Mr. FOUNTAIN. There is no question but that some localities in every State will lose some funds if the States' share is not continued. I have always favored keeping the States in, but I am in a state of indecision at this point because of the critical financial situation which confronts us. You made reference to my own State of North Carolina. I might say that we did have a big surplus, but do not have it now. Like some 32 other States, we reduced taxes; 33 States have reduced taxes within the last couple of years. To some extent, some States may have boxed themselves in by passing resolutions asking for a balanced Federal budget. Mr. Cosgrove? Mr. COSGROVE. Mr. Chairman, let me add this. The feeling of many of us in the trade union movement is this. The revolt of the people against taxation may be against the regressive and unfair taxation which is heavily based on real estate sales taxes rather than on the more progressive forms of taxation such as you, generally speaking, see in the Federal Government. On the matter of inflation itself and dealing with it, we have had some direct control experience with our Federal employees who between 1 year and 2 years ago had to go with a 5.5-percent increase, as you are aware, when the consumer price index increase was much greater. At the same time, President Carter saw fit to write to the mayors of the large cities and the Governors asking that they hold public employee wages at 5.5 percent. So, we have had some experience with direct controls, and while we do not think they are any solution to the problem of inflation, it may be that in the short term they would have merit, if they were combined with across-the-board controls of profits and of dividends and generally of the economic factors. The time could be used to address a national rationalization of our approach to these problems such as is envisaged in principle in the HumphreyHawkins Act. With reference to proposition 13 from California, and now the new one that they will be facing in June as part of the primary-proposition No. 9, which is in many ways more drastic-they are going to face problems. Our judgment about that is that this is the revolt against an inequitable tax system. It cannot be construed as a desire to repeal the New Deal, or the Fair Deal, or the Great Society, or the New Frontier, or the great social and economic advances we have made. The history of this country for about 200 years now is one of having more to devote to the public or common good and to the least fortunate among us. This can be maintained in that general direction by the production of a "bigger pie" which has been our classic approach to the thing. With all deference to the ecologists and the necessity for cleansing the environment, we would, I think, not take the position that we want to return to a small America or an America at the level of 1900, but rather having an expanding and growing America that can meet its social and moral obligations in terms of human dignity and the purposes of this country. Mr. FOUNTAIN. Thank you. Mr. Weiss? Mr. WEISS. I did not want to let the occasion go by without thanking all of the panelists for supporting a piece of legislation which I have been trying to get the House to consider seriously for the last 12 years. I am talking about mandatory, across-the-board controls. Our chances of getting that legislation passed are as difficult now as they were 18 months ago. I do not understand why, but the economists of the administration are still fighting the last economic war rather than the one coming up. Some who have left the administration have changed their position. I had occasion to listen to Barry Bosworth at breakfast this morning. He has been on record now for some time. He says that if you rely on fiscal and monetary efforts in terms of restraints to cure this problem of inflation, then you have to talk about having something like 10 million additional Americans who currently have jobs losing their jobs. That kind of America is not one that I look forward to with any kind of enthusiasm. I would think that none of us would. Yet, the policies we are following in this Congress are going right down that path. I guess what is going to happen is that after the elections are over, whether we get a new President or the old President in, we will be fighting the depression instead of inflation. Maybe then we will start looking realistically as to where we are. Thank you, Mr. Chairman. Mr. FOUNTAIN. I want to thank the panel for its testimony. We are delighted to have Congressman Minish with us this morning. He will introduce our next witnesses. STATEMENT OF HON. JOSEPH MINISH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY Mr. MINISH. Thank you, Mr. Chairman. I appreciate the opportunity of bringing before your subcommittee two of my friends, Arthur J. Holland, the mayor of the city of Trenton, one of the oldest cities in the United States. He is an individual who has done a tremendous job considering all the problems that cities of that age have. Also, we have Commissioner Richard I. Bonsal from Montclair, N.J., which is part of my district. He is a professional engineer and probably did more work on the inequity of the municipalities versus the township than any man in the country. I would just like to say, Mr. Chairman, that while you are going to have many witnesses before you, and have had earlier, these two individuals have been in the trenches. They are really in the infantry as compared to those people that testified before your subcommittee, and while they have very responsible positions, when you get it from two men who have been slugging it