If our engineers find questions-something possibly overlooked by he State which is not frequent-that is called to the attention of the State authority. Mr. Bow. You have told me all that the States do, but what I sked you was, What do you do to make sure that these Federal funds are being properly spent? Do you take the word of the State? Mr. MCCALLUM. No; we have detailed engineering plans and speciications of the project and before any payments are made, site inspecions are made and can be made at each quarter of the progress of the project so that the municipality can be paid as the work progresses. Mr. THOMAS. Who are your inspectors, the General Services Administration? Mr. MCCALLUM. No; we do that ourselves, our own engineers. Mr. Bow. How many engineers do you have in this particular division taking care of this particular work under this act? Mr. HARRIS. We have a field staff of 55 people and 17 in headquarters. I would say that 60 percent of those are engineers so we have around 70 people. Mr. Bow. About 70 people? Mr. HARRIS. About 36 engineers. Mr. Bow. That is all, Mr. Chairman. Mr. THOMAS. Thank you very much, gentlemen. DISTRICT OF COLUMBIA WEDNESDAY, JUNE 8, 1960. WITNESSES HON. ROBERT E. MCLAUGHLIN, PRESIDENT OF THE BOARD OF COMMISSIONERS HON. DAVID B. KARRICK, COMMISSIONER BRIG. GEN. A. C. WELLING, ENGINEER COMMISSIONER D. P. HERMAN, BUDGET OFFICER Mr. THOMAS. Gentlemen, the committee will please come to order. We have with us today a distinguished group from the District of Columbia and we have our friend here from the District government, Commissioner McLaughlin. We are certainly delighted to have all of you, gentlemen. Mr. Commissioner, do you want to talk about this contribution of $7 million first? Mr. MCLAUGHLIN. Could I read a brief statement here which gives my position? Mr. THOMAS. Go ahead. GENERAL STATEMENT Mr. MCLAUGHLIN. Mr. Chairman, we thank you for the opportunity of appearing before this committee to testify on the items for the District of Columbia contained in House Document 403. Our requests are divided into two parts-those payable from Federal funds and those payable from District funds. Actually the two categories are interdependent since the Federal funds items become part of the revenues of the District and are used to finance the items payable from District funds. The estimates payable from Federal funds amount to $35 million and they are for the following purposes: Payment to general fund of the District__ Contribution to metropolitan area sanitary sewage works fund....... Total----- 35,000,000 The latter two items will be available contingent on the passage of H.R. 12063 or similar legislation. The requests for District funds amount to $39,703,373 and they are chargeable to funds as follows: There are sufficient funds available to finance the items payable from the highway, water, and sanitary sewage works fund and the metropolitan area sanitary sewage works fund will finance the appropriation for the Potomac interceptor. Although appropriations of $11,405,973 are requested from the general fund, language is proposed in "Capital outlay, public building construction and capital outlay, Department of Sanitary Engineering" to defer $2 million of expenditure until fiscal year 1962 which reduces the cash requirement for 1961 to $9,405,973. This would be financed by the requested Federal payment of $7 million and the balance from District revenues. Our original plans contemplated that the requests, with the excep tion of the metropolitan area sewer items, would be budget amendments. However, the early approval of the District of Columbia Appropriations Act, 1961, necessitates the submission of the items included in House Document 403 as supplemental requests. Mr. Chairman, the first item is "Federal payment and it is assigned to me. I have a very brief statement on that. Mr. THOMAS. Your first statement was perfect and if your second one is as good as that, we will give you a plus-A. Let us see if I can summarize your needs. You have some 15 or 20 items totaling around $40 million and of that you want $10 million in Federal funds. The remainder will be your own money. Mr. HERMAN. Three and seven. Mr. THOMAS. Does that roughly summarize your proposition? Mr. MCLAUGHLIN. Yes, sir. Mr. THOMAS. Go ahead with your other statement. STATEMENT ON FEDERAL PAYMENT Mr. MCLAUGHLIN. This is brief, but I think it is pertinent now on the subject of the Federal payment. There is presently appropriated the amount of $25 million as the Federal payment to the District for the fiscal year 1961. This request for an additional $7 million will increase the total to $32 million, the amount authorized by the act of June 6, 1958 (Public Law 85-451). Also the act of March 31, 1956 (Public Law 84-460) provides that whenever a deficiency exists between the