Urban America and the Federal System

COMMISSION FINDINGS AND PROPOSALS

URBAN AMERICA AND THE FEDERAL SYSTEM

Prepared by Allen D. Manvel for the Advisory Commission on Intergovernmental Relations with assistance of a grant from the Ford Foundation

This document is based on research and recommendations on urban and metropolitan problems previously published by the Commission.

ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS Washington, D. C. 20575 October 19 69 M -47

For sale by the Superintendent of Documents, U.8. Qovernment Printing Omcc Washington, D.O. 20402 - Price $1.25

ADVISORY COMMISSION ON INTERGOVERNMENTAL RELATIONS'

The reports on which this book is based were published between April 1961 and May 1969. During this period the following persons sewed as members of the Commission:

Period Served Private Citizens Frank Bane (Chairman; Virginia; Democrat) ...... 12/8/59 . 4/29/66 *Farris Bryant (Chairman; Florida; Democrat) ...... 1 10/10/67 .10/30/69 John E . Burton (New York; Republican) ...... 12/8/59 . 12/7/61 **James K . Pollock (Michigan; Republican) ...... 12/8/59 . 12/7/61 Howard R . Bowen (Iowa; Democrat) ...... 2/22/62 .2/21/64 *Don Hummel (Arizona; Democrat) ...... 2/22/62 .2/21/64 Thomas H . Eliot (Missouri; Democrat) ...... 4130164 .3/17/67 Adelaide Walters, Mrs . (North Carolina; Democrat) ...... 4130164 .4/29/66 Dorothy I . Cline (New Mexico; Democrat) ...... 3/18/67 .pr~nt *Price Daniel (Texas; Democrat) ...... 3/18/67 .10/9/67 Alexander Heard (Tennessee; Democrat) ...... 3/18/67 .10169

U. S . Senators Sam J . Ervin. Jr . (North Carolina; Democrat) ...... 12/8/59 .present Karl E . Mundt (South Dakota; Republican) ...... 12/8/59 .present Edmund S. Muskie (Maine; Democrat) ...... 12/8/59 .present

U. S . Representatives Florence P . Dwyer. Mrs . (New Jersey; Republican) ...... 12/8/59 .present L . H. Fountain (North Carolina; Democrat) ...... 12/8/59 .present Wilbur D. Mills (Arkansas; Democrat) ...... 12/8/59 . 1/9/61 Frank Ikard (Texas; Democrat) ...... 3/10/61 .12/15/61 Eugene J . Keogh (New York; Democrat) ...... 2/5/62 .1213 1/66 Al Ullman (Oregon; Demowat) ...... 1/30/67 .present

Members of the Federal Executive Branch Robert B. Anderson (Secretary of the Treasury; Republican) ...... 12/8/59 .1/20/61 Arthur S. Flemrning (Secretary of Health. Education. and Welfare; Republican) ....12/8/59 .1/20/61 **James P . Mitchell (Secretary of Labor; Republican) ...... 12/8/59 .1/20/61 C. Douglas Dillon (Secretary of the Treasury; Republican) ...... 3/15/61 .3/26/65 *Abraham A . Ribicoff (Secretary of Health. Education. and Welfare; Democrat) ....3/15/61 .7/12/62 Arthur J . Goldberg (Secretary of Labor; Democrat) ...... 3/15/61 .9120162 *Anthony J . Celebrezze (Secretary of Health. Education. and Welfare; Democrat) ...1012162 .10/1/64 Robert C. Weaver (Secretary of Housing and Urban Development; Democrat) .... 10/10/62 .3/17/67 Orville L . Freeman (Secretary of Agriculture; Democrat) ...... 2/4/65 .3/17/67 Henry H. Fowler (Secretary of the Treasury; Democrat) ...... 511 1/65 .12120168 *Farris Bryant (Director of the Office of Emergency Planning; Democrat) ...... 2120167 .10/9/67 Ramsey Clark (Attorney General; Democrat) ...... 3/18/67 .1/19/69 *Price Daniel (Director of the Office of Emergency Planning; Democrat) ...... 10/10/67 .1/19/69 Robert H . Finch (Secretary of Health. Education. and Welfare; Republican) ...... 3/26/69 .present Robert P . Mayo (Director of the Bureau of the Budget; Republican) ...... 3/26/69 .present George Romney (Secretary of Housing and Urban Development; Republican) ..... 3/26/69 .present Governors Ernest F . Hollings (South Carolina; Democrat) ...... 12/8/59 .1/14/63 *Abraham A. Ribicoff (Connecticut; Democrat) ...... 12/8/59 .1/20/61 Robert E . Smylie (Idaho; Republican) ...... 12/8/59 .4/29/66 William G. Stratton (Illinois; Republican) ...... 12/8/59 .1/14/6 1 John Anderson. Jr . (Kansas; Republican) ...... 1/19/61 .111 3/65 Michael V . DiSalle (Ohio; Democrat) ...... 3/15/61 . 1/14/63 Carl E . Sanders (Georgia; Democrat) ...... 3/13/63 .1 /lo167 Terry Sanford (Georgia; Democrat) ...... 3/13/63 .1 1/12/63 John Dempsey (Connecticut; Democrat) ...... 4130164 .1 1/26/68 Nelson A. Rockefeller (New York; Republican) ...... 11/10/65 .present Buford Ellington (Tennessee; Democrat) ...... 311 8/67 .present James A. Rhodes (Ohio; Republican) ...... 5/23/67 .4130168 Spiro T . Agnew (Maryland; Republican) ...... 7/5/68 . 1/19/69 Raymond P . Shafer (Pennsylvania; Republican) ...... 3/26/69 .present

