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Limiting the annual debt service of the District for general fund purposes to percent of general fund revenues from local taxes and the Federal payment would permit the District at the current .. Treasury interest rate of 1⁄2 percent on 30-year bonds to incur an outstanding indebtedness which is slightly less than the estimated revenues from local axes and the Federal payment for the corresponding years as the borrowing authorization estimates shown above Indicate. In comparison with prevailing local government borrowing practices generally in *he United States this is a conservative amount of indebtedness in relation to foesi revemies. A comparison of the outstanding indebtedness for generni governmental purposes with revenues in the 21 largest cities in the United States in fiscal 1964, which is shown in the attached table, indicates that the ratio of revenue ro dent in these cities ranged from a low of sightly less than i to to a high of itɑ 4 with a median level of indebtedness that was twice the revenues for the same year. The objective of sil debt limitation provisions is to limit the amount of dem a government may incur to an amount which it can safely repay and to restrict the authority of imprudent administrations. Most governments are unable to finance all their requirements on a current basis and use long-term borrowing to finance capital outlay projects of lasting benefit whose cost is heavy relative to the current financial resources of the community. Between 1952 and 1960, 63 percent of all local government capital outlay work was financed with loans. In many respects the use of long-term loans to finance projects which will serve residents of the community for many years in the future is more equitable than current payment since it places some of the financial burden of these projects on the future users of the facilities. Paying for such capital improvements entirely out of current revenues actually constitutes payment in advance in these cases.

The proposed change in the District's borrowing authority would relieve Congress of the need to periodically adjust the lump sum authorization that inevitably becomes inadequate in a relatively short time since this type of authorization does not reflect repayments or changes in the District's capacity to finance longterm debt. A flexible borrowing authorization is essential to putting financial planning for long-range public works programs on a sound basis in the District. The availability of early estimates of the level of borrowing authorization would permit the District to plan the timing of substantial capital outlay expenditures by providing a more accurate estimate of the city's ability to finance such projects. An increase in the general fund borrowing authorization that is reasonably related to the ability of the District to support long-term debt and will enable the District to finance essential school construction, library, health, welfare, and recreational facilities is urgently needed at this time to allow the District to make more rapid inroads on capital requirements. The present 6-year capital works plan of the District calls for the use of the rest of the District's present general fund loan authorization of $175 million, exclusive of the rapid transit loan of $50 million, by 1968. These essential public works will have to be abandoned unless some provision for additional loan funds is made. This proposed borrowing authorization provides a prudent yet flexible debt limit. The amount of debt actually incurred will continue to be appropriated each year by the Congress.

The proposals for the annual Federal payment and general fund borrowing authorizations together with the increases in District tax revenues which have been recommended by the Commissioners and the President represent an urgently needed long-range solution to the District's most eritical financial problems. They will in our judgment provide a fair and flexible measure of the amount of Federal support that should be provided the District for essential services and facilities and a constructive approach to long-term debt management. We respectfully request your earliest consideration of these measures so that the District may nove ahead to meet its goals and fulfill its increasing responsibilities.

These proposals have been prepared on the basis of and conform with the statement made to this committee February 28, 1966, by the Honorable Elmer B. Staats, then Deputy Director of the U.S. Bureau of the Budget.

ARTS AND JUNIOR COLLEGES

HEARINGS

BEFORE THE

THE UNIVERSITY
OF MICHIGAN

JUN 17 1966

MAIN
READING ROOM

PUBLIC HEALTH, EDUCATION, WELFARE, AND

SAFETY SUBCOMMITTEE

OF THE

COMMITTEE ON

THE DISTRICT OF COLUMBIA
UNITED STATES SENATE

EIGHTY-NINTH CONGRESS

SECOND SESSION

ON

S. 293

TO AUTHORIZE THE ESTABLISHMENT OF A PUBLIC COMMUNITY COLLEGE AND A PUBLIC COLLEGE OF ARTS AND SCIENCES IN THE DISTRICT OF COLUMBIA

S. 1612

TO ESTABLISH A BOARD OF HIGHER EDUCATION TO PLAN, ESTABLISH, ORGANIZE, AND OPERATE A PUBLIC COMMUNITY COLLEGE AND A PUBLIC COLLEGE OF ARTS AND SCIENCES IN THE DISTRICT OF COLUMBIA, AND FOR OTHER PURPOSES

MARCH 14, 15 AND 24, 1966

Printed for the use of the Committee on the District of Columbia

60-755 O

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1966

LEPOSITED DY

COMMITTEE ON THE DISTRICT OF COLUMBIA
ALAN BIBLE, Nevada, Chairman

WAYNE MORSE, Oregon

WINSTON L. PROUTY, Vermont THOMAS J. MCINTYRE, New Hampshire PETER H. DOMINICK, Colorado ROBERT F. KENNEDY, New York

JOSEPH D. TYDINGS, Maryland

CHESTER H. SMITH, Staff Director

SUBCOMMITTEE ON PUBLIC HEALTH, EDUCATION, WELFARE, AND SAFETY

WAYNE MORSE, Oregon, Chairman

WINSTON L. PROUTY, Vermont

ROBERT F. KENNEDY, New York

II

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