DEPARTMENT OF POLICE 27 Riverside Road Riverside, Illinois 60546 447-2125 17 December 1979 Mr Henry Hyde Congress of the United States: Dear Mr Hyde: Your letter of 11 Dec.1979 was gratefully received by my person and I would like to extend my sincere appreciation for your endeavors in co-sponsoring house bill H.R.2291. to extend Federal Revenue Sharing. As I am sure you are aware most suburban communities are involved in self imposed austerity programs, promoted by necessity to meet the basic needs of their respective citizentry. The somewhat misguided concept of suburban areas, and communities therein related being affluent, is factually a now non-existant entity. Only with people such as you representing in essence the peoples of those communities, can the necessary funding be continued and thereby the level and degree of respective services be continued; In summary I would like to state emphatically, that I firmly believe the Revenue Sharing Program must of necessity be continued, and that any prohibitions relative thereto could seriously impede amount and degree of police service generally. Thank you for your concern in this matter and please be assured of my complete support in your endeavors relative to H.R.2291: In answer to your letter of December 11, 1979, Federal Revenue Sharing funds have meant a great deal to the Village of Norridge. These funds have been a tremendous asset to our Village, since they have enabled us to continue excellent water service to our citizen users, without increasing rates. Our use of Revenue Sharing funds for the purchase of Water Department equipment, improvements, and in some cases, actual purchase of water, has kept our water rates down, thus providing lower costs to the users, and has meant a definite savings to our people. This is particularly important to those on a fixed income, as many of our retiree citizens are. STATEMENT OF HARRY HUGHES, GOVERNOR OF THE STATE OF MARYLAND, ON BEHALF OF THE NATIONAL GOVERNORS' ASSOCIATION Mr. HUGHES. Mr. Chairman and members of the subcommittee, thank you for providing me this time to appear before you. I am appearing today on behalf of the National Governors' Association and the National Governors' Association Committee on Executive Management and Fiscal Affairs on which I serve. I am cochairman, with Gov. Lamar Alexander of Tennessee, of the committee's task force on revenue sharing. These are unsettling times for the country both at home and abroad. We elected officials must provide the leadership and intellectual guidance necessary to move our country forward. While I believe the President and the Congress are providing that leadership, I also must emphasize the importance of a significant State role in the process of Federal budget reduction. We who are administering, implementing, and partly funding Federal programs have an interest and a responsibility in the substance as well as the effective delivery of those programs. It is in this regard that I wrote to the President last week. I would like to share that letter with you and have attached it to my testimony to be included in the record of these hearings. With your permission, I would like to share the letter with you now. From here on, I will be quoting from the letter: DEAR MR. PRESIDENT: I am concerned, both as Governor of Maryland and as Co-Chairman of the Task Force on Revenue Sharing of the National Governors' Association, with the restraints on federal grant-in-aid programs you seek to impose in connection with the anti-inflation program announced on March 14, 1980. I support the purposes of that program. I also accept that cuts in aid to state and local governments are an essential part of attainment of these purposes. Reductions in federal subsidies to the private sector and increased federal user charges, elements apparently omitted from your program, should also be considered. Because it is desirable that states have flexibility in responding to the conditions created by cuts in federal aid, it is imperative that such cuts be focused on narrow categorical programs rather than on programs, such as general revenue sharing, which gives states flexibility to respond to areas of greatest need within each state and to fill the widening gaps caused by reductions in categorical programs. My concerns relate to the principles which I believe must be followed in this necessary effort if random violence to important programs is to be avoided, if the anti-inflation program is to be effective, and if due respect is to be paid to the federal nature of our system of government. These principles are several: 1. It is essential that state and local governments individually, as well as through their national organizations, be actively involved in the identification of areas to be reduced. In anticipation of just such a need to reduce federal grants in aid and improve their effectiveness, the Committee on Executive Management and Fiscal Control of the National Governors' Association, of which I am a member, has undertaken to survey state governments to identify programs which are most expendable or amendable to consolidation. I would hope the results of this ongoing work will be considered as the administration and Congress make their decision; 2. We recognize that large-scale consolidations in categorical programs require protracted legislative consideration. I believe that the present occasion requires immediate measures to allow state and local governments greater flexibility in the use of the categorical funds that remain. I suggest that categorical cuts should take the form of ceilings for groups of related programs. The grant consolidations proposed by the Executive Management and Fiscal Affairs Committee relating to economic development, airport development, health, energy conservation and planning and by bills in Congress such as S. 605 (Food and Nutrition Programs), S. 1126-H.R. 443 (Environmental Programs) S. 2270 (Education Programs) and S. 878 (Assistance Reform) and other consolidation proposals under consideration within the administration should be at least partially implemented through the group ceiling device. This action, if taken concurrently with the reductions, will allow states to protect programs of vital priority and permit them to eliminate duplication and waste intolerable in a period of financial stringency. Consideration should also be given to application of the group ceiling approach to the consolidation proposals contained in the report prepared by the Advisory Committee on Inter-governmental Relations in 1977 relating to programs affecting child nutrition, vocational rehabilitation, older Americans, child welfare, domestic volunteers, forest land management, highway beautification, transportation safety, urban transportation, state transportation, water