State Legislators **Elisha Barrett (New York; Senate; Republican) ...... 12/8/59 .3/2/60 Leslie Cutler (Massachusetts; Senate; Republican) ...... 12/8/59 .12/7/61 John W. Noble (Missouri; Senate; Democrat) ...... 12/8/59 .11216 1 Hal Bridenbaugh (Nebraska; Senate; Republican) ...... 313 1/60 .3130162 Robert A . Ainsworth, Jr . (Louisiana; Senate; Democrat) ...... 511 6/61 .1013 116 1 Robert B. Duncan (Oregon; House; Democrat) ...... 2/22/62 .1/14/63 John E . Powers (Massachusetts; Senate; Democrat) ...... 2/22/62 .2/21/64 Graham S. Newel1 (Vermont; Senate; Republican) ...... 8/ 1/62 .713 1/64 Harry King Lowman (Kentucky; House; Democrat) ...... 3/13/63 .1/6/64 Marion H. Crank (Arkansas; House; Democrat) ...... 4130164 .3/17/67 Charles R . Weiner (Pennsylvania; Senate; Democrat) ...... 4130164 .4/29/66 C. George DeStefano (Rhode Island; Senate; Republican) ...... 2/4/65 .1/7/69 Ben Barnes (Texas; House; Democrat) ...... 3/18/67 . 1/17/69 Jesse M. Unruh (California; House; Democrat) ...... 13/18/67 .10/30/69] W. Russell Arrington (Illinois; Senate; Republican) ...... 3/26/69 .present Robert P . Knowles (Wisconsin; Senate; Republican) ...... 3/26/69 .present

Mayors *Anthony J . Celebrezze (Cleveland. Ohio; Democrat) ...... 12/8/59 .7/27/62 Gordon S. Clinton (Seattle. Washington; Republican) ...... 12/8/59 .3/2/62 *Don Hummel (Tucson. Arizona; Democrat) ...... 12/8/59 .2/21/62 Norris Poulson (Los Angeles. Calif .. Republican) ...... 12/8/59 .6/30/61 Richard Y . Batterton (Denver. Colorado; Republican) ...... 2/22/62 .6130163 Leo T . Murphy (Santa Fe. New Mexico; Democrat) ...... 2/22/62 .4130162 Neal S. Blaisdell (Honolulu. Hawaii; Republican) ...... 8/1/62 .1213 1/68 Arthur Naftalin (Minneapolis. Minnesota; Democrat) ...... 8/1/62 .6/17/69 Raymond R .Tucker (St . Louis. Missouri; Democrat) ...... 10/10/62 .10/9/64 **Arthur L . Selland (Fresno. California; Republican) ...... 8/27/63 .12/5/63 Herman W. Goldner (St . Petersburg. Florida; Republican) ...... 4130164 .4/29/66 Richard C . Lee (New Haven. Connecticut; Democrat) ...... 5/11/65 .5/10/67 Theodore R . McKeldin (Baltimore. Maryland; Republican) ...... 3/18/67 .12/4/67 Jack D . Maltester (San Leandro. California; Democrat) ...... 5/23/67 .present William F . Walsh (Syracuse. New York; Republican) ...... 12/29/67 .present Richard G . Lugar (Indianapolis. Indiana; Republican) ...... 3/26/69 .present County Officials **Edward Connor (Wayne County, Michigan; Democrat) ...... 12/8/59 - 4/29/66 **Chi1 Donnenwirth (Flumas County, Calif.; Democrat) ...... 12/8/59 - 7/22/65 Edwin G. Michaelian (Westchester County, New York; Republican) ...... 12/8/59 - 12/7/61 Barbara A. Wilcox, Mrs. (Washington County, Oregon; Republican) ...... 10/10/62 - 4/5/66 William 0.Beach (Montgomery County, Tenn.; Democrat) ...... 1/22/66 . 112 1/68 Angus McDonald (Yakima County, Wash.; Republican) ...... 4/28/67 - 6/17/69 Gladys N. Spellman (Prince George's County, Maryland; Democrat) ...... 4/28/67 .6/17/69 John F. Dever (Middlesex County, Mass.; Democrat) ...... 1/24/68 .present

