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Mr. BLATNIK. And, Governor, may I say, too, in this barrage of socalled political labels that the gentleman gave, you have taken a most active part in these hearings and shown a keen interest, and you have made a very active contribution.

That will be all. We thank you for your assistance, Governor, and Congressman O'Hara.

Governor SWAINSon. Thank you, Mr. Chairman, and members of the committee, and I, too, am very proud of all of our congressional delegation down here and certainly the politics are meaningless.

I am sure you are all familiar with the bill introduced by Congressman Bennett some time ago, which is very similar to this legislation.

Mr. BLATNIK. May the Chair make a comment at this point?

Speaking of editorials, we have an editorial from the Washington Evening Star of March 28, 1962.

Mr. HARVEY. I have no objection to it. I turned the other two that I mentioned over to the reporter that was here earlier.

Mr. BLATNIK. This will be put in the record. (The editorial follows:)

[From the Washington Evening Star, Mar. 28, 1962)

FOR RELIEF WHERE NEEDED On the conditions specified by President Kennedy, the administration's proposed $600 million capital improvements program could give a worthwhile shortterm lift to communities where economic recovery has lagged and unemployment has remained distressingly high. The testing of its real effectiveness in this regard would depend, of course, on the care with which the localities and projects are chosen—with an obvious requirement that need and merit, rather than vote getting, should be the determining factors.

Mr. Kennedy has spelled out the standards in his letters to the House and Senate Public Works Committees. They are, first of all, that the funds would go only to those localities already designated as redevelopment areas or to those where substantial unemployment (more than 6 percent) has prevailed for at least a year. Redevelopment areas are those where exodus of industry or displacement of labor through technological changes or other factors suggests that a permanent shift in economic interests will be needed to restore prosperity This long-term help is being sought through the Area Redevelopment Act of last year, with the pending program designed to give interim relief.

As further safeguards in this program, the President specified that only projects that can be started soon and completed within 12 months will qualify, and that they must meet an essential public need and contribute significantly to reduction of unemployment. As examples, he mentioned water and sewer system improvements and modernization of hospitals, airfields, or other public facilities. Secretary of Labor Goldberg already has testified that there will be no leaf-raking projects and that at least 95 percent of the work will be done by workers in the employment of private contractors rather than on public payrolls. Allocation of the funds will be made by existing Government agencies.

With congressional and State elections coming up this fall, it is not surprising that administration critics already have pinned a “pork barrel” label on this program. And it could, of course, have some influence on the November voting, although there will be relatively little time remaining even if Congress authorizes the program and appropriates the funds promptly. At the same time, it is indisputable that the overall national recovery has bypassed many communities and has left untouched a large number of long-term unemployed. An investment of $600 million in their welfare, and in worthwhile public improvements, pending efforts at a permanent solution of this economic problem, seems justifiable.

Mr. HARVEY. If the chairman will excuse me now, I have a person waiting in the Capitol Restaurant.

Mr. BLATNIK. I will ask the witness, the Honorable Frank P. Celeste, mayor of Lakewood, Ohio, to come forward.

STATEMENT OF HON. FRANK P. CELESTE, MAYOR, LAKEWOOD,

OHIO; ACCOMPANIED BY DONALD A. SLATER, EDITORIAL ASSOCIATE, AMERICAN MUNICIPAL ASSOCIATION, WASHINGTON, D.C.

Mr. BLATNIK. Mayor Celeste, we thank you for your patience in standing by all morning. We have been inadvertently delayed and some of the testimony ran longer than we had expected.

We appreciate that you stood by.
Mayor CELESTE. Thank you very much, Mr. Chairman.

Mr. Chairman, members of the committee, I am Frank P. Celeste, mayor of the city of Lakewood, Ohio. I appear before you today in behalf of the American Municipal Association, an organization representing over 13,500 municipal governments of all sizes, to express the position of our association on H.R. 10317, the Standby Capital Improvements Act of 1962 and offer some observations concerning H.R. 10113, the Public Works Coordination and Acceleration Act.

America's municipal governments, meeting last August at their annual American Municipal Congress, adopted the following statement concerning public works:

The American Municipal Association has long supported a program of Federal financial assistance for local public works. The administration and the Congress are to be commended for their action in expanding the public facility loan program to provide an additional $450 million. Also, a limited program of loans and grants is provided by the Area Redevelopment Act for areas of greatest economic need. However, these amounts are not nearly enough to meet the large and growing need for community facilities.

