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This trend is most dramatically illustrated by the sharp increase in State contributions to the financing of schools and public welfare and in the fact that in 1978 in all but four States, the local government played a smaller financial role than the State. This is illustrated in table 5 which I have submitted for the record.

Mr. FOUNTAIN. Without objection, a copy of table 5 will be inserted in the record at this point.

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Table 5


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1/ Includes functions not shown separately. Source: ACIR staff calculations.

Mr. CANTOR. In 1959, for example, local governments raised more tax revenue than the States. This is shown in table 4 which I have submitted for the record.

Mr. FOUNTAIN. Without objection, a copy of table 4 will be entered in the record at this point.

[The material follows:]

Table 4

(Frequency Distribution of States)

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Mr. CANTOR. The States have also done a great deal in helping local communities ease the property tax burden on lower income groups and the elderly through financing "circuit breaker" type property tax relief. Twenty-nine States now finance such local property tax relief measures through allowing credits against the State income tax.

These factors, compounded by the precarious position of the economy, indicate to us that the GRS program must continue. Failure to authorize the program could make any recession longer and deeper and create particularly severe consequences for the States and local governments that depend most on those funds and are most vulnerable to an economic downturn.

We do feel, however, that Congress should take this opportunity to improve the program's effectiveness in targeting funds where needs are greatest and the program should also become a framework for extending Federal minimum wage and overtime standards to State and local government employees.

We maintain our view that since the funds available for the program are collected from all Americans through the authority of Federal laws and Federal tax structure, it is appropriate that Federal standards and safeguards be included.

In summary, we urge:

One, that the GRS program be continued at current funding levels and attempts to reduce or eliminate the States' share be rejected. The States have markedly increased their responsiveness to local government needs. And, in light of the demands to reduce local property taxes, court-mandated educational financing reforms and the disturbing economic outlook, the pressure on the States is likely to continue

to grow.

Two, that changes be made in the allocation and enactment formula to provide a better targeting of funds to areas in line with their need for essential public facilities and services with particular emphasis on the Nation's urban centers. The 20-percent per capita payment floor and 145-percent ceiling has resulted in a diversion of funds to tiny government units with narrow functions and few responsibilities. We feel that the minimum payment floor should be reduced substantially or eliminated, and the 145 percent of the statewide per capita allocation ceiling should be increased.

Three, we would also like to see States and localities be required to meet the requirements of the Fair Labor Standards Act, similar requirements to those of the National Labor Relations Act, and other basic labor standards legislation.

Mr. Chairman, we believe that the general revenue-sharing program is playing an important role in helping to meet the Nation's public needs and it should be continued and fully funded at current levels. Thank you.

Mr. FOUNTAIN. Thank you very much.

We will now hear from Mr. John E. Cosgrove, director of legislation, Public Employee Department, AFL-CIO.

Mr. Cosgrove, we welcome you to the subcommittee. Please proceed as you wish.

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