out in the trenches, you know that you are getting it firsthand. Let me apologize for not being able to stay with you. I do have another committee meeting, but it is my pleasure to introduce the commissioner of the municipality of Montclair, N.J., Richard Bonsal, and following him the Honorable Mayor of the city of Trenton, Arthur Holland, will have a few remarks to make. I want to thank you very much. STATEMENT OF RICHARD I. BONSAL, COMMISSIONER, AND DIRECTOR, DEPARTMENT OF PUBLIC WORKS, MONTCLAIR, N.J. Mr. BONSAL. It is a privilege to appear again before the subcommittee for the purpose of seeking legislative correction of an inequity in the allocation of general revenue-sharing funds on the one hand to townships, and on the other hand to municipalities having other designations such as cities, towns, villages, and boroughs. The mere difference of designation has been creating severe distortions in the funding. In my previous testimony before the subcommittee in 1975 on the general revenue-sharing legislation when it was up for renewal, I presented testimony requesting relief from this inequity but to no avail. The following year, Congressman Minish submitted a corrective amendment to the House of Representatives, but that too failed. Since that time, with the assistance of the city of Paterson, the city of Trenton, and the city of Plainfield, and other New Jersey municipalities, various alternative avenues of relief have been pursued in an effort to have townships and nontownships compete simultaneously with each. other within their respective county areas in our State-the only State which has had a longtime ongoing concern about the matter. Governor Byrne has been supportive of these efforts for which we are deeply appreciative. I have a supportive letter from the Governor which I would like to read at the conclusion of my testimony, and then I will submit it for the record, if I may. As we appear here today, our long-sought goal seems to be more than met by the new provision in the administration's bill which would eliminate all tiers and cause all types of local governments, except Indian tribes, to compete simultaneously with each other within their respective States. As seekers of equity, our cup runneth over. For years, because of the difficulty in having any changes made, we have pursued a limited goal of seeking relief for the township inequity in New Jersey alone. The administration has now responded by eliminating the township distinction throughout the entire country with the distinctions as to county areas and county governments eliminated also. This is breathtaking. Having had so many disappointments over the years, however, we cannot help being concerned about whether there will be sufficient. political support to enact the administration's new provision. This might result in the provision being amended out of the bill thereby perpetuating the township inequity in New Jersey where the problem is acute. The township inequity in New Jersey is of a very substantial magnitude. In the four New Jersey counties of Essex, Hudson, Mercer, and Passaic, the 19 townships in these counties receive about $2.5 million per year more than they would if they were treated as other municipalities. This huge sum is at the expense of other municipalities in the four counties with the largest impact being on the cities. The losers include East Orange-$102,000; Jersey City-$151,000; Trenton $591,000; Paterson-$258,000; Passaic-$83,000; and Clifton$62,000. Worse still, under New Jersey law, it is possible for nontownships by independent action to reclassify themselves as townships for demographic and revenue-sharing purposes. This has happened twice so far and a third such change is in the offing. In 1977, the Village of South Orange changed its name to the Township of South Orange Village. This mere name change resulted in an increase in its entitlement from $73,000 to $336,000. South Orange, by the way, has a per capita income of $10,889-the seventh highest of all of New Jersey's 567 municipalities. Similarly, when the Borough of Fairfield changed itself to the Township of Fairfield in 1978, its entitlement increased from $77,000 to $235,000 and would have been $346,000 except for the 145-percent constraint rule. Also, the Town of West Orange has announced it intends to change to the Township of West Orange. I estimate that its entitlement will be increased thereby from $252,000 to $939,000, should the present allocation procedure remain in effect. My purpose in citing these details is to point out that should the administration provision fail, New Jersey will still be without any remedy whatsoever and the worsening situation may further deteriorate as other municipalities seek benefit for themselves at the expense of their neighbors by getting on the township bandwagon. Surely this would be most unjust. Therefore, it is our plea that as a fallback alternative, special legislation be enacted for New Jersey by amending the definition of townships in section 108 (d) (3) according to language suggested in my prepared statement. Mr. FOUNTAIN. Without objection, your entire prepared statement will appear in the record at this point. [Mr. Bonsal's prepared statement follows:] STATEMENT BY COMMISSIONER RICHARD I. BONSAL ON BEHALF OF THE TOWN OF MONTCLAIR, CITY OF PATERSON, CITY OF TRENTON, BEFORE THE INTERGOVERNMENTAL RELATIONS AND HUMAN RESOURCES SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS UNITED STATES HOUSE OF REPRESENTATIVES RE: PROMOTING MORE EQUITABLE GENERAL REVENUE SHARING INTRA-COUNTY ALLOCATIONS IN NEW JERSEY BY AMENDING SEC. 108 (D) (3) OF THE ACT APRIL 16, 1980 |