h he Act establishing the Commission provides that members appointed from private life shall be appointed without regard to political party; of the members representing the Congress, two shall be from the majority party of the respective houses; of each class of members representing State and local governments, not more than two shall be from any one political party. (P.L. 86-380, September 24, 1959.) Party affiliations for all present and previous members are shown for the information of those interested in historical, geographical or other comparison. *Served on the Commission in two capacities at different times. **Deceased. ACKNOWLEDGMENTS Many people have shared, directly or indirectly, in the preparation of this book. Its substance has been drawn from nearly a score of reports of the Advisory Commission on Intergovernmental Relations, issued over a 9-year period during which more than 80 individuals (as listed on page iii) served as Commission members. Many proposals made in those reports are specifically quoted here. In addition this report, in some instances, summarizes, paraphrases, or repeats relevant portions of the source reports without detailed footnoting; it thus incorporates some of the earlier writing of members of the Commission or its staff. Preparation of this report involved an initial effort to select, from among the considerably broader set of Commission reports and recommendations, those that relate most directly and significantly to metropolitan problems; organizing the selected subject matter into an ordered pattern for discussion; and drafting a presentation concerning the issues involved and the relevant findings and recommendations of the Commission. In some cases-particularly where the source report was issued several years ago-these efforts included the assembly of more background data. The preliminary draft of the study was reviewed in detail by several individuals, and extensively modified. The final version, as presented here, especially reflects numerous suggestions made by John Shannon, Elton K. McQuery, and David B. Walker, Assistant Directors of the Commission staff, and by Laszlo L. Ecker-Racz, a former Assistant Director. Miss Hope Marindin assisted in the preliminary drafting and in the final preparation of copy for the printer. Arrangements for the illustrative charts, and for publication of the report were handled by Eugene R. Elkins. This document was made possible through a grant from the Ford Foundation of $25,000. The support of the Foundation in the endeavor is gratefully acknowledged.

Allen D. Manvel Assistant Director (Special Rojects)

Wm. G. Colman Executive Director FOREWORD

Problems of intergovernmental relations are particularly significant, varied, and difficult in large metropolitan areas where activities of all three levels of Government operate in close proximity. Since its establishment over 9 years ago, the Advisory Commission on Intergovernmental Relations has devoted continuing attention to these problems. ACIR policy reports have dealt with alternative methods of governmental organization, planning, Federal and State relations with local governments, and the administration of several federally aided urban programs. Taken together, they present a review of urban America and its governmental capabilities. Their recommendations provide the foundation for a philosophy of intergovernmental relations and for a coordinated program of Federal, State, and local action. This philosophy has been characterized by a pragmatic, incremental approach to Federal-State-local relationships; it involves a major strengthening of State government as a present weak link in the federal system and a drastic reordering of financial priorities within the States to give proper attention to urban affairs; and it calls for greater emphasis in Federal financial assistance upon strengthening the State and local general governmental institutions and less emphasis on furnishing vertical, functional relationships through narrow categorical assistance. With the intense interest in positive programs of governmental and private action in the Nation's urban areas, the periodic need to integrate and synthesize the analyses and recommendations contained in the Commission's policy reports has been recognized, and it is for such a purpose that thls single volume was brought together. The manuscript was prepared by Mr. Allen D. Manvel for the Advisory Commission on Intergovernmental Relations. The volume draws on those Commission studies that deal with urban problems. It places them in a broad context and summarizes ACIR recommendations to all levels of government for utilizing the resources of the federal system in urban areas. The volume summarizes previous recommendations but contains no new policy proposals. The reports used were adopted over the period from kpril 1961 to May 1969. A list appears immediately preceding this foreword showing the people who served as members of the Commission at any time during this period. The Commission was established by Public Law 380, passed by the first session of the 86th Congress and approved by President Eisenhower September 24, 1959. The act declared it to be essential that an appropriate agency be established to give continuing attention to intergovernmental problems. The act assigns responsibility to the Commission to bring together representatives of all levels of government for the consideration of common problems; provide a forum for discussing programs requiring intergovernmental cooperation; give critical attention to grant programs; make available technical assistance to the Federal Government in reviewing proposed legislation; encourage discussion and study of emerging public problems likely to require intergovernmental cooperation; recommend the most desirable allocation of functions, responsibilities, and revenues; and recommend methods of coordinating and simplifying tax laws and administrative practices. The Commission is composed of 26 members representing all levels of government. It selects specific intergovernmental problems for analysis and policy recommendations, and during the past 9 years a growing number of these have related to urban areas. In some cases, matters proposed for study are introduced by individual members of the Commission; in other cases, public officials, professional organizations, or scholars propose projects. In still others, possible subjects are suggested by the staff. Once a subject is placed on the work program, staff is assigned to it. In limited instances the study is contracted for with experts in the field or a research organization. The staffs job is to assemble and analyze the facts, identify the differing points of view involved, and develop a range of possible, frequently alternative, policy considerations and recommen-

