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1958 National Legislative Review Federal Help With Municipal Problems Wanes
By HUGH MIELDS, JR.
The record of the 85th Congress will show that the majority of its members were largely convinced of the need for and merit of existing urban programs as well as being aware of the great national significance of growing urban problems. But in the Congress it is not always the majority which has the last word, and much of the good that might have been accomplished by the 85th was effectively blocked in Committee or vetoed by the President. The net result was that for the first time in ten years the Congress adjourned without having enacted an omnibus Housing bill. This failure was, most agree, a product of extenuating circumstances. A community facilities low interest loan program was defeated in the House after encountering severe opposition on the part of the Administration. A measure to expand a grant program for the construction of waste treatment facilities was refused a hearing by the Chairman of the House Rules Committee and thus never brought to vote. A four-year $437 million extension of the Airports program was passed with overwhelming approval in both the House and the Senate only to be vetoed by the President. Also vetoed was the Area Assistance (Depressed Areas) program which would have brought Federal resources to bear in assisting communities to solve problems of chronic unemployment and under-development. The Presidential vetoes of the Federal Airport Program extension and the Area Assistance measure stand as further evidence of the willingness of the Administration to ignore vital domestic needs of national importance in its effort to maintain the fiction that the cost of government can remain constant in the face of spiraling defense demands, a rapidly growing population, and an expanding economy. That the vetoes were expected goes almost without saying. They were the inevitable result of a course of action which characterized the conduct of the Administration throughout almost the entire period the 85th Congress was in session. During that time it persisted in its efforts to minimize expenditures for urban grant-in-aid, and righteously justified its position on the theory that these programs were primarily the responsibility of the states. Throughout the entire period it energetically pursued a course, along with a powerful minority In the House, of uncompromising austerity for civilian programs. When it became apparent late in the second session that a twelve to fifteen billion dollar deficit was in the offing, efforts to pare back or eliminate these programs were redoubled. The Defeat of the Housing Bill While the prospects for strengthening urban renewal and housing never appeared really bright during the second session of the Congress, as late as the day before adjournment, it looked like a developing eleventh hour attempt to enact a stopgap bill, at least, could succeed. The Senate, which had already passed S. 4035 extending the urban renewal program for six years, was greatly impressed by the House vote on a similar measure (which fell only six votes short of the two-thirds needed for passage under suspension of the House rules) and decided to try to pass a compromise substitute bill. Key to the success of the Senate move was acceptance by the Republican leadership in the House and the White House of the compromise measure. That acceptance never materialized, and the Senate's compromise measure, S. 4323, never got beyond a second reading. Thus the Chairman of the all-powerful House Rules Committee, Howard Smith (D., Va.); the minority leadership in the House, and the White House itself which was adamant to
November 1958 / Illinois Municipal Review / Page 256 the end that only a bill completely to its liking would do, combined to defeat the will of a Congress which had in effect approved housing and urban renewal legislation. On August 27 President Elsenhower released the $100 million for urban renewal capital grant contracts in a gesture to keep the urban renewal administration at least nominally in business. Both Senator John Sparkman, Chairman of the Senate Housing Sub-committee, and Congressman Albert Rains, Chairman of an identical committee in the House, have already indicated that their first major activity when the 86th Congress convenes will be the enactment of Housing and Renewal legislation to put these programs back into effective action. Other actions taken by the 85th Congress of interest to local governments are noted below: Community Development Area Redevelopment Act—S. 3683— Vetoed September 6, 1958 S. 3683 would have created an Area Redevelopment Administration within HHFA to assist communities suffering from substantial or persistent unemployment to develop overall programs for their economic redevelopment. To Implement such economic redevelopment programs the bill authorized (1) the establishment of $100 million revolving fund for industrial loan purposes; (2) $75 million a year in grants for the construction of public facilities within industrial redevelopment areas; (3) technical information and assistance in developing the program and in (4) setting up vocational education programs to retrain workers for new jobs developing out of the program. The President vetoed the bill. Urban Planning Assistance Program A bill introduced late in the session by Congressman Reuss of Wisconsin which would have substantially enlarged and expanded the urban planning assistance program was not acted upon by the House Banking and Currency Committee. The bill would have increased from $10 million to $25 million the amount of money which could be made available for urban planning assistance. It also would have made 50-50 grant money available to cities with a population of up to 50,000 instead of the maximum of 25,000 permitted under existing law. Grants could have also been made to state planning agencies for the carrying out of state planning activities and urban and rural non-farm areas. It is anticipated that similar legislation will be reintroduced early during the next session. Appropriations for the urban planning and assistance program were approved as a part of the Independent Offices Appropriations Act. The Administration requested $3.5 million for fiscal year 1959 and the Congress approved $3.25 million for grant purposes. As of the end of July the urban planning and assistance division of the Urban Renewal Administration had a backlog of applications amounting to nearly $2.4 million. It is anticipated that grant funds for the program will probably be, as was the case (Continued on next page)
