The question of competence

The administrative competence to handle current local affairs and organize the planning for future development exists at the local level. And it can be most effectively applied there. Where extra municipal assistance or guidance is required, the answer is State not Federal help. The flexibility of administrative competence which is necessary cannot be provided by a Federal Department of Urban Affairs. In fact, the degree of State bypass which appears likely under these bills, would involve a consistency of Federal directives for local operation and planning that would ignore the variations necessary to differing local situations. Our many cities have only one thing in common; namely, a concentration of people into a relatively small area. In every other respect they differ, often radically. Solutions must vary to fit these differences. There must be freedom to experiment, to seek new and different methods of dealing with widely different situations.

The question of fiscal adequacy

To the centralist disbelief in local administrative competence is added the fiction that State and local fiscal resources are not adequate for the job. Hence it is argued that the Federal Government must provide funds for slum clearance, waste treatment, education, depressed areas, juvenile delinquency, housing, and various other things.

It can be bluntly said that the Federal Government is the least able to bear such costs. It is in no position to try to play "rich uncle" to American municipalities. Its only resources are those within the boundaries of the various States. Its tax rates are detrimental in the extreme; by comparison, State and local rates are relatively moderate. Its debt is nearly five times as large as State and local debt. Legislative action is already underway to raise the temporary public debt ceiling for fiscal 1962. The past 5 months have seen a $5 billion spread from surplus to deficit estimates for 1962. This is not a picture of a government which can afford to extend itself further into areas of State responsibility.

Unfortunately, State and local officials frequently endorse the view that Federal funds are necessary because it has been easier to get funds from a Federal Government ready and willing to supply them, than it is to make a case to their own constituents. Also, Federal money enables these officials to provide services and benefits which do not require financing by State and local taxes.

If State and local officials and the people were given the option of foregoing Federal grants and having a corresponding reduction of Federal taxes, it is entirely possible that a very different attitude toward Federal aid would be apparent.

It is a strange twist of logic which permits advocates of Federal aid to believe and to make this argument regarding State-local fiscal incapacity. The Federal Government has no money to lend or give away except that which it first takes from the people. The cities are the situs of a very large proportion of the wealth and income of the people and hence the large bulk of the Federal revenues is collected from taxpayers in the cities. It is futile to contend that Federal intervention is necessary to collect money from city residents and businesses in order to hand it back to local municipal officials for specific local benefits.

The fact that municipal improvements of whatever kind are always specific and local should be emphasized. Whether it be housing, school buildings, waste treatment works, parks, or any other improvement, the material benefit is strictly localized. Such net advantage as may be realized will be reflected in local property values, additions to the local ratables, a higher base for local debt, and so on. The steady advance of construction of every sort will add many billions of dollars to the property tax base in coming years and thereby provide local units with greatly increased taxable resources peculiarly adapted to local

use.

If there were only one, or a few, communities in great need of improvements, and if these communities were clearly unable to pay the cost, there would be a case for State assistance, but none, even so, for Federal help. But when these problems exist, or so it is alleged, in municipalities everywhere, the levy of Federal taxes to provide aid amounts to self-support by bootstrap levitation. The taxpayers of New York City would contribute to Federal aid across the Nation, and the taxpayers of all other cities would contribute to New York. 71743-61--13

It is an ironic circumstance that the major urban areas, like the so-called depressed areas, are located primarily in the more populated, industrialized, richer States-the very States most able to finance their own problems. There is hardly any call for exacting a share of such cost from the States which are without comparable problems or comparable resources.

Since municipal corporations are creatures of the State and subject to its supervision and control, there is a clear obligation on the several States to establish the conditions under which local government can effectively meet its responsibilities. To some extent this obligation is recognized. Programs of shared revenues and State aids to local government vary considerably but no State is entirely lacking in the provision of some degree of financial support of local functions. Where, in particular local circumstances, more support may be needed, the duty to provide it rests on the State.

It is contrary to fact to plead State fiscal incapacity. There are no limits on the taxing power of the States other than the prohibition on import duties and such restrictions as may be imposed by their own constitutions. The total wealth and income of the citizens of the several States is the aggregate of the United States. The States can obtain as much financial support from these sources as the Federal Government can. Indeed, the States and their local units have, in the property tax, a revenue source not practically available to the United States under the "direct tax" clause.

