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Washington, D.C. The subcommittee met, pursuant to notice, at 9:45 a.m., in room 2247, Rayburn House Office Building, Hon. L. H. Fountain (chairman of the subcommittee) presiding.

Present: Representatives L. H. Fountain, Ted Weiss, Mike Synar, John W. Wydler, Clarence J. Brown, and Olympia J. Snowe.

Also present: Representative Frank Horton of New York.

Staff present: Delphis C. Goldberg, professional staff member; Pamela H. Welch, secretary; and John Faso, minority professional staff, Committee on Government Operations.

Mr. FOUNTAIN. The subcommittee will come to order. Since some of you will have to leave early, I will yield first to Mr. Wydler. I will make my statement later.

Mr. WYDLER. Thank you, Mr. Chairman.

I am pleased this morning that the subcommittee will begin consideration of one of the most important and successful domestic programs-general revenue sharing.

It seems like only yesterday that our subcommittee last considered this program. You will recall that last time the subcommittee spent many hours and over 15 days of hearings in a thorough examination of the program.

The fact that we fulfilled our oversight responsibilities on this matter can largely be attributed to the conscientious manner in which this subcommittee, under your leadership, Mr. Chairman, conducted its business.

Though we are not scheduled for as many days of hearings this time around, I know that the committee work will be no less important.

While I am pleased with you, Mr. Chairman, I must say I am anything but pleased with the administration. In fact, I am appalled that Secretary Miller is not before us here this morning to explain the administration's position on the largest piece of domestic legislation which the Congress will consider during this session.

However, we alone should not be affronted. I am told that the administration also decided not to appear before Senator Bradley's subcommittee just a few weeks ago.

Perhaps everyone in the Treasury Department and the White House staff has been too busy traveling around the country to selected


primary States. Indeed, I am told that one of the reasons the administration is not here this morning is that a detailed announcement of proposed cuts in the budget is being withheld until after the New York primary next Tuesday.

I would hope that in between the primaries the administration could find some time to run the country, though I think it rather unlikely.

Many times issues seem to get narrowed down to one or two points of contention. So it is here.

There is little doubt that Congress will reenact the local share of revenue sharing in some form or other. However, the big issue will be whether or not State governments will continue to participate.

I believe they should, and I believe it would be a mistake for Congress to take them out.

We hear this argument about States' surplus. The argument goes something like this: Why should the Federal Government, while running a deficit, give revenue sharing moneys to State governments while they have a surplus?

I think the argument is superficial since it ignores the important points.

The real question should be, if that rationale is used, why should States be eligible for any of the more than $82 billion in aid that the Federal Government makes available to States and localities?

I would hope that witnesses who come before us during our hearings will be able to tell me why they think States should not get revenue sharing, but should continue to be eligible for highway aid, water aid, sewer construction, and so forth, to the tune of about $82 billion of Federal funds.

Why single out revenue sharing?

I suspect that those pointing to the State share really do not support the program anyway. But they know that they cannot eliminate the local portion.

Second, why go after revenue sharing when it has been one of the most successful programs ever devised to aid States and localities by the Federal Government?

Not only has it been the most successful, but it also has been one of the most responsible from a budgetary point of view.

According to the House Budget Committee, general revenue sharing payments over the last 5 years have increased at a rate of 12 percent. On the other hand, AFDC has gone up 31 percent. Social service programs have increased 48 percent. Highway programs have gone up 48 percent. Elementary and secondary education programs have gone up 51 percent. Unemployment payments have increased 66 percent.

EPA water programs have gone up 78 percent. Medicaid has gone up 81 percent. Health services have gone up 81 percent. CETA has gone up 152 percent. Subsidized housing has gone up 156 percent. Mass transit grants are up 247 percent.

All of these may be worthwhile programs, but I fail to see the logic in cutting the one program that has added the least to the Federal deficit.

What is the administration doing about the almost 500 individual categorical grant-in-aid programs which spread the bureaucracy rules and regulations over America ? State and local officials would much prefer the Congress to make cuts in categorical aid.

In fact, I would go so far as to say that we could make $2 or $3 in cuts in categorical programs for every dollar we leave in revenue sharing.

At a time when the country is supposedly tired of the obtrusive rules of the Federal Government, tired of the burgeoning Federal bureaucracy, tired of the rules and regulations, the administration wants to cut a program which costs one-tenth of 1 percent of program

funds to administer and employs only 200 people in the process.

Yet, we spin along on our merry way and insist that State revenue sharing is the culprit. I fail to see the logic in this.

It is only too bad the administration is not here to explain it today.

I support the existing program. I think it is responsible. I think it is effective, and I think it recognizes the fact that all wisdom does not reside here in Washington and that State and local officials many times are closer to local problems. Their judgments and solutions to these problems are usually better than those concocted by Washington bureaucrats.

My bill, H.R. 2291, introduced last year, calls for a straight extension of the existing program for another 4 years. That legislation has over 90 cosponsors, among them are 4 members of this subcommittee: Mr. Horton, Mr. Weiss, Mr. Brown, and Mrs. Snowe.

State and local officials support the existing program. They do not want any changes.

I am told, however, that the administration feels some compunction to alter it, but only slightly they say.

It is during times like this that I wish the President's friend, Bert Lance, was still in town. He said: "If it ain't broke, don't fix it." That is some advice the administration needs to heed right now.

Thank you, Mr. Chairman.
[Bills relative to the hearings follow:]



H. R. 1771

To amend the State and Local Fiscal Assistance Act of 1972 to provide incentives for the funding of education by means other than property taxes.


FEBRUARY 1, 1979 Mr. Care introduced the following bill; which was referred to the Committee on

Government Operations


To amend the State and Local Fiscal Assistance Act of 1972 to

provide incentives for the funding of education by means other than property taxes.


Be it enacted by the Senate and House of Representa

2 tives of the United States of America in Congress assembled,

3 That (a) section 106 of the State and Local Fiscal Assistance

4 Act of 1972 is amended by inserting at the end thereof the

[blocks in formation]


“(1) IN GENERAL.-Notwithstanding the preced


ing provisions of this section the amount allocable to a




State under this section shall be increased by an


amount equal to 10 per centum of the amount to which

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“(2) AUTHORIZATION.—There are authorized to


be appropriated such sums as may be necessary to in


crease the entitlements of State governments as pro


vided in paragraph (1).”.


(b) Section 108 of the State and Local Fiscal Assistance

11 Act of 1972 is amended by inserting at the end thereof the

12 following new subsection:




"(1) IN GENERAL.-Notwithstanding the preced


ing provisions of this section the amount allocable to a


unit of local government under this section shall be in


creased by an amount equal to 10 per centum of the

[blocks in formation]

“(2) AUTHORIZATION.—There are authorized to


be appropriated such sums as may be necessary to in

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