November 1958 / Illinois Municipal Review / Page 257 last year, exhausted within six to eight months. Public Works Advance Planning Loans For the program of advances for public works planning the Community Facilities Administration of the Housing and Home Finance Agency requested $8.5 million for advances during fiscal year 1959. The Congress approved approximately $7 million. With repayments flowing in from previous loans, the Agency expects to have approximately $9.5 million free for additional loan purposes. It reports that it currently has a backlog of applications amounting to approximately $9 million. Public Facilities Loan Program The public facilities loan program of the Community Facilities Administration of the Housing and Home Finance Agency operates from a $100 million revolving fund set up under the law in 1955. The program has approximately $55 million unencumbered for purposes of construction loans to small municipalities. Priority is given under the program to small communities to whom funds are not available from private markets at reasonable terms. For fiscal year 1959 the Administration requested $750,000 to administer the public facilities loan program, an amount which contemplated some expansion of staff in order to handle an increasingly large work load. The Congress approved $400,000, an amount which will enable the program to sustain its current level of operations but not increase it. Transportation The Federal Aid Highway Act of 1958 Public Law 85-381 The Federal Aid Highway Act of 1958 was signed by the President on April 16. Major provisions of the bill were: an additional $400 million for fiscal year 1959 for the immediate apportionment for projects to be undertaken on contracts awarded by the states before December 1, 1958, which provide for completion of construction before December 1, 1959. While the $400 million was allocated to the states on the basis of 45 per cent for the primary, 30 per cent for secondary, and 25 per cent for urban extension of these systems, the states themselves were authorized to spend their share without any limitations as to the percentage to be utilized on any one of these systems. The project costs were to be shared on a two-thirds federal, one-third state basis. In addition, the bill provided for $150 million for loan purposes to the states to help them meet their share of the project costs. The amount loaned cannot exceed two-thirds of the state's share of the cost of the project and is to be repaid from future federal aid allotments. For the primary, secondary and urban extensions systems the bill provided $900 million for fiscal year 1960 and $925 million for fiscal year 1961 on the basis of a 50-50 matching grant. For the interstate system the law provides for a total authorization for fiscal year 1959 of $2.2 billion and for fiscal year 1960 $2.5 billion and for fiscal year 1961 $2.5 billion. The bill suspended for fiscal year 1959 and 1960 Section 209 (g) of the Highway Revenue Act of 1956 (Byrd amendment), so that expenditures for highway purposes are not, during those two years, limited by the amount of money available to the Highway Trust Fund. The law also established a new national policy "that it is in the public interest to encourage and assist the states to control the use of and improve the areas adjacent to the interstate system by controlling outdoor advertising in those areas." Portions of the interstate which pass through municipalities are excluded from this provision. The federal share of payment on the interstate system is increased from 90 per cent to 90.5 per cent in those states participating in billboard control. Construction on Rights of Way Acquired for Highway Purposes Public Law 85-597 The new law amends the Federal Highway Act of 1956 by increasing from five to seven years the period within which construction must commence on rights of way which are to be or have been acquired in anticipation of use with funds advanced for any of the Federal aid highway systems including the interestate system. Federal Airport Act of 1958—S. 3502 Vetoed September 2, 1958 The Congress, in the face of Administration opposition, and in spite of the refusal of the Chairman of the House Rules Committee even to consider the measure, did pass a four year $100 million a year extension of the Federal Airport Act. The Senate action on the bill was unanimous while the House passed the measure under "suspension of the rules" with better than a three-quarters majority. The President vetoed the bill on the grounds that (1) already "well over one billion dollars has been allocated by the Government to the construction and improvement of local civil airports"; (2) he was convinced that now is the time "for the Federal government to begin an orderly withdrawal from the airport grant program," and (3) 'because he believed that "more and more airports have progressed to the point of self-sufficiency." Federal Aviation Act of 1958 Public Law 85-726 The Federal Aviation Act of 1958 creates a new agency to be known as the Federal Aviation Agency to replace the Civil Aeronautics Administration, to absorb the Airways Modernization Board, and to take over the technical regulatory functions of the Civil Aeronautics Board. CAB will retain its accident investigation function as well as its economic regulatory functions. Water Resources Water Supply Act of 1958 Public Law 85-500 The Water Supply Act of 1958 authorizes the Corps of Engineers and the Bureau of Reclamation to include as a part of federal navigation, flood control, irrigation or multi-purpose
