COMMISSIONER VS. COUNCIL ON SUBSIDY

Mr. HAHN. As to appropriating money for the subsidy, the Mayor vetoed the Council's proposal that it not be paid and the Council overrode the Mayor's veto in this respect.

This is the City's position officially, that there not be appropriated funds to continue this subsidy.

Mr. NELSEN. In other words, his action would indicate that he supports the subsidy, but the City Council did not agree with the Mayor's position. That is about what it amounts to?

Mr. HAHN. That is correct.

Mr. NELSEN. As to public ownership, I think the record of other cities would indicate to me that publicly-owned systems have not been too successful. I would be a little hesitant, as an individual, about public ownership. It seems to me, under our free enterprise system, there has been more evidence of successful operations, well-regulated, under private management than there has been under public ownership, but this, of course, is something we can settle later.

I also re-emphasise what has been said by the Chairman, that if we were to have school buses, knowing what it costs, this might run into pretty extensive figures, and I think this is something we need to move carefully on. I thank the Chairman for yielding and I am going to have to run along now and catch my plane.

Thank you very much.

Mr. DOWDY. Mr. Jacobs?

HOW TO PROVIDE FOR THE SUBSIDY

Mr. JACOBS. What was the ten-cent item; was that the property tax or fares?

Mr. HAHN. Do you mean to raise $3 million to pay the subsidy? I was just indicating by way of comparison the sort of thing

Mr. JACOBS. Were you referring to the property tax?

Mr. HAHN. Yes, 10 cents a hundred on the real estate tax. It is that high an increase. In other words, you are talking on the one hand about the possibility of raising

Mr. JACOBS. I understand. Is the assessed evaluation for the District of Columbia about $3 billion?

Mr. HAHN. Yes.

Mr. JACOBS. I was somewhat puzzled when you said the subsidy would make the profit picture of the company more solvent. It seems to me that the company requires a subsidy. If it raised its legitimate income by fares, would it not cure that profit problem? Am I mistaken?

Mr. HAHN. No, you are correct. The gross revenue of the bus company is about $40 million and the proposed profit for it is two or two and a half million dollars. So when you are talking about a $3 million subsidy paid to the company from the City Treasury, you are talking about a sum that makes its entire profit. Otherwise it would not operate at a profit.

Mr. JACOBS. On this separate bus system for the school children, would you suspect that operating an additional bus system might be more expensive?

Mr. HAHN. I really haven't any idea. It wouldn't seem to me that, given the pattern of using this kind of school ticket, which has been in existence-well, when I went to school here we bought three bus

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tickets for ten cents and any pattern like that that permits rides in such a complicated pattern, I wouldn't think that a school-owned bus system could conceivably cope with it. I haven't any idea though of what it would cost.

My main objection to it is, as I said before, that I think we should be buying this company; I think continuation of this subsidy, which didn't used to be part of what the operator got-he has always, up to three years ago dismissing this one minor subsidy that was in existence

Mr. JACOBS. You are telling us that you think this subsidy would "Chalk up one more" for the owner, is that what you are saying? Mr. HAHN. Yes, I do, Congressman.

Mr. JACOBS. I yield to the legal member of the committee.

Mr. DOWDY. I intended to continue with members of the subcommittee and then get to you, but go ahead. That is all right.

Mr. FAUNTROY. How long would it take to consummate in your judgment the purchase of the Transit System by the District Government once the authorization was given? How long in terms of months or weeks?

Mr. HAHN. As I recollect the terms of the compact amendment, I believe they provide for relatively quick ability to acquire the company first by the Transit Authority itself, and then actual negotiations or condemnation by the Transit Authority by the jurisdictions themselves, and I would think that bearing in mind the problems that we have with mass transportation, the need to keep down the fares, the need to increase the number of riders on bus systems and to improve it, that the actual saving to the city in terms of its cost and budget are enormous; that a subsidy of this kind which continues in existence a system that costs the city and the taxpayer so much indirectly ought to be opposed.