vii dations which the Commission might wish to consider. This is all developed and set forth in a preliminary draft report, containing (a) historical and factual background, (b) analysis of the issues, and (c) alternative solutions. The preliminary draft is reviewed within the staff of the Commission and after revision is placed before an informal group of critics for searching review and criticism. In assembling these reviewers, care is taken to provide (a) expert knowledge and (b) a diversity of substantive and philosophical viewpoints. The draft report is then revised by the staff in light of criticisms and comments received and transmitted to the members of the Commission at least 3 weeks in advance of the meeting at which it is to be considered. In its formal consideration of the draft report, the Commission registers any general opinion it may have as to further staff work or other considerations which it believes warranted. However, most of the time available is devoted to a specific and detailed examination of conclusions and possible recommendations. Differences of opinion are aired, suggested revisions discussed, amendments considered and voted upon, and finally recommendations adopted with individual dissents registered. All of the reports used in this volume were a product of this intricate process. All have produced extensive followup efforts at every level. AH have achieved some positive results. But it is our hope that this volume will stimulate even greater action. Urban America, after all, is the greatest challenge to the American federal system and looms over the country's search for a "New Federalism" adequate for the 1970's and the decades beyond. It is the Commission's belief that the proposals set forth herein provide a bold but balancid approach to meeting this challenge. Farris Bryant Chairman

September 1969

viii Table of Contents

Page

ACKNOWLEDGEMENTS...... vi FOREWORD...... vii

CHAPTER 1. MAJOR INTERGOVERNMENTAL DIMENSIONS OF THE URBAN CRISIS ...... 1 Basic Intergovernmental Problems Besetting Urban America ...... 1 Fiscal and Political i rag men tat ion Resulting in Mismatch of Needs and Resources Disorderly, Uneconomic and Anti-Social Patterns of Urban Development . and Land Use Timidity of State Government in Grasping the Urban Nettle Unbalanced Federal-State-Local Revenue Sources Growth of Functional Government Thrust of Major Advisory Commission Proposals ...... 3 Restoring Fiscal Balance in the American Federal System Adoption of Explicit National and State Urbanization Policies Civilizing the Local Government Jungle Curbing the Vertical Functional Autocracy Massive State Financial and Administrative Commitment to Urban Problems

CHAPTER 2. RESTORING FISCAL BALANCE IN THE FEDERAL SYSTEM . . 7 Why a Local Fiscal Crisis? ...... 7 Countervailing Economic and Political Trends Fiscal Mismatch Fiscal Consequences The Political-Fiscal Dilemma Political Balkanization of the Metropolitan Area ...... 9 The Rise of the Lopsided Communities Grim Fiscal Outlook for Central Cities Cracks in Suburbia's Picture Window A Few Winners and Many Losers Beggar Thy Neighbor "Staying in Line": An Exquisite Tax-Expenditure Calculus Too Little and Too Lopsided-The State and Federal Aid Response ..... 13 Poor State Equalization Performance Financing Education and Public Welfare: Misallocation of Financial Responsibility Lopsided Federal Aid System The Local Government Revenue Gap ...... 16 Size Makes a Difference Property Tax Defects Become Tax Brakes Restoring Fiscal Balance ...... 17 ACIR Recommendations-A Summary page Broadening the Geographic Base to Support Education and Public Assistance . . 18 Education-A State Responsibility Toward Equalization of Educational Opportunities and Burdens: Children Needing Education the Most Receiving the Least Regional Taxing Districts Equalizing Educational and Municipal Overburden State Assumption of Most Responsibility for School Financing Public Assistance-A Federal Responsibility Upward Shift of Educational and Welfare Financing-Combined Fiscal Effect Creating a More Balanced Federal Aid System ...... 27 Adding General-Support Payments-"Revenue-Sharing" Streamlining Federal Aid Strengthening the State and Local Revenue System ...... 29 Federal Income Tax Credit Balanced State Tax Structure : Income and Sales Tax Combination Rehabilitating the Property Tax Pulling the Regressive Stinger from the Property Tax States Must Become Involved in Local Property Tax Administration The Reach of the Property Tax Can Be Improved ~ractionalAssessment: A Convenient Graveyard for Assessors' Mistakes "Full Disclosure" Assessment Policy-A Blow for Property Tax Equity Making Better Use of Local Nonproperty Tax Sources Toward More Effective State Aid Systems ...... 38 Some Background Dimensions Improvements in State Aid Taking Account of Local Fiscal Overloads "Systematizing" State Grant Programs