The association also believes that provision should be made for grants to give the program needed flexibility and to aid communities in greatest need.

The American Municipal Association actively supports Federal legislation to assist communities of all sizes, but particularly small communities, in their effort to provide adequate public facilities through an expansion of present community facilities programs through the provision of grant assistance.

Mr. Chairman, as is made clear in the above statement, the American Municipal Association does not have specific policy which covers the particular bills which you are considering. We are, however, clearly on record in support of Federal grants and loans to municipalities to assist in the construction of vitally needed public facilities. But we do, however, welcome the President's suggested amendment to H.R. 10318 to make available $600 million for public works in areas of substantial labor surplus and redevelopment areas.

We support this action because it will channel public works funds into areas where public facilities are needed. We would like to see, however, the institution of a permanent program of Federal assistance in the public works field which would spur and assist efforts by local governments across the Nation.

The need for additional community facilities has become critical in many areas. There now exists a tremendous backlog of unmet needs and our exploding population is creating new demands with the passing of every day. The U.S. Department of Commerce has estimated, for example, that our construction of water and sewer facilities in recent years has been only two-fifths of that necessary to bring us up to proper standards of health and service in a reasonable time.

Engineering News-Record reports that the total State and public works backlog as of February 1962 is $55 billion, and this includes only projects for which engineering studies have been completed or are underway. However, this figure does not include any of the essential public works which are needed but are not in the engineering phase because of a shortage of funds. Perhaps we should double the $55 billion to arrive at something nearer what is needed but stymied for lack of funds. This certainly is an area requiring an enormous amount of investment which, necessarily, will come from State and local governments in the main, but Federal encouragement and participation would produce a great stimulative effect.

This backlog does not exist because municipal governments have shirked their responsibility or ignored an obvious and pressing series of problems. The fact is that during World War II public works were, of necessity, postponed, and because of the delay, a backlog developed. Since the war, city governments have been buffeted by staggering shifts in population and demands for additional public services and facilities.

Municipalities have responded to these obligations with vigor and determination. Since the termination of the war, municipal indebtedness has quadrupled. Since 1946, local revenues have tripled, indicating that municipalities have faced the unsavory necessity of raising local taxes to meet local obligations.

It might be noted that State and local public indebtedness now stands at the alltime high figure of $72 billion, two-thirds of which is held by local government, and that, at the present time, local public expenditures exceed local revenues by approximately 10 percent in each year. This means that our municipal governments, in spite of all efforts to the contrary, are steadily going deeper into debt. If we are to provide the basic, needed, and, most assuredly, demanded public facilities at the local level, we must find a system which will balance income and outlay. Public works assistance by the Federal Government will provide a step in that direction.

In order to fully evaluate the efforts of local governments in all fields of their activity, it is important to bear in mind that municipalities are committed to primary reliance upon real property taxation for their income. To be sure, State and Federal grants have assisted, and continue to help us in meeting our responsibilities, but the amount and dimensions of these grants have not kept pace with the needs and demands locally. At a time when revenue is in increasing demand at the local level, the property tax provides a stabilized return to our communities. While our urban areas generate some 80 percent of the national wealth, they are prohibited from tapping it by tax base limits, by State debt limits, and by hard political realities.

Because of these facts, many local governments have reached the practical limits of the revenue-raising potential; yet, the needs and demands for increased municipal services and facilities persist and increase. We feel that Federal assistance is unavoidably necessary.

. We favor the President's Standby Capital Improvements Act because it will authorize grants-in-aid in areas of maximum need. If

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we are to provide adequate local public facilities, then Federal aid is necessary. The provision of Federal aid as in this bill is welcome. We do feel, however, that Federal aid is necessary, independent of the fact of economic adversity. We believe this bill moves a step in the right direction.

Mr. Chairman, I would like to comment briefly on the proposals put forward in H.R. 10113. I feel that a coordinator of public works would make a valuable contribution to the public works effort across the country. The Federal Government should have available to all of its agencies the kind of detailed accurate data which this office could collect. With a complete, national picture at hand, Federal officials and the Congress could make a more reasonable decision on any new or existing program.

