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Mr. BINGHAM. Mr. Chairman, that completes my testimony,
Mr. Brown. I understand that you are representing virtually all of the municipalities in the Nation. You say, “I am testifying as a representative of the American Municipal Association, which through its affiliated cities speaks for all of the municipalities in the United States."
Mr. BINGHAM. Yes, sir. By a process of policy formation which is widely publicized among tens of thousands of municipal officials, the American Municipal Association does develop a national municipal policy on a very democratic representative basis to present to the Congress, and I speak for them today.
Mr. BROWN. I understand this bill carries the sum of $20 million for loans. You say your State needs or wants sewage disposal facilities and plants, water systems, improvements, and extensions in the amount of $170 million. That is a pretty good amount, is it not?
Mr. BINGHAM. Well, Mr. Brown, I do not think on the whole that larger municipalities will use this program to any extent and they do represent three-fourths, maybe 80 percent of the total investments and the total problem in the sewage and water field.
However, a number of larger municipalities, as in the case of Flint, are having to pay exorbitant rates of interest on purely revenue bonds, particularly when they are pressing their debt capacity or the capacity of their particular utilities to meet some tremendous problems that have been either delayed or which, for one reason or another, have assumed tremendous proportions.
Mr. Brown. You understand, under the provisions of this bill not more than 10 percent can go to one State, do you not?
Mr. BINGHAM. I understand that. Mr. Brown. You are asking for about 25 percent. Mr. BINGHAM. Congressman, as I cited one case, we have four larger cities above 150,00 population and unless they have some tremendous problem, they will not use this legislation. In the case of Nashville with an accumulated 25-year backlog of unmet needs for sewers in a vast area of about 60 square miles and 160,000 people, I do not believe they can issue revenue bonds, and they are pressing their practical general obligation capacity now. I think a city of that sort might find it helpful to use this program.
Mr. BROWN. I thought the State of Tennesee was financially as strong as most any State in the Union. Mr. BINGHAM. Was financially strong. Mr. Brown. Yes; compared with any State in the Union. Mr. BINGHAM. Well, we are proud of our State, Congressman. We have about 270 prosperous communities of one size or another but we only have two-thirds of the national per capita income on the average and about 350,000 of our people a year are leaving Tennessee and going to Michigan and other growing industrial States—at least they were going up until last year. I want to say those people represent quite an investment.
We figure we spend $10,000 to rear and educate a young man or woman. When 350,000 a year leave for California, Texas, Michigan, and New Jersey to fill the assembly lines and engineering offices and the front offices of industry and business, we think it costs us about $350 million a year.
That is our chief export, manpower.
Mr. WIDNALL. The State of Tennessee sold some 2-percent bonds due December 1, 1965, and they are currently selling to yield 2.75 percent. The Federal Government 25/8 bonds due in 1958, the same year, are currently selling to yield 4.14 percent. If Tennessee municipalities need help in their financing, why doesn't the State of Tennessee do it? They can finance cheaper than the Federal Government.
Mr. BINGHAM. I have lobbied in several sessions of our legislature and I will have to give a brutal answer to a brutal problem. If you want to get a fine example of broken field running and ducking and dodging, you can look at almost any one of our 50 State governments or 49 State governments, including New Jersey. The States are basically irresponsible.
They have not in the highway field, the hospital field, the unemployment field, or any field you want to mention, stepped forward with an adequate program, and we cannot get our State government to assume any of the responsibility in this field.
I have to give a brutal answer because we are trying to serve 1,700,000 of our citizens in 207 incorporated municipalities with the necessities of life and we cannot depend upon the State government. We even went to our State government, Congressman, as they do in New Jersey, and requested them to authorize home rule taxing powers to be exercised by vote of the people, and we got a resounding denial only a few weeks ago in the biennial session of our general assembly.
Now, I must give a frank answer to that. We tried.
Mr. WIDNALL. I was very much interested in the statement you made that if this program went into effect, you felt the larger cities would not participate in them.
Now the current bond offerings for the 12 large cities, New York, Chicago, Philadelphia—I have them right here—the coupon rate at New York, 3 percent; Chicago, 314 percent.
Percent yield of market is 3.65 in New York.
San Francisco, 214 percent coupon rate; percent yield at present market, 3 percent.
Pittsburgh, 234 percent; 3.40 percent yield.
Now, in view of those facts on the record, do you not think that all of the major cities in the United States would come in for the grab bag if they could get money at 278 percent?
Mr. BINGHAM. I understand this bill is tied to the average rate of interest.
Have you made an analysis of what will happen to the average interest rate with the monetary policies of our Federal Government in the next few years? What wiĩl be the average rate of interest in the next year or two?
Mr. WIDNALL. I know this: It is becoming increasingly difficult to sell Government securities and we have to pay a higher and higher interest rate and one of the statements being made in testimony today that in projecting the renovation of hospitals and providing for new facilities the estimated cost has now gone up from $1 billion to $2 billion because of inflation and there is no more inflationary impact on the market than Government borrowing at more than the rate charged by the Government to lend the same money to the people.
I feel this is the type of bill where if we do not finance at the going rate as far as the Federal Government is concerned, we are merely contributing to inflation and we are just kidding ourselves by saying we are going to get it at 112 percent or 278 percent whatever it is.
Mr. BINGHAM. This bill is tied to the average Federal cost of money and I think that average will keep increasing because your borrowings at the Federal level and also at the municipal and State level are much higher now than they have been.
