METRO construction effort. In other cases, planned program efforts could not go forward. For example, the Personnel Office had planned to hire a Personnel Management Specialist for updating, revising and completion of the District Personnel Manual. This effort has been cut back due to the need to absorb certain other higher costs.

Mr. COPPIE. Mr. Chairman, if we eliminated the 900 positions and then turned around in our next budget requesting those same 900 all over again, obviously we would be vulnerable to extreme criticism. Those positions have been eliminated and the new positions that we are requesting are positions that are needed for specific areas other than the areas that they were eliminated from. Mr. CABELL. Mr. Link, any questions?

Mr. LINK. No.

COMPARABLE AREA TAXES

Mr. BROYHILL. Mr. Chairman, I think Mr. Back did a good job in setting up these charts so that we could compare the District's income tax with those in the surrounding communities, as well as the sales tax. But getting back to Mr. Hahn's point of comparability, I think that Mr. Hahn and all of us on this Committee want to make certain that there is comparability. We don't want to impose on the District residents real property, income, or sales taxes in excess of those being paid in the suburbs.

Mr. HAHN. That is what you said at the hearings last year.

Mr. BROYHILL. Again I say Mr. Back has probably come up with a very accurate chart in comparing income and sales taxes, but I wonder whether these are accurate in comparing real estate taxes, because there are different methods of assessment and of setting up the rates. I don't know. Virginia's formula is 40 percent of assessed value, and there is a little gimmick that the elected officials pull over there occasionally which is periodic reassessment, which increases the base although not the rate. Thus, the taxes are increased just the same. And I think the problem, Mr. Chairman, is that we are trying to compare taxes in the District of Columbia with those in the suburbs, and I don't think you can do this in view of the different tax rates and bases upon which they are taxed. I think you may have to consider separate spot appraisals.

May I just point out that in Virginia our latest reassessment actually increased the assessed values of many properties as much as 35 to 50 percent, and that didn't change the rate one iota. Yet comparisons that you might make of the District of Columbia and nearby Virginia would show the rates in Virginia much lower than that in the District of Columbia or vice versa, but this would not paint a true picture of tax comparison. I don't know whether you use spot checks like that, Mr. Back, but you might get some distortion here.

Mr. CABELL. Mr. Broyhill, that is why it is necessary to always adjust to a fair market value rather than the assessed value because otherwise you get a distorted picture.

Mr. BROYHILL. No, I am talking about two things. We tax at 40 percent assessment, but the appraisal on a property might be $20,000 one year and if you multiply that by 2%, you get a $50,000 evaluation; and the next year that same property value may be increased to $30,000, and this is an evaluation by the assessor. But the rate may stay the same.

I think that is the thing we are going to have to consider to make certain that we are maintaining a proper rate.

And another fact I don't think Mr. Back shows in his chart here is when we look at the Fairfax County or the Fairfax City graph, this does not show that they have just come out with a great big utility tax. I think it was 25¢, wasn't it?

They had an electric and gas tax, and I think it was 14 percent on the telephone tax. I think you have to put these into the computer also, in order to obtain full information and thus show a true comparison.

Mr. BACK. Of course, the District also has a utility tax.

Mr. BROYHILL. Is that reflected in the charts?

Mr. BACK. No, sir. What we reflect here are the taxes on the individuals, the three basic taxes.

Mr. BROYHILL. Did you compute the consumption of utilities by

the consumer

Mr. BACK. Well, he pays a sales tax on that but the utility also

pays

Mr. BROYHILL. I am not talking about utilities

Mr. BACK. He pays a tax.

Mr. BROYHILL. You are talking about the fact that the consumer pays the utility tax. He doesn't pay a surcharge on his utility? Mr. BACK. Only the sales tax.

