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ticularly in those categories of expenditure described as projected operating expenditures. I think this matter can better be understood by considering table III.

You will see that we have taken the average of operating expenditures for the prewar years 1939–42 as the basis in portraying.percentage increases. These figures all were taken from the Highway Department's report. You will see, first, that during the 1939-42 period an average of $2,176,347 was spent on what is termed operating expenditures. In 1947, Congress allowed the Highway Dee partment, for this purpose, the sum of $3,091,452, an increase over the prewar average of 42 percent. This we consider entirely reasonable. However, the Highway Department now is asking that its operating expenditures be hikel in 1918 to 69.4 percent over the base period, and in 1949 to 74.9 percent. It is our feeling that the Highway Department can manage very satisfactorily during the fiscal years 1948 and 1949 with the same rate of increase in operating expenditures that Congress allowed them for this purpose in 1947. The detailed statistics covering this matter are shown on table IV.

The Highway Department has indicated that there is a great backlog of work at the present time in the so-called minor capital improvement category, resulting from curtailed expenditures for this purpose during the war years. However, this assertion is open to serious question on the basis of the Department's own figures as contained in its report. Table V is simply a page from the Highway Department's report set up in this form. Here you see Highway Dapa rument expenditures for the years 1939 to 1948. This table does not sustain the assertion that the war caused a holiday in expenditures for minor capital improvements. The same can be said for major capital outlay during the war, as this table clearly shows a considerable amount of work was done in this category. These substantial expenditures indicate that the District's highway plant was maintained and expanded during the war years. The claim, therefore, that there is a tremendous backlog of minor capital improvements and maintenance work resulting from a wartime moratorium on highway construction is not borne out by the Department's own figures.

Based upon our analysis of this program, we feel that the major District capital improvement program can be fully carried on-sufficient funds will be available for completion of the South Capital Street Bridge. Furthermore, the record shows that revenues available to the District will be sufficient to match the full allotment of Federal-aid funds granted under the 19H act. As the committee knows, however, the large Federal-aid highway program authorized by the 1944 act is running very far behind schedule, and the President has recommended that additional time be granted the States to match their allotments. Although the end of the second postwar fiscal year, as detined in the act, is fast approaching, Congress has seen fit to appropriate only $175,000,000 for the Nation as a whole, ont of a potential $1,000,000,000 for this period. Congress has been asked by such organizations as the American Automobile Association and the American Association of State Highway Officials to extend the act for a sufficient period of time to allow the States to take up their full allotments. Legislation is now pending in the Congress to effectuate this necessary request. Therefore, if the High way Department so desires it will be able, with the passage of that legislation, and in line with the congressional expression, to project its Federalaid expenditure program over an additional period of time, thus lessening this strain on its finances. However, even if the District chooses to go ahead despite present high costs and other ditliculties, and attempts to match fully its Federalaid allotations within the time now set by law, our analysis shows that this an be done without any increase in the gasoline tax rate and at the same time. leave the Department with a surplus of better than half a million dollars. The details to support this statement are set forth in table VI.

On the basis of careful analysis of the Highway Department's report, irafar as revenues and expenditures are concerned, it is our considered judgment that funds available to the Department will be more than sutficient, if economiciliy front, to carry on a highway development program adequate to the needs of the District of Columbia. We submit that there is certainly an area of reasnable doubt as to the ability of the Department to make such an expenditure.

The petroleum industry sincerely trusts that its efforts toward a sound and complete analysis at this problem will be beneficial to the committee in its de liberations; and we should likts at this time, to present to you tangible evidence

of the thinking of Washington residents on this measure in the form of thousands of signatures to petitions asking that there be no increase in the gasoline tax in the District of Columbia,

Mr. KELLER. There are other copies here, if anybody would like to have them.

I would like to submit this brochure for the record.
Mr. BATES. That will be submitted.
(The brochure is as follows:)

DISTRICT OF COLUMBIA PETROLEUM INDUSTRIES COMMITTEE,

Washington 4, D. C., March 7, 1947.

PROPOSAL TO INCREASE THE DISTRICT OF COLUMBIA GASOLINE TAX This brochure and accompanying material carefully examines the spending program advanced by Highway Director Whitehurst for which a further increase in the gasoline tax rate is demanded. It shows beyond question that no additional tax increase is needed to carry on a highway construction program more than 100 percent greater than carried on during the years immediately preceding the war.

It is submitted with a view of acquainting those whose responsibility it is to enact our laws with the true facts on this important subject. That it is an important subject is beyond dispute, for even under ideal conditions unnecessary taxes have a disturbing effect on the economic well-being of all of us. At the present time, however, with the personal and business tax burden heavier than ever before in our history, an unnecessary tax increase is intolerable.

