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Pechman, Joseph A., Taxation With Representation, statement__
Pennsylvania Citizens Committee for Revenue Sharing, statement:

Hon. James H. J. Tate, (Mayor, Philadelphia) cochairman...
Ralph F. Scalera, cochairman__

Peterson, Hon. Russell W.:

Governor, State of Delaware, statement..

378

1100

1100

850

Chairman, Education Commission of the States, statement... Peterson, Hon. Walter, Governor, State of New Hampshire, telegram dated June 14, 1971, to Chairman Mills.

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861

Port Arthur (Tex.), City of, Hon. Bernis W. Sadler, Mayor, letter dated
June 22, 1971, to Congressman Jack Brooks of Texas..
Region V Citizens Council, Rev. Lloyd Ewing, executive director, letter
dated June 10, 1971, to John Martin, Jr., chief counsel, Committee on
Ways and Means, with resolution.__.

1398

1479

709

Rochester (N. Y.), City of, Hon. Stephen May, Mayor, statement----
Roth, Hon. William V., Jr., a U.S. Senator from the State of Delaware,
letter dated June 28, 1971, to Chairman Mills, with attachments..
Roussey, Hon. R. H. "Bud", Mayor, Oxnard, Calif., letter dated May 18,
1971, to Chairman Mills, with resolution_.
Rousselot, Hon. John, a Representative in Congress from the State of
California, joint statement with Hon. John G. Schmitz, a Representative
in Congress from the State of California__

Sadler, Hon. Bernis W., Mayor, Port Arthur, Tex., letter dated June 22,
1971, to Congressman Jack Brooks of Texas-

St. Louis (Mo.) County Municipal League, Donald E. Clark, executive
director, letter dated May 28, 1971, to Chairman Mills, with resolution.
Sargent, Hon. Francis W., Governor, State of Massachusetts, letter dated
June 14, 1971, to Chairman Mills...

Save Our Suburbs, Mrs. Eileen S. McIntosh, president, letter dated
June 14, 1971, to Chairman Mills, with resolution__
Scalera, Ralph F., cochairman, Pennsylvania Citizens Committee for
Revenue Sharing, statement_

Schira, Frank J., executive director, National Police Officers Association
of America, letter dated June 15, 1971, to Chairman Mills, with resolution
Schmitz, Bernard R., Westbury, L.I., N. Y., letter dated June 2, 1971, to
Chairman Mills, with enclosure_.

Schmitz, Hon. John G., a Representative in Congress from the State of
California, joint statement with Hon. John Rousselot, a Representative
in Congress from the State of California..
Shere, Louis, professor emeritus of economics, Department of Economics,
Indiana University, letter dated June 22, 1971, to Chairman Mills_----
Shirley, Franklin R., chairman, North Carolina Citizens Committee for
Revenue Sharing, letter dated June 10, 1971, to Chairman Mills ----
Stanton, Hon. James V., a Representative in Congress from the State of
Ohio, statement___

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1398

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789

1476

1100

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1317

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1098

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Steiger, Carl E., cochairman, Wisconsin Citizens Committee for Revenue
Sharing, letter to Chairman Mills..

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Stenehjem, Erik J., joint statement with Charles F. Adams, Jr..
Stover, Francis W., director, national legislative service, Veterans of For-
eign Wars, letter dated June 17, 1971, to Chairman Mills..
Stuart, Robert, member, National Citizens Committee for Revenue Shar-
ing (board of directors, National Can Corp.) letter dated June 9, 1971,
to Congressman Harold R. Collier of Illinois...

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Cochairman, Pennsylvania Citizens Committee for Revenue Sharing, statement.

1100

Taxation With Representation:

Joseph A. Pechman, statement..

378

Stephen P. Dresch, research associate, National Bureau of Economic
Research, statement__.

381

Charles Waldauer, associate professor of economics, PMC Colleges,

statement..

386

Jerome R. Hellerstein, professor of law, New York University, statement.

389

Tennessee, State of, Hon. Winfield Dunn, Governor, statement..
Tennessee Citizens Committee for Revenue Sharing, statement:

Hon. Frank C. Gorrell (former Lieutenant Governor) cochairman...
Lamar Alexander, cochairman..

Thomson, Hon. Vernon W., a Representative in Congress from the State
of Wisconsin, statement.

