programs, one of 5 years, one of 10 years, that amount to many millions of dollars, to bring the city up to what it should be.

Mr. O'HARA. For example, water utilities, is that a self-paying proposition or is it far behind?

Commissioner YOUNG. No, sir, that is self-sustaining.

Mr. O'HARA. Is the District still furnishing free of charge to the Government the water for the Government buildings?

Commissioner YOUNG. Yes. It amounts to between eight and nine hundred thousand dollars a year if they paid the same as you pay for your water.

Mr. O'HARA. Does that include the Pentagon Building?

Commissioner YOUNG. Yes.

Mr. O'HARA. That is all.

Senator CAIN. Are there any other questions? If not, thank you, Mr. Young.

Comissioner YOUNG. Thank you, Mr. Chairman.

Senator CAIN. Mr. Fowler, will you come to the table, please?

Mr. Fowler, as I think you all know, is the budget officer for the District of Columbia, and we shall be delighted to have you proceed in your own way.

STATEMENT OF WALTER L. FOWLER, BUDGET OFFICER, DISTRICT OF COLUMBIA, WASHINGTON, D. C.

Mr. FOWLER. Mr. Chairman, before I make this statement that I have here prepared; and which is very brief, I would like to say to Mr. Bates that we have here practically every department head, and I am pretty confident that they will be able to answer any questions with reference to these expenditures over the last 10-year period, and I would also like to bring to your attention before I make my prepared statement, a slight amplification of Mr. Young's statement with reference to the Federal payment.

Last year before the Committee on Appropriations, I made a statement which I would like to put into the record here. It is brief, and it gives you the history and background of that statement.

Under the title of the "Federal Payment to the District of Columbia" in the act of Congress providing a permanent form of government for the District of Columbia, approved June 11, 1878, appeared the first legislative provision definitely recognizing the obligation of the Federal Government to share in the cost and development of the District. That act provided, in part, that—

to the extent to which Congress shall approve of said payments, Congress shall appropriate the amount of fifty per centum thereof, the remaining fifty per centum of such approved estimate shall be levied and assessed upon taxable property and privileges in said District, other than properties of the United States and the District of Columbia.

Now, the 50-50 plan of appropriating for the District of Columbia, as it came to be popularly known, continued unchanged until the fiscal year 1921. For the fiscal year 1921 and 1922, Congress provided 40 percent, and in the appropriation act for 1923, made this 60-40 plan permanent law.

Beginning with the fiscal year 1925, Congress began ignoring this definite obligation, and its own substantive law, and commenced ap

propriating the Federal share in a lump sum each year, to and including the fiscal year 1939.

These lump-sum appropriations varied from $9,500,000 down to $5,000,000. Beginning with the fiscal year 1940, the Federal payment has been $6,000,000 as authorized by the District of Columbia Revenue Act of 1939, except that last year it was raised to eight.

For the fiscal year ending June 1940, and for each year thereafter until fiscal year 1947, the appropriation act provided that the payment of the United States to defray the expenses of the government of the District of Columbia is in the amount of $6,000,000.

I have here a table that runs from 1922 up to date, which gives you the total appropriations for each fiscal year; the District of Columbia's share, the United States share, and the percentage of the United States share, showing the steady decline.

Senator CAIN. May I interrupt to ask one question? In what year did you get your greatest sum of dollars from the Federal Government, and under what formula did you get it? Did you get it under 50-50, 60-40, or lump sum.

Mr. FOWLER. In 1931 and 1932 we received $9,000,000; in 1931 the amount was, $9,500,000; that was 20 percent.

Senator CAIN. But that was under the lump-sum procedure where they were getting away from either the 40-60 or 50-50.

Mr. FOWLER. That is right. You see, the idea as I see it, Mr. Chairman, is that the 40-60 formula became quite a heavy burden when the appropriations got up around $40,000,000, and the Congress refused, it just would not give that much money to the District, so they just ignored it.

May I insert that into the record?

Senator CAIN. Yes.

