ACKNOWLEDGMENTS This report represents the combined efforts of the entire Commission staff. The major responsibility for the staff work was shared by John Shannon and David B. Walker, Assistant Directors, and their colleagues Jacob M. Jaffe, Albert J. Richter, Will S. Myers, Jr., James H. Pickford, Page L. Ingraham, Frank X. Tippett, L. Richard Gabler, Eugene R. Elkins, Hope Marindin and Thomas Hanna, all of whom relied on Sandra Osbourn for library research and reference service. Research on fiscal disparities in the 37 largest metropolitan areas and in-depth fiscal studies in 12 of those areas was made possible through an Urban Planning Research and Demonstration contract awarded by the Department of Housing and Urban Development under the provisions of Section 701 (b) of the Housing Act of 1954 as amended. Professor Seymour Sacks of Syracuse University conducted the fiscal disparities research and submitted the initial draft of detailed findings. The work on the 12 metropolitan fiscal case studies included in Volume 2 of this report was carried out under contract with Seymour Sacks, Roy Bohl, James Banovetz, Morris Beck, Wendell Bedichek, George F. Break, Alexander Ganz, John Riew, Frederick Stocker, John A. Vieg and J. D. Wingfield. Professor Sacks of Syracuse University and Mr. Jaffe of the Commission staff coordinated the efforts of the "on-the-scene" investigators. Throughout this project, the staff benefited from the advice and counsel of L. L. Ecker-Racz, Assistant Director at the time the study began. Special thanks are due the staff of the Governments Division, Bureau of the Census, for the data and assistance they provided, especially in connection with the analysis of metropolitan fiscal disparities. The Commission and its staff benefited from an informal review of a draft of the report by a number of individuals, including John Bebout, Andrew Bullis, George Bell, Robert Berry, Jo Bingham, Gerard Brannon, Charles Byrley, William Cassella, Arnold Diamond, Daniel Elazar, Frank Fernbach, H. R. Gallagher, Woodrow Ginsburg, Del Goldberg, Nathaniel Goldfinger, Thomas Graves, Robert Harris, Peter Harkins, Patrick Healy, Manuel Helzner, Bernard Hillenbrand, Victor Jones, Frank Keenan, Lawrence Kegan, I. M. Labovitz, Carl Madden, Allen Manvel, James Maxwell, Mary McAniff, Richard Murphy, Selma Mushkin, Richard Nathan, Tom O'Brien, Joseph Pechman, Robert Rafuse, William Robinson, George Roniger, Seymour Sacks, Harry Schieber, Charles Schwan, Charles Smith, Robert Smith, Tom Smith, Robert Steadman, E. Winslow Turner and Anita Wells. The involvement of the entire professional staff in this report makes it fitting to separately acknowledge the vital role of those who backstopped the research effort with clerical and technical skills, specifically: Elizabeth D. Green, Frances D. Buckler, Mary R. Hamrick, Karen Haagensen, Jackie Wallace, Ronald Ross, Sue A. Reynolds, Inez B. Rountree, Lavinia Clarke, Jean L. Dorsey, Linda Topham and Deloris Boyd. The Commission records its appreciation for the contribution of these individuals to this report. Responsibility for content and accuracy rests, of course, with the Commission and its staff. The Commission gratefully acknowledges the financial assistance from the Department of the Treasury for the printing of Volume 1, and from the Department of Housing and Urban Development for its financial support of the metropolitan fiscal disparities research and the printing of Volume 2. William G. Colman Executive Director WORKING PROCEDURES OF THE COMMISSION This statement of the procedures followed by the Advisory Commission on Intergovernmental Relations is intended to assist the reader's consideration of this report. The Commission, made up of busy public officials and private persons occupying positions of major responsibility, must deal with diverse and specialized subjects. It is important, therefore, in evaluating reports and recommendations of the Commission to know the processes of consultation, criticism and review to which particular reports are subjected. The duty of the Advisory Commission, under Public Law 86-380, is to give continuing attention to intergovernmental problems in Federal-State, Federal-local, and State-local, as well as interstate and interlocal relations. The Commission's approach to this broad area of responsibility is to select specific, discrete intergovernmental problems for analysis and policy recommendation. In some cases, matters proposed for study are introduced by individual members of the Commission; in other cases, public officials, professional organizations or scholars propose projects. In still others, possible subjects are suggested by the staff. Frequently, two or more subjects compete for a single "slot" on the Commission's work program. In such instances selection is by majority vote. Once a subject is placed on the work program, a staff member is assigned to it. In limited instances the study is contracted for with an expert in the field or a research organization. The staff's job is to assemble and analyze the facts, identify the differing points of view involved and develop a range of possible, frequently alternative, policy considerations and recommendations which the Commission might wish to consider. This is all developed and set forth in a preliminary draft report containing (a) historical and factual background, (b) analysis of the issues, and (c) alternative solutions. The preliminary draft is reviewed within the staff of the Commission and after revision is placed before an informal group of "critics" for searching review and criticism. In assembling these reviewers, care is taken to provide (a) expert knowledge, and (b) a diversity of substantive and philosophical viewpoints. Additionally, representatives of the National League of Cities, Council of State Governments, National Association of Counties, U.S. Conference of Mayors, U.S. Bureau of the Budget and any Federal agencies directly concerned with the subject matter participate, along with the other "critics" in reviewing the draft. It should be emphasized that participation by an individual or organization in the review process does not imply in any way endorsement of the draft report. Criticisms and suggestions are presented; some may be adopted, others rejected by the Commission staff. The draft report is then revised by the staff in light of criticisms and comments received and transmitted to the members of the Commission at least two weeks in advance of the meeting at which it is to be considered. In its formal consideration of the draft report, the Commission registers any general opinion it may have as to further staff work or other considerations which it believes warranted. However, most of the time available is devoted to a specific and detailed examination of conclusions and possible recommendations. Differences of opinion are aired, suggested revisions discussed, amendments considered and voted upon, and finally a recommendation adopted (or modified or diluted as the case may be) with individual dissents registered. The report is then revised in the light of Commission decisions and sent to the printer, with footnotes of dissent by individual members, if any, recorded as appropriate in the copy. SCOPE OF THE REPORT The Commission's study of Fiscal Balance in the American Federal System is contained in two volumes. In Volume 1, the Commission analyzes the basic structure of fiscal federalism, isolates the major shortcomings of the present system, identifies the fiscal sources of tension, and prescribes policies designed to strengthen the fiscal foundation of our intergovernmental system. In Volume 2, the Commission concentrates on the critically urgent problems caused by the growth of fiscal disparities among jurisdictions within metropolitan areas. Specifically, the Commission probes in depth the "fiscal facts of life" in the 37 largest metropolitan areas, draws on special case studies in 12 of these areas, and sets forth a series of recommendations designed to bring metropolitan needs and resources into greater alignment. The Commission was aided in its urban fiscal research by a grant from the Department of Housing and Urban Development. A. RECOMMENDATIONS Volume 1. Basic Structure of Fiscal Federalism Broadened Fiscal Mix and Greater Fiscal Flexibility in Federal Aid to States and Localities 1. The Commission concludes that to meet the needs of twentieth cen- |