The argument in favor of it has been wrapped up in what I consider, Mr. Congressman, a specious argument that you are going to be hurting little children. That is the reason so many people have shied away from making this argument.

This body can do several things. The first thing it can do to prevent hurting school children is, by its own fiat, to set the fare at ten cents. The second thing it can do, which is in everybody's interests, I believe, is to face up to the fact that this is a profit subsidy for the company and the third thing is that, continuing that profit subsidy inhibits the acquisition.

If I owned a business and I had a formula that provided for me a permanent guaranteed profit out of the Treasury of the District, or the United States, I wouldn't be very eager to give it up either. Mr. FAUNTROY. Given an expiration date of August 31st, do you think there is time to consummate transfer of ownership and adequate subsidy before the people who have to use the system might, through the WMATC process be obliged to pay or to take away?

Mr. HAHN. I think there is no need to act that quickly. Before there was this three year bill in existence, D.C. Transit carried the school children for ten cents and there was not a subsidy of this kind in existence. This subsidy has, in my opinion, while it was well-intentioned at the beginning, has become a device to provide a profit mar

gin for the company. Each person who may object to paying a high bus fare is if he is a tenant, and has his rent raised when there is a real estate tax increase, gets a ten cent increase in his real estate tax to subsidize it. It is the same people, one way or the other.

I just think that the simple act of limiting the school bus children's fare to ten cents and denying this profit subsidy is a sensible course of action that will both protect the school children and bring us a step closer to public ownership and operation of the company. Mr. FAUNTROY. Thank you, Mr. Chairman.

Mr. Dowdy. Mr. McMillan.

Mr. MCMILLAN. I regret I could not be here for all your testimony. I was tied up in another committee meeting. We appreciate your coming down to Capitol Hill and expressing your opinion on this proposed legislation.

Mr. HAHN. I am also pleased that you permitted me to come.

FINANCING THE BUS SYSTEM

Mr. MCMILLAN. I introduced this bill at the request of the Chairman of the WMATC, and it was my understanding that he thought that no private company-and I am certain no publicly owned concern-could carry these school children for ten cents and break even when they are compelled to increase the salaries of the drivers and pay more for the buses.

If you should get control of the bus system here, who would pay for all this expenditure? Who would pay for purchasing the bus system and who would pay for its operating expenses?

Mr. HAHN. Under the compact amendment that has been passed in Maryland and Virginia, and I hope will be passed by the District, two-thirds of the cost would be borne by the Federal Government. Mr. MCMILLAN. My taxpayers and your taxpayers and other taxpayers.

I don't blame you for wanting that system. It would be mighty good if I could get it at home. The State of South Carolina pays for transporting its children to school, the entire cost. I just wanted to get some explanation.

Yesterday after the Commissioner sent down to me a very voluminous revenue proposal, and we have to find some additional money somewhere. I just wonder where you are going to get the money from to buy this bus system, with all this other money the city wants at the present time?

Mr. HAHN. With all due respect, Mr. chairman, the $3 million which will be paid by the District of Columbia, either out of, say, a ten-cent increase in the real estate tax, or an additional $3 million of federal payment provided by you, is what is going to be the source of this subsidy.

Mr. MCMILLAN. Why shouldn't the people in the District of Columbia pay for their children riding the buses? I don't believe I have heard any complaint about this in the states. Why do they object here to paying for children riding the buses?

Mr. HAHN. As the case was when Mr. Chalk acquired his franchise

Mr. MCMILLAN. Let's forget Mr. Chalk for a minute and let's talk about the bus system. I know how you feel about Mr. Chalk.

Mr. HAHN. The bus company, before this bill three years ago, had as part of the conditions of the charter that school children were to be carried at such fares as Congress would set and that is the way it has always been since the time I went to school here, and that was part of the conditions of the franchies when it was obtained, and it is the same with any public utility operating a carrier in the District.