(The table referred to was as follows:)

Statement showing appropriations for the government of the District of Columbia by funds and the amount paid from Federal funds for the fiscal years 1925–38, inclusive

Mr. FOWLER. Now, the Commissioners of the District of Columbia for several years have known that in 1948 additional tax revenues would have to be made available to the municipality if it was to continue to maintain a high standard of service.

When we were before the subcommittee of the Committee on Appropriations of the House of Representatives, considering the appropriation bill for 1947, attention was specifically directed to our financial resources and to the fact that considerable additional revenues would have to be found to balance the budget for 1948.

We then advised the Congress, through its committee, that the Commissioners had appointed a committee to review the tax structure, and when that study was completed the committee's findings, with recommendations of the Commissioners, would be forwarded to the Congress.

We feel that we have been most fortunate in passing through the war years so successfully, from a financial standpoint; through the cooperation of the Congress, we paid our indebtedness, over $16,000,000, and we were able to set aside a reserve for capital improvements when priorities would permit, amounting to $10,000,000.

We were conscious of the fact that we were postponing many important capital items which perhaps would now have been available. for utilization for our people, had it not been for priorities and high

costs.

We had hoped that building and maintenance and operating costs would have, by this time, shown a considerable decline, but this is not the fact; we must face those high costs.

Now, the total amount of our budget, as Commissioner Young has just told you, is $95,082,500. Of this amount, the total estimated obligation for the highway fund is $9,210,000, and the total estimated obligations for the water fund is $8,646,000; the estimated obligations, the total estimated obligations for the general fund, remembering that we have three funds, is $77,226,200. Of this, the operating expenses will take $69,347,800 and the capital outlay, $7,878,400. So we have that picture before us. we going to get it? Well, the revenue availability is arrived at this way: We had unobligated balances released to surplus which amounted to $1,000,000, and then we had the revenues from existing legislation. We estimated that those revenues would be as follows:

We need $77,226,200.

How are

From real estate, $27,000,000; from personal tangible, $3,700,000; motor vehicle, personal. $1.250,000; penalties and interest, $225,000; alcoholic beverages, $2,500,000: beer, $300,000; insurance, $1,185,000; public utilities, banks, and so forth, $3.327.000; licenses and permits, $2.170,000: individual income, $3,900.000; corporation net income, $5.270,000: inheritance and estate, $1,200,000; earnings and miscellanecus. $3,545,000.

So we estimated that the total revenue availability from existing legislation would amount to $55,550,000. That, of course, added to the unol ligated balance, released to surplus, would not be enough. Therefore, we had to estimate on new legislation, and the legislation which has been sent to you here, according to our estimates, if enacted into law, would produce for the first year $11,300,000, broken down as follows:

Sales tax, $5,250,000; the cigarette tax, $600,000; amusement tax, $750,000: alcoholic-beverages tax, $2,200,000; the public-utility bills tax. $500,000; and the income tax, $2,000,000.

Now, that 11 million, added to the other revenues, plus the Federal payment of 8 million, and plus the sale of securities in the public

works investment fund which we have, of $1,376,200, would balance our general fund budget of $77,226,200; which would leave, however, in our public-works investment fund, as a cushion, $3,698,307.

Now, in these items of the budget, there are certain items which Mr. Bates just referred to, over which the Commissioners have no administrative control. The fact of the matter is, when you analyze it straight through, the Commissioners have hardly added more than 3 million dollars over last year, other than the mandatory provisions. Take the pay increases, $5,101,217, a 3-year total amounting to $11,518,900.

Now, that becomes regular each year, $11,518,900 pay increases, and do not forget that does not include school teachers' increases for 1948.

Mr. BATES. Let me interject a question at this moment, Mr. Fowler. Mr. FOWLER. Yes, sir.

Mr. BATES. You mention it because it is a very important item. I think we have figures here to show what percent of all expenditures of the government is composed of what we call personal services. Mr. FOWLER. That is right.

Mr. BATES. This 11 million dollars that you speak of, over which you say the Commissioners have no control, I presume you meant in the authorization and the direction of the Congress to increase salaries. Mr. FOWLER. That is correct.

