July 22, 1975
Page 24093
EDITORIALS SUPPORT ANTI-RECESSION AID TO CITIES
Mr. MUSKIE. Mr. President, last week, the Government Operations Committee reported out a bill introduced by Senator HUMPHREY, Senator BROCK, and myself — the Intergovernmental Anti-Recession Assistance Act of 1975. The bill S. 1359, was approved by the committee by a vote of 9 to 2.
During the previous week, the anti-recession legislation was endorsed by the U.S. Conference of Mayors, meeting at their annual conference in Boston, as one of their highest legislative priorities for this session of Congress.
The rationale behind this legislation is one of good commonsense. The proposal itself is somewhat complex, however. And since it will be before the Senate in the not too distant future, I would like to begin now to alert my colleagues to the merits of the proposal, and to the support which is growing for it around the country.
Recent editorials in the Baltimore Sun, the Boston Sunday Globe, the Portland Evening Express, and County News — the publication of the National Association of Counties — have supported the concept of the legislation, as a proposal which is both timely and needed.
I ask unanimous consent that these four editorials be printed in the RECORD.
There being no objection, the editorials were ordered to be printed in the RECORD, as follows:
[From the, Baltimore Sun, July 9, 1975]
FEDERAL AID TO THE CITIES
The United States Conference of Mayors is scheduled to vote Wednesday on a resolution calling for a significant change in the federal revenue sharing formula. That program now allocates federal funds in a manner which results in every single unit of government in America, some 39,000 of them, getting a share of the federal income tax collections. This floor means that a significant amount of money goes to small and wealthy communities that do not really need the federal income tax to help them finance local government. Even worse, the present revenue sharing program imposes a ceiling on how much any one government can receive. No matter how large the city, no matter how broke, no matter how heavy the local tax burden already is, there is an artificial limit imposed on federal aid. Actually, some change is needed in the formula just to keep existing relationships the same. Some big cities have been losing population, causing a reduction of revenue sharing for the new fiscal year.
We think that formula ought to be changed drastically and hope the Conference of Mayors agrees. If it does not, it will be because mayors representing small and middle sized cities without the tax base and service demand problems of the larger cities have turned their backs on their brothers. Should that happen, we would hope the big city mayors would unite in a lobbying effort in Washington. The time to get the revenue sharing formula changed is now, with the original legislation soon to expire.
There is something else the cities need from Washington. That is special, temporary aid during the current recession. The same day the mayors are scheduled to vote, a Senate committee is expected to approve a bill providing so-called counter-cyclical aid to cities, counties and states which have significant unemployment. This aid would start going to hard hit governments whenever the national unemployment rate was over 6 percent. The amount of aid would be related to the amount of local unemployment. This sort of federal assistance makes especially good sense right now. The mayors should be making a stronger lobbying effort for counter- cyclical aid. It could still be weeks before the Senate acts and months before the House does if nothing is done to show that the mayors want this aid, want it badly and are willing to invest political time and prestige in the effort to get it.
[From the Boston Sunday Globe, July 13, 1975]
UNCLE SAM AND THE CITIES
In some respects, the most remarkable feature of the $2 billion emergency aid for cities and states sought by the nation's mayors convening here last week is that the figure is so small. The nation's state and local governments last year ran a collective deficit of almost $8 billion and the situation is still deteriorating.
It is quite reasonable that the mayors turn to the Federal government to assist them in the crisis period through which many of them are now passing. The problems faced by the city of New York are highly symptomatic of those confronting many other municipalities, long-term problems that have been severely exacerbated by the recession. Revenues at the state and local level are failing to meet estimates and expenditures are rising for social programs and to simply keep pace with inflation.
The specific form of assistance backed by the mayors, initially conceived by economist Charles Schultz, is embodied in a bill sponsored by Sens. Edmund Muskie (D-Me.), Hubert Humphrey (D-Minn.), and William Brock (R-Tenn.) , expected soon to be reported favorably by the Senate Governmental Operations Committee.
Its key features call for assistance to states and localities based on the unemployment rate starting at 6 percent and total tax receipts. Under its provisions, Detroit, with a staggering 21.6 percent unemployment rate, would receive $38 million. Houston, with 4.5 percent unemployment, would receive nothing.
The virtue of the program in the eyes of its supporters is its anti-recession structure, coming into play at a set level of unemployment and phasing out whenever unemployment drops below that threshold. One might argue about whether the 6 percent figure is the correct one but the program avoids the danger of setting into place major works projects that gain a bureaucratic momentum of their own.
The formula for setting the total amount of available funds is also a subject about which one might argue.
The bill in effect establishes a kitty of $500 million at a national unemployment rate of 6 percent and adds $250 million for each increase of half of one percent in the unemployment rate — hence the $2 billion figure for the approximate 9 percent unemployment rate now suffered nationwide.