Mr. MCMILLAN. The Congress also approved the franchise to Mr. Chalk, saying he could make six per cent profit on his investment. I have to admit I didn't vote for that franchies on the floor of the House, but it is a law just the same. How can he make a profit carrying these children for ten cents?

PREFERS HIGHER FARES TO TAXES FOR SUBSIDY

Mr. HAHN. As between the law which actually provides him a reasonable profit-it does demand a six per cent but if I had to choose between raising taxes or asking for a larger Federal payment to provide this profit, or having to go up higher on the regular bus fare, then I would go up higher on the regular bus fare rather than see the Federal Government or the District taxpayer subsidize this privatelyheld company.

Mr. MCMILLAN. What is the difference between subsidizing them and subsidizing a public bus system?

Mr. HAHN. Of course, a publicly-owned bus system operates under a different set of considerations. We know from our experience around the country

Mr. MCMILLAN. In New York I understand they are $100 million in debt with their publicly-owned bus system.

Mr. HAHN. There is no question about the problem public carriers have everywhere, Mr. Chairman. The question is, where do greater expenses wind up if we don't have a bus company carrying more people at low fares?

Mr. MCMILLAN. We have increased salaries in the District of Columbia and for the Federal employees, to my knowledge 14 times since I have been in Congress. In fact, the average government employees was getting $1,740, and the policeman's starting salary was $1,740. Now it is $8,000 and $8,500.

Don't you think that those people are able to pay a little more for a bus ticket? I would be ashamed to grumble if I were a government clerk about paying 50 cents for a little token on a bus.

Mr. HAHN. As I said, if I had to make the hard choice between going up in the fares and paying this out as a subsidy, I would rather see the school fare maintatined at ten cents, whatever the action has to be in the public interest before the Transit Commission.

Mr. MCMILLAN. I would like to see it ten cents myself. I would like to see us take every child for less than ten cents if possible. I know some of them come from rather poor families, but if you are going to expect a bus system, whether it is owned by the public or owned by private enterprise, to stay in business, we are going to have to do something to help them out.

Mr. HAHN. Of course, a third of the rides that we are talking about are actually now free to the school children of the District of Columbia. That ten cent fare itself, in about a third of the cases, is paid for by Federal funds.

Mr. MCMILLAN. That is all.

Mr. DOWDY. Do I understand correctly that those that are paid for entirely are children who are transferred from one school to another which makes them have to go further?

Mr. HAHN. As I understand the Deputy Mayor's answers to you— and, really, that is all I do know about it-it is that if they are a mile and a half from the school that they are required to attend and can otherwise qualify. I am not sure what that means.

Mr. DOWDY. I read this and I wondered if that is the reason for it because I thought the schools were closer together.

Mr. HAHN. I would have to admit, Mr. Chairman, that that letter took me back a little bit, and I am not clear what that meant myself. Mr. Dowdy. I think that if a child is required to go to a school other than his neighborhood school, somebody ought to pay for the cost of his transportation rather than the student himself.

Mr. HAHN. As I understand it, that is the purpose of that subsidy, which came after the 1968 school court decision.

Mr. MCMILLAN. If this subway system ever gets to where we can see light, where we think we are going to be certain to have a subway system, and know something about when the time will be when we can expect to transport the majority of the people by subway, why I think that would be the proper time to purchase the bus system and have it all synchronized together. However, at this time I don't think we can afford to take that chance, because the subway system is not moving as fast as we would like to see it.

Thank you.

Mr. DOWDY. Mr. Hagan, have you any questions?

Mr. HAGAN. No questions.

Mr. Dowdy. I have no further questions. Thank you.

Mr. HAHN. Thank you, Mr. Chairman and gentlemen. Congressman Fauntroy, this is my first appearance before you.

(Whereupon, at 11:50 a.m., the subcommittee was adjourned.)