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FOR RELEASE: lO A.M.
Friday, October 13, 1967
National Conference on Legislative Leadership
Heehington Hilton Hotel
Washington, D. C.
October 13-14, 1967
Remarks by Farris Bryant, Chairman
Advisory Commission on Intergovernmental Relations
On behalf of the Advisory COmmission on Intergovernmental Relations
I extend a warm and cordial welcome. We are pleased that you hsVe
accepted our invitation to participate in the National Conference on
Legislative Leadership. He hope that the discussions will be stimulating
and informative, and that the informal association with your colleagues
and with the Henbers of Congress will be rewarding and pleasant.
This meeting, in one sense, is a sequel to the White House
Conference that was held in Hashington last year. That meeting, too,
brought together legislatiVe leaders from the several States; many of
you were present. It provided an opportunity for you to meet with the
President and Members of his Cabinet to discuss key programs and activi-
ties of interest to the States.
This Conference, however. differs from last year's meeting in
subject matter and in scope. Us haVe the prospect, I believe, of
breaking new ground, of exploring new ways to buttress the foundations
of our federal system.
A major portion of the time this morning will be devoted to a
discussion of the need for State legislatures to "tool up" for effective
operstion in our federal system. A distinguished panel will focus
attention on the role of the legislative branch and how State lawmaking
bodies may be better organised and equipped to carry out that role.
this afternoon a group of Congressional and State leaders vill
examine the relationships between Congress and the State legislatures
and has those relationships may be strengthened and improved, has better
channels of cosnmmication may he built.
Tomorrow morning we vill explore some of the irritating problems
that Federal grant-in-eid programs impose on the State legislative
process, including, I hope, the problems of fiscal scheduling and legis-
lative oversight. Also tomorrow ve will consider the pros and cons of
a controVersial proposal much in the news of late--reVonue sharing.
The Vice President will join us at the close of the luncheon
today to bring us greetings and to offer informal remarks. And at the
closing luncheon session tomorrow our speaker will he Governor Richard
Hughes of New Jersey, uho is Chairman of the Committee an State-Urban
Relations of the National Governora' Conference.
The Advisory Counission is proud to play a role in this important
endeavor. From the founding of our republic the division of authority
and responsibility among the several levels of government in our federal
system has been a matter of urgent concern to the "practitioners" as well
as to the students of government.
Those who visualize "federalism" as a static, stable, relationship
amung levels of government do it an injustice; they ignore its dynamic
character. The constant and continuing struggle among the several levels
to reconcile and balance the forces for and against centralization is a
distinguishing feature of our system. The struggle--the pulling and
hauling--croates tensions and conflicts. The presence and growth of
these tensions and conflicts among levels of government prompted Congress
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in 1959 to set up the Advisory Commission on Intergovernmental Relations
as a permanent independent agency and to charge it with the dual task of
analysing intergovernmental problems and formulating recommendations for
their solution.
The Commission is a 16 member bipartisan body with representation
from all levels of government. A majority of the members are elected
State and local officials~-four governors, three State legislators, four
mayors and three county officials. The Federal Government is represented
by three senators, three congressmen, and three officials of the
executive branch. Three public members complete the Commission roster.
The three State legislative members of the Commission are out-
standing legislative leaders. One of them is Our distinguished presiding
officer, Senator C. George DeStefano of Rhode Island. He will be our
heat this evening at the reception for Members of Congress, when he done
another of his hats and appears as President of the National Conference
of State Legislative Leaders.
Speaker Jesse Unruh of California, the immediate past president of
the National Conference of Legislative Leaders, and Speaker Ben Barnes of
Texas, the newly elected Vice President of the National Legislative
Conference, are the other two State legislative members of the Commission.
It is an honor to serve with these gentlemen. I assure yOu that
in our deliberations they vigorously espouse and diligently defend the
interests and viewpoint of the legislative branch of State government.
They are able, constructive, dedicated members of the Advisory Commission.
Because of its composition, the Commission is able in a unique
manner to bring to bear on intergovernmental problems the combined
judgement of lawmakers and executiVes from all levels of government and
from widely diverse backgrounds.
Virtually eVery major governmental activity on the domestic front
lies within the Commission's realm of interest encompassing as it does
Federal-State, State-local, Federal-lacal, interstate and interlocsl
relations. In more than forty reports issued since its creation the
Commission has offered an imposing checklist of specific proposals for
legislative and administrative action at one or more levels of government.