Mr. BATES. Will you answer this question. Did the Commissioners at any time favor any legislation respecting any part of those salary increases that you mention, that 11 million dollars?

Mr. FOWLER. Yes; the Commissioners did.

Mr. BATES. For what part?

Mr. FOWLER. I think that the Commissioners favored the increase in the police and firemen's salaries, and they favored, to some extent, the increase in the school teachers' salaries, but as to the general increase affecting the Federal pay roll, the Federal employees, throughout the Government, they were not even heard on those, and took no part in it, because, as a general proposition, whatever the Congress does for the Federal employees, they do for the District employees who are classified, and they certainly would have no objection to it.

Mr. BATES. You are speaking about the 14-percent increase, is that right?

Mr. FOWLER. That is right. I mean at no point did the Commissioners object, and I think, certainly, they never would object to whatever the Congress did as to the over-all picture for all of the employees of the Government. We fit into that same category.

Mr. BATES. The thought that I want to leave in the record is whether or not the Congress has actually forced onto the District expenditures that the District did not want to assume, and that is the essence of the editorial that I read yesterday, that it is due to what Congress did in forcing these expenditures that resulted in this increased cost, or will as the years go on, to the District government.

Now, I want to clear that thing up. Are we responsible? If so, in any substantial degree or is it just one of those things that happened in an economic set-up that, due to increased cost of living, we must recognize it in the form of increased salaries.

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Mr. FOWLER. Well, I will say that in a great number of instances the Congress have passed legislation that the Commissioners have opposed. They have opposed the legislation, and you requested a few moments ago that we give you citations and we will be very glad to furnish you with that information.

Senator CAIN. One other question, please: According to your present estimates, if the Congress were to pass the revenue measures that you have in mind, if the Congress is to give the same cash contribution to the District that it gave a year ago, you would balance your budget? Mr. FOWLER. That is correct.

Senator CAIN. With how much of a surplus?

Mr. FOWLER. Well, I told you that we would have in the reserve fund $3,698,000. These other mandatory items, besides the salaries which, as you see, is very substantial, are something we have to face whether we want to or not until the whole philosophy of government is changed and things start coming down again. Civil-service retirement fund, $337,000; teachers' retirement fund, legislation of last year, $1,098,000; we have got the law and we have to pay the bill; the police and firemen's relief due to the increase in salaries in the case of police and firemen, their relief went up to the extent of $425,000 which we had to put into this budget. The United States courts, $151,000; and St. Elizabeths Hospital, $2,451,000, and it is rapidly increasing; so that our mandatory provisions alone were over $9,000,000.

Mr. BATES. Was that a direct result of the new legislation or was it a result of the Retirement Act being tied in with the general salary schedules on a percentage basis, or, in other words, the retirement law providing that when the salaries or wages of any District employee, any group, is increased, the percent shall apply also to the retirement. allowance?

Mr. FOWLER. That only relates to the police and firemen and not to anyone else.

Mr. BATES. Then you mention schools.

Mr. FOWLER. The school teachers' retirement fund was changed entirely last year.

Mr. BATES. And that resulted in an increase of how much?

Mr. FOWLER. $1,098,000.

Mr. BATES. Did the Commissioners come up here and recommend that?

Mr. FOWLER. The Commissioners did not oppose that because it is bringing the school teachers in line with other Federal employees; there was no opposition.

Mr. BATES. I am not asking whether it was opposed. How did it come up here?

Mr. FOWLER. The Commissioners approved it.

Mr. BATES. Was it the Commissioners' bill?

Mr. FOWLER. Certainly.

Mr. BATES. Then it was the Commissioners' bill; they are the ones who suggested it; it was not an item forced on them.

Mr. FOWLER. That item was not forced. Of course, the St. Elizabeths item and other items were not approved, but we have to meet the costs just the same.

The Commissioners, in budget preparation, must of necessity bear in mind the role of the Federal Bureau of the Budget with respect to