The real solution

Instead of adding to Federal costs at this time, the Federal Government should be taking action to reduce the cost to the Nation of a growth-retarding and jobdestroying tax structure. This can be done only through a program for reform of the tax rates and methods which unduly penalize and impede capital formation. Achievement of the objectives of such legislation would require priority over increased spending in use of the revenue increase which comes from economic growth. All areas of the country, and all segments of the population, would be in a much better position to handle their problems through local and State governments, and through private initiative, if there were greater and more sustained economic growth than from any programs of Federal aid superimposed on an inadequately growing economy.

Conclusion

In conclusion, I repeat that the establishment of a Department of Urban Affairs will further divert the time and talent of the Congress and the executive branch of the Government from the truly national tasks.

Let me emphasize again that Federal aid to municipalities is not needed, either to help pay the bills or to stimulate local initiative. Home rule for cities, rather than supervision and control exercised through leadership in the executive branch, should be our goal. Urban affairs are not a proper Federal responsibility and Federal supervision and direction are not needed to stimulate local initiative. Nor is Federal support needed to help pay the bills. Candid consideration of the facts reveals that the States and cities are much better able to finance and manage local matters than is the Federal Government. They have no massive public debt, no nagging balance-of-payments problem, no prospect of huge budget deficits to inflate the money supply and erode the value of our currency, no obligations for national security or in the diplomatic negotiations on which world peace so heavily depends. Since State tax rates are comparatively moderate and there is a variety of taxes available for their use, their potential for revenue from their own sources is substantial. Instead of yielding to pressures for more Federal authority over the people and their local affairs, the concern of both Congress and the executive branch should be to develop a new emphasis on recognition and assumption of their responsibilities by the States. The Members of the Senate and House of Representatives have a dual loyalty and obligation. They are Federal officials but they also represent States and districts within the States. Their great influence can be exerted as fully and effectively against more Federal centralization, as for it. I submit that they would be doing a greater service for the Nation and for their constituents by working toward a better division of governmental labor and preservation of the vital principle of mutual noninterference than by promotion of a highly centralized Federal Government.

The President has spoken of the sacrifices which the people should be ready to make. The most fruitful sacrifice that they could make would be the surrender

of Federal bounty and control for the full right to manage and finance their own local public affairs.

Senator HUMPHREY. Mr. Harold Wise?

Mr. Wise, we shall try to be a little more cooperative. I think we owe an apology to our two most recent witnesses for undue duress of time, and I want to extend it on my behalf and for anyone else.

STATEMENT OF HAROLD F. WISE, CHAIRMAN, LEGISLATIVE COMMITTEE, AMERICAN INSTITUTE OF PLANNERS, ACCOMPANIED BY WILLIAM C. DUTTON, JR., EXECUTIVE DIRECTOR

Mr. WISE. Mr. Chairman, I have with me W. C. Dutton, Jr., who is the executive director of the American Institute of Planners.

My name is Harold Wise. I am chairman of the Legislative Committee of the American Institute of Planners. The American Institute of Planners wishes to make known to this committee our wholehearted support of proposals to create a Department of Urban Affairs and Housing.

The American Institute of Planners is the professional society of city and regional planners in the United States. Its 2,700 members constitute professional planning staffs and consultants of the city planning, housing, and urban renewal agencies in American communities.

In supporting S. 1633, we would like to present the following points for consideration:

I have five brief points:

(1) Our urban areas, and their problems, have become a dominant factor in our Nation. Two-thirds or more of our national population, and most of our productive enterprise, are in cities and metropolitan urban areas. The national interest in the proper development, growth, and change of our cities is expressed through a number of programs administered through the Federal Government in cooperation with local governments. A number of the most important programs, those dealing primarily with shelter and community facilities, have developed within the present Federal housing agency.

The

We believe that these programs should be recognized at the highest councils of the executive branch and accorded representation at the Cabinet level for both practical and psychological reasons. prestige and influence of departmental status are needed beyond question, in our opinion, to conduct successful programs of housing and urban development in the coming years. The statistics on the requirements to rebuild the obsolescent parts of our cities and to provide adequately for the additional 100 million population predicted for the year 2000 are staggering.

Virtually all of this population growth will occur on the suburban fringes of metropolitan areas. No city, large, small or medium sized, will escape growth pressures. Within the next 20 to 25 years, 80 percent of our population will become urbanized, leaving only 20 percent in farm and rural nonfarm areas. Already, more than threequarters of our economic wealth and productive capacity is concentrated in cities comprising less than 3 percent of our land area.

These cities are our greatest sources of economic and military strength. Our national welfare is dependent on their continued

efficiency as instruments of production in our economy. In the broadest concept of the national interest and the welfare of the people of the United States, we simply cannot afford any effort that will not contribute to the efficient functioning of these cities and to the development of a creative living environment for the people who live in the cities and metropolitan areas of our country.