CHAPTER 3. THE METROPOLIS OR MEGALOPOLIS-WHOSE FUTURE WILL IT BE? ...... 43 Some Dynamics of Urban Development ...... 43 The Pace and Pattern of Population Growth Mobility, Migration, and Immobility Cities as Economic Types Income Differences-Convergences and Divergences The Growth Cycle and Industrial Change The Bleak Side of Burgeoning Urbanization ...... 47 The Lust for Land When is Big, Bad? Metropolitan Heterogenity, Municipal Homogenity Bulldozers, Progress, and People Pushed Aside The Rural Remainder-and Its Plant Jobs Here-Unemployment There The Commission's Theme of Balance ...... 52 Ending the Balkanization of Building Requirements ...... 53 Building Codes: A State of Chaos Laying Some Firm Foundations Better 'construction research Greater uniformity of building requirements Improving administration of building codes Development Programs and the Displacement of People ...... 57 Renewal and Relocation Needed: Uniform and Equitable Relocation Policies Urban Development Planning and Land Use Regulation ...... 60 Plans, Plans, Plans Planning Bodies, Planners, and Their Powers Toward More Effective Planning and Land Use Regulation Providing responsible metropolitan planning bodies Improving Federal provisions that affect local and State planning Curbing "Fiscal" zoning practices Providing for extraterritorial planning and zoning Upgrading local land-use development controls Authorizing State regulation of the use of highway-fringe land Formulating Urban Development Policy ...... 66 Formulation of a National Urbanization Policy Reorientation of Multi-State Economic Planning and ~ Development Agencies Development and Implementation of State Urbanization Policy Possible Components of Urban Growth Policies ...... 69 The Economic Front The Human Element The Physical Pattern of Future Urban Growth

CHAPTER 4. CIVILIZING THE LOCAL GOVERNMENT JUNGLE ..... 74 The Past is Prologue ...... 74 Common Features Traditional Local Goernments Special Districts Patterns For Tomorrow ...... 79 The "Cafeteria" Approach The "Package" Approach Intermediate Approaches Obstacles to Change ...... 8 1 Tax Level Differences Social Disparities Established Interests Public Uncertainty Thrust of Advisory Commission Proposals ...... 82 To Provide State-Level Machinery ...... 83 Create State Urban Affairs Agencies Remove Constitutional Barriers to Legislative Action Improve Data on Governmental Performance and Social Conditions To Discourage Non-Viable Local Governments ...... 84 Limit New Incorporations Create Boundary Commissions' Use Grants-in-Aid as a Weapon To Limit Special Districts ...... 87 Control Formation; Encourage Merger and Dissolution Increase Visibility and Compel Intergovernmental Coordination Recast Federal Aid Programs To Unshackle Local Governments ...... 89 Clarify Local Government Powers Permit Local Choice of Internal Structure Free Up Local Taxing Authority Relax Limitations on Local Debt Liberalize Municipal Annexation Procedures Encourage Metropolitan Area Study Commissions To Provide An Arsenal of Weapons Strengthen Urban Counties 'Authorize County Subordinate Service Areas Permit Neighborhood "Subunits" in Major Urban Governments Allow Voluntary Transfer of Functions Authorize Interlocal Agreements Empower Metropolitan Functional Authorities to Handle Areawide Services To Foster Area-Wide Coordination ...... 98 Authorize Regional Councils of Public Officials Empower Governor to Resolve Interlocal Disputes

CHAPTER 5. MEETING THE CHALLENGE OF FEDERALISM: THE STATES' CRUCIAL ROLE ...... 101

The Keystone Role of the States ...... 101

Making the Most of States' Potential ...... 102

Can We Rely on the Fifty States? ...... 103

Strong Medicine-But a Serious Illness ...... 104

APPENDIX A. Statistical Tables ...... 106

APPENDIX B. Directory Listing of the 228 Standard Metropolitan Statistical Areas in the United States, as Defined in 1967 ...... 118

