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The last time our country had adequate public facilities was at the end of the recession in about 1939 and 1940. Then we had the war period when civil public works were sacrificed to our war objectives. Then, following the war, we had restrictions on materials and only a brief period in which to make progress, and then another war and another sacrificing of civil facilities—the Korean war. Then in the decade of the fifties the tremendous urbanization of the Nation made it impossible to catch up with the backlog that had developed, and we even estimated the backlog as exceeding $500 million in public facilities in schools, water systems, and so forth. So we are far behind.
There are many national estimates of the extent to which our public facilities are deficient. For example, studies have been made of the need for such a basic facility as local water and sewer works. There is a backlog right now in this country of $10 billion of needed facilities. This is just water and sanitation that we are talking about here-nothing luxurious—the bare essentials of urban life. This estimate was actually made 5 years ago and we have been falling further behind all the time.
The problem is not that the municipal governments have failed to make an effort. Every year local taxes are being increased. In the Congress you have a tax bill every 6 to 10 years. Generally speaking,
6 municipal governments in the Nation, and certainly in my own State, increase taxes every year. This week they increased the property tax rates in the city of Memphis 15 cents on a hundred dollars of valuation to try to balance the budget, and I believe that this is the second tax increase in row; that is, two times in the last 2
With shortages of revenues there has been no hesitation to undertake long-range debt financing of public facilities. In fact, the total debt of local governments has been steadily rising in the last 10 to 12 years. Yet we are still behind.
Mr. Chairman, in my own State local governments have become desperate in trying to meet the needs of their people, and recently two of our local government organizations--my own league and the Tennessee County Services Association-joined in adopting a local government platform of legislation and related measures which we are offering to candidates for Governor and the legislature in our State, and I would like to quote from it. It is a statement that has been approved by hundreds of county and municipal officials in Tennessee.
However, impressive as the accomplishments of local government are, they are in serious trouble. Many of their services are inadequate because of an inability to meet growing financial demands, including costs imposed by the State. Faced with such demands and lacking current income, local governments have been forced into massive deficit financing. Local bonded debt now exceeds $900 million-or nearly seven times the approximately $130 million indebtedness of State government. If the current trend continues during the next Governor's 4-year term of office, State government policies will force local governments to increase their bonded indebtedness to well over $1 billion. Mr. Chairman, this platform includes a statement on taxes.
In the past years the State government's attitude has been such that local governments have been forced to impose, and local taxpayers to pay, higher and higher rates of taxation upon property due to State denial of other productive revenue sources at the local level. These are the results : The combined citycounty property tax rate now averages a burdensome $5.80 per $100 assessed valuation on homes, farms, businesses, and industry; and combined city and county bonded indebtedness incurred in an effort to keep pace with citizen needs is approaching the astounding and dangerous level of $1 billion. These burdensome property tax and debt levels must be relieved.
That is the situation in Tennessee. One of the problems of local government and of State government is the inability to maintain an adequate tax structure due to interstate and intercommunity competition for industry and business. I would like to quote from a talk that I made in Alabama before the Alabama League of Municipalities on Monday of this week, where they had a great gathering of some 700 Alabama municipal officials on this subject of the difficulty in maintaining local and State tax structure. I quote from my statement there:
An enormous influence opposing adequate local taxes is intercommunity and interstate competition for business. It goes on between Alabama and Tennessee.
We find that one large national concern with a Tennessee plant paying $650,000 annually in county and municipal property taxes only pays $47 a year on a plant of almost equal value in Alabama, due to your industrial tax exemptions.
Only 3 years ago, large industries forced Tennessee to reduce its 3-percent sales tax on new manufacturing equipment using the argument that Alabama had an extremely low tax rate. So our sales tax on new machinery was reduced in March 1959, while Alabama made the opposite decision and increased its tax in May.
When virtually all States surrounding Tennessee exempt new industry from property taxes, Tennessee must do likewise through illegal exemptions. One of the largest industries to locate in our State in the last 20 years secured a complete and illegal tax exemption for a 10-year period, and is now being charged a token local tax on assessment of 2 percent of actual value.