United Automobile Workers of America, Jack Beidler, legislaive director,
letter dated June 21, 1971, to Chairman Mills, with attachment_
Unruh, Hon. Jess, cochairman, California Citizens Committee for Revenue
Sharing, statement. - - -

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864

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U.S. Catholic Conference, Bishop Joseph Bernardin, general secretary,

statement_ _ _

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U.S. Conference of Mayors, Hon. James H. J. Tate, president (Mayor of
Philadelphia, Pa.), statement..

663

Venema, Maynard P., cochairman, Illinois Citizens Committee for Revenue
Sharing, statement..

1051

Vermont Citizens Committee for Revenue Sharing:

Consuelo N. Bailey, cochairman, letter to Chairman Mills.

1103

Hon. Thomas H. Candon (Minority Leader, Vermont House of Representatives) cochairman, letter dated June 10, 1971, to Chairman Mills

1103

Veterans of Foreign Wars, Francis W. Stover, director, national legislative
service, letter dated June 17, 1971, to Chairman Mills..
Waldauer, Charles, associate professor of economics, PMC Colleges,
statement__

1426

386

Weems, Lawrence D., cochairman, Alabama Citizens Committee for Rev-
enue Sharing, letter dated June 4, 1971, to Chairman Mills..
West Virginia Citizens Committee for Revenue Sharing, letter dated
June 8, 1971, to Chairman Mills:

1046

Hon. Robert E. Hinerman (Mayor, Huntington, W. Va.), cochairman_
Hon. William P. A. Nicely (Mayor, Parkersburg, W. Va.), cochairman_
Whitney, Wheelock, president, Investment Bankers Association of Amer-
ica, letter dated June 25, 1971, to Chairman Mills_-_
Williams, Hon. Jack, Governor, State of Arizona, statement_

Wisconsin, State of, Hon. Patrick J. Lucey, Governor, letter dated June 15,
1971, to Chairman Mills, with enclosure---

1103

1103

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Wisconsin Citizens Committee for Revenue Sharing, letter to Chairman
Mills:

Carl E. Steiger, cochairman.......

1104

John Kannenberg, cochairman.

1104

Zeo, Frank J., chairman, National Taxpayers Conference, letter dated
June 16, 1971, to Chairman Mills, with statement--.

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GENERAL REVENUE SHARING

MONDAY, JUNE 7, 1971

HOUSE OF REPRESENTATIVES, COMMITTEE ON WAYS AND MEANS, Washington, D.C.

The committee met at 10 a.m., pursuant to notice in the committee room, Longworth House Office Building, Hon. Wilbur D. Mills (chairman of the committee) presiding.

The CHAIRMAN. The committee will please be in order.

Our first witness this morning is Andrew J. Biemiller, director of the Department of Legislation, American Federation of LaborCongress of Industrial Organizations.

Mr. Biemiller, we appreciate having you back before the committee. You are recognized, sir.

STATEMENT OF ANDREW J. BIEMILLER, DIRECTOR, DEPARTMENT OF LEGISLATION, AMERICAN FEDERATION OF LABOR-CONGRESS OF INDUSTRIAL ORGANIZATIONS, ACCOMPANIED BY NATHANIEL GOLDFINGER, DIRECTOR, DEPARTMENT OF RESEARCH

Mr. BIEMILLER. Thank you, Mr. Chairman.

I am accompanied by Mr. Nathaniel Goldfinger, director of our department of research."

The CHAIRMAN. We are glad to have you with us, too, sir.

Mr. BIEMILLER. The American labor movement has always championed programs which would effectively increase the quantity and quality of the Nation's public facilities and services.

It is for this reason that we are particularly grateful for the opportunity to present our views on proposals to meet the financial needs of States and local governments.

The sharing of Federal revenues with the States and localities has been a part of the American system of government since its very beginning. The first programs date back to the Articles of Confederation of the 1780's, and today about one-fourth of the Federal revenue available for domestic use is shared with the States and localities.

Agreement on the responsibility of the Federal Government to provide financial aid to the States and local governments, particularly in this time of rapid social and economic change, is widespread and longstanding.

So the issue is not whether the Federal Government should share. its revenues with the States and localities. On that there is not disagreement. The issue before this committee and before the Nation is the method of distribution and sharing.

The present method of categorical grants-in-aid transfers Federal funds to a State or local government for specific purposes or "categories," geared to meet high priority needs determined by Federal Tegislation. Such programs are established by the Congress, through the normal process of legislation and appropriation, with the opportunity for congressional review of how the programs are working. Moreover, the State or local government must use such Federal grants, usually combined with additional small percentages of State or local funds, to provide specified public facilities or services, under performance standards such as civil rights and labor standardsthat are established by Federal statute.

This system has served the Nation well.

In contrast, the administration has proposed a program of "nostrings" revenue sharing with no requirement that the funds be spent for any specified purposes or programs, and without specified and enforceable Federal performance standards. The administration's program would dispense to the States 1.3 percent of Federal individual income tax base -$5 billion in the first full year-with complicated pass-through formulas based on "tax effort," that would provide an average of 48 percent of each State's grant to general purpose local governments.

The AFL-CIO is firmly opposed to a concept of no-strings, nostandards, and no-supervision revenue sharing. There is no justification for the adoption of a new Federal aid delivery system which is specifically designed to bypass the process of congressional legislation, appropriation, and oversight.

The administration's proposal is not a magical new concept. It will not create money where none now exists. It will not provide the substantive and immediate assistance so badly needed by State and local governments to meet growing public requirements.

The Eighth Biennial Convention of the AFL-CIO in October 1969, reiterated its longstanding position that the Nation's interests will not be served through so-called no-strings revenue sharing, or other devices to spend federally collected tax revenues without tailoring these expenditures to specific program needs that are in line with national goals and priorities, subject to congressional scrutiny, and conducted under Federal standards of performance.

This past February, after a careful examination of the current crop of revenue-sharing proposals-particularly that offered by the administration the AFL-CIO executive council urged "complete rejection" of no-strings revenue sharing, and noted its conviction that:

no-strings money will not add one Federal penny to the money available to the States and localities. It will merely be a substitute for the full funding of existing programs, which could quickly provide the State and local governments with at least $6 billion of additional Federal funds rather than $5 billion. Establishment of a no-strings grant program would also block or slow down the needed expansion of grant-in-aid programs and the development of new ones.

The executive council also stated that:

With no requirement that the funds be spent for any specified purposes or programs, critical needs could be bypassed in the expenditure of these Federal moneys. There is no reason to believe that each of the 50 States and 81,000 cities, borroughs, townships, and school districts is in a better position to weigh and balance national priority needs, and use Federal funds to meet them more effectively and efficiently.

Moreover, without specified and enforceable Federal performance standards there is no assurance that Federal civil rights guarantees and fair labor practices will be applied to projects supported by no-strings Federal grants.

America needs a long-range, national effort to greatly expand and improve public investments in facilities and services. This is beyond question. Planned public programs will be required throughout the remainder of this century to revitalize the Nation's urban areas as centers of American civilization, and to improve the quality of life of the American people. Such effort is essential if we are to strengthen the basic foundation of American society and permit our three-level Federal system to meet the requirements of a growing and increasingly urban population in the midst of rapid and radical changes in technology, urban growth patterns, and race relations.

This country has been undergoing these vast social changes for at least 40 years. Needs for every kind of public investment from sewer systems and waste-treatment facilities to urban mass transit, education, health care, public safety, libraries, roads, and airports have multiplied. But despite efforts to meet these growing needs, mainly in the past 25 years-and particularly during the latter 1960's large backlogs have remained and some have expanded to monumental size. And in large part these changes have converged upon functions and services traditionally considered the jurisdiction of State and local government.

There is no question that Federal revenues must be used to help meet these needs. The Federal tax structure, with all of its deficiencies, is a more equitable and efficient producer of revenue than State and local tax systems that depend so largely on unfair sales and property taxes. Moreover, many public needs involve nationwide social issues such as education and welfare. Many others cross the boundary lines of States and local government units, such as requirements for highways, pollution controls, manpower training, and regional economic development. And, of course, if more Federal help is not forthcoming, a number of States and virtually every large city is or will soon face the prospect of continued deterioration and cutbacks in public services that could be socially disastrous.

Under the present system of categorical grants, Federal aid to State and local governments has more than tripled in the past decaderising from $7 billion in 1960 to $24 billion 10 years later. The total is expected to exceed $30 billion in fiscal year 1971.

Last year, Federal grants accounted for 18 percent of total State and local revenues, compared to less than 13 percent 10 years ago. Significantly, the major share of this increase in Federal funds flowed to the larger cities and the poverty-stricken rural regions of the country for such programs as the education of disadvantaged children, training workers in new skills, building hospitals, and underpinning other State and local government functions and services. Between 1960 and 1970, Federal grants-in-aid to the hard-pressed urban areas shot up from about $3.5 billion, or approximately half of all grantsin-aid, to $16.7 billion, or over two-thirds.

Despite this sharp rise of Federal grants-in-aid-and despite increasing outlays by the States and local governments-mounting needs for public facilities and services have left many States, every large

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