APPENDIX C. Summary of Information on State Offices of Local Affairs ....123

APPENDIX D. Two Case Studies: Water and Sewerage and Mass Transportation. . 129

TABLES 1. Proportion of Local General Expenditures Financed from "Outside Sources," Selected Years, 1950-1967...... 16 2. Education Has Displaced General Local Government as the Chief Claimant for Local Property Tax Dollars ...... 22 3. Total Public Assistance Expenditures, by Source of Funds, and Recipients and Monthly Payments for Selected Programs, Selected Years 1950-1968 . 24 4. Average Monthly Payment Per Aided Person, October 1968 ...... 25 5. Percent of the Counties Containing 50 Largest Central Cities with Disproportionate Public Assistance Programs ...... 26 6. Federal Aid in Relation to State-Local General Revenue, 1958-1970 .... 27 7. Wisconsin's "Circuit Breaker" System for Protecting Low Income Householders from Property Tax Overload Situations, 1966 ...... 32

xii 8. Local General Revenue From Own Sources Within and Outside of Standard Metropolitan Statistical Areas, by Source, 1967 ...... 37 9. Average Annual Population Increase (Percent) ...... 44 10. Proportion of Local Governments Adopting Building Codes: 1968 . . . . . 54 1I. Local Governments in Metropolitan Areas, by Population-Size of Area: 1967 . 75 12. Local Governments and Local Elective Officials in Metropolitan Areas, by Type of Government ...... 77 13. Special District Governments in Metropolitan Areas, by Functional Class: 1967. 87

A-1. Estimated Local Direct Tax Burden for a Family of Four with $10,000 Gross Income Residing in the Largest City in Each State, 1968 . . . . 106 A-2. Effect on State and Local Financing of 90 Percent State Financing of Elementary and Secondary Education and 100 Percent National Financing of Public Assistance, Including Medicaid, 1967 ...... , . 106 A-3. State Legislation Exempting Business Personalty Tax from Taxation on Reducing the Business Personal Property Tax, January 1, 1969 . . . . 107 A-4. Selected Features of Property Taxation, by State ...... 112 A-5. Retail Sales, Inside (CC) and Outside Central City (OCC) Areas, 37 Largest Standard Metropolitan Statistical Areas, 1958 and 1963 ...... 11S A-6. Manufacturing Employment, Inside (CC) and Outside Central City (OCC), 37 Largest Standard Metropolitan Statistical Areas, 1958 and 1963 . . . 116 A-7. Ten Metropolitan Areas with Most Numerous Local Governments . . . . . 117 A-8. Municipalities in Metropolitan Areas, by 1960 Population-Size: 1967 . . . 117

FIGURES 1. Public Welfare Contributes Significantly to "Urban Pathologyy'-Some Extreme Cases ...... ' ...... 11 2. School Systems are laying Claim to an Ever-Increasing Share of the Local Property Tax ...... 15 3. Public School Systems in Standard Metropolitan Statistical Areas, by Enrollment Size: 1967 ...... 18 4. Per Capita Local Expenditure for Education and Other Purposes in the 36 Largest Metropolitan Areas: 1957 and 1965 ...... 19 5. Use of Personal Income and General Sales Taxes by States, 1969 . . . . . 30 6. Levels of Assessment for Nonfarm Houses in 594 Assessing Jurisdictions in Metropolitan Areas: 1966 ...... 34 7. Some States Aid their Localities Considerably More than Others . . . . . 39 8. School Districts Receive More Aid Than Cities and Counties Combined . . . 40 9. Proportion of the Population of Individual States Residing in Metropolian Areas: 1966 ...... 44 10. Metropolitan-Area Population Within and Outside Central Cities: 1966 . . . SO 11. Local Governments Engaged in Planning, Zoning, and Building Regulation in Metropolitan Areas: 1968 ...... 61 12. Local Governments in Standard Metropolitan Statistical Areas ...... 76 13. Local Governments and Elective Local Officials Per County in Metropolitan Areas: 1967' ...... 78 14. Some Hypothetical Patterns of Local Government for the Modern Metropolis . 80 15. The St. Louis Urbanized Area (as of 1960): One Example of the "Goernmentally-Crowded" Modern Metropolis ...... 85 16. Municipal Governments in Standard Metropolitan Statistical Areas, by Population Size: 1967 ...... 86

xiii Page

17 . What is "The Urban Community"? ...... 94 18. Community Water Systems. by Population of Areas Served: 1963 .....130 19. Passengers Carried by Local Transit Lines. Selected Years. 1940 to 1967 ...135

