February 26, 1975
Page 4446
MAINE LEGISLATURE SUPPORTS REVENUE SHARING REENACTMENT
Mr. MUSKIE. Mr. President, the Maine Legislature recently adopted a joint resolution urging Congress to support reenactment of the general revenue sharing program.
In this resolution, the legislature noted that since 1972, Maine governments – some 500 in all – have received $124 million of vitally needed fiscal assistance through revenue sharing. It went on to note the increasing burdens which inflation has placed on Maine taxpayers and on Maine communities caught in the squeeze between escalating prices and rising demands for governmental services.
Mr. President, I want to assure the people of my State of my continued support of general revenue sharing. Last week, in a speech before a Conference on Federalism sponsored by the Advisory Commission on Intergovernmental Relations, I reaffirmed that support. At the same time I outlined my conviction that we must seek to resolve some of the very real problems that presently exist in the program, particularly with respect to current formulas, incentives for State and local tax reform, and civil rights enforcement.
I ask unanimous consent that the text of my speech, as well as a copy of the joint resolution of the Maine State Legislature, be printed in the RECORD.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
Joint resolution memorializing the Congress of the United States to support the reenactment of the General Revenue Sharing program
We, your Memorialists, the Senate and House of Representatives of the State of Maine in the One Hundred and Seventh Legislative Session assembled, most respectfully present and petition your Honorable Body, as follows:
Whereas, the State of Maine, her 16 counties and her 496 municipalities have received $124,000,000 of vitally needed fiscal assistance through the allocation of federal dollars under the General Revenue Sharing Program; and
Whereas, these Revenue Sharing dollars are received directly from the Federal Government by the State, the counties and the municipalities with a minimum of federal paperwork, enabling the citizens to use the funds to meet their self-determined priorities; and
Whereas, the citizens of Maine view state, county and local officials as being accountable for the expenditure of Revenue Sharing funds, and citizens as having ultimate control of their priorities through the governmental processes; and
Whereas, the taxpayers of Maine are being severely affected by the spiraling and unprecedented rate of inflation in costs of government as well as in their private lives; and
Whereas, the current inflationary rate is undermining the ability of government to provide essential services to their citizens within reasonable levels of taxation; and
Whereas, the General Revenue Sharing Program, which began in 1972, will terminate in 1976 unless the 94th Congress authorizes an extension of the State and Local Fiscal Assistance Act of 1972; and
Whereas, the 107th Maine Legislature endorses the continuation of the General Revenue Sharing Program in order to insure that vitally needed federal assistance will be provided to Maine; now, therefore, be it
Resolved: That we, your Memorialists, respectfully request and urge that each Member of the United States Congress from the State of Maine publicly state his support for the reenactment of the General Revenue Sharing Program in order that citizens of Maine may be informed of their commitment to continuing their flow of resources back to the People of the State of Maine; and be it further
Resolved: That a copy of this Resolution, duly authenticated by the Secretary of State, be forthwith forwarded to each Member of the United States Congress from the State of Maine.
REMARKS OF SENATOR EDMUND S. MUSKIE
I am glad to have an opportunity to speak to you today on a subject of such great interest to all of us.
I want to begin by saying that I continue to be a firm supporter of revenue sharing.
Having made that clear, I want to say also that revenue sharing – as we now know it – faces rough sledding in Congress. The title of my remarks uses the word "renewal" as if re-enactment were a foregone conclusion. That may be so, but it will be neither automatic nor easy.
I do not mean to play the role of the alarmist here this afternoon. Nevertheless, I think that candor is in order. For if we are going to insure the continuation of revenue sharing in anything resembling its present form, we cannot afford to overlook or underestimate the opposition that has mounted against it.
Revenue sharing has been an important shot in the arm for our federal system.
But there have been problems, and those problems have generated opposition that we must deal with to re-enact the program.
That opposition is remarkably similar to the arguments raised against revenue sharing back in 1971 and '72. Fiscal conservatives then opposed revenue sharing because it separated the easy task of spending money from the difficult one of raising it. Liberals opposed the idea because they wanted Federal money to be spent on specific social programs. Neither group trusted State and local officials to spend the money responsibly.
But today there are new arguments that may be raised.
Those who opposed the unfettered giveaway of federal money three years ago now have an enormous federal deficit to worry about. It is not inconceivable that they could select revenue sharing as one area ripe for budget-cutting.
Those who three years ago wanted revenue sharing funds tied to specific social programs have since seen revenue sharing used to justify drastic cutbacks in the very programs they supported. And they have seen revenue sharing funds going to some communities with little need, and into projects with little social impact.
In the middle, there are many in Congress who are simply indifferent to the fate of revenue sharing. It is not an issue that generally stirs passions in its support.
To be sure, the constituents of revenue sharing will be able to rally considerable support for their cause. Working to their benefit will be the current disarray of the economy, which has many state and local governments in their worst fiscal shape since the depression, with promises of harder times to come.
That these conflicts will be resolved, through renewal of revenue sharing, may not be in doubt. The form that resolution will take is a different matter. Those critics who feel revenue sharing is a retreat from national social goals may want to attach more strings to the money, or require an application process to insure that only worthy projects are funded. Those critics who feel that revenue sharing is too expensive and that the money is just being thrown away may want to subject revenue sharing to the annual appropriations process, or limit the life of the program to one or two years only.
