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ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS
WASHINC'TON.D.C. 10575
October 3, 1967
W
Honorable Farris Bryant
Chairmen
Subject: Briefing Notes for October 6-7 Meeting
Following are briefing notes keyed to the various agenda items.
Attendance
It looks about the same on last time. Rhodes and Ellington will
not be here; neither will Chancellor Heard. Rockefeller will be here one
day only. All three State legislators, all four mayors, and the three
county officials apparently will attend. From the Senate, Muskie is out.
Nundt possible and e "no" iron Brvin; iron the House, Ullnan and Buyer
will attend but Fountain is in doubt because he is on the UN delegation
this year. Clark will he in for awhile and the Treasury atnfi will try
to deliver the Secretary for the discussion of revenue sharing.
1. Hinuten
The draft minute: were corrected pursuant to two or three
notices received, including your corrections, and they should be ready
ior iormnl adoption.
Fiscal Eederelian nggrt; General Note!
As you know the ground to be covered is tremendous. Following
in I listing of the reconnendation items that will be pending.
C a ter VII O atoll clone
1. QuestLOn of new fiscal ortongements--Fn .er-
natives ranging iron gtatue guo ti rcvcu. .cing
2. State action to shore up property tax and :OVide
combination of broad based taxes (sole: and income)
3. State legislation to ..ield basic family incoue
iron ealea tenet.
h.
5.
6.
7.
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State legislation to provide reimbursement to
low income owners and renters for portion of
property tax
Federal assistance for State reimbursement to
low income property taxpayers and renters
Federal assistance for State programs to shield
basic family income tram sales taxation
Exploration of feasibility and desirability of
establishment of Federal metropolitan taxing
districts
Chapter IV Metropolitan Fiscal Disparities
l.
2.
5.
6.
7.
9.
10.
State action to establish metropolitan school
taxing districts
State authorization for use of scarce educational
facilities on an sreswide basis
Federal encouragement and assistance for metro-
politan educational arrangements
Changes in State school aid formulas to reduce
educational disparities
Uniform assessment and taxation of business property
throughout metropolitan areas
State legislation to control further fragmentation
of metropolitan tax base
State legislation authorizing establishment by
central cities of neighborhood subunits oi government
State legislation authorizing establishment of
neighborhood information centers and referral services
State constitutional and statutory action to encourage
the use of private enterprise in coping with urban
problems
Expansion of IRS income statistics lot Standard
Metropolitan Statistical Areas
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ll. Establishment of national systeu of social
statistics
12. Establishment by nongovernmental organization
of facility for neasuring and comparing
performance of major urban governmental functions
Chapter VI (Carryover from July nesting)
l. Use of project or formula grants (two alternatives)
2. Coordination of grant programs in Vashington
(two alternatives)
3. Headquarters field office coordination (two
alternatives)
4. lnterageacy field coordination (three alternatives)
5. Annual sessions of State legislatures
6. State legislative initiative in testifying
before Congressional committees
7. Pending Federal legislation affecting inter-
governmental relationships in field of planning
(three alternatives)
Thus a total of twenty six recommendations will be before the
Conndssion. 0f ihcuc. leVun deal with the broad issues of fiscal balance
in the federal system. tuclvc with fiscal disparities between central
cities and suburbs in the metropolitan areas and seven with improvements
in the existing grant-in-aid system carried over from the July meeting.
2(a). is th the de a ~-
Critical issues and Basic Alternatives
You will probably wish to emphasize the difficult and important
nature of the subject matter confronted in this chapter. Toe alternatives
are presented in terns of four broad possible paths tnat may be taken as
our federal fiscal system evolves.
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One is basically the status gun,but including all of the
improvements in the categorical aid system already recommended by the
Comission in this report.
A second is a changeover from the typically narrow categorical
approach to a very broad functional approach in Federal aid--e.g.. nodal
cities, and urban development fund or other block grant to cities as
proposed by the Urban Coalitioa, a broad grant for education, a broad
grant for agricultural services and so on. This alternative envisages
redressing the fiscal imbalance by infusing siseable additional amounts
of Federal aid through broad functional grants.