pollution, library aid, and state education assistance; 3. Cuts should be focused on programs such as LEAJ which function through project grants and which are precluded by federal guidelines from financing ongoing activities. Cuts directed at ongoing activities will frequently require the assumption of costs by state governments if federally identified needs are to be met, a result burdensome to state governments and also not conducive to the objective of reducing inflation by controlling overall government spending, federal, state and local; 4. Reductions in federal funds must be accompanied by reduced federal mandates directed at state governments. I urge that a high-level and visible group be established within the Office of Management and Budget under the direction of your Inter-governmental Relations Office to review recent and contemplated regulations relating to the implementation of federal programs by state and local agents. It must be recognized that reduced funds will, in many instances, require compromise of the original aspirations of these programs and their implementing regulations-aspirations in many instances excessive in any case. State and local governments, unlike the federal government, do not possess the power to coin and issue money. It must be made very clear, from the top, that federal regulations are not immune from the principle that "you get what you pay for;" 5. Reductions are obviously more tolerable when addressed to programs that are not fully established or which have hitherto been funded by project grants; and 6. The selection for reduction of categorical programs must be made in a way which sharpens the inherent division of functions between federal and state governments. Traditionally, law enforcement and education have been state functions. In view of the relatively small share of total funding supplied by federal aid to law enforcement and to education, we believe that states are better able to bear reductions in specialized programs in these spheres than in many others, particularly if the cuts take the form of ceilings on groups of programs. There are, however, large general federal education aid programs such as the Title I, vocational, handicapped, and delinquent education and library aid programs that are worth preserving; these programs tend to be those with the fewest restrictions upon use by the states and localities. If, after applying these principles with rigor, limited reductions in the state share of revenue sharing remain necessary, they must be carried out in a way which does not compromise the continued existence of the program or the possibility of its increased funding in future years. I note that the administration has delayed announcement of the identity of most of the programs to be subject to reductions. I assume that this delay has the purpose of allowing wide consultation with congressional representatives and state and local governments. I specifically urge that you meet, at an early date, with representatives of the Executive Management and Fiscal Affairs Committee so that the results of its survey of state priorities may be given full consideration in your work. This course will ensure that the effect on inflation of federal spending cuts is not largely negated by state and local spending increases. In your address to the nation, you repeatedly stressed the importance of discipline. An effective program requires not merely discipline by the federal government but self-discipline by states; this self-discipline can only be the product of the exercise of responsibility for allocation of cuts within federally imposed group program ceilings. Sincerely, HARRY HUGHES, Governor. Obviously, Mr. Chairman, an important facet of my recommendations is the program we are discussing today, general revenue sharing. It is uniquely suited to meet the demands that will be placed on the intergovernmental system in the 1980's. I believe the following points support this conclusion: Revenue sharing permits State and local governments to allocate Federal dollars to their highest priorities at a time when all public funds must be spent in the most effective way possible. Revenue sharing is a productive method for using Federal funds at a time when increased productivity in the public and private sectors is a major national goal. Revenue. sharing is controllable at a time when a consensus has been built for slowed growth in Federal spending. Revenue sharing promotes cooperation among the three levels of government at a time when shifting rules will place new strains on intergovernmental relations. General revenue sharing has an important role in an intergovernmental grant system shaped by increased controversy over expenditure of Federal funds because it permits State and local governments to use the money for high priorities. In Maryland, the disposition of the State share of revenue sharing is provided in the State budget, which is voted upon by the 188 elected representatives of the 23 counties and Baltimore City. The range of purposes for which States currently use revenuesharing funds demonstrates that the program is now accommodating the diverse priority needs of different sections of the Nation. Over half of the money which States receive is earmarked for education and social service programs. Thirteen States spend all of their funds for educational programs. These States are Florida, Illinois, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Virginia, and Wisconsin. Eight States, Alaska, California, Connecticut, Colorado, Idaho, Michigan, Minnesota, and New Mexico, spend all of their funds for social service programs. State funds are also used to finance construction projects. These provide immediate job opportunities and lasting benefits to State citizens and help make public facilities accessible for handicapped persons. State funds support pension benefits. This is an emerging area of public sector concern in light of the House pension task force finding that public pension plans face a $150 to $175 billion unfunded liability. Revenue sharing supports part of an effort in many States to put their pension systems on an actuarially sound basis, and many of the workers covered by pension plans aided with State revenue-sharing dollars are local government employees. State funds are used to provide tax rebates. They are being used directly to alleviate property taxes in four States. Rebates are targeted to homeowners, farmers, renters, and handicapped persons. For 1981, Maryland has budgeted general revenue sharing in the loan fund of the State. If the program is reauthorized, these moneys will be used in lieu of issuing general obligation bonds. The pay-asyou-go approach will result in interest savings of more than $22 million to the taxpayers over a 15-year period. |