This is one of our problems. Thus we feel that realistically-
Mr. Baldwin. When you say that this industry obtained a 10-year exemption which is illegal, wouldn't it be possible under the laws of the State for any interested citizens taxpayer then to bring a suit in court to confirm the illegality of that action?
Mr. BINGHAM. There are doubtless legal remedies, but this is a realistic policy that is so realistic that it has general community support. We know it is disastrous, but we can't avoid it.
I can only point out that this country has about 30,000 citizens, and nobody brought a lawsuit in that 10-year period. But I would emphasize that some Federal attention to the urgent needs of the Nation that are to be administered by State and local governments, is a sound fiscal measure. In fact, in my belief it is an essential fiscal measure if we are to maintain adequate government and government services in this Nation. The States are not-we are not going to condemn the States entirely for their lack of efforts. The States themselves have been making an increasing effort in the last 10 to 12 years in supporting local government, and in carrying out State finance functions as well. State taxes and debts have risen rapidly in recent years, and the Bond Buyer recently reported 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.
So that State taxes and debts and local taxes and debts are constantly rising
I know there is a great argument about any increases in Federal taxes and increases in Federal debt, but it seems to be taken for granted that State and local governments have an unlimited financial capacity, both as to taxes and debt.
Mr. Chairman, I am positive that this is not a truthful assessment of the actual situation. Mr. Chairman, we are interested both in the long-term emergency authority for the President to spend $2 billion in Federal, State and local public facilities, and in the immediate grantsin-aid in the amount of $600,000. We believe both of those are eminently sound. As I say, I am limiting my testimony to the need for public facilities and for Federal participation in the financing of it, and not to the economic aspects of this legislation. But we have an enormous backlog of public facilities needs.
There are a number of Federal-aid programs in airports and in sewage disposal which the chairman was instrumental in enacting in the Congress; and, these also apply to hospitals, and highways, and in a number of other fields, but we truly have a massive backlog now of public facilities that could be put under construction immediately and be completed within the 12-months limitation imposed by the suggested amendment providing the $600 million for grants.
We have the Area Redevelopment Act. In fact, in my State under the $600 million proposal for immediate action we have 42 counties which would be eligible as redevelopment areas under the Area Redevelopment Act, and we have three large areas that would be eligible because they have a substantial labor surplus, namely, Chattanooga, Knoxville, and what is called the Tri-Cities area, Bristol, Kingsport, and Johnson City. Altogether these areas contain about 40 percent of the total population of our State.
I would like to cite one example of a public facility need by a specific community in Tennessee. I am going to refer to Camden, Tenn., in the western portion of our State, as the chairman knows. This community recently, 2 years ago, completed a rebuilding of its water and sewer system, and incurred very heavy debt obligations. It has recently reanalyzed its potential for economic development and finds that it must provide an improvement in its water system costing in excess of $500,000, to build a new pumping and filtration plant on the Tennessee River, and a large transmission line. This community cannot finance this from additional local debt or additional charges or taxes locally. It is in a redevelopment area.
If this program of immediate grants were put through, this community could finance this vital improvement. Hinging on this improvement is the economic future of this community and its entire surrounding areas. It is now about to negotiate arrangements for the location of a plant employing several hundred people in that community, but it must spend $125,000 in water improvements to serve this one plant, and it must build a better water source, because the present sources, wells, are inadequate. It has the potential of two large industrial sites on the Tennessee River, close to navigation and water supply, that would attract large industries, if it can provide water service to these sites. Thus there is a potential here hinging upon a Federal grant for an enormous economic development in one of the poorer and most rural areas of our State.
Mr. Chairman, it has been a pleasure to testify before you, as I have stated before.
Mr. Davis. Thank you, Mr. Bingham. I see it is stated at the beginning of your document that you appear on behalf of the American Municipal Association, of course, as well as being the executive director of the Tennessee Municipal League. I think it is a fair statement that you have brought in, I think, apparently a new approach to this whole matter, which is more than refreshing to me, and informative, and which will certainly prove good reading in the record to the other members of the committee.
You were not here when I stated that we have been holding rather long and arduous sessions, and this happens to be a Friday, and a lot of the men are taking advantage of catching up with their office work. You can believe me, the office work is tremendous today, because everybody knows how to write their Congressman about every imaginable sort of thing.