Since early l966 the Advisory Commission has been engaged in an
extensive study of 'Tiecal Balance in the American Federal Systee."
The study new is virtually completed. The findings, recommendations and
supporting material will fill several volumes. We anticipate they will
be printed and available for distribution in a few months.
The study probes the harsh fiscal realities of our structure of
government.
Let no review some of our findings.
Despite the powerful centralizing trends of recent decades, the
bases of federalism rennin strong. Federalism is imbeddsd in our
Constitution. It is soared into our political value system. And it
draws strength from social reality; notwithstanding our growing ecoaomic
and cultural interdependence, we remain a nation of diverse regions and
a people of varying attitudes and needs.
Three significant developments can be identified that now are
creating serious intergovernmental tensions.
The rapid expansion of Federal grants-in-aid to State and local
governments stand out as one major development. Persona who fsvnr
decentralisation view with alarm the growing dependence of States and
localities on Federal aid with expenditure strings attlched bee-U00 it
permits the National Government to make many crucial political decisions
in fields heretofore occupied primarily by State and local government.
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The great expansion of Federal aid programs causes apprehension
also among those who favor a strong national position. Their concern
runs to administration and the difficulties of managing the multitudes
of grant programs that may overlap and duplicate One another.
A second major development is the "crisis" in the cities. In its
most recent Annual Report, the Advisory Commission warned:
The States are on the verge of losing control over the metro-
pelitan problem; if they lose this control they lose the
major responsibility for domestic government in the United
States and in turn surrender a vital role in the American
federal system. So, at the close of 1966, the tremendous
task of financing, servicing, and governing Metropolitan
America clearly poses the greatest challenge to federalism
since the Civil war.
A growing "fiscal mismatch" is the third major source of inter-
governmental tension. The enormous productivity of the Federal income
tax and the prospect of periodic Federal tax cuts or surplus situations
stand out in sharp contrast to the general State and local fiscal picture.
Harnessed to a less productive tax system and hobbled by the fear of
interstate tax competition State legislators move through a crossfire
laid down by those who demand tax relief and thoso who urge greater
outlays of State funds.
We have found that the American federal system is indeed out of
fiscal balance. However, the manifestations of imbalance--serious as
they are and assuming crisis proportions in same areas-ode not give a
clear guide as to the actions which could or should be taken. Rather
they point in differing directions.
The principal manifestations are:
...increasing fiscal disparities between central cities
and suburbs
...a national revenue system that is more responsive to
economic growth and change then the State-local revenue
systemm
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...greatly increasing expenditure demands for domestic
purposes, especially in the cities
...a considerable untapped revenue potential at State
and local levels but barred from access by strong
voter and legislative convictions averse to higher
taxes
...the prospect of s substantial deficit this year at
the national level
...many Federal aid programs authorized but funded at
low levels
...the promise of intense competition for public funds
between national security and international comic-
nents on the one hand and domestic expenditure '
requirements on the other
...the Omnipresent pressure for eventual Federal tax
reduction manifested currently by videspread opposi
tion to a Federal tax increase.
Less than three years ago, you will recall, there was a lively
debate over the alternative ways of distributing an impending Federal
surplus. Economists foresaw recurring National Government surpluses--
a "fiscal drag on the economy--created by the ability of the Federal
tax system to generate more revenue than the National Government required.
At the same time State and local gavernnents were depicted as relative
paupers subsisting on an inadequate revenue system and providing an
inadequate level of public services--s fiscal mismatch of classic
proportions.
In the current fiscal year, however, we have a National Govern-
ment confronted with the prospect of a deficit of up to $30 billiOn
vhile State and local revenue needs continue to grow. In one respect
the situation re-ains unchanged. State and local governments continue
to have substantial unused revenue potential, provided they exert
exceedingly strong tax efforts on the property, sales, and inco-e
tax fronts.
Now let us examine more closely the problems of our great urban
areas. The Comission's detailed analysis of the socio-ecoucmic and
fiscal disparities between the metropolitan central cities and their
surrounding suburban communities reveals that:
--There is, with few exceptions, a concentration of "high fiscal
cost" citizena--children in school, the aged, welfare
recipients--in the central city, and there is reason to
believe this concentration will increase in the future.
--The paradox of poverty in the midst of plenty emerges nest
vividly in the central cities of the large metropolitan
areas-~and most especially in the older central cities of the
industrial Northeast and Midwest.