The major problems facing our Highway Department are shortages in trained peronnel and in most building materials. Additional tax revenues can alter this condition only slightly, if at all. Indeed, fiscal sanity would seem to dictate a prudent course in expenditure-a course that would not add strength to the inflationary pressure, but that would assure the public and highway taxpayers more roads for their money. Very truly yours,

JOSEPH E. KELLER,

Executive Secretary.

DISTRICT OF COLUMBIA POSTWAR HIGHWAY FINANCES

In requesting a 1-cent increase in the gasoline tax, the Highway Department has submitted an elaborate postwar highway building program for the District of Columbia. The program is broken down into three distinct phases or time periods. The first part embraces the fiscal years 1946-49 and corresponds with the period covered by the 1944 Federal-aid highway program. The second phase would extend from 1950 through 1955. The third phase of the program extending beyond 1955 is very indefinite, since it is contingent upon so many unpredictable factors.

In fact, the Highway Department itself admits that the third part of the program is of a highly uncertain nature.

Because of the many uncertanties involved, it is impracticable to attempt to forecast revenues and expenditures beyond the next 3 or 4 years. Even the Highway Department does not know how much Federal aid it can count on after 1949 and does not include any specified amount of Federal aid beyond that year in estimating the amount of funds which will be available for carrying out its projected longer-range program. It is logical, however, to assume that the District will continue to receive Federal aid after it has used up its allocations under the 1944 act, because since 1939 when the District first started to receive regular Federal-aid allotments (it previously received Federal funds under the NRA and other authorizations) it has always shared in Federal road grants.

It should be noted that the Highway Department, in planning its postwar highway construction, has included a substantial amount of both minor and major capital improvements outside the projected Federal-aid program. (See table II.) For example, the estimated expenditures during the next three fiscal years, as set forth in the recent special highway committee report, provided for $4,450,000 worth of minor capital outlays and $2,800,000 of major capital outlays (the latter to complete the South Capitol Street Bridge), or a combined total of $7,250,000 for minor and major caiptal improvements outside the Federalaid program. Another factor which also has served to place projected expendi. tures at a greatly inflated level in the immediate postwar years as compared wit the period just prior to the war has been the tremendous increase in allowances for opearting costs during the next three fiscal years (1947–49). According

the official figures, operati expenses in this period have been set at approximately 62 percent above the 1939-42 average.

It is interesting to compare the Highway Department's projected operating expenses in the postwar period with actual expenditures before the war. These costs are shown in detail in tables I and II, but for the sake of ready reference the comparative annual figures for the 1947–49 fiscal years and for the 4 years, 1939-42, are set forth below :

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1 Includes trees and parking, vehicles and traffic, metropolitan police, and miscellaneous expenses.

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1 Includes trees and parking, vehicles and traffic, Metropolitan Police, and miscellaneous expenses.

It will be seen from the foregoing tabulation that the Highway Department is progressively raising annual allowances for operating costs above prewar levels to 42 percent for the 1947 fiscal year and to almost 75 percent in the 1949 year. Provision for some items of expense has been increased out of all proportions. For example, the Highway Department's proposed budget would raise allowances for vehicles and traffic by 135 percent as compared with the average for the 4 years preceding the war. Here are the actual expenditures for this purpose before the war and projected expenditures in the Highway Department budget :

Allowances for vehicles and traffic

Year

Actual

Year

Projected

1939.
1940.
1941.
1942

$213, 530
362, 670
337, 110
382, 045

1947.
1918.
1949.

$556, 152
800,000
900,000

Total.
Annual average.

Total.
Annual average.

1, 295.345

323, 836

2, 286, 152

762, 050

1 Percent increase over 1939–42: 135 percent.

In addition to this tremendous increase in operational costs, the Highway Department's projected program calls for total capital improvements of $7,253,000 outside the Federal-aid program during the 3 years 1947–49, as mentioned previously. This highly ambitious program probably would require additional funds of about $1,800,000, over and above the large amount of revenues which will be available from existing sources, both District and Federal. If, however, operational costs and minor capital improvements are held to the 1947 level, the Highway Department can complete $6,175,000 of non-Federal projects, which include the South Capitol Street Bridge, match all its Federal allocations and still have a surplus of more than $500,000 at the end of the 1949 fiscal year.

This conclusion is based on a conservative appraisal of future revenues. These estimates of revenues, moreover, are closely in line with those set forth in the Highway Department's own budget, with the exception of motor-fuel-tax receipts. Even in this case, the Highway Department's figure for gasoline-tax collections for the 1947 fiscal year has been accepted, and only moderate increases have been projected for the following 2 years (about 8 percent in 1948 and about 6 percent in 1949).