Mr. Chairman, our Nation's local governments face a great responsibility in the provision of essential facilities and services to our urban population. We meet that responsibility to the best of our ability and with all of our resources. When the balance of our vtal needs exceeds the totality of our means, we turn then, and only then, to the Federal Government. The needs are obvious and this proposal is justified. We urge your favorable consideration of this legislation.

Thank you, Mr. Chairman and members of the committee.
Mr. BLATNIK. And we thank you, Mayor Celeste, for your statement.
Are there any questions?
Mr. Baldwin. I have one question, Mr. Chairman.
Mr. BLATNIK. Mr. Baldwin.

Mr. BALDWIN. Mayor Celeste, on page 3 you mention the public indebtedness of the State and local municipalities, that they have reached an alltime high of $72 billion, and you state in the same paragraph, “We must find a system which will balance income and outlay."

Now, it happens that the Federal Government has a total public indebtedness of about four times that sum of $72 billion.

Our debt limit now is $300 billion. The President has indicated that he will have to come to Congress around July 1 for an increase of about $8 billion more in the total debt limit.

Why do you feel it is so essential for you to obtain a system which will balance income and outlay but, apparently, you do not care whether the Federal Government goes into deficit spending?

Mayor CELESTE. Well, I think your point is well taken. I think, perhaps, the difference in the Federal and local changes has not been as great. I think the Federal change has been much of an increase, or, much more of an increase than the local area, No. 1.

No. 2, I think that it is important that everything be done to bring the system into a position where income and outlay is the same.

Mr. BALDWIN. Thank you.

Mayor CELESTE. I am glad you asked this question, because I would like to tell you what we did locally to try to raise the income, instead of decreasing spending.

And I would like to point out that some 7 years ago, when I took office, Lakewood was a town which had reached its point of mature growth some 25 years previous, and everyone said that nothing could be done about the town.

Well, we expanded. We went up; whereas a parcel of ground was producing $3,000 a year in tax income, today it is producing $90,000 in tax income.

Whereas a parcel was producing $7,000, it will produce, when the project is completed, some $257,000. So we tried to encourage the activity in this area.

And how did we do it? As a matter of fact, by the simple expedient of spending some $5,612, by hiring a coordinator which we called a director of modernization, who gathered together the statistics, who outlined the plans that could be put into use in certain areas, such as making the maximum use of this particular area, as a result of which this expenditure of $5,612 resulted in increasing building permits on an average of $2 million a year to $20 million last year.

. So that in the last 5 years, in a town which had reached its point of mature growth some 25 years previously, 30 percent of the building permits, issued in the 55-year period, were issued in the last 5 years.

So that an incentive was provided, and I was reminded of this by some of the questions that were asked earlier when the Governors were testifying:

Mr. BALDWIN. Thank you.
Mr. CRAMER. May I ask a question ?
Mr. BLATNIK. Mr. Cramer.

Mr. CRAMER. I am very interested in your statement, on page 3, concerning hard political realities as it relates to local governmental, municipal expenditures.

By that, I assume you mean the objections expressed by the voting of the people in the communities, themselves, as to how much should

Now, do they not have a right to make those decisions?

Mayor CELESTE. Mr. Cramer, I think you are absolutely right, and we have gone to the people. We have presented the programs to the people, but not only do we have the political realities, but we also have the debt limitations that sometimes

Mr. CRAMER. No, I am talking about political realities now.

In other words, it is your position, as a municipal public official, that if the people in your municipality do not want a project and vote against it, that still the Federal Government should be able to force it down their throats with Federal funds ?

Mayor CELESTE. No, no, I do not think that is the case at all.
Mr. CRAMER. That is the effect, is it not?

Mayor CELESTE. No, no, I think that the political reality that I mean is one which imposes a debt limitation and, too, perhaps you have opposing forces fighting for a position

Mr. CRAMER. And you want the Federal Government to make the decision between the two?

Mayor CELESTE. No, not at all. I was coming to the real crux of the matter.

Whereas, we have projects which were turned down some three different times by vote of less than 45 percent, after the facts had been properly presented and after an incentive had been provided and thirdly, and more important, when the spirit had been generated

be spent.

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