June 2, 1966
Page 12085
THE CRISIS IN FEDERALISM
Mr. BOGGS. Mr. President, the junior Senator from Maine [Mr. MUSKIE] spoke in Wilmington, Del., last week at the annual awards dinner of the Committee of 39.
The Committee of 39 is a bipartisan group of interested, active citizens. It promotes better government in the State of Delaware and has been a considerable force for progress.
Senator MUSKIE'S address outlined the three challenges to creative federalism; namely, management, manpower, and money.
Senator MUSKIE's astute summation of the crisis in federalism deserves wide attention, and for this reason I ask unanimous consent that his speech be printed at this point in the RECORD.
There being no objection, the speech was ordered to be printed in the RECORD, as follows:
MANAGEMENT, MANPOWER, AND MONEY: THREE CHALLENGES TO CREATIVE FEDERALISM
(Address by Senator EDMUND S. MUSKIE at the Committee of 39 annual awards dinner,
Wilmington, Del., May 26, 1966)
For 177 years our federal system has provided a favorable climate, unmatched by any other devised by man, for the free growth, free expression, and opportunity of its people. Its strength springs from its adaptability to change and from a tradition of cooperation among all levels of government.
We frequently take this strength for granted. But the unparalleled changes of our era have brought about a crisis in our federal system. It is a crisis we must solve, at all levels of government.
As I see it, today's basic intergovernmental relations problems might well be tagged the "Three M's” -- management, manpower, and money. These three problems have reached crisis proportions in the period since World War II. We have added 53 million people to our population. We have more than tripled our gross national product. We have crowded into urban centers. We have come to enjoy higher living standards and the benefits of modern science and technology. And we have demanded more from our governments in education and public welfare, job opportunities, transportation, housing, pollution control, equal rights, and the elimination of poverty.
As a city official, as a governor, and more recently as chairman of the Senate Subcommittee on Intergovernmental Relations, I have had an opportunity to observe this crisis in federalism at all three levels. The Subcommittee has surveyed various aspects of the "Three M's" -- management, manpower, and money. And from our surveys we have gained new insights into the crisis in our federal system.
THE MANAGEMENT MUDDLE
Many people are not aware of the extent to which our society has turned to the grant-in-aid device to achieve the goals of a better America. Today we have 170-odd grant programs with a fiscal 1967 budget total of some $14.6 billion.
The most striking feature in the whole grant-in-aid picture is not in the size of Federal outlays, but in their diversity, and in the wide range of governments eligible for their program funds. The problem of sheer numbers is serious. I am sure you can appreciate the difficulty of managing 170 grant-in-aid programs in the 21 different Federal departments and agencies and in over 92,000 units of government throughout our 50 States -- counties, municipalities, townships, metropolitan areas, independent school districts, and other special-purpose districts.
Dean Stephen K. Bailey of the Maxwell School recently summarized the administrative problems of the Great Society program in a recent Reporter magazine article:
"Probably no series of legislative enactments in U.S. history has created more complex administrative problems than those recently passed under Lyndon Johnson's leadership. They have three things in common: their implementation cuts across existing departmental and agency lines within the Federal Government; they demand heroic responses from State and local governments if they are to succeed; they require a combination of technical and administrative skills that are critically scarce in the society at large. Despite the demands of the war in Vietnam, the critical shortage is not money but people to carry out the programs and effective administrative machinery. Neither Medicare nor aid to education nor the poverty program has either of these at the moment."
These findings support those of a recently completed survey of Federal-State-local officials conducted by the Senate Subcommittee on Intergovernmental Relations; in our study we found substantial competing and overlapping of programs at all levels, sometimes as a direct result of legislation and sometimes as a result of bureaucratic "empire building." We found a lack of interest -- even hostility -- among many middle-management Federal officials in coordinating programs within and between departments. We found them reluctant to encourage coordination and planning among their State and local counterparts. We also found that State and local administration, in many cases, is understaffed, lacking in quality and experience, unimaginative, and too subject to negative political and bureaucratic pressures. We found archaic State constitutional restrictions blocking effective application of Federal aid programs, and hamstringing State and local administrators in developing their own programs. In short, we found too much tension and conflict, and too little cooperation, in contemporary Federal relations.
To overcome these problems we need several management innovations.