Mr. Baldwin, do you have any questions?
Mrs. Prost. No, thank you, Mr. Chairman. I would just like to congratulate the gentleman from Tennessee--are you from Tennes
Mr. BINGHAM. Yes.
Mrs. Pfost (continuing). On a very fine statement, and one which I am trying to read carefully because, as the chairman has just said, it is an interesting approach and we are very happy to have you here.
Let me underwrite what Chairman Davis just said—that we would like, each of us, to spend more time here on the committees, but because of our heavy schedule we just about have to take some time out. That is why I have been a little tardy this morning in getting here.
Thank you very much.
Mr. Elmer George, who is director of the Georgia Municipal League, and Mr. W. B. Withers, mayor of Moultrie, Ga., who is president of the Georgia Municipal Association. He will be here to answer any questions and we will be glad to hear from you at this time, Mayor Withers.
STATEMENT OF W. B. WITHERS, MAYOR OF MOULTRIE, GA., PRESI.
DENT, GEORGIA MUNICIPAL ASSOCIATION; ACCOMPANIED BY ELMER GEORGE, EXECUTIVE DIRECTOR, GEORGIA MUNICIPAL LEAGUE, APPEARING ON BEHALF OF THE AMERICAN MUNICIPAL ASSOCIATION
Mayor WITHERS. Mr. Chairman and members of the committee, these next few moments are not going to be so memorable because of any great pronouncements that I might make, but they will be memorable in the rest of my life for the magnanimity of this committee in allowing me to appear before you and to make a statement on behalf of a matter in which we are vitally interested.
If you will permit me, sir, I will be happy--it is a very brief statement we have and I would be happy to read this statement as I have it prepared.
Mr. Davis. Yes, sir, Mayor Withers. Mayor WITHERS. Thank you, sir. This statement, as prepared, is as follows: Mr. Chairman and members of the committee, I am W. B. Withers, mayor of Moultrie, Ga. I appear before you as mayor of my city and as president of the Georgia Municipal Association.
I am honored to be permitted to make a statement on behalf of H.R. 10113, the Public Works Coordination and Acceleration Act, and H.R. 10318, the Standby Capital Improvements Act of 1962, and to offer general comments in connection with the proposed legislation.
In Georgia, as in other States, there are several factors contributing to area and/or general statewide unemployment from time to time. These factors are:
(1) Increased efficiency in agriculture through improved techniques, better seeds and fertilizers, mechanization, consolidation of small farms into larger farms, and, generally, more farm production with less labor.
(2) Increasing emphasis on livestock, forestry, and fruitgrowing which tend to remove considerable acreage from our traditional row crops which used a vast amount of manual labor.
(3) Automation in business and industry. (4) General decline in the national economy from time to time.
(5) Failure to develop local and areawide economic development opportunities because of lack of capital improvements to provide needed services. These public facilities must be provided to create new job opportunities to keep pace with our population increases and unemployment created by the circumstances explained in paragraphs 1, 2, and 3 above.
In Georgia, much of our chronic unemployment and low income employment generates from our rural areas. With the flooding of migrants from the country to our towns and cities, however, this unemployment problem becomes more profound and more the responsibility of our municipalities. In many areas, not only are we faced with the fact of declining purchasing power, our towns and cities inherit the problems of housing, schools, streets, water and sewerage improvement, welfare, public safety, recreation, and otherwise have to underwrite the expense of improvements necessary to the economy and public well-being.
We endorse and support the general intent of H.R. 10113 and H.R. 10318; however, we subscribe to the principle that opportunity to participate in the programs provided for in the act should not be confined to economically distressed areas. In some cases, the cause of economic decline cannot be cured by artificial stimulation. However, assistance with public works financing in a nearby city might considerably result in the desired effect of creating more jobs in an economically sound development. We suggest this possibility be given strong consideration.
In recognizing that economically distressed areas which meet the requirement criteria provided for in H.R. 10113 and 10318 should be given emergency consideration, we submit that a continuing program of loans and grants should be made available to encourage and assist municipalities generally in carrying out their responsibility to provide public improvement.