rule. I believe that the people of the world would view passage of home rule for the District of Columbia as further evidence of our consistent devotion to the cause of democracy and self-government.

I know that each of us as Members of the U.S. Congress, both House and Senate, would feel that we had not only satisfactorily performed our duty by granting home rule, but we would have freed ourselves to perform more competently the other significant tasks which the country expects us to perform. The diversion of our energies to District affairs, which are a matter of indifference to most Members, detracts from our time and energy needed in the discharge of our other duties.

For all of these reasons, I urge the Senate again to pass this measure, and assure the committee I will do what I can to encourage our own body, the House, to do the same.

I thank you.

Senator HARTKE. I certainly want to thank you for your statement this morning, and your interest in this matter. We appreciate your coming over this morning. I have no further questions.

Mr. JOHNSON. Thank you, Mr. Chairman.

Senator HARTKE. The hearings will now be recessed until tomorrow morning at 10 o'clock, at which time we will reconvene in the regular District of Columbia meeting room, which is 6226. I believe we will possibly be meeting there on Thursday and Friday, and, if necessary, we will reconvene on Tuesday and Wednesday the week following.

(Thereupon, at 11:30 a.m., the subcommittee recessed to reconvene at 10 a.m., Thursday, April 16, 1959.)

DISTRICT OF COLUMBIA CHARTER ACT

THURSDAY, APRIL 16, 1959

U.S. SENATE,

SUBCOMMITTEE ON THE JUDICIARY

OF THE COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D.C. The subcommittee met, pursuant to call, at 10 a.m., in room 6226, New Senate Office Building, Washington, D.C., Senator Vance Hartke presiding.

Present: Senator Hartke.

Also present: William P. Gulledge, counsel; Donald P. Feldman, assistant counsel; Chester H. Smith, chief clerk; and Charles Lee, assistant chief clerk.

Senator HARTKE. Good morning, ladies and gentlemen. I think that we will be able to move along this morning without any interruption, and as far as I am concerned personally I am not pressed to go to some other meeting, so we may move a little better than yesterday.

I want to thank those people who did testify yesterday. I think we covered a lot of ground in a hurry.

I am going to ask the Commissioner to please resume the position of the witness this morning.

STATEMENT OF HON. ROBERT E. MCLAUGHLIN; ACCOMPANIED BY CHESTER GRAY, IRVING BRYAN, SCHUYLER LOWE, AND DAVID F. NOLL, MANAGEMENT OFFICE STAFF-Resumed

Commissioner MCLAUGHLIN. May I bring my staff with me? Senator HARTKE. Bring your staff with you; yes sir.

As you know, Senator Morse did introduce his bill yesterday as I indicated he would, and it is S. 1681. For the purpose of this hearing the special bill will be considered in hearing with S. 659, S.J. Res. 10.

Senator Morse has also explained to the chairman that it was impossible for him to appear due to the fact that he is having hearings on another matter where he is a subcommittee chairman himself, and therefore it is impossible for him to appear until a later date, but he will appear before the hearings are concluded.

Commissioner, I have some questions I would like to ask of you, and I want you to know that some of them may be in the nature of technical approaches and some of them may require expansion of thoughts you expressed yesterday. I hope that you will realize that what we are trying to do here is to amplify information and in no way cast any reflections upon testimony already received. But these

are some things that possibly the Congress would want to know, and I think it is better for us to have at least a clarification of them here. Commissioner MCLAUGHLIN. Yes, sir.

Senator HARTKE. I want to submit to you a rather compound question for your consideration and also of Commissioner Karrack. It may be possible that you may want to elaborate upon them with written memorandums at a later late.

With your indulgence, however, I am going to try to get as much comment and discussion on these matters as we can today.

There is contained in the preamble of S. 659, on page 2, the following statement:

Finally, it is recognized that the restoration of the powers of local self-government to the inhabitants of the District by this Act will in no way change the need, which arises from the unique character of the District as the Nation's Capital, for the payment by the Federal Government of a share of the expenses of the District government, and it is intended that an equitable share thereof shall be paid annually.