xiv Vicious Circle

Chapter 1

MAJOR INTERGOVERNMENTAL DIMENSIONS OF THE URBAN CRISIS

"America's federal system is on trial as Because urban problems are so deep, complex and never before in this century of crisis and intertwined with one another; because the spectrum of change. Hopeful signs can be found at all levels essential institutional change is so wide; and so that the of government, and within the perspective of reader may view a forest instead of countless trees; it is the 'past three decades some suggest drastic desirable at the outset to look broadly at the range of changes-for the better. Yet, when measured issues and the general nature of the proposals to follow. against present and prospective needs and expectations, progress seems discouragingly slow . . . . The challenges of today are cast in BASIC INTERGOVERNMENTAL PROBLEMS seething racial unrest and civil disorder, bur- BESETTING URBAN AMERICA geoning crime and delinquency, alarming dif- Fiscal and Political Fragmentation Resulting ferences in individual opportunity for educa- in Mismatch of Needs and Resources tion, housing and employment. Historically, these constitute one more-albeit a highly The metropolitan areas of the United States account dramatic-chapter in the age-old American for 80 percent of the Nation's bank accounts, three- struggle to fulfill the mighty promise of Jef- quarters of Federal personal income tax collections, and ferson's Declaration within and through the 77 percent of the value added by manufacture. Yet, it is balanced, constitutional system framed by the in these same metropolitan areas that civil government Founders in the Great Charter of 1789. The faces its fiercest challenge with rising crime and delin- manner of meeting these challenges will largely quency; city schools that are becoming jungles of terror; determine the fate of the American political neighborhoods that are blighted; poverty and disease system; it will determine if we can maintain a that are rampant; and gravest of all, with millions of form of government marked by partnership and citizens feeling completely alienated from government wholesome competition among National, State and the whole concept of liberty with order. and local levels, or if instead-in the face of In brief, most of America's wealth and most of threatened anarchy-we must sacrifice political America's domestic problems reside in the metropolitan diversity as the price of the authoritative action areas. Why then, cannot this vast wealth be applied required for the Nation's survival." Ninth An- through vigorous social measures to meet the growing nual Report, ACIR, January 3 1,1968. problems? Because the resources exist in one set of jurisdictions within the metropolitan areas and the The crucial question of the day is whether the problems in another. Through a large part of the country American federal system can survive the crisis that this disparity between needs and resources is the eddies and boils in the great cities of the Nation or if disparity between the central city and its suburbs. only a highly centralized and unitary governmental Most metropolitan areas are made up of a central system will be equal to the task. The Advisory Cornrnis- city and many smaller units surrounding it. Each of sion on Intergovernmental Relations believes the federal these governments typically has the power to tax and system can survive, provided major changes are made in the power to spend for public purposes. Tax bases, our governmental institutions, programs, and proce- therefore, generally follow a parallel pattern of frag- dures-changes that will permit urban problems to be mentation with local government boundaries. But the dealt with forthrightly and effectively. To outline these fragmentation generates dangerous fiscal disparities. In- changes is the central purpose and theme of this volume. creasingly populated by low income, aged, and nonwhite . people, America's central cities are faced with the ascribed to the States. Cities and suburbs, counties, necessity of spending abnormal amounts per pupil for townships, and boroughs alike are, after all, legal education and abnormal amounts per capita for such creations of the State. The deadly combination of functions as sanitation, law enforcement, and welfare at restricted annexation and unrestricted incorporation; the the same time that their tax bases are being eroded by a chaotic and uncontrolled mushrooming of special dis- continuing exodus of businesses and moderate and upper tricts; the limitations upon municipal taxing and bor- income people to the suburbs. Since the major source of rowing powers; the deliverance of the all important , revenue for most local functions in the United States is police powers of zoning, land use and building regulation the property tax, especially for education, the fiscal into the hands of thousands of separate and competing disadvantage of the core city is obvious. local governments-these are but a few of the byprod- ucts of decades of State government nonfeasance and Disorderly, Uneconomic and Anti-Social Patterns malfeasance concerning urban affairs. of Urban Development and Land Use Unbalanced Federal-State-Local Revenue The overall course of urban development generally Sources has been disorderly, destpctive, and distasteful, the deadliness of which has only begun to become apparent But the States, as well as the localities, have been in the past decade. It is a product of a relative laissez laboring under increasing handicaps as more of them faire in land use-with governmental action, when strive to meet their responsibilities. The Federal income occuring, being of the wrong kind, at the wrong level, tax has funded a rapidly rising magnitude of domestic and frequently for the benefit of the wrong social and expenditure from the Federal budget since 1950 with economic groups. It often has tended to stultify rather actual net decreases in rates over this period. State than stimulate the forces of private enterprise. governments, dependent upon consumption taxes and Specifically, government at all levels has been moderate- to low-rate income taxes, have had to raise basically passive in the migrational flow of people, in the rates and impose new taxes time after time in order to