First, we need to enact the proposed Intergovernmental Cooperation Act of 1966, which passed the Senate unanimously last year and is now pending before the House.
This measure, which I introduced and which Senator BOGGS and others co-sponsored, would establish a coordinated Federal urban assistance policy and provide greater focus for, and coordination of, Federal urban development efforts.
Second, there is a need for a full-time special assistant to the President for Intergovernmental relations; at present this responsibility is shared by four or five assistants responsible for the various program areas.
Third, there is a need for additional staff in the Bureau of the Budget to give more continuing attention to intergovernmental problems, to perform management surveys, and to recommend administrative reforms.
Fourth, there is a need at the departmental and agency level for assigning full-time responsibility for coordinating Federal grant programs to an assistant, or preferably a deputy undersecretary or his equivalent.
Finally, there is a need for a new executive unit for coordinating domestic programs at the White House -- a National Council for Intergovernmental Affairs. The President needs a new and continuing source of constructive ideas regarding intergovernmental finances, for improving economic and social development programs, and for upgrading public administration all along the line from Washington to the local scene. He needs a staff unit to help develop new policies for program coordination and to check on their implementation. Next week I shall introduce legislation in the Senate to implement this proposal.
A MATTER OF MANPOWER
Sound management is more than a matter of organization. It involves improved manpower. At the Federal level, the personnel problem has received almost continuous attention since President Kennedy's appointment of the Randall Commission in 1961. At the State and local levels, however, it is not yet recognized as a topic for national concern.
State and local employment has now reached the 8-million mark, or 4.7 million more than in 1946. Total Federal employment was 2.6 million in 1965, or 100,000 less than in 1946. These comparisons document the expansion in State and local government employment in the past 20 years to meet the demand for more and better public services.
Present estimates indicate that State and local governmental employment will rise by more than 38 percent between now and 1975. By the end of the present decade, the overall demand for professional and technical personnel at the local level will have increased by 40 percent. There already exists a shortage of well-trained and highly-qualified personnel in these categories at all levels, and this gap will grow. State and local governments generally -- not just a few of these jurisdictions -- are having difficulty in attracting and holding such personnel.
Unfortunately, too many decision-makers at all levels of government are not yet aware of the critical nature of this manpower gap. Long-range planning in this area is in its infancy.
There is another dimension to the personnel problem. In our survey of 109 Federal administrators of grant-in-aid programs we learned that excessive turnover, relatively low pay, ineffective merit systems, and inadequate on-the-job training have frustrated State and local governments in their attempts to meet government manpower needs.
The Federal Government has a direct stake in meeting the State and local manpower crisis. Economy and efficiency make such concern necessary. Success of our Federal aid programs makes it essential. Improved intergovernmental relations make it desirable. And the scope of the problem makes Federal assistance to State and local governments imperative.
Yesterday I introduced in the Senate the proposed Intergovernmental Personnel Act of 1966. Its main purpose is to encourage State and local governments to improve the quality of their own public service. It does this by focusing on three basic problems in the personnel area: merit system, personnel administration, and in-service training programs.
To stimulate expended State merit systems, the bill authorizes the President to extend merit system requirements to more grant-in-aid programs;
To encourage better personnel management, the bill would authorize a program of grants to enable States to strengthen their personnel administration, to provide State personnel services to smaller jurisdictions of local government, and to stimulate projects for the improvement of personnel administration in larger cities. It would also authorize the Civil Service Commission to join on a shared-cost basis with States and local governments in cooperative recruitment and examination programs;
Closely linked to the merit system and personnel management problems is the need for more and better training opportunities. The proposed legislation attacks this problem in four ways. First, it would authorize Federal departments and agencies conducting training programs for their own employees to open them up to State and local personnel in counterpart agencies. Second, it would authorize Federal departments and agencies administering grant-in-aid programs to initiate training programs for counterpart State and local personnel in short-supply categories. Third, it would establish a grant-in-aid program for in-service training of State and local employees. Fourth, it would give Congressional consent to interstate compacts or other agreements for cooperative efforts relating to the administration of State and local personnel training programs.
Improved merit systems, improved State and local personnel management, and improved in-service training programs -- these are the three basic concerns of this legislation. They must become national concerns if the States and their localities are to be vigorous members in the great partnership that was established in 1789.
