citizen of Washington is approximately $335.00 in State and local taxes, according to Commerce Clearing House, Inc.'s 1967 report.

Representative HOLIFIELD. Senator Baker.

Senator BAKER. Mr. Chairman, I thank you very much, and I thank the members of the committee, especially my colleague from Tennessee, Senator Gore, for the privilege of sitting with you today and for the purpose of introducing a most distinguished delegation from Oak Ridge, Tenn., consisting of the Honorable A. K. Bissell, major of Oak Ridge, and his colleagues, Mr. McMullin, city manager, and Eugene L. Joyce, attorney.

Representative HOLIFIELD. Will you please step forward to the witness table?

Senator BAKER. Mr. Chairman, I share with my colleague, Senator Gore, a deep sense of pride in the accomplishment not only of Oak Ridge but of these gentlemen and others in the community like them who have done so much.

If I may, with the committee's consent, I would like to make one brief additional statement.

As you know, Oak Ridge was born during the critical days of World War II. Its citizens from the very beginning made, under austere conditions, a major contribution to the security of this country.

After the war ended and when the scope of Oak Ridge's operations was no longer limited to security-oriented programs the city began the transition from a Government owned and operated status to that of a typical, privately owned community. But it was not an easy transition.

Virtually the entire economy of Oak Ridge still remains dependent on the federally owned nuclear establishment. As a result, the available tax base is minute compared to the total industrial capacity of the city.

I firmly believe that the citizens of Oak Ridge deserve the continued financial support of the Federal Government, and I wish to emphasize my support for the community assistance program which will be described by Mayor Bissell and his colleagues.

Thank you very much.

Representative HOLIFIELD. Thank you, Senator.

Senator GORE. Mr. Chairman, before you recognize the mayor of Oak Ridge, I wish to bring up a matter.

It has been alleged to me that if I were in one room and he in another and each of us would make the same speech, that an unbiased audience would have difficulty detecting which was the Senator from Tennessee one difference being that the mayor of Oak Ridge might make the better speech, though in the same nasal tones that I use.

Now with such an accomplished impersonator before the committee. I wish to warn the committee to beware. [Laughter.]

Representative HOLIFIELD. Well, warn the reporter to be sure to get the words in the proper context and refer to the proper person. [Laughter.]

Representative HOLIFIELD. Mr. Mayor.

STATEMENTS OF A. K. BISSELL, MAYOR; CARLETON E. McMULLIN, CITY MANAGER; AND EUGENE L. JOYCE, ATTORNEY, CITY OF OAK RIDGE

Mr. BISSELL. Thank you, Mr. Chairman and members of the committee. Thanks also to our good friend, Senator Gore, for those nice comments. It took me years of hard work to be able to get anywhere near the speaking ability of our distinguished Senator.

DELETION OF TERMINATION DATE ON AEC ASSISTANCE

I would like to say, gentlemen, that I think a good bit of our testimony has already been developed by Senator Gore in his prior questions. I would simply like to say, gentlemen, that the city of Oak Ridge recommends to this committee that the proposed legislation be amended by deleting the reference to 10 years and the June 30, 1979, cutoff date.

I would like to say that Mr. McMullin and Mr. Joyce here may have comments that they would like to make, but I think this simply summarizes briefly my comments.

Representative HOLIFIELD. The Chair forgot to mention that the prepared statements will be received in their entirety for the record and appreciates the summary that the mayor has given. (The documents referred to follow :)

TESTIMONY OF A.K. BISSELL BEFORE THE SUBCOMMITTEE ON COMMUNITIES OF THE JOINT COMMITTEE ON ATOMIC ENERGY, U.S. CONGRESS, AUGUST 24, 1967 Mr. Chairman and Members of the Committee, my name is A. K. Bissell, Mayor of the City of Oak Ridge, Tennessee. With me today are Carleton E. McMullin, our City Manager; Mr. Eugene L. Joyce, a local attorney; Dr. Jack Davidson, Superintendent of Schools; and Councilmen Robert A. McNees, George C. Corley, and Bert M. Kelly. Mr. McMullin and Mr. Joyce will present our statements before the Committee.