That is the quote.

As you are well aware the annual Federal payment to the District has been much in the limelight during the past few weeks. Under the terms of the bill, how do you envision that the Federal payment process will work? Or to put it another way, would you agree that as of the present time, by the tests of the appropriations process-that is the manner in which these estimates are now submitted to the Congress by the Bureau of the Budget, and the classification system under which the District personnel are employed and paid-the city may be said to be the executive branch rather than the legislative branch of the Federal Government? Under this hypothetical situation, that is, if S. 659 is enacted, just how would you deal with this particular process? Commissioner MCLAUGHLIN. Mr. Chairman, it has always been our understanding and contention that home rule in the District would not minimize the necessity for the making of a Federal payment. As a matter of fact, prior to our present form of Government, that is, from 1802 to 1871, the Federal payment to the District government averaged about 42 percent of the cost of the government of the District of Columbia. There is a clause or a section under which broadly I have always assumed that adjustments would be made between the Federal and the District Governments. It is section 731 of S. 659, on page 51, and it provides as follows:

Subject to section 901 and other provisions of law, the Governor, with the advice and consent of the Assembly, and the Director of the Bureau of the Budget, are authorized and empowered to enter into an agreement or agreements concerning the manner and method by which amounts owed by the District to the United States, or by the United States to the District, shall be ascertained and paid.

Now I don't recall that there is a more explicit provision in our bill, but I know as this bill was developed the thought was always that there would be a Federal payment which related equitably to the costs of maintaining a deluxe sort of city here, which we so frequently refer to as the showcase of democracy.

For instance if the concept of a Federal payment does not fall technically within the words "amounts owed by the United States to the District," then perhaps there should be some other provision added

or perhaps it could be handled annually by a bill introduced in the Congress.

I can never quite read Schuyler Lowe's writing. He said something here which we ought to have on the record.

Senator HARTKE. Let us do this: Let us not worry too much about formalities here. If any of your staff care to make any comments, it is all right with me. I think it is perfectly all right.

Mr. Lowe. The point I was mentioning to the Commissioner is that S. 659 if enacted would not rescind or otherwise amend the present authorizing acts pertaining to the Federal payment. Therefore, entirely apart from this proposed section 731, the U.S. Government could still go to the Congress through the Bureau of the Budget requesting an annual Federal payment up to the full authorized amount. Senator HARTKE. Let us come back to section 731. In the first place, the words there are "amounts owed."

Commissioner MCLAUGHLIN. Yes.

Senator HARTKE. Now I can see where anyone looking at it then even in the light of hearings, and so forth could interpret that as being in the past. In other words, antedating the enactment of this particular law assuming that it were enacted, and would therefore have reference to amounts owed prior to the effective date of the law rather than having reference to this interchange.

I will have some more questions along this same line, but I do think that some place in the record it would be at least advisable to indicate just why this is necessary, if you think it is necessary.

Let us back up a little farther. Is it necessary that there be a Federal payment, and if so, why? I think that should be in the record. I have my own personal feeling but I do think this should be made a part of the record.

Commissioner MCLAUGHLIN. We have a rather exhaustive study on that, Mr. Chairman. Could it be placed in the record at this point? Senator HARTKE. Certainly. I think that was what I was getting at; yes. It will be made a part of the record without objection at this time.

(The documents entitled "The Federal Payment to the District of Columbia" are as follows:)

GOVERNMENT OF THE DISTRICT OF COLUMBIA

EXECUTIVE OFFICES

WASHINGTON, D.C., April 8, 1959.

The Commissioners have a comprehensive statement on the Federal payment which we request be inserted in the record. We do, however, wish to discuss some of the most important aspects of this very important matter.

From 1946 through 1954 the Federal payment never exceeded $11 million. In 1955 it reached $20 million.