It seems much more reasonable to anticipate conservative increases in such collections during the next few years than to assume, as the Highway Department does, that gasoline-tax receipts will remain fixed at the 1947 level. This is particularly true in view of the sharp increases in gasoline-tax revenues which have occurred since the elimination of wartime rationing. Moreover, leading authorities have forecast a continuing and widespread growth in the consumption of motor fuel for several years to come. The consensus of some of the best-informed authorities is that gasoline consumption for the country as a whole will reach a Jerel by 1950 approximately 25 percent above the 1941 rate of consumption. Recent monthly gasoline-tax collections in the District are shown below.

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Total revenues, 1947–49 placed at $21,442,000

The Highway Department has projected that net receipts from the 3-cent gasoline tax for the fiscal year ending June 30, 1947, will approximate $4,800,000. It seems conservative to assume that this same rate of taxation on motor fuel will produce $5,200,000 and $5,500,000, respectively, in the two following fiscal Fears, bringing total revenues from the 3-cent gasoline tax for the 3-year period, 1947-49, to approximately $15,500,000. Combined returns from the registration and weight tax, plus motor vehicle permit fees, etc., for the 3 years under consideration are placed at approximately $5,450,000. This projection is made on the conservative assumption that combined revenues from these latter sources will not quite recover to prewar levels even in the 1949 fiscal year. (Compare figures in tables I and II.) Assessments and miscellaneous revenues anticipated for the 1947–49 period are estimated at approximately $492,000. Thus, total reveniles from these various sources for the 3-year period are expected to reach about $21,442,000. (See table II.) In addition there was a balance of $1,893,830 in the highway fund as of June 30, 1946, including $303,286 lapsed balances from appropriations. This brings indicated total District highway funds for the three fiscal years, 1947–49, to $23,335,830.

99538 47

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Funds available for matching Federal aid and/or construction

Assuming that operational costs and minor capital improvements are held to the 1947 fiscal year level, the total amount required for these purposes plus the $2,800 000 needed to complete the South Capital Street Bridge, will call for $15,449,356 in the 3-year period 1947–49. (See table II for details.) Deducting this amount from the $23,335,830 of anticipated District funds, leaves a balance of $7,886,474 available for matching Federal-aid allocations.

Under the 1914 Federal-Aid Highway Act, the District is eligible to receive a total of $8.922.000 on a dollar-for-dollar matching basis. This amount breaks down for the different classes of highways as follows: Primary Federal-aid system.

$3, 291, 000 Secondary system

2, 193, 000 Urban highways

3, 438,000

Total..

8, 922, 000 The District, however, set aside approximately $1,600,000 in its 1916 budget for matching its Federal-aid allocation, reducing the matching requirement to about $7,322,000. This is $564,474 less than the $7,886,474 which will be available for matching on the foregoing basis of operational costs.

Almost $24,600,000 available for construction purposes in 3 years, 1947-19

Again assuming that operational costs and minor capital improvements are held to the 1947 level, a total of $24,583,474 will be available for construction purposes during the 3 years 1947-49, as follows: Available for minor capital improvements (see table II).

$3, 375, 000 Available for completion of South Capitol Street Bridge (see table II)-

2, 800, 000) Federal-aid funds

8, 922, 000) District funds: Available for matching--

7, SS6, 474 Appropriated for matching from 1946 budget

1, 600,000

Total--

24, 583, 474 This means that there would be about $8,200,000 annually available for new construction during the above 3 years, which is more than double the prewar average.

The following tabulation shows the appropriations made for capital outlays during the 4 years, 1939-42, as taken from the Highway Department's own figures : 1939

$3, 721.00) 1940

3, (12), 34) 1911

2, 726, 600 1942

5, 76. (*) 4-year total.

1.5. 234. TEXT Annual average

3, SUS. 6:5 To sum up: If operational costs and minor capital improrements are beld 19 the 1947 level, which in the case of operating expenses would mean an increase of +2 percent over the 1939/42 average, the Distriet will be able to carry out all its other non-Federal capital improvement projects. match its Federalaid allocations, and have an indicated surplus of over $500.000 at the end of the 1949 fiscal year. Proceeding on the same basis, conbined District and Federal funds will be sufficient to carry out a new construction program of $24.600,000 during the 3-year period, which on an annual basis will mean there will be more than double the amount available before the war. If on the other hand, the Hghway Department were to increase its operational costs to the proposer excessive levels in 1948 and 1949, and at the same time carry out all the projeeted minor capit ! improvements, the probability is that it would be about $1.500.000 short of Federal-aid matching requirements. However, if the program were extended for an additional year even the larger program could he easily handled within the present framework of taxes. And it should be pointed out that all indica

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