But the program is in no sense a device simply for bailing out state and local governments that build up deficits through inefficient operations. While there is no specific ceiling on the proportion of deficits that might be made up through the bill's formula, the $2 billion total would fall far below the needs of state and local governments collectively, and would keep political pressure on those governments to practice fiscal responsibility. It has been suggested that even if the concept were to be expanded, Federal assistance should not as a general rule make up more than half or perhaps two-thirds of state or local deficits.
More than just an expression of the immediate fiscal needs of the cities, the bill is an important antidote to the increasing tendency both at the Federal level and at state levels to treat the cities as civic lepers that should care for themselves.
It is noteworthy, for instance, that the Senate bill failed to win endorsement by the annual governors' conference last month. But that failure may be attributed at least in part to the absence of Govs. Hugh Carey of New York and Michael Dukakis of Massachusetts — each unable to attend because he had to deal with urgent fiscal problems within his state that grew directly out of the kind of problems the bill is designed to correct.
As with so many aspects of state and local government problems that relate to urban life, the issue now hinges on congressional action. Since the plight of the cities and of highly urbanized states has resulted in large part from the underperformance of the national economy, Congress owes no less than the modest aid encompassed by the bill to help ease the problems of our most troubled communities.
[From the Evening Express, July 18, 1975]
HELP WHERE IT'S NEEDED
Near unanimous approval this week by the Senate's Government Operations Committee of $1.7 billion anti-recession aid bill sponsored by U.S. Sen. Edmund S. Muskie was not unexpected. But whether the proposal, which could provide up to $8.5 million in aid to high unemployment areas in Maine, will receive White House approval remains in doubt.
The measure would provide emergency aid to state and local governments hard pressed by the current recession. Funding would automatically be triggered when unemployment nationally reached six per cent — it is now 8.6 per cent — and would be available to specific areas depending upon the local unemployment rate. Conversely, the program would be terminated when unemployment fell below six per cent.
In Maine, a state with an unemployment rate of about 11.5 per cent, the $8.5 million in aid would be distributed to high unemployment areas with approximately $3 million going directly to the state. Portland, which has an unemployment rate of approximately 9 per cent would be eligible for $436,000 in assistance.
The money, which would be made available with few strings attached, is designed to make it possible for cities and towns to continue meeting essential services without resorting to additional tax increases during a period of high unemployment. As such, Muskie argues that the emergency aid program would provide a substantial boost to the economy but would be non-inflationary.
There is no doubt that the program would be extremely helpful during a period of high unemployment, particularly in Maine. The Maine Legislature's approval of a lean $704 million budget was accomplished without additional state taxation only because state aid to cities and towns was reduced by several million dollars. Federal funding to those communities with high unemployment would make possible continuation of essential local programs without the need to further increase property taxes.
But how the Ford administration, concerned over an increasing federal deficit will view the program is another matter. When the measure was first proposed by Muskie the reaction from the White House was negative. Yet, after a delegation of the nation's mayors strongly supported the aid plan Treasury Secretary William E. Simon announced the administration would "reconsider its position."
On balance, we believe the proposal deserves passage. It will provide the aid desperately needed and would bring it to those areas with the greatest need. If it can be funded within the deficit restraints necessary to hold down the deficit to acceptable limits — and Muskie is convinced that it can — it would be of significant benefit to areas of the country, including Maine, now shouldering the massive burden resulting from high unemployment and inflation.
[From County News, July 21, 1975]
COUNTY OPINION ANTI-RECESSION AID
Two Senate committees reported this week emergency legislation designed to help counties, cities and states hard hit by the economic recession. The bills are S. 1587, amendments to the Public Works and Economic Development Act of 1965, and S. 1359, Intergovernmental Anti-Recession Act of 1975. Both of these NACO-supported measures would provide urgently-needed funds to local and state governments so that state and local budget and taxing decisions will be in concert with the federal government's efforts to revitalize our economy.
NACO believes the Congress and the Administration should be taking a comprehensive approach to emergency federal aid and should combine these two bills.
We believe this kind of comprehensive assistance for state and local governments offers the best way to provide employment, while at the same time allowing states and localities to stabilize their budgets. A public works program would provide jobs in the private sector as well as much- needed public facilities.
Emergency grants as provided in S. 1359 would help stabilize state and local government budgets and taxes, and would avoid lay-offs which are contrary to national economic recovery programs. Lay-offs of existing employees in many localities have worked to the detriment of employment programs such as the public service jobs program under CETA.
The two cosponsors of S. 1359, Senators Brock (R-Tenn.) and Muskie (D-Me.) urged the President "to forge a total economic assistance program for local governments." Both have pointed out that anti-recession aid is not a substitute for general revenue sharing.
Anti-recession aid will be discontinued when unemployment falls below six per cent. To be effective, all of these programs for economic stimulation must be coordinated at both the national and the local levels. A combination of public works and anti-recession or countercyclical assistance would provide a comprehensive approach. We urge Congress to act now.