

The petroleum industry sincerely trusts that its efforts toward a sound and complete analysis of this problem will be beneficial to the committee in its deliberations.

Now, I want to have tomorrow morning a number of petitions which have been signed by District residents. I have quite a few thousand of them, Mr. Chairman, and I did not know for sure that I would get on this afternoon, so I did not want to bring them up this afternoon, but I would like to file them with you tomorrow, and we have a number of witnesses that we would like to have the committee hear tomorrow, so that you can have a full understanding of this thing.

If there are any questions that I could answer in any way about the report or the analysis, I would be glad to do so.

Mr. BATES. Well, now, Mr. Keller, this tabulation is, in part, what I have been rather looking for, although Mr. Whitehurst says that he has that ready for me this afternoon, and I did ask General McCoach this morning if he had analyzed this program over a period, say, of 3 or 4 or 5 years, and he said no, that he did analyze the program for 1948 and that he approved that.

He is representing the board of trade as chairman of the committee on municipal finance, making a further study of the so-called 3- or 4or 5-year program.

Mr. KELLER. I am also a member of that committee, Mr. Chairman. Mr. BATES. Then you can perhaps become part of his organization to study that program. We have not had any comments from the District officials as to the character of that program, not only the Highway Department but also the Building Department, which would include the school buildings and public buildings of every description, and we would like to have the benefit of that, because, as I said this morning, we must gear our requests for additional revenue into the over-all program projected ahead 3 or 4 or 5 years. Now, you are a member of that committee?

Mr. KELLER. Yes, sir.

Mr. BATES. Did you approve the 1948 program?

Mr. KELLER. No, sir. I would like to say a word about that, if I

may.

There was a committee on highways of the board of trade, and I was not a member of that committee, but I was asked to attend a meeting 1 or 2 or maybe 3 days before the hearing before the District Com

Mr. Upham, Charlie Upham, head of the American Road Builders Congress, is the chairman of that committee.

The meeting was held in his office. I went up to the meeting and I presented my figures. They said, "Well, they do not agree with the Highway Department's figures."

Mr. Upham called Mr. Harrison over, and Mr. Harrison came to the meeting, and they said they would discuss it further, and I was not a member, and they decided that they would go along, not with our particular statement, that they would rather feel that there should be more revenue for more streets in the District of Columbia.

Then I went to the municipal tax committee meeting which was held at the board of trade, in their offices, sometime around the middle of March. At that time I appeared, and Mr. Cleveland, my good friend over here, also appeared. He will tell you that we were there. General McCoach was chairman.

Another man who appeared at that time was Mr. Howat, of Howat Concrete Co. He was in favor of the increased tax.

We had what I considered a very fair discussion of the matter, but those people felt that the increased taxes were the thing, and they could not see my point of view on the thing.

But there are so many other organizaitons who will be here tomorrow, Mr. Chairman, to give you their viewpoint on the matter, I think that certainly you will want to hear from them, and then make up your own mind about changes in the better parts of this particular discussion.

Mr. BATES. Now, we had hopes of closing this hearing today, but whom do you have in mind coming here tomorrow?

Mr. KELLER. Well, sir, the District of Columbia Trucking Association, for instance; they want to appear.

The milk industry representatives want to appear.

The Washington Automotive Trades Association want to appear. The taxicab people want to appear.

The bread industry has a representative who wants to appear.

And they are all lined up, and we were told by the clerk of the committee they could be heard tomorrow morning.

Mr. BATES. I just was handed this list. We have, altogether, 39 persons who wish to be heard yet; is that right, Mr. Stewart?

Mr. STEWART. That is right.

Mr. BATES. We do not have much of a chance to close the hearing today. We will have to continue tomorrow morning.

I am rather impressed by this schedule. It is at least a projected program, both from the standpoint of revenue and expenditures ahead for 3 years.

While you are about it, if you have any spare time between now and tomorrow morning, I wish you would project that 2 years further ahead and then we will have a complete story for 4 years ahead of us. This is 1947. Of course, that year is over.

Mr. KELLER. The Highway Department, in its report, we have been talking about these 3 years always, Mr. Chairman, because, you see, the statutes of the Federal aid program are very much in doubt. It

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