A third approach envisages shifting responsibility for financing
the more expensive functions of local government upward; for example,
more educational financing responsibility to the State government and
more welfare financing responsibility to the Federal Government.
Finally, there is the possibility of a Federal revenue sharing
plan (general support along heller-Pechman lines).
These four alternatives are basically mutually exclusive
although some will argue otherwise; some governors and mayors might
prefer a course that figuratively says "Dear Congresa--please give us
all of these and heaven too"! There probably will be an effort made by
some of the Conaussion members to substitute an alternative being con-
sidered by Governor Rooney's Connittee that asks for a revenue sharing
plan, limited to a percentage of categorical grants (in order to appease
the functional enthusiasts), and with a further caveat that the revenue
sharing plan would not endeavor to deal with the "big urban problems"
but rather v0uld help sustain some of the more routine functions of State
and local government.
The second caveat is designed to place revenue sharing in a
noncompetitive altuation with respect to the call of the big city mayors
and the Urban Coalition for large amoants of Federal funds pinpointed
to the large cities. the A01! staff could not see this type of approach
as a really viable alternative betause no matter what words are used,
the revenue sharing dollar must inevitably be in competition with the
categorical dollar and with the kind of dollars being saught by the Urban
Coalition. The Urban Coalition approach is "problem oriented whereas
the Heller-Pechman approach is "institution oriented, with the insti-
tution in question being federalism.
-5.
After your introductory remarks John Shannon and I could
present the general "fiscal facts of life" draun from our metropolitan
studies and from the general fiscal background contained in Chapter ll
of the report, which the Commission members had prior to the last
meeting.
It la likely that the general discussion of revenue sharing
and debate among the various alternatives would take all of the first
half day and perhaps the bulk of the first day.
Another sticky question that may arise before the Commission
concludes discussion of the broad fiscal alternatives is the question
of income tax credits. Hany people view the incume tax credit previously
recommended by the Commission as a desirable alternative to the Beller-
Pechman plan. Terry Sanford. in his forthcoming book, uses it as a
desirable prerequisite to the Heller plan. The Commission, when making
the recommendation, stressed that the purpose of the partial credit was
to help even the "decision-making scales" at the State level when
choices are being made between income and other taxes because of the
so-callcd "preeemptiVe" eiiett of the Federal income tax. The Concussion
stressed at the time the credit was go; being put forward as a means of
sharing Federal revenue. Since the Commission's position on the credit
is clear and has been well publicized, the credit has not been advanced
as an issue to be reconsidered at this time. The partial tax credit
recomendation is referred to at various places in the text.
We should probably plen for a coffee break at around 10:30 a.m.
A photographer will be over for pictures. It is suggested that. as you
did last time. you hold the members a few moments prior to the coffee
break so that the photographer may make his shots. Coffee will also
be on hand for mideftornoon of the first day and midmorning of the
second day.
2(b). Chapter IV Fiscal Balance Among Jurisdictions
Uithin Metropolitan Areas
There are twelve possible recommendations in this group. The
information gleaned izom the metropolitan studies iurnishea a very
significant part of the {actual background for consideration of revenue
sharing proposals as well as more particularized actions by State govern-
ment especially, and by the Federal Government that might be taken to
ease metropolitan disparities. The metropolitan studies were financed
jointly by the Counission and the Department of Rousing and Urban
Development. The Concussion provided something in excess of $i0.000 of
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budgeted funds plus supervision and rewriting, occupying one of our
professional staff full time throughout the period of the study. HUD
supplied a grant of $60,000, $50,000 of which has been used to employ
investigators performing the in-depth analytical research for the
selected metropolitan areas. $10,000 of the HUD grant will be used
for printing the metropolitan portion of the report, including the
twelve case studies.
After your remarks Hr. Shannon and I could present a rundown
of the principal findings of the metropolitan studies, and than you
would be ready to take up the recommendations seriatim.
It is possible that most of the metropolitan recommendations
might be completed by the end of the first day, but more likely we
will he in the middle of them or perhaps barely started.