WASHINGTON AND ITS SUBURBS

Mr. LINK. Mr Chairman, probably I have no direct questions except to observe the very interesting exchange of ideas that is going on here at the hearing this morning between Congressman Broyhill and Mayor Washington and other members of his staff. The thing that impresses me most of all is that a very strong case was made here that the income tax method of seeking additional financing for the needs of the community was brought out here.

lives

In the second place as I observed this interchange I thought a very strong case for revenue sharing was being built up here. And as we view the situation in Washington and the surrounding community and attempt to compare it with situations all over the country, it is true as Congressman Broyhill stated that just because a person here doesn't mean that he brings along a tax paying base to support the services that are necessary. The industrial plant where the average worker, the average resident works, that is where the money, the tax paying revenue, is generated. It happens to be of a different

nature in this community.

it is not available to be taxed on a property tax basis. And what Mayor That industrial plant here is the government; that is the plant. And Washington and the Council and the Government of Washington is seeking here is to on an equitable basis derive that fair portion of the tax paying ability of the industrial plant to provide the necessary supof this large community and because of the interrelationship: economic, port for the city where the people live. And because of the very nature social and moral, the states of Virginia and Maryland have a responsihappens to the City of Washington because of their very close proximbility and they recognize their responsibility to a degree for what As this picture unfolds and I am not at this point prepared to say that every proposal, every detail that is offered here should either be approved or rejected. I believe our subcommittee and the full District.

ity.

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Committee should use every bit of its resources and its counsel in working with the city government in seeking a means to establish this proper balance. As I drive in to the capital each morning, I happen to live across the river to the West.

I wonder if more people are going the other way than are coming in this way. And I think sometimes the highway is more crowded going the other way than coming in to work.

And the large shopping centers that are still outside, perhaps even at the present time are attracting more business outside. And that is where the tax base is in the District. And so I think the attempt on the part of the District Government here is commendable, I believe those of us on the District Committee have a responsibility not only to them but to the residents of the adjoining states because I feel it is to everyone's advantage to have the best kind of financial support for the community of Washington and the surrounding areas. The surrounding areas, and this is nationwide too, can be very little better for very little longer than the condition of the center core of a community. So, again, without having a specific position, I would hope that we would take a great deal of time in giving this entire approach the deepest and most serious consideration because we have these opportunities only each time the Congress meets to make some progress and I hope we will come up with something.

Mr. BROYHILL. Will the gentleman yield?

Mr. LINK. Yes.

Mr. BROYHILL. I want to commend the gentleman for a very excellent statement, and particularly for his observation regarding the responsibility of the suburbs to the central cities. I say to the gentlemen that this has been the feeling of the people in the suburbs right along. I have made the observation on many occasions that we can't expect the suburbs to grow and prosper and become better places to live at the expense of the central city. We have to help to build up and improve the central city as well.

And I would not want to be a party to any action designed to enhance the suburbs to the detriment of the center city. You made some excellent observations that a large portion of this industrial base belongs to the federal government, and that is the reason why I feel that the main source of responsibility does lie with the federal government in making whatever payment may be necessary in lieu of taxes. And thirdly, Mr. Link, there is still a large portion of the places where people work in the District of Columbia that does provide such a tax base, and I am talking about private business.

Mr. CABELL. Mr. Nelsen, did you have any questions?

GASOLINE TAX

Mr. NELSEN. Yes, in reference to the gasoline tax. I remember when we increased the cigarette tax. I think the revenue went down rather than up when we increased it at one time. This was some years back, so the law of dimensioning returns begins to apply. Now, speaking of the suburbs, I would be very very concerned about the possibility that if the increase should drive the customer out of the District to buy outside, I am sure you have given thought to this, and I hope that it has been carefully calculated because it might very well turn in the direction of producing less revenue instead of more revenue

Mr. BACK. Well, Mr. Nelsen, as I indicated earlier in discussing another tax, you can never predict precisely what the effect might be of a tax increase or a tax change. It is true that the proposed 8e raise would be the highest in the area of Maryland and Virginia. We would anticipate some loss in consumption, but not enough in our opinion that the $1 and 1⁄2 million additional revenue predicted would be greatly effected. So, our estimate of the amount of revenue reflects a guess, if you want to call it that, or an estimate that consumption will be reduced slightly as a result of this.

DISTRICT GOVERNMENT SAVINGS

Mr. CABELL. I want to thank all of you gentlemen. One question that slipped my mind. A while ago, Mr. Coppie, I believe you mentioned some $42 million that had been saved by job elimination?

Mr. COPPIE. No, Mr. Chairman, I said that $46 million over a period of three years: 1970, 1971, and 1972, had been redirected from the base sustained increases in the budget. $35 million of that actually was a firm base reduction and $11 million was a one time redirection to fund――

Mr. CABELL. Would you note those or document just what positions were eliminated?