However, the alternative to not trying to solve these problems, or to halfway measures that fall short of the challenges and opportunities present, is to settle for a less satisfactory-and in many cases chaotic-physical environment for a large proportion of our citizens. Another step toward achieving the national housing policy adopted by the Congress in 1949 will be made by the establishment of a department with this as one of its assignments and goals.

(2) We believe that the proper coordination of all Federal aids to urban areas is one of the most pressing domestic needs of our time. We know it will be difficult to achieve. While we do not propose that all Federal programs of this type be placed within one agency, it is apparent that more coordination between the housing, community facility, and planning programs is possible and desirable. Several proposals before your committee would provide maximum opportunity for achieving this coordination by clearly assigning this responsibility to the Secretary of this Department.

Pleas for improved coordination of urban programs of the Federal Government date back at least 24 years to the President's Committee on Advisory Management and the National Resources Committee, at a time when the programs were much smaller and the problems less severe. While many improvements have been made in the intervening years, the obvious action needed at this time is the creation of the proposed Department.

In order to achieve maximum benefit and to insure the most efficient use of the large Federal expenditures now needed in these areas, careful administrative coordination is vital.

(3) It is a function and obligation of responsive government to adapt its programs and approaches to meet the new issues and problems of its society. The safest prediction we can make about the future is that it will be different than today. Accordingly, we believe that it is timely and mandatory that clear-cut responsibility be assigned, as provided in S. 1633, to an appropriate official to—

*** advise the President with respect to Federal programs and activities contributing to the achievement of national policy declared by this Act

and

develop and recommend to the President policies for fostering the orderly growth and development of the Nation's urban communities.

It is clear that further definition and statement of our Nation's goals with respect to urban communities is of utmost importance. To digress for a moment, we would hope that the second paragraph in the statement of policy would remain in the bill.

Senator MUSKIE. This has been tossed from pillar to post.

Mr. WISE. The programs that need to be developed and utilized in a manner to achieve these goals are identified clearly in Section 2: Declaration of National Housing and Urban Affairs Policy of S. 1633. Adequate programs of research and information services on urban problems are sorely needed at the national level. By doing those

things which can be done best, if not only, at the national level, we are most likely to insure the retention and strengthening of our system of local governmental institutions. Those of us who are engaged in a professional career of helping make local communities work effectively, and their governments efficient and capable, recognize that much-needed research and exchange of data and experience can be carried out or sponsored only at the Federal level.

It is significant to us that most other countries of the Western world, and the developing countries alike, have given greater emphasis to facing the problems of urbanism than have we. In our numerous contacts with visiting professionals from other countries, brought here by the State Department, ICA, Eisenhower fellowships, and similar programs, we have become conscious of the progressive strides made by many other countries in the areas of city growth and development. And yet, here is a field in which we should be setting an example as the tide of urbanism sweeps through all developing countries.

Our system of partnership between private enterprise and governmental programs and between the Federal and local governments, as exemplified by the Federal Housing Administration and urban planning assistance programs, deserves maximum study and application in other countries and cultures. Yet, we experience considerable difficulty in explaining the relationships between these and other programs of the Housing Agency and the apparent diffidence at our national level of government toward a comprehensive, overall approach to our urban development. We would hope that the new Department would have greater resources for working in international affairs.

(4) The proposal for a Department offers great encouragement that solution will be forthcoming to one of the major problems facing those local communities which try to do an effective job of planning and development. It suggests the possibility that urban communities will know better where to go within the Federal Government to get assistance on their problems. This is of particular significance to the smaller municipalities and less populous counties which are not in a position to maintain continuous professional staffs.

I got a letter in my office the day before yesterday, probably one of the most unlikely letters I expected to receive, from a place called East Fallowfield Township, Pa. It said, in effect, we are starting a planning program, we would like to know

Senator MUSKIE. It sounds like a good place for politicians.

Mr. WISE. It said, we would like to know if you would like to come and advise us. We are having problems of suburbanization. We are 25 miles from Coatesville, and we have inadequate water supply, and the letter mentioned other things.

Now, that is a really small place and it is the smaller communities that are going to really bear the suburban brunt of this growth in the suburban areas, and we think that the Department of Urban Affairs-we should underline the fact that such a department is going to be a help, of course, to Philadelphia and New York City, but mainly, it is going to be a help to the smaller communities and the now rural counties that are changing very rapidly in America. Senator MUSKIE. The East Fallowfields of America. Mr. WISE. That is right.