November 1958 / Illinois Municipal Review / Page 258
projects, storage for the immediate and future water supply of municipalities. Both the Congress and the President termed this section of the bill "important legislation." The House and Senate Public Works Committees indicated that they felt the bill provided a framework within which the Corps of Engineers and the Bureau of Reclamation could "proceed to develop the best overall use of water resources and river basins and the service of water supply and other needs." The bill provides for the construction of water storage facilities and reservoirs where it is apparent that there will be a future demand for such storage but where the demand is not pressing at the time of construction. Under the law, state and local interests must give reasonable assurance that they will contract to use the water storage on a basis adequate to pay for the cost attributed to the construction of the water facility. Initial repayment of such costs are deferred until storage facilities are actually utilized by local or state interests with the proviso that the final repayment shall be made within the economic life of the project and not to exceed fifty years from the date of the first use of the water storage. The bill also provides for an interest-free period of up to ten years on the cost attributable to the storage facility. Water Pollution Control The Blatnik bill, H. R. 11714, which would have doubled the amount of federal aid available for the construction of sewage treatment plants, was approved by the Public Works Committee of the House but failed to secure the necessary rule from the House Rules Committee to clear it for debate on the floor of the House of Representatives. The bill also would have made it possible for two or more local communities to combine in the construction of a treatment plant and still secure the maximum grant allocable to each community. Although the Administration did approve an appropriation of $45 million to the Public Health Service for payments under Section 6 of the November 1958 / Illinois Municipal Review / Page 259 Water Pollution Control Act, as amended, for the construction of waste treatment works, it has recommended the complete termination of this grant program at the end of fiscal year 1959—at which time the states will theoretically assume the grant burden from the federal government in exchange for the federally relinquished telephone tax. The future of this program is in grave jeopardy. The President's budget will not include funds for its continuance for fiscal year 1960, and stiff opposition can be expected within the House Appropriations Committee to any attempt to initiate legislation to appropriate the necessary funds to continue the program against the Administration's will. During the last hours of the 85th Congress a bill was introduced by Congressman Blatnik (D., Minn.), author of the Federal Water Pollution Control Act, to establish the post of Assistant Secretary of the Health, Education and Welfare Department whose exclusive responsibility would be water pollution control. The Minnesota Congressman explained his aim in the last minute filing was to call attention to the serious problem of water pollution control so that all responsible parties may think about it during Congressional recess. Blatnik also indicated that he proposed to reintroduce this bill as well as his earlier measure to expand and improve the water pollution control program. The Water Pollution Control Advisory Board whose members are appointed by the President has recommended continued federal leadership in protecting the nation's water resources. In a recent report, the Advisory Board contended that the proposal of the joint Federal-State Action Committee to the President on turning back the Water Pollution Control Program was not practical. The Board, impressed with the progress made thus far under the program, stated that while it fully agreed that the states have primarily the responsibility for controlling water pollution, it was "firmly convinced that the federal government has a nationwide interest and responsibility in the quality and quantity of water." Industrial Treatment Facilities Recommended The Board also urged that the Surgeon General recommend to Congress legislation to permit rapid tax amortization over a 5-year period for industrial waste treatment facilities. "In addition to stimulatory grants to municipalities," the Board stated, "we believe that the federal government should provide financial incentives which would stimulate industry also to accelerate construction of adequate waste treatment facilities." The Board said the industrial waste disposal problem is just as important to the preservation of the nation's water supply as the municipal sewage problem. Civil Defense Federal Civil Defense, PL 85-606 This measure is designed to achieve a more effective total national defense program by authorizing orderly expansion of the civil defense activities of the federal government. The law revises the current or previous legislative policy and makes the nation's civil defense effort the responsibility of the federal government, the states and their political subdivisions instead of primarily the responsibility of the states and cities. Under the new law all federal financial assistance to the states and their political subdivisions is on the fifty per cent federal, fifty per cent state basis. Consolidation of the Federal Civil Defense Administration and the Office of Defense Mobilization As a result of an analysis of the structure of the federal organization for the planning, coordination and conduct of the nation's non-military defense programs, the Administration concluded that the existing statutes assigning responsibilities for the central coordination and direction of these programs were out of date. Accordingly, the