concentration of industrial development, and in the keep abreast of increasing educational and other domes- forging of urban growth policies. Local government tic expenditures. Local governments have had to do activity has been marked by economic competition, likewise with property taxes and miscellaneous nuisance exclusionary zoning, and building code anarchy. State taxes. The political landscape has been strewn with governments usually have been indifferent to urban defeated Governors, mayors, and county officials who financial and service needs and rarely willing to challenge courageously committed suicide at the polls by doing the local government status quo. The Federal role has what had to be done to increase the resources of been wholly contradictory. On the one hand, Congress government to meet, in part at least, the escalating enacts areawide planning requirements, strengthens service demands from an insatiable (and largely unap- representative regional bodies, adopts programs to assist preciative) public. the rehabilitation of central cities. On the other hand, the Federal-State highway program, FHA's activities, the failure of a fair and uniform relocation policy, and Growth of Functional Government various location decisions of the Department of Defense When Congress, in the 1930's enacted a number of and other Federal agencies more often than not have grant-in-aid programs to assist hard-pressed State and collided head on with long term urban development local governments in meeting their responsibilities in needs. such costly fields as welfare and housing, there began, The result of all this has been to accentuate concurrently with these programs, the onset of "func- wrong-way migrational patterns of people and business; tional government" in the United States. This new to forge a white, middle- and high-income noose around institutional arrangement was characterized by a chain the increasingly black and poor inner city; and to subject of direct Federal-State-local functional and professional much of rural America to a continuing course of gradual communication-bypassing in many instances the de- erosion. cisionmaking prerogatives of Cabinet officers, the Exec- utive Office of the President, Governors, legislators and Timidity of State Government in Grasping the Urban Nettle county co&nissioners. Functional government reached its zenith in the mid- and late 1960's when categorical As the road to the present urban hell was paved, grant programs passed the 400 mark. With each new many major sins of omission and commission can be category and subcategory, a new crop of specialists and supspecialists was spawned at all levels of government to Sharing of a percentage of the Federal personal administer and to propagandize and few, if any, counter- income tax with States and major localities (at a balancing efforts were made to strengthen the position beginning level of perhaps $5 billion annually) and with of the departmental secretaries, the Governors, or the distribution according to population and tax effort. This mayors. The functional specialists are aided and abetted would "federalize the Federal income tax." by private groups-many of them well organized and Assumption by the Federal Government of all politically influential-that benefit directly or indirectly costs of public welfare and medicaid ($5 billion in from the narrowly focused individual programs. additional Federal costs). Welfare has become so inter- The program specialists in each aided field typically state in nature and so dominated by Federal policy that consult with 'one another in the formulation of grant only complete Federal financing makes sense. regulations. Similar consultations produce draft amend- Assumption by State government of substantially ments to existing legislation and draft bills for com- all local costs of elementary and secondary education. pletely new programs. The bypassing of general political (A shift of $12 billion from the local to the State leadership is not so marked at the Federal level because level.) This would help assure equality of educational plans of the specialists must receive the approval of opportunity, would release the local property tax for use Cabinet officers and the Budget Bureau before trans- in meeting growing noneducational costs, would halt mittal to the Congress. In State and local government much of the existing interlocal comeptition for industry the story is different-with elected executives and and would mitigate exclusionary zoning practices di- lawmakers being told that a grant is available if matching rected against large, low-income families. money can be raised and the accompanying package of Encouragement of a high-quality, high-yield State regulations adopted. The lure of "50 cent" (or cheaper) tax system through a Federal income tax credit for State dollars is usually impossible to resist. income taxes paid (at a current Federal cost of $4-6 ***** billion annually). This would provide a strong incentive These are major factors that have generated an for more intensive use of the income tax by State incredible and seemingly insoluable array of difficulties governments and for a better integrated State-local tax confronting urban America. They reveal a critical institu- system resting upon a strong income tax, a strong sales tional lag in our governmental process. Of course, there tax and an equitable and productive local property tax. are highly important factors of attitude, of motivation The cost in Federal revenues for these measures to and of social (and anti-social) behavior which are part of restore fiscal balance to the federal system would the domestic challenges confronting the country. This approximate $15 billion at current levels of expenditure. volume, and the responsibilities of the Advisory Com- Federal categorical grants have risen by this amount over mission on Intergovernmental Relations, are confined to the past six years. The Commission's proposals favor a the governmental and specifically the intergovernmental restoration of balance and a strong Federal-State-local aspects. There follows an overview of the general nature partnership in preference to a further willy-nilly massive and direction of Commission proposals over the past growth in increