STAFF MEMORANDUM H.R. 16361-D.C. REVENUE PROPOSALS (1) Federal Payment Authorization___ April 24, 1968 (Millions of dollars) Adopt a formula to make Federal contribution equal to 25% of D.C. General Fund tax revenues (realized from income and Franchise taxes, sales and gross receipts taxes, property taxes, inheritance and estate taxes, etc., estimated to yield $331.6 million for fiscal 1969). 4 would be $82.9 Federal payment as compared with $70 million presently authorized. (2) Individual Income Tax Increase_. Present Rates 22% on first $2,000 3% on next $2,000 32% on next $2,000 4% on next $2,000 4%% on next $2,000 Proposed Rates 2% on first $1,000 (3) Extend Unincorporated Business Franchise Tax.. 12. 9 8. 2 3% on next $2,000 4% on next $2,000 5% on next $5,000 6% on all over $10,000 5% on all over $10,000 1. 6 To those now exempt, as doctors, dentists, lawyers, architects, engineers (for whom more than 80% of gross income is derived from personal services) (4) Increase (from 3% to 4%) in general sales tax _ _ 10. 6 (5) Increase (from 3% to 5%) sales tax on restaurant meals and sales of alcoholic beverages_. 6.6 (6) Eliminate present (1%) sales tax on food for consumption off the premises (3.3) (7) Remove exemption of local telephone service from sales and use tax and apply 4% rate on same_ 1. 4 Total Estimated Revenues from H.R. 16361_-_Also, the D.C. Government on April 15, 1968 increased real property tax rate by 10 (from $2.90 to $3.00 per $100 of assessed valuation), and increased personal property tax by the same amount (from $2.20 to $2.30 per $100) for fiscal 1969, estimated to yield... Education PUBLIC SCHOOLS Operating funds for the public school system in 1969 require $110 million, an increase of $9 million over 1968. Since 1955, the District's per-pupil expenditure has risen from $283 to $797 in 1967. The foregoing tabulation shows that in the period 1964-69, the total D.C. budget of $713.8 million has increased almost 100% over 1964's $358.5 million. Some items have increased as much as 950%, as the last column shows. At the same time, the total Federal payments to the District (lump-sum and grants) increased 168% ($255 million in 1969 as compared with $94.95 million for 1964). FEDERAL ASSISTANCE TO THE DISTRICT OF COLUMBIA As is indicated in some of the following charts and exhibits, there is an extraordinary expenditure of Federal funds (dollars from the American taxpayers) in the District of Columbia, over and above the expenditures which Congress makes via appropriations from the tax revenues originating in the District. FEDERAL PAYMENTS First in the category of Federal funds for the District are the annual Federal payments or contributions which are authorized by the District Committees and appropriated by the Appropriations Committees of the two Houses and by the Congress. As is shown in the following chart, the authorized Federal payment to the District has jumped from $20 million per year in 1956 to $70 million in 1968, a 250-percent increase in this period. COMPARISON OF FEDERAL PAYMENTS (LUMP SUMS AND FEDERAL GRANTS) TO THE DISTRICT WITH THE DISTRICT'S GENERAL FUND REVENUES Also as Federal expenditures in the District, are the widespread Federal grants which flow into practically every department, agency and activity of the District of Columbia. The following chart show the summary of these Federal grants. going back to fiscal year 1963 when $55.8 million came from the Federal coffers into the District, and increasing each year to reach $79.9 million in fiscal 1967. And projected ahead, it is estimated the District will receive $178.3 million in Federal grants in 1969 $185.0 million. The CHAIRMAN. Mr. Commissioner, we had planned to hear any statement you care to make, and we hope you advise the Committee on just how you want to spend this extra money and why it is necessary. FEDERAL GRANTS TO THE DISTRICT OF COLUMBIA (FISCAL YEARS 1966-69) Source: Executive Office, Budget, District of Columbia Government, Mar. 23, 1968. 278,000 176,000 55,755, 295 57, 461, 330 43, 558, 842 62, 469,986 79, 855, 190 178, 310, 921 21,056, 777 184,970, 378 STATEMENTS OF HON. WALTER W. WASHINGTON, COMMISSIONER, DISTRICT OF COLUMBIA; HON. JOHN W. HECHINGER, CHAIRMAN, DISTRICT OF COLUMBIA COUNCIL; THOMAS W. FLETCHER, ASSISTANT TO THE COMMISSIONER, DISTRICT OF COLUMBIA; KENNETH BACK, FINANCE OFFICER AND ACTING DIRECTOR, DEPARTMENT OF GENERAL ADMINISTRATION; AND DAVID P. HERMAN, BUDGET OFFICER, DISTRICT OF COLUMBIA Mr. WASHINGTON. All right, sir. I will make an opening statement, and then I will call upon my colleagues here to give any definition and respond to any questions that will be involved. I certainly want to thank the Chairman for his expeditious calling of this hearing so that we might explain the revenue measure. The revenue measure, we believe, is by far the singlemost important legislative request which our new government has before the Congress. I believe it is. Without the substantial revenue increase, our municipal services and projects for the Capital City will be seriously crippled. So, Mr. Chairman, I am thankful for this opportunity, and I want you to know that we in the administration feel very proud that you sponsored this piece of legislation and that it is cosponsored by Mr. Nelsen. We believe that as we unfold our story here that it will become evident that the need is great and that the time is upon us. We therefore would, in making our statement, say that we hope we can, by full and open discussion, make it infinitely clear the need for favorable action on the revenue-raising request. Before discussing the specific revenue proposals, which have the support of my office and all members of the City Council I would like to touch upon some of the city's needs and reasons why we are seeking additional funds. The District's proposed budget for the forthcoming fiscal year totaled $608.7 million. We need nearly $40 million in additional revenue to help finance these appropriation requests and proposed pay raises for policemen, firemen, and teachers. In addition, pending items such as increased fee for court witnesses, and additional salary increases for the District's classified and wage board workers will widen this gap between available revenue and spending needs well over $40 million. |