Mr. COPPIE. We would be glad to do that, Mr. Chairman. I would want you to understand now that only $9 million of that $46 million actually applied to the 923 positions. The remainder were other savings that we took.

Mr. CABELL. And I might also say to you, Mr. Mayor and Mr. Watt, that if you wish to present documentation, the record will be kept open for a period and we will be glad to entertain any.

Mr. BROYHILL. Mr. Chairman, let me ask one more question.
Mr. CABELL. Mr. Broyhill?

SANITARY SEWERAGE

Mr. BROYHILL. Again, in making up this deficit as we must do, I don't suggest this as a substitute at all; but sometimes by putting a little red ribbon around it, and making it look a little prettier, you might make it a little bit easier to sell. I remember that last year we put into the revenue bill a provision for a study on the part of yourself, the Environmental Protection Agency, and others to provide. some area of coordination for adequate water supply and treatment of sanitary sewerage for the entire area. That report is ready now isn't it? You were a part of it.

I don't want to delay this bill at all, but if we could implement the first stage of that program, that would remove one item of expense out of the District budget and into a federal budget, and thus reduce the amount of revenue that you would need. Now this might help us psychologically in regard to the large percentage of federal payment increase that you are asking for at this time. You might give some thought to that. I don't want to delay the action, but I know you want to move along with your pollution problems as well.

This might just be helpful in selling this package and getting an additional federal payment.

Mr. CABELL. Would the gentleman yield?
Mr. BROYHILL. Yes.

Mr. NELSEN. I was going to point out that I have been a little concerned. We criticize the ballooning costs but I am wonderin ing the past five years how many increases have resulted because of Congressional action, adding to the burden of the District by legislative action and how many dollars have you had to spend, shall we say, in the last five years that we are responsible for because of legislation we have enacted? I am kind of curious if you have any study, because I would like to see it. We had the increases in salaries for the police and the firemen: we have created a Federal City College and the Washington Technical School. All these items add to the total budget, and I think this should be highlighted in defense of the city's government revenue proposals.

Mr. WASHINGTON. I thank you very much, Congressman Nelsen. I think the Chairman indicated that we may expand our presentation in the record but I would certainly like the opportunity, because this is so significant, to be able to give to you, Mr. Chairman, a study that we had put together or at least an analysis of it so that each member of the Committee may have it outside of the record as well as on it. (Subsequently, the following information was submitted for the

record:)

D.C. BUDGET INCREASES RELATED TO CONGRESSIONAL ACTIONS

The question has been raised as to the extent of D.C. budget increases over the past five years which have resulted from legislative action by the Congress. In responding to this question, it should be stressed that most new programs or major new efforts of the District of Columbia must originate with enabling legislation enacted by the Congress, inasmuch as the Congress acts as the primary legislative body for the District. It is also important to note that new thrusts are not conceived of separately and apart from the desires and policies of the District government. The Congress, the Federal Government and the District were all actively concerned and seeking legislative authority to modernize and expand the District's judicial system. The result is the enactment of the 1970 Court Reform and Criminal Procedures Act.

As a result of these relationships, legislative actions often have a pervasive budgetary impact and it is difficult to separate a specific impact from the ongoing program at a particular point in time and budget of the responsible District agency. In many cases, a new law may expand the responsibilities or workload of a particular agency. This may result in a budgetary proposal by the agency to meet that responsibility. In almost every budget year, this kind of impact is felt in various areas of District operations. For example, the Minimum Wage and Industrial Safety Board is requesting additional funding (6 positions and $75,200) in fiscal 1972 to meet increased inspections and related workload principally due to amendments of the Industrial Safety Act. These amendments were enacted in the 1970 Revenue Act and expand the law's coverage to all places of employment in the District.

From year to year there are many such budget requests, some approved and some denied, which are related to Congressional actions. Because of the broad ranging and pervasive impact, however, it would be nearly impossible to trace out over a five year period the total amount of cumulative funding added to the D.C. budget in response, directly or indirectly, to legislative actions of the Congress. There are however some cases which should be highlighted because of the major impact and direct relationship of the increased funding required.

PERSONNEL COSTS

The District of Columbia personnel system operates under the jurisdiction of the Federal Civil Service System and as such the increases in salaries and benefits which have been enacted over the last several years have sharply affected the District's budget. The pay and benefits systems for District police, firemen, teachers and judicial employees are separate from the Civil Service System.