Mr. WIDNALL. I will yield to no one in my own interest in hospitals. I have worked hard in trying to raise funds for them and I work with them throughout my own area in New Jersey.
Something that amazes me though is an incident that took place just a few weeks ago when I took my son to a hospital in Paterson, N.J. There a whole floor of the hospital was shut up because they could not get sufficient staff. There appear to be a number of hospitals severely handicapped in their work because of shortage of
In our area hospital after hospital has foreign interns and some are most difficult to understand. Where are the American interns? We have to have more medical schools over here. We have a crying need for that here. To me right now we are, in a way, putting the cart be
fore the horse. We do not have the nurses to man existing facilities and we are talking about a great program to build many new ones.
Mr. BINGHAM. Congressman, I heard an interesting address made by the mayor of Newark, N.J. to the board of estimators about the future of his city and I remember that article about the decay in the center of Newark and the insoluble problems that the city has. As he pointed out without State assistance, without the State having broadened the municipal tax structure beyond the property tax, with the tremendous impact of annual property levies upon business and industry, there had been a flight of homeowners, business, and industry from the central city. The central city was in decay; it had been left without State aid to meet the cost of education of welfare, of low rent housing, and so on; they were in a period where costs were excessive and in the absence of a broadened tax base and State aid the future of his city was exceedingly unpromising:
That is not true of every city in this country but it is a pattern that applies to many;
Mr. WIDNALL. I think, if you went to Newark and looked around you, you would see a marked change taking place. Some of the major
. insurance companies were tempted to leave Newark a few years ago. They made a decision to stay and they are making a great contribution now through private enterprise toward rehabilitating the city.
Mr. SPENCE. I may say that the large cities through their organizations have been invited to appear and testify but none of them are to appear so I do not suppose they are interested. Our speakers have
I . been from the smaller towns. Are there any further questions?
Mr. BINGHAM. I might make an observation. The larger cities have not, as a whole, displayed too much interest in this legislation.
Mr. SPENCE. Mrs. Dwyer!
Mrs. DWYER. Mr. Chairman, I would like to ask a question of Dr. Bingham, please?
You testify as a member of the League of Municipalities, is that correct? It was my understanding that the League of Municipalities took the position that all State legislatures were unfriendly to cities but friendly to rural areas, is that correct?
Mr. BINGHAM. Well, maybe if my words will not be remembered 2 years from now when our general assembly convenes, I will have to be frank again. Our legislature has not been reapportioned in more than 50 years. It has a predominant rural representation, interest, and bias, although we are rapidly becoming and we are an urban State. Over and beyond the inequities of representation which discriminate against urban areas in State legislatures, I think the State government is basically an irresponsible level of government in this country. I base this on observation and long experience, and I know of no function of government, except perhaps the operation of a State price, where the State government steps up and takes responsibility for any program of service to the people. For example, in 1953, the U.S. Governors conference passed a resolution recommending the Federal-aid highway program be eliminated and ended.
One year later, Mr. Nixon, speaking for the President, came before the Governors conference and proposed a $101 billion Federal aid highway program.
Now the States have not built the highway program with just moderate Federal aid. They have not provided adequate hospitals; they have not provided adequate universities and colleges and our experience is that they will provide neither financial aid, nor even provide authority for local governments to solve their own problems by granting either authority to act or authority to tax.
Mrs. DWYER. Well, sir, what I am trying to say is this: In a tour last year of the Federal-State Relations Committee we heard time and time again from administrators in cities that the legislature was only interested in the rural communities and legislatures would not listen to the cities. Thereby the cities bypassed the State legislature and came to the Federal Government.
Now you talked in your testimony on rural areas and help for small communities in this program. My question again to you is, if the State legislatures are controlled by rural areas, why, then, do not those State legislatures help the small communities on this problem of treatment plants and sewage disposal?
Mr. BINGHAM. My testimony is to the effect that over and beyond a rural bias the States and their legislatures and Governors are basically irresponsible and do not undertake responsibility under our system of government. They have not made any effort in my own State to take care of the problems of nonmetropolitan areas, of incorporated communities in the population range of 1,500 to 15,000.
Mrs. DWYER. Sir, I would certainly say that is an indictment against the legislatures and the Governors of these United States.
Mr. BINGHAM. If I could make the indictment any stronger, I certainly would. I think they are crippling local government in this county. That is why we come to Washington.
Mr. SPENCE. If there are no further questions-
I notice the bill provides that notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury which shall not be more than the average annual interest rate on all interestbearing obligations of the United States. Is that not correct?
Mr. BINGHAM. Yes.
Mr. SPENCE. And the loans shall be of such sound value and so secured as to reasonably assure retirement and repayment?
Mr. BINGHAM. Yes.
Mr. SPENCE. There are no grants in this bill. It seems to me that the objective we desire to obtain would justify the Government in being liberal in trying to do away with these menaces to health and happiness of our people.
Mr. BINGHAM. I think it would do more for the nonmetropolitan areas of our country if we could divert some of the funds we are spending to sustain mere agricultural production and help them to convert over to an industrial economy. The President seemed to feel that the rural areas are swampy crossroads with no potential but I can assure you that communities of 1,500, 2,000, 3,000, and on up have tremendous industrial potential, what with our great mobility of labor force because of our transportation ease, but they are denied the opoprtunity to provide the basic public facilities which are essential for industrialization and urbanization.