President submitted to the Congress a reorganization plan providing for new arrangements for the conduct of federal defense mobilization and civil defense functions. The principal effects of the Reorganization Plan were (1) transfer to the President the functions vested by law in FCDA and those vested in the Office of Defense Mobilization. Secondly, the Reorganization Plan consolidated the Office of Defense Mobilization and the Federal Civil Defense Administration to form a new Office of Defense and Civilian Mobilization renamed under Public Law 85-763 "Office of Civil and Defense Mobilization" in the Executive Office of the President. The consolidation became effective July 1, 1958 and Governor Leo A. Hoegh, who was a guest speaker at the 1958 Colorado Municipal League Conference in Colorado Springs, was appointed as the new administrator of the Office of Civil and Defense Mobilization in the Executive Office of the President. Taxation Broad PILOT Measure Dies in Committee Under identical bills introduced in the Senate by Hubert Humphrey, S. 967, and by Congressman Glenard Lipscomb, H. R. 2107, in the House, federal payments in lieu of taxes would be made to states, cities, counties, school districts, tax districts and all political subdivisions of the states for local special assessments such as streets, roads, bridges, etc., on property held on conditional sale or leased to private persons and on all federal property acquired since June 1950 and used for commercial or business purposes. Neither the House Interior Affairs Committee nor the Senate Government Operations Committee to which the bills were referred even got so far as to schedule hearings on the matter. Technical Amendments Act (Police Subsistence Allowance), PL 85-866 H. R. 8381, the Technical Amendments Act of 1958, repeals Section 120 of the Internal Revenue Code of 1954 which provided that a maximum of $5 per day in the form of a subsistence allowance could be paid policemen which would be excludable from gross income tax purposes. The repeal takes effect as of September 30, 1958. Excise Tax Technical Revision Bill Public Law 85-859. The bill H. R. 7125, 429 pages in length, contains two sections, 4221 and 4222, which are of considerable interest to state and local officials. Section 4222 permits the registration of state and local governments to eliminate the use of tax exemption certificates. The section provides that state and local governments may be assigned code numbers for exemption purposes. Thus the use of the tax exemption code number by a local government automatically assures exemption from excise taxes. This provision is a significant administrative development which will make an appreciable dent in the amount of paper work which faces state and local government in the executing of individual tax exemption certificates on their many purchases. Section 4221 makes it possible for state and local officials to purchase, tax-tree, tires and tubes on original automotive equipment and thus eliminate a troublesome excise tax exemption problem. Both provisions of H. R. 7125 will require considerable interpretation and implementing regulation by the Treasury Department. Municipal Bond Market Representative Curtis bill, H. R. 8702, which was designed to broaden the market for municipal bonds permitting regulated and unregulated investment companies to distribute the interest on such bonds to their shareholders without loss of the tax exemption, was afforded hearings before the House Ways and Means Committee last January. The Committee failed to report the bill out favorably, and the measure was thus lost for this session. Municipal Bond Underwriting Senator Clark's bill, S. 2021, which would authorize commercial banks to (Continued on next page) November 1958 / Illinois Municipal Review / Page 260 MUNICIPAL PROBLEMS underwrite municipal revenue bonds, was introduced during the first session of the 85th Congress. Commercial banks are, under present laws passed in 1933, specifically excluded from underwriting "revenue" bonds. They are, however, authorized to underwrite municipal "general obligation bonds." The increased competition which would result from passage of the Clark bill would, the AMA feels, have a tendency to lower interest rates and thus reduce the cost of financing needed local public works. Health, Education and Welfare Hospital Construction Program Extended—Public Law 85-680 The Hill-Burton Act which authorizes federal grants to states, on a matching basis to pay part of the cost of constructing public and other non-profit hospital and related facilities has been extended for 5 years. The old law was due to expire in 1959. The Appropriations bill for fiscal year 1959 which authorized $186.2 million for the hospital construction program under Hill-Burton was signed by the President on August 1. Surplus A bill introduced by Congressman Charles E. Chamberlain (R., Mich.), H. R. 5460, would have for the first time required the General Services Administration to make available federal surplus personal property to states, cities, counties, towns and other political subdivisions of the state at private or negotiated sales. Hearings on all surplus property measures were held very late during the second session. The Subcommittee on Donable Property of the Government Operations Committee reported out only one bill and that one involved making surpluses available to volunteer fire departments in connection with civil defense activities. While this provision carried in the House, it was lost in the Senate. Census Representative Udall of Arizona introduced a bill, H. R. 12414, to provide that a census of population, unemployment and housing be taken every five years instead of every ten years as at present. The measure, never called up for a public hearing, died in the House Committee on Post Office and Civil Service. The bill will be reintroduced during the next session. November 1958 / Illinois Municipal Review / Page 261
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