My colleagues and I are pleased to appear before you today to discuss the proposed amendments to the Atomic Energy Community Act of 1955, as amended, providing for continued assistance payments to our community.

The City of Oak Ridge is pleased that the United States Atomic Energy Commission has pursued the question of community assistance well in advance of the cut-off date specified in Public Law 221. Prompt action by the Commission and the Congress will make our financial planning easier and should serve to enhance the fiscal stability of Oak Ridge.

Continuing financial assistance to the City of Oak Ridge, as recommended by the Atomic Energy Commission and incorporated in S. 2220 and H.R. 12087 is of extreme importance to the future economic stability of our city. The Atomic Energy Commission is to be commended for recognizing this need; however, the proposed legislation fails to recognize fully the importance of this legislation on the fiscal stability of our local government or the responsibility of the Federal government to the City of Oak Ridge.

Oak Ridge was built by and for the Federal government. The programs which require the existence of Oak Ridge-nuclear power development, production of enriched uranium and nuclear weapons, research in biology and nuclear desalination, support of NASA missions—are all initiated and supported by the Federal government.

At the root of the City's fiscal problems is the lack of an adequate tax paying industrial base. Private tax paying industrial properties constitute less than 1% of the total property assessment. Yet, within the City of Oak Ridge is located

the single largest industrial complex in the State of Tennessee, an installation valued in excess of a billion and a half dollars. Unike other industries in our state, this large industrial complex is tax-exempt although AEC does make token financial assistance payments representing an equivalent to one-fifteenth the valuation of the industry.

We desire to be a fiscally sound, self-sufficient community, and have worked diligently toward that end. We want to attract new industrial and commercial enterprises and participate in the vital aspects of the regional, state and national economy. To do so, however, we must have legislation that will assist rather than hinder the efforts of our community.

Gentlemen, the City of Oak Ridge recommends to this committee that the proposed legislation be amended by deleting the reference to ten years and the June 30, 1979 cut-off date. Mr. McMullin and Mr. Joyce will present our statements of support for this recommendation.

Thank you, Mr. Chairman.

TESTIMONY OF CARLETON E. MCMULLIN BEFORE THE SUBCOMMITTEE ON COMMUNITIES OF THE JOINT COMMITTEE ON ATOMIC ENERGY, U.S. CONGRESS, AUGUST 24, 1967

Mr. Chairman and Members of the Committee, my name is Carleton E. McMullin, City Manager of the City of Oak Ridge. I wish to address my remarks to the specific problems of administering local government in Oak Ridge. To do so I must place Oak Ridge in a perspective with other cities and in particular discuss its reasons for existence.

Most cities serve three primary functions-trade, industry, and a place to live a method of existence and a way of life. In addition to these purposes, you can find cities that were created for purely political reasons such as Washington, D.C., or for national purposes such as Oak Ridge, Tennessee.

Oak Ridge, as we all know, started when the Federal government purchased farmland on which to create a community for the sole purpose of housing the scientists, engineers and labor force required to operate the laboratories and plants of the Manhattan Engineer District. Since 1947, and under the leadership of the Atomic Energy Commission, the Federal government has continued and diversified the initial reasons for the community's existence. Of the three functions of a city, two of them, industry and trade, are completely dependent upon Federal programs which serve national and international interests.

I do not wish to over-simplify why cities have developed, but it is important to understand, in discussing financial assistance for Oak Ridge, that the community was created at the hands of the Federal government for national purposes, not for the normal functions of industry and trade.

The desire of the City and the Atomic Energy Commission, on the other hand, is to transcend the sterile upbringing and participate in the flow of commerce, while continuing to serve the national purposes of the government-owned industry. The fulfillment of this desire is not possible unless fiscal stability and a reasonable business climate prevail.

The United States Atomic Energy Commission and Congress recognized the lack of the City's fiscal soundness in the passage of the Atomic Energy Act of 1954 and Public Law 221 in 1955. Today, in retrospect, it is obvious the original AEC conclusions that Oak Ridge would soon be financially self-sufficient were based upon wishful thinking rather than a knowledge of urban economics. Our purpose in appearing before the Committee is to urge that legislation duplicating this wishful thinking not be passed but rather that positive language be incorporated in the bill that will assist both the Atomic Energy Commission and community leaders in developing the economic base necessary for support of governmental services. To state it more simply, Gentlemen, we are only asking for that which the Committee, in its wisdom, asked Congress to do in 1955; i.e., grant financial assistance without a cut-off date.