Beginning with the fiscal year of 1946, the Congress has approved basic salary increases aggregating $56,596,467 annually, and pension and insurance benefits amounting to $4,876,405 a year. These increases, with mandatory within-grade step increases of $7,025,000, reach a total of $68,496,872 per year.

In 1946 our total general fund appropriations amounted to $64,728,423, but because of the increased costs resulting from such legislation, from increased requirements for services and from inflationary trends, the estimate for 1960 is in excess of $200 million.

In these years District residents became acquainted with many new or increased taxes, like the income tax which is estimated to produce $23,500,000 in 1960 and the sales tax estimated to produce $20,550,000 in 1960. These, with gen

eral increases throughout the tax structure, could not hold the line in the face of rising costs and almost annual beneficial legislation.

Since 1954 exhaustive hearings have been held by the Joint Fiscal Committee and the result of these hearings was, in each instance, legislation that combined increased Federal payments with additional local taxes or borrowing to provide the total funds needed. In other words, the Congress and the District each agreed to provide a specified amount, and only the District has kept its part of the bargain. The sequence of these agreements is as follows:

1954: The increase in the Federal payment authorization was $9 million, accompanied by increases of $9 million in local taxes supporting the general fund (Public Law 83-364).

1956: Financial stringency made a further increase necessary, this time by $3 million, accompanied by a disproportionately larger increase in general fund taxes of $16.5 million (Public Law 84-460).

1958: Because of a continued spiraling of costs, and because local taxes were equal to those prevailing in the suburbs and therefore should not be further increased, it was necessary to increase the payment by $9 million in 1958, raising it to its present authorized limit of $32 million a year (Public Law 85-451). At the same time, authority was granted to the District to borrow up to $75 million to finance some of the urgently needed public works projects such as schools.

Altogether, during the past 5 years, the District has increased general fund taxes by $25.5 million a year, and has proceeded to collect this amount. In addition, highway user taxes, water rates, and sewer service charges have been increased $6.4 million a year, and real estate has been reassessed, resulting in $4 million a year additional revenue. Thus, local taxes and charges have been increased $35.9 million a year while the authorized Federal payment has been increased $21 million.

However, the full amount of the authorized Federal payment has been paid only once in these years. The intent on the part of the Congress ultimately to pay the full amount of the Federal Payment is indicated by the fact that Public Law 84-460 provides that any deficiencies in the amounts appropriated from year to year for the Federal payment may be paid in subsequent years. This provision is as follows:

"SEC. 2(b) If in any fiscal year or years a deficiency exists between the amount appropriated and the amount authorized by this article to be appropriated, additional appropriations are hereby authorized for subsequent fiscal years to pay such deficiency or deficiencies."

Our tax structure is frequently criticized. Attached to the detailed statement on this subject is a document titled "Tax Comparisons of Major Taxes in the Washington Metropolitan Area." This statement is very revealing as to the true picture of taxation in the District. It shows that we have one of the most comprehensive systems of taxes of any jurisdiction in the United States. It also shows that despite many differences in rates and types of taxes, the tax structures of Maryland, Virginia, and the District tend to have the same aggregate impact on the taxpayer. We believe that a careful study of the attached statement will confirm that the District is thoroughly taxed.

The committee will observe that in 1959 the District received $20 million instead of the authorized $32 million.

The committee will also observe that we did not ask in the supplementals for any more than we thought we would need at the time, that is $9 million, which would have made a total of $29 million. The House approved $5 million of the $9 million requested.

We now find that instead of $4 million we only need $3,100,000 additional to balance our budget. Accordingly, that is the amount we urgently request you to restore.

The implications of the failure of Congress to approve the amount requested for the Federal payment are very serious. The Commissioners, in formulating a budget for the District, consider the requirements necessary to operate a city of this type. When the Federal payment is reduced there is usually a corresponding cut in services and capital outlay items. The effect is that we are constantly striving to catch up on services and construction that should have been done several years ago.

We should like your permission to insert in the record at this point, the remainder of our statement on the Federal payment to the District of Columbia