amount appropriated and the amount authorized, additional appropriations can be requested in subsequent years to pay such deficiencies. The deficiencies through the fiscal year 1961 now amount to $29 million. When the 1961 estimates for the District of Columbia were submitted to Congress last January, a segment of the capital outlay program was proposed for later transmission. It was contemplated that these items would be transmitted subsequent to the passage of legislation modifying the tax structure of the District which would have resulted in an increase in revenues of $8.3 million in 1961. The program to increase taxes has been submitted to Congress, but as of this date no action has been taken. The deferred portion of the capital program is fully as important as the items that have already been approved for 1961. The request pending before this committee will enable the District to pay debt installments to the Federal Government, provide classrooms for increased school enrollment and reduce the size of public school classes, purchase sites for libraries and a firehouse, relieve overcrowded conditions at institutions, and install stormwater sewers to alleviate the pollution of the Potomac River. Mr. THOMAS. What is the dollar amount of those capital expenditures? Mr. HERMAN. $38,656,800. That includes $28 million for the Potomac interceptor. Mr. MCLAUGHLIN. Since it is most important to proceed with these projects, and in the absence of congressional approval of new revenues, the Commissioners are requesting that $7 million of the deficiency in Federal payment be made available to partially finance these require ments. (A complete statement on Federal payment follows:) THE FEDERAL PAYMENT TO THE DISTRICT OF COLUMBIA Washington is more than a seat of government. It is the symbol of our great Federal Union and has a place in the hearts and the minds of all Americans and of free peoples everywhere. Washington gives meaning to the personality and the spirit of a great nation in a free world society. These considerations impose such special requirements as: subordination of local interests to the Federal interest in matters of planning, zoning, and related activities; mantenance of wide avenues and beautiful streets; dedication of large areas of valuable land to Federal purposes; exemplary standards in health, welfare, and educa 56863-60-5 tional programs; special tax benefits for large segments of the local community; and numerous other factors which, on the one hand, occasion increased costs and, on the other, handicap revenue possibilities. Obligations occasioned by the Federal interest, and thus considered properly chargeable to the Nation's taxpayers, are met through an annual Federal payment to the District of Columbia government. Annual Federal payments have been made in varying amounts since the District of Columbia was established as the Nation's Capital. From 1879 through 1920 the Federal payment was 50 percent of the general fund appropriation; i.e., of each dollar appropriated to operate and maintain the District, the local taxpayer paid 50 cents with the remaining 50 cents being paid by the Federal Government. In 1921 the Congress of the United States discontinued its practice of paying 50 percent of the cost of operating the District of Columbia. Since that time. the percentage of costs borne by the United States has fluctuated from a high of 39.5 percent of general fund appropriations in 1924 to a low of 8.5 percent in 1954. Since 1956, the Federal payment has been only slightly over 12 percent. The newly increased authorization (Public Law 85-451) provides for an annual payment of $32 million, which is approximately 13 percent of the general fund budget estimate for fiscal year 1961. LIMITATIONS UPON REVENUE POSSIBILITIES Illustrative of the ways in which the District's revenues are limited through its role as the Federal City, are: 1. The city was established and developed to serve the Federal Government as its Capital. It does not have and probably never will have independent basie industries that would support it. The Federal Government is actually the major “industry” in the District. The tax-exempt status of the Federal Government deprives the District of major sources of tax revenue that are paid by the prin cipal employers and land users in other cities. Recent studies show that a crosssection of the Nation's largest corporations pay approximately $1 in State and local taxes for every $20 spent for salaries. If the same ratio were applied to the annual Federal payroll of more than $1,250 million in Washington, and the Federal Government were to pay to the District the amount which a private employer of comparable size would pay in State and local taxes, the annual Federal payment to the District would approximate $62.5 million. 