Let me quickly summarize the background of our present 1969 cut-off date for financial assistance. When AEC, in 1955, proposed quick withdrawal from community support, the Joint Committee on Atomic Energy (Senate Report 1140, page 16, and House Report 1402) stated, "The Commission, so far as is known to this Committee, has failed to recognize that it has thrown special burdens on any local government despite the wording in the present statute." Recognizing these special burdens, the Joint Committee on Atomic Energy reported out a recommended bill without a fixed cut-off date on financial assistance.

Despite unanimous approval by the Joint Committee, however, the 1955 bill ran into difficulty in the Senate and amendments were offered which limited financial assistance to ten years.

With the sale of residential and commercial properties virtually completed by 1958 and incorporation of the City accomplished in 1959, the citizens assumed both the responsibilities of self-government and the burdens of financing local government. Because it had been built as a temporary, war-time Federal city, the tax base was composed of those low-cost residential and commercial properties built to last for the duration of the war and to meet the military needs of our country. An industrial tax base was nonexistent. Nevertheless, the first City Council following incorporation in 1959 proceeded to take advantage of the revenue sources available to Tennessee cities. Property taxes were founded upon a professional appraisal of property values and a high tax rate. Today, eight years later, a City-initiated reappraisal program has increased private property valuations 24%. Even with the reappraisal of property and the use of other available revenue sources, Oak Ridge citizens pay the highest effective combined City and County tax rate in the State of Tennessee. The present tax payment has jumped 57% for the average home owner since 1960 and is almost 15% higher than the second highest city and 40% higher than the average Tennessee city over 20,000 population.

The Oak Ridge tax rate will continue to spiral upward as the community undertakes the necessary burden of rebuilding the temporary schools, recreation centers, fire stations, and library. Unlike other cities, the public buildings and facilities were hurriedly built for the duration of the war and have now served their functional and economic life. Already a total of $6.1 million has been authorized by the voters to replace two schools, a library, and community recreation building. Another $5 million in General Obligation Bonds will be required to replace other schools and fire stations. Modernizing the utility systems is calculated to cost $2.3 million in addition to moneys already expended. These expenditures are necessary, not because of economic growth, but because of our inheritance of temporary, war-time structures.

During this same period there has been also a tightening of the belt. The level of school and municipal services is no longer in the first quartile as established and maintained for years by the Atomic Energy Commission. That these services are not only devoid of frills but are administered efficiently can be noted by the following comparisons. In 1967 the per capita expenditure in Oak Ridge, excluding education, was only $61.47 compared to the latest available national average of 5 years ago of $91.00 for all cities of less than 50,000 population. The per pupil expenditure for education during fiscal year 1967 was 14% less than the national average for school systems of comparable size.

Since the assumption of municipal responsibilities, Oak Ridge has made every effort to bring about industrial diversification. The City operates its own industrial development office, participates in the county-wide Melton Hill Industrial Development Association, and takes advantage of the services available from the Tennessee Valley Authority; yet, in spite of our concerted efforts, less than 1% of our taxable property is private, tax-paying, industrial property. The paucity of private industrial investment is not surprising when it is considered that the isolation of Oak Ridge from transportation and markets was a primary reason for the original selection of the site for the city.

Industry and trade are the prime movers of a local economy since they generate employment income and produce needed property tax revenues. The industrially diversified city in Tennessee receives 40% of its property tax revenue from industrial property. Oak Ridge receive less than 1%. Fifteen percent of property tax revenue comes from commercial property in Tennessee cities. Oak Ridge receives 11%. To state this in another way, the diversified city in Tennessee obtains 55% of its property tax revenue from the two functions of industry and trade. Oak Ridge receives less than 15%.

The law of diminishing returns establishes an intangible but nevertheless very real upper limit on property tax rates. High tax rates on commercial properties lead to high retail prices resulting in transfer of trade to out-of-town merchants. This then lowers retail profits and depresses commercial investments further restricting tax revenues. When residential tax rates approach the prohibitive point, new housing development is curtailed, residential values fall, old residents leave the city and potential new residents settle elsewhere. A decline in population further depresses the commercial sector initiating a downward eycle of investments, profits and tax revenues.

There is little doubt that the main cause for the City's failure to develop financial stability as rapidly as had-been hoped by AEC is that those hopes have been shown to be largely based on wishful thinking. The professionals, i.e., the consultants who surveyed the City's prospects before incorporation, knew better. All of the consultant reports stressed the fact that due to the lack of an economic base, the City could not financially sustain itself. Further, the consultants were not optimistic about the chances of large-scale industry being attracted to Oak Ridge. They listed these deterrents to successful industrial diversification: (1) existence of a large core of tax-exempt industry creating an unbalanced tax structure with abnormally high tax rates on private property, and (2) the establishment of a time limit in Public Law 221 creating a cloud of uncertainty over the City's financial future, thus scaring away potential investors. The proposed legislation continues this cloud of uncertainty.

We believe, Mr. Chairman, we have made every reasonable effort to become self-sufficient and that we have administered our programs economically and efficiently. We have been praised publicly by Mr. Sam Sapirie, Manager of Oak Ridge Operations, United States Atomic Energy Commission, for the manner in which we have met our responsibilities.

Today, in spite of the earlier prediction by the Commission, Oak Ridge is still a one-industry city, Federally created, with tax-exempt plants and without the tax-paying industrial economic base to support local government. The proposed ten-year cut-off date continues, as has the present cut-off date, to have immediate adverse effects upon the outlook of potential industrial and commercial entrepreneurs, local businessmen and residents as to the permanency of the community. Gentlemen, we strongly urge that the Committee recognize the damaging effects of another cut-off date and reaffirm its previous position substantiated by the record during the last 10 years. It is only through removing this cloud of uncertainty that Oak Ridge can move toward a broader trade and industrial base and continue to fulfill the missions for which it was created. Thank you.

TESTIMONY OF EUGENE L. JOYCE BEFORE THE SUBCOMMITTEE ON COMMUNITIES OF THE JOINT COMMITTEE ON ATOMIC ENERGY, U.S. CONGRESS, August 24, 1967 Mr. Chairman and Members of the Committee, my name is Eugene L. Joyce, an attorney and a resident of Oak Ridge since 1944.

Members of this committee have heard the statements of the Commission representative relating to the proposed legislation. As has been stated, the recommendation of the City of Oak Ridge is to delete from the bill reference to any cut-off date such as June 30, 1979. The City of Oak Ridge has recognized this deficiency in the present Public Law 221 since a short time after its enactment. Our experience forms the foundation for this opinion. I would like to explain the basis for our opinion.

Historically, the United States Atomic Energy Commission and the community have maintained a desire for Oak Ridge to achieve the status of a normal community. However, studies sponsored by the Atomic Energy Commission and conducted by such nationally known consultants as Lyman Moore, J. L. Jacobs Co., and the R. G. Scurry Advisory Panel, reported in clear terms to the Commission in the 1950's that the lack of a taxable industrial base to assist in support of the community would be a continuing and serious problem. Experience since then indicates that the achievement of normalcy is impossible as long as the current conditions in Oak Ridge regarding the federal installations continue to exist. When the Atomic Energy Commission submitted legislation to the Joint Committee in 1955, it was indicated that the legislation should encourage "vigorous action by the local bodies to take such steps as will be necessary to achieve selfsufficiency." Some twelve years later it is incumbent upon us to give an account of our stewardship and to report our progress.

1. Mr. McMullin has reported to you the increase of 57% in taxes paid by the average Oak Ridge home owner since 1960 as well as the significant increase in appraisals.

2. Local initiative for capital improvements has been shown by the approval this past year of two separate bond issues for schools, a library, and a recreation

center.

3. In 1953 the federal government's net cost to operate the City of Oak Ridge was slightly over $18,000,000. This year the government's subsistence payment to city operation is $1,400,000. This savings of approximately $16 million is an indication of the aggressive assumption of citizen responsibility. I am attaching as