A QUESTION OF MONEY
Related to the problems of management and manpower is the question of money. And in terms of public concern and debate, this is the major problem in contemporary Federal-State-local relations.
The Federal budget holds the center of the stage in governmental finances. Only rarely has much attention been given State and local budgets; in the fiscal area, most Americans draw a sharp line between governments. But if we consider the total cost of government -- Federal, State, and local -- over the past twenty years, some dramatic fiscal facts are highlighted.
When it comes to providing the public services demanded by our growing and heavily-urban population, it is the State and local governments -- not the Federal government -- which have shouldered the burden. This is documented in the shifting balance of government finances over the past two decades.
*Of total revenues raised by all levels of government in 1946, State and local governments accounted for only 23 percent; by 1965, their share was 43 percent.
*Of total government expenditures in 1946, State and local governments accounted for only 15 percent; in 1964, this percentage had increased to 42.
*State and local governments accounted for only 5 percent of the total public debt in 1946; today their share has increased to 23 percent.
State and local governments are under great pressure to increase outlays for public services, and this will continue.
They have made Herculean efforts in the past two decades to meet their rising needs.
Property taxes have increased more than 350 percent in the post World War II period, and still provide 87 percent of all local revenues.
In the 1946-1964 period, State sales taxes rose 427 percent; individual and corporate income tax collections by State and local governments rose by 800 and 280 percent, respectively.
We have reached the point where 42 States have a general sales tax and 36 have some form of tax on individual incomes.
For all their efforts at raising revenues, State and local governments find it difficult to keep pace with mounting needs. The primary reason is that most of their basic revenues still come from levies imposed on property owners and consumers. Unlike Federal revenues, they tend to grow at a slower rate than the gross national product. Some recent estimates, based on this fact, project a $15-billion deficit in State and local budgets five years from now. A number of proposals have been offered to strengthen State and local capacities to meet their needs.
Several alternatives have been suggested through which Federal action might provide the additional funds. Most of them assume further rapid growth in State-local expenditures, and the availability of Federal surpluses. These are the recent proposals: (1) reduce Federal tax rates; (2) relinquish specific Federal taxes to the States; (3) allow tax credits against Federal income taxes for certain State-local taxes; (4) return to the States a portion of Federal collections originating in each State; and (5) adopt a new Federal program of general assistance to the States, in the form of block grants, with few or no Federal restrictions on how the money is to be used.
None of these plans have been explained in detail. None have been examined by Congressional committees. None, as I understand them, give adequate recognition to the economic inequalities among the States. None consider the disproportionate economic advantage that high-income States now enjoy under the present distribution of total Federal funds, especially Defense and Defense-related expenditures. And finally, all assume a Federal budget surplus and present levels of spending for existing grant-in-aid programs. Neither assumption provides a solid foundation on which to build fiscal policy.
What are the prospects for resolving the fiscal dilemma of State and local governments? I believe that within our Federal system of cooperation among all levels of government there are indeed answers, and that we should pursue them vigorously.
First, States and localities should mount a combined attack to improve the administration of the property tax.
Second, Congress and the Administration should review the inequities of existing grants. The present system does not give adequate recognition to States' relative fiscal capabilities to support these programs. More than half of existing grant-in-aid programs favor the wealthier States in spite of the fact that the poorer States and localities are already taxing their citizens far more vigorously on the whole.
Finally, Federal policymakers should look beyond Federal grants to the impact of the broad range of Federal expenditures on State and local government. For example, we have found that high per capita income States enjoy a proportionately higher advantage under Defense, NASA, and related disbursements than the less affluent States. Since this is the lion's share of Federal outlays, no discussion of equalization of tax sharing is complete if this category of spending is ignored.
These are fiscal responsibilities the Federal Government should assume now. The Advisory Commission on Intergovernmental Relations is surveying the long-term question of a more equitable financing of the Nation's public needs. I called for this study last February. I am sure the Commission will produce a thorough, balanced, and constructive report.
Management, manpower, and money -- these are the real challenges to creative federalism. These are the major hurdles to be surmounted if the goals of the Great Society are to be realized. And these are top priority items on the administrative agenda of the President, on down to that of a First Selectman.
All levels of government, then, not just one, must pool their resources in a concerted effort to perfect our federal system.