2(c). Chapter VI Scygn Recggggndationg garrieg
Over from guly eeting
Six recommendations before the Commission at the July meeting
were deferred for one reason or another. Additionally, Governor
Rockefeller urged that alternative recmmnendations be developed regarding
the Scott bill. This has been done. The material under TAB D in the
Docket Book contains seven recommendations~-six numbered and the final
one, unnumbered, comprising three alternatives regarding the Scott bill.
a few of these recommendations should move fairly rapidly especially the
two dealing with State legislatures. However, the ones dealing with
the Scott hill, with project 13. formula grants, and alternative patterns
of Federal organisation to cope with the grant-in-aid problem will likely
occasion protracted discussion. when you introduce the carryover recom-'
mendations you may or may not wish to make reference to the letter from
the Bureau of the Budget protesting the Commission's consideration of
three of these-~9, 10, and 10-. Senator Huskie may submit a letter to
the contrary relating to these three recommendations.
3. Date and Place at t Heetin
In their review of the Commission's activities, both the House
and Senate Coenuttees pointedly recommended that the Commission hold at
least one meeting a year outside of Washington in order to bring it more
closely in contact with the "grass roots" and hopefully to improVe its
visibility in various regions of the country. The Gmmaittees also urged
that the Commission hold one or more regional meetings or "hearings" a
year for basically the same general purpose- Consequently, in the
Coonussion'a budget request for the current fiscal year w; proposed one
regional meeting associated with a Commission meeting and anotner regional
meeting held independently of a Commission meeting.
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Assuming that the Commission completes action at the October
meeting on the fiscal federalism report, the two major items for
consideration at the next meeting will be the comprehensive draft report
on "Balanced Urbanization and New Community Development" and a decision
as to the new item to be added to the work program of the Public Finance
staff. By year's end that staff will have finished all oi the revisions
in the fiscal federalism report. prepared it for the printer and caught
up on other pending items of work. The earliest that the staff can
complete the draft report on "Balanced Urbanization" [or a Commission
meeting is late January. Consequently, as far as dates are concerned
we would suggest the fourth week in January, around the 24th, 25th, or
30.
Since the subject of "balanced Urbanization and New Cons-unity
Development" is of general interest both to State and local governments
and to both urban and rural areas, it would be possible to have a
regional meeting concerned with this subject on the day preceding the
Coasnission meeting, possibly including reactions to alternative recon-
mendations in the draft report. Incidentally. the Chauniasion meeting
itself would probably require somewhat more than one day because of
the broad and controversial nature of the subject matter and the cen-
siderable number of alternative recommendations that will be involved.
We have examined the pros and cons of several areas {or a late
January meeting of the Commission. Our first recommendation would be
St. Louis, because of its interstate nature. central location, and local
interest in the Cmission'e work. A former Comiasion mber and
iormer mayor. Raymond Tucker, runs an urban affairs program at washington
University in St. Louis. The Chancellor of Hashington University was a
iormer vice chairman of the Commission. in all probability, Hayor Tucker
and his colleagues at the University. as well as city and county officials
on both the Missouri and illinois sides of the river, plus Governor
Hearnes and Governor Kerner and their respective staff: would be inter-
eeted in presenting views on "Balanced Urbanization" and other intergovern-
mental issues.
Looking at the question.strictly from the standpoint of the sub-
Ject matter involved, Chicago would be a good seconu chaice it also is
an interstate metropolitan area and we could get Lesli itucest and
participation from the city of Chicago, Cook County, hi.waukee city and
county, Governors Kerner and Knowles with some local interest perhaps
from the Indiana people. however. the university interest is less pro-
nounced than in St. Louis.
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If the location of the meeting were thrown up for grabs at
the forthcoming Comission meeting, Neal Blaisdell would extend his
usual invitation to Hawaii and the awaii bandwagon would toll. That
has come up at two or three previous meetings, and I have been in the
embarrassing position of raising budgetary objections. The additional
$5,000-S7,000 involved in holding a mating in Ema-ii makes it all but
impossible.
WW
Wu. 0. Column
Executive Director
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