--The high cost of governmental services is illustrated by the
level of noneducational expenditures in the large central
cities. Central city governmenta have been given greater
local governmental responsibilities than their suburban
counterparts, even within the same State.
--Central city educational expenditures have fallen relative
to their adjacent areas, not only on a per capita basis,
but for the first time they now are significantly lower on
a per pupil basis as well. "here the needs are greatest the
dollars are fewest.
~~The resulting overall picture shows an expanding noneducational
burden in the central city and a drop in the level of educational
expenditures in the same cities.
--A clear disparity in tax burden is evident between central city
and suburbia. Local taxes in the central cities. measured against
income, are more than 50 percent higher than in the suburbs.
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The picture revealed in the Commission's studies is stark in
its implications for the future economic and social bases of our cities
and our society. It is apparent that much of the current sickness of Our
large cities is rooted in the increasing economic and fiscal disparities
between central cities and suburbs. The gap between the have and have-
nst jurisdictions in the metropolitan areas is great and widening
rapidly. Each new economic or social setback triggers increased migration
of higher income residents into more affluent and protected areas. Pay-
rolls diminish, businesses move, tax rolls shrink, and property values
decline. Poverty begets poverty, and economic and social losses climb.
The disparity between fiscal needs and resources in our metro-
politan areas is strikingly illustrated by the fact that the 230
Standard Metropolitan Statistical Areas in the United States account for:
...65 percent of the population
...70 percent of taxable assessed valuation
...at least three quarters of Federal personal income
tax collections
...80 percent of bank checking accounts
BUT ALSO, the metrOpolitan areas suffer:
...most of the Nation's poverty!
...most of the Nation's crime and delinquency!
...most of the Nation's current diaaffection, disarray,
and civil disorder!
In brief, the metropolitan centers contain most of the country's
wealth and most of the country's problems. One set of jurisdictions--
usually the central city-~has the problems and the other set of
jurisdictionso-usually the suburbs-~has the resources. Solutions or
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even palliatives here are most difficult; some would say-o'Isdistribute
the wealth." Others are not so sure of the necessary inevitability of
increasing metropolitan congestion and say "Hake it attractive for
people to stay in the small towns and rural eress; slow up the trek to
the cities." Still others suggest various combinations of private and
governmental action.
In any event, regardless of actions taken by the public sector
to control riots, regardless of steps taken by the private sector to
protect or increase economic investment and opportunity, regardless of
efforts by public and private enterprise together to combat poverty and
disease among low income families, regardless of all these, the stubborn
fact remains that State, local, and Federal legislative action is required
to bring fiscal needs and resources of our urban governments into better
balance.
Those are the harsh fiscal realities facing us today.
They offer an awesome agenda of difficult decisions.
And they emphasise--if, indeed, further emphasis is required--
the urgent need for us to find ways to refine further and to perfect
more fully the organizational, structural and procedural tools of
laumaking.
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This afternoon a group of Cnngrcosional and State leaders will examine tbc reintionships between Crngress and the State legislatures and baw those relationships may be strengthened and improved, how better channels of communication may be built, Tomorrow nirrning we will explore some of the irritating prob1eras that E'ederal grant-in-aid prograins impase nu the State legislative process, including, I hope, the problene of fiscal scheduling and legislative rversight. Alan tomorrow we will consider the prom and cons of a enntroversial prepnsal auch in the aims of late--revetsue sharing. The Vice President will join us at the close raf the luncheoli today ta bring, us greedngs and t,, nffer infarnral remarks, aind at the clnsing luncheon session tomnrrew sur speaker will be Governor Richard Rughes of New Jersey, wbn is Chairman of the Commictee on Stats-Urban Relations of the Nationa i Coverners Conference. Tlie Advisory Coirallission is prnud to play a role in this important endeaver. Frem the founding of our republic the division cif authority and responsibility among the several levels of government in our federal system has been a matter nr urgent concern to the "practitioners" as well as to the students eE government. Those who visualize "federalforf as a etstic, stable, relationship m-ng levels of gnvernment de it an injustice; they ignore its dynonic character The cnnstant and contilwing struggle amang the several levels en reconcile and balance the forces far and against centralization is a distinguishing feature et our system. The struggle--the pulling and hauling--creates tensinns olid conflicts. The presence and growth of these tensions and conflicr.s among levels of government prompted Congress
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