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Mr. Davis. Will Mr. Bingham come around ? It is nice to have a Tennesseean before this committee. I have had witnesses from all over the country and I can say that Herbert Bingham, who is the executive director of the Tennessee Municipal League, is well informed on municipal matters, and I know him and I know he is personally and professionally well informed. I am delighted to welcome an old friend and a longtime friend before this committee.
This statement does not appear to be too long. You may want to summarize the statement and then let the full statement be made a part of the record. You may make your own choice about that, Mr. Bingham.
STATEMENT OF HERBERT J. BINGHAM, EXECUTIVE DIRECTOR,
TENNESSEE MUNICIPAL LEAGUE, ON BEHALF OF THE AMERICAN MUNICIPAL ASSOCIATION; ACCOMPANIED BY DONALD A. SLATER
Mr. BINGHAM. Mr. Chairman, I will indeed summarize it.
I want to say first that it is really a very great privilege and, in fact, a pleasure, to testify before this committee today, when you are serving as its chairman.
Before beginning my main testimony, this is another significant proposal in the field of public facilities and public works. I can't help remembering that in my professional work for the last 16 years I have been privileged to watch the great performance of the chairman of this committee in the field of public works in this Nation. I can remember the enactment in which the chairman played a key role, of the interstate highway program, which is assuring our own State of an unparalleled 1,100 miles of magnificent interstate highways. I know of his great accomplishments in the field of river and harbor legislation, and the resulting massive flood control works on the Mississippi River. Throughout the Tennessee Valley we will forever remember your great battle for the Tennessee Valley Authority. These accomplishments are your monuments, Mr. Chairman, in Memphis, and in Shelby County in Tennessee, and throughout the Nation. They have helped to make the city of Memphis, in my opinion, a great center of commerce and transportation and manufacturing, with a great harbor project and highways and airports. It is for this reason such a pleasure for me to testify here before you.
Mr. Davis. Thank you very much. Mr. BINGHAM. I appear today to support the legislation before the committee on behalf of the American Municipal Association, representing over 13,500 municipal governments and the Tennessee Municipal League.
I would like, as you suggest, to put my testimony in the record, and summarize it as briefly as possible.
Mr. Davis. Without objection, the entire statement will be made a part of the record at this point, just as presented.
Mr. BINGHAM. Mr. Chairman and members of the committee, I am Herbert Bingham, executive secretary of the Tennessee Municipal League. I appear before you today in behalf of the American Municipal Association, representing over 13,500 municipal governments and the Tennessee Municipal League.
All of us who are concerned with the immediate needs of municipal governments are greatly heartened by the proposals for Federal aid for local public works which have been made to your committee and we are grateful for the interest and hard work which this committee is devoting to the problem. Certainly the need for prompt action is clearly evident. I will not undertake to discuss the economic aspects of the legislation you are considering or the overall problem of continued high unemployment, important as that problem is. Other witnesses with special competence in this sphere have covered these subjects thoroughly. Instead I want to emphasize the critical need of our municipalities or more accurately, the people who live in our towns and cities—for assistance in meeting their needs for local public works.
Public investment has long been a stepchild in our economy. Around 1940 I believe most communities had reasonably adequate community facilities due in large part to the programs of the Federal Government as well as the slow rate of growth of our urban population during the 1930's. Then in the first half of the 1940's local government expenditures were sharply curtailed because of the war. In the second half of that decade they were limited by material shortages and the competing demands of other types of construction. Again, at the beginning of the last decade, war restrictions once more limited public investment. And through most of the last decade our local officials have been confronted time and again with a restrictive monetary policy which it is generally recognized hits especially hard at local government borrowing. Throughout this period local governments have been hard pressed to finance the sharp rise of the dayto-day services needed by our expanding population.
The result has been a serious neglect of investment in publicly owned facilities. A study done by the U.S. Department of Commerce in 1955 found that in the field of local water and sewer works alone, there was a backlog of need totaling approximately $10 billion. That same study found that we must spend $1.5 billion every year just to offset obsolescence and take care of population growth. In each of the past 2 years the value of new construction of water and sewer works has amounted to just about $1.5 million. Because of cost increases during the period, however, the current physical level of construction is somewhat below the minimum level estimated in 1955 to meet current annual needs. The conclusion is inescapable that we are even worse off now than we were in 1955 and substantially worse off than we were in 1940.
Let me assure the committee that this has not been the result of any lack of effort on the part of municipal officials. Every year local taxes have been increased. Since 1957, total tax revenue of municipal governments has risen from $16 billion to $21 billion, a net gain of $5 billion or nearly one-third. Meanwhile, local government debt has risen steadily. The fact is that local governments are simply unable to finance all of the services and investment needed by their citizens currently, and at the same time overcome the backlog of needs in a reasonable period of time.