We who support a continuation of revenue sharing – in more or less its present form – must be prepared to meet these efforts, by focusing on constructive alternatives. And it is not too soon to begin that process now. First and foremost, we must redefine what revenue sharing actually is, and what it was intended to accomplish.
During the first years of operation the program has, unfortunately, acquired a mistaken identity.
To many, it has come to mean a retreat from social progress, even though it was never intended to replace ongoing social programs.
For many others revenue sharing was a victim of the expansive rhetoric of the New Federalism – a "new American revolution" which promised to reverse overnight the imbalance of generations of increasingly centralized government.
When measured against such a promise, it is small wonder that revenue sharing comes up short.
If there is one thing we all should have learned from our experiences of the 1960's, it is that programs which over-promise will invariably leave hopes unrealized, and confidence undermined.
As we begin anew the debate on revenue sharing we must not allow that to happen again. We must re-define revenue sharing in terms of its original purposes which were, in fact, quite limited.
First, to relieve the fiscal problems of hard-pressed local governments with inadequate or inflexible tax bases.
Second, to reduce the regressive burden of State and local taxes by substituting revenues from progressive federal income taxes.
And third, to give people at the State and local levels the resources and the flexibility to develop solutions suited to their unique problems.
Returning to these relatively modest – but extremely meaningful – goals is necessary as the Congress considers re-enactment.
The proper role for revenue sharing is, and always has been, that of a complement – not a substitute – for a balanced mix of general revenue sharing, block grants, and categorical programs.
When measured by this more limited test, we find that the success column for revenue sharing is longer than the critics would have us believe.
In most cases, revenue sharing monies have gone into worthwhile programs. Hot lunches for the elderly, improved police protection and health care, and new sewage treatment facilities are just some of the successes.
In many other instances, State and local taxes have been held down because of revenue sharing. And I might add that in many of our urban areas holding down property taxes is a worthy social objective.
The plain fact is that – matching the record with, the original goals – revenue sharing is a demonstrated step forward. And once the bugs have been ironed out, its potential is even greater.
Which brings us to the next round of difficult questions. Once we have agreed upon our objectives, we have to make some tough choices about how we want to achieve them. Some of these choices are necessary because of flaws in the program that have become evident since 1972. Others are choices that should have been made before revenue sharing was ever enacted, but which were avoided in the spirit of compromise deemed necessary to get any program at all.
Perhaps the most difficult question of all is if it makes sense – or if we can afford – to give something to everybody under revenue sharing, whether they need it or not. That is what we did in 1972, in order to get a bill. As a result, we gave revenue sharing critics some of their best ammunition.
I personally do not think it does make sense – and I do not think we can afford – to give revenue sharing money to certain units of government simply because they exist, but serve no substantial governmental function. I don't think it makes sense – nor do I think we can afford – to give money to affluent communities with no demonstrated need for assistance, while big cities with big problems have arbitrary limits imposed on the amount they can receive.
The old formula gave us a consensus, which was needed at the time. But in the process, we lost sight of our purpose.
So our first tough choice this time around must be to rewrite the revenue sharing formula to insure that greater emphasis is placed on need.
We need to raise or eliminate the ceiling that holds down payments to cities, relative to other communities in the same State. We must find a better way to judge the amount all governments should receive, and adjust the formula where it deprives cities of needed funds because they are located in relatively affluent States.
At the same time, we need to revise the 20% floor where it benefits wealthy communities or governments with very limited functions.
A second difficult question that faces us in renewing revenue sharing is the matter of incentives for tax reform at the State and local levels.
During the original debate on revenue sharing, a number of members of Congress – including myself – wanted to explore the possibility of using revenue sharing assistance as an incentive to State and local governments to move toward more progressive tax structures.
In the search for a consensus on a revenue sharing bill, that idea was abandoned. This time around, we should consider reopening that question.
To be sure, tying tax reform to revenue sharing is going to be unpopular with a good many people. But we must consider the argument of critics that revenue sharing has actually shored up regressive State and local tax systems. For every time a local government has been able to cut property taxes because of revenue sharing funds – as necessary as that may be in some instances – the pressure for reform is weakened.
A third major focus of the revenue sharing debate must be on improved civil rights enforcement.
The problem here is not one that we avoided during the original debate, but one which has reared its head since that time. The U.S. Civil Rights Commission has just released a blistering report confirming the poor enforcement of the civil rights provisions of the Act.
In our upcoming efforts to enact a renewal of revenue sharing, we must make it very clear that simply because these funds are free, they are not a blank check to discriminate. We must also assure that the Office of Revenue Sharing has the staff to enforce the law.
And we must assure for local citizens the opportunity to participate more fully in decisions about how revenue sharing money will be used.
These three major areas of change that I have outlined will not please everyone. If all were adopted, there would be some disappointed governments who would receive less than under the present formula. Some might, in fact, receive nothing at all.
But we must recognize that a large part of our present problem is that in 1972 we did try to please everyone, with consequences we may not want to repeat.
Today, in 1975, there is a growing realization that the size of the federal pie is limited – and that we simply may not be able to afford spending money where it is not needed. Nor may we be able to continue propping up State and local tax structures which do not make the most efficient and fair use of the tax base throughout the nation.
I said at the outset of my remarks that we supporters of revenue sharing must focus our efforts carefully. This means sticking to limited objectives, and not promising more than the program can produce.
It also means ensuring that we get the most for our money, by fully considering the tough choices I have described.
The health and vitality of our federal system demands the continuing attention of us all. Revenue sharing is only a part of that effort, but one well worth fighting for.