2. Washington attracts tax-exempt activities such as foreign agencies, patriotic organizations, and others, because it is the Capital City. Each year more property is taken off the tax rolls. Property with an assessed value of $81 million has been taken off in the last 3 years, making the total $275.3 million now exempt. 3. Building-height limitations are set to prevent any commercial structure from overshadowing Federal structures, which precludes the skyscrapers common to large cities. This limitation holds down realty values and, as a result, tax revenues. For example, Chicago in its central business district has an employment density of about 160,000 persons per square mile contrasted with 90,000 in Washington. 4. Many local residents maintain their legal domiciles elsewhere and are thereby exempt from payment of District of Columbia income tax. Also among District residents is an extraordinary number of persons in the military service who are exempt from the District of Columbia income tax under the Soldiers and Sailors Civil Relief Act. 5. Many cities extend their boundaries to include growing suburbs. This obviously is not possible here, but is particularly pertinent to the city's problem in view of the fact that during the postwar years the income of District residents is not increasing at the rate of the surrounding suburbs. The median family income per household in 1947-58 compares as follows: Source: 1947 data, U.S. Census Bureau, 1958 data, Washington Board of Trade: Dr. J. P. Picard. INCREASED COSTS In the matter of expenses, the District incurs increased costs over and above those incurred by an ordinary city because it is the Nation's Capital. Some examples of these increases follow: 1. The Fine Arts Commission and National Capital Planning Commission require that most public works structures be designed to harmonize with the Federal master plan for the Capital City. It is estimated that the structure of the new Theodore Roosevelt Bridge will cost $2.5 million, or 33 percent extra, because of this. The Municipal Center is also an illustration of fine monumental construction consistent with such concepts. Furthermore, the delay in receiving concurrence of other agencies frequently defers construction which results in considerable additional cost. 2. The federally conceived plan of the city calls for wide, beautiful, tree-lined streets such as few other major cities enjoy. Planting and maintaining these trees is costing over $620,030 this year, and further increases are in sight. Wide streets also mean additional paving costs. 3. An unusually fine federally operated zoo is wholly paid for by the District of Columbia. The cost this year is approximately $1.3 million. 4. The National Park Service receives more than $3 million each year from the District of Columbia primarily for the maintenance and operation of federally owned and controlled parks in the city. Of this amount, the District pays approximately $600,000 per year to support the Park Police. This is considerably more park land and more park expenditures than are customary in comparable cities. 5. The District has unique Federal legislation which frequently adds considerably to the cost of maintaining the city. For instance, under Public Law 648, 79th Congress, as amended, the District is required to share the cost of Federal grants for the construction of a hospital center and other hospitals. The potential liability for these purposes is $18.5 million. It is estimated that 30 percent of the patients treated at these hospitals are non-District residents. 6. Because of Federal expansion in the area, Washington is now completely encircled by a thickly settled area that is more populous than the city itself, and which requires the construction of expensive arterial highways to enable suburban populations to move to and from the city. The fact that two rivers have to be crossed by much of this traffic requires the construction of very costly bridges. The District, more so than other municipalities, renders numerous services to nonresidents. Faced with a somewhat similar situation, some cities have resorted to a payroll or earnings tax applicable to residents and nonresidents alike. The imposition of such a tax in the District would, however, further increase the already heavy tax burden since District residents would pay about two-thirds of the total yield. TAX COMPARISONS A significant comparison of taxes is one which measures the relative burden of taxes upon the taxpayer. The following table shows both the present and proposed level of District taxes compared with the current level of taxes in other Washington metropolitan area jurisdictions. Metropolitan area tax burden fiscal year 19591 (family of 4 owning a house and a car) 1 Includes sales, personal income, real and personal property taxes, and auto tags. |