It must be remembered that State and local governments suffer one serious handicap which the Federal Government does not face. That is the problem of varying tax rates from one place in the country to another. A State or community which recognizes the need and is willing to spend the money to overcome it often finds that if it raises taxes to meet this responsibility it will simply drive industry to other locations. Apart from the loss of employment and basic economic difficulties of losing industries, the community may find itself with even less tax revenue than before. This is one of the fundamental reasons why local government must call upon the Federal Government for financial assistance.
Local government, in particular, is faced with serious financial handicaps imposed by State constitutions and legislatures. Ceilings on property tax rates and other forms of taxation, as well as the exclusion of many forms of taxation from consideration, often limit a municipality's resources. Unfortunately, State governments are all too often dominated by rural areas which are unsympathetic to the problems of the city. In this connection, I would like to quote a story from my good friend, Mayor Ben West of Nashville, who summed it up this way:
Cities in practically every State of the Union face the same situation. They are the greatest revenue generators for both State and Federal governments. They have traveled the well-worn road to rurally dominated State legislatures many times seeking relief, only to be rejected and rebuffed.
Their problems have been consistently ignored. State legislatures have compelled them to turn to the Federal Government for aid and assistance and then decry "creeping federalism” and oppose direct city-Federal relationships in the manner of the youth who slew his father and mother and then asked the mercy of the court on the grounds he was an orphan.
I think Mayor West has made a very good point there. But that, of course, is not the entire story. Even where State legislators are more sympathetic to the needs of their urban constituents there is a limit to what they can do. State taxes and State debts have risen rapidly in recent years. The Bond Buyer recently reported that more than 60 major changes in tax laws were enacted by State legislatures in 1961 and these were expected to increase revenues by approximately $1 billion. I would certainly agree that in many cases the States as well as the cities are doing what they can to meet the expanding needs of our growing population. However, the fact remains that the Federal Government has preempted the principal source of revenue through the income tax. There are those who say that the Federal Government should return some fields of taxation to State and local government, but personally I do not see what could be gained by breaking up the present efficient system of Federal collection of income taxes. In fact, it would be a step backward if taxaation were put on the basis of competition between States. This would give a premium to the State which limited its activities to the minimum which its citizens would tolerate in the interest of inducing industry to come in. I feel also that it would be a shortsighted policy since the arrival of industry would certainly add to the revenue and expenditure needs in future years. It would be far better for the Federal Government, which draws the bulk of its revenues from the people who live in our towns and cities, to make available to them some part of those funds to meet pressing local needs.
We have come a long way in improving our methods of financing local public works. I recently read that when New York City built two miles of wood plank road in 1869, they apparently thought they
had found an easy way to finance it. They issued $377,000 worth of bonds bearing 7 percent interest with the principal not to be repaid for 278 years. They are still paying that interest on more than half of the issue yet outstanding. Municipal officials today can finance public works at lower cost but this does not mean that all problems are solved. Important assistance in this field is available through the Federal Government's community facilities loan program particularly as it was amended in the Housing Act of 1961. These loans have helped to overcome the wide disparity between the cost at which small communities can borrow compared with larger metropolitan centers. It fills a vital need but I do not think that its proponents claim that it is a complete answer. The fact remains that even at low interest rates many communities are simply unable to bear full cost of their entire capital works programs. Outright grants are essential if we are to make real headway in providing our citizens with all of the public improvements they need.
The fact is that there is no way to achieve our goals in the fields of public works without spending money. The problem is to find the best and most equitable way to meet the cost. The tremendous backlog of needed local public works that is built up over the last two decades must be overcome as soon as possible and local governments are financially unable to do it by themselves. The legislation which you are now considering and particularly the amendment offered by the administration witnesses last week for immediate assistance would be an important step forward. It would make a frontal attack on our probleins right now.
I know that our municipalities are strongly behind this assistance. Earlier this session a bill was introduced by Representative Albert Rains, to provide an immediate program of Federal grants for local public works. This bill is enthusiastically endorsed not only by the municipalities in my own State, but by Government officials from other States to whom I have talked.
May I urge this committee to include provisions in the bill you will report out to see to it that the bulk of the funds made available are for outright grants to meet a share of the cost of public works. Only in this way can we make a substantial net addition to local expenditure programs by making it possible to start projects which our communities cannot afford by themselves.
Mr. Chairman, I will not undertake to discuss the economic aspects of this legislation. In fact, it appears this is getting so much emphasis that the function of both the emergency provisions of this bill and the immediate provisions as counterrecession economic legislation that has as its chief function and purpose that of providing this Nation with adequate public facilities which are vital to the economic progress and to the welfare of our citizens, may be almost overlooked. We know that our municipalities have critical deficiencies and deficits in their public facilities, and that they need financial assistance now and in the future from the enormously productive Federal tax base if they are ever to have the water and sewer facilities and the airport and hospital and other facilities needed to serve their rapidly expanding population.
We must remember that there has been a history in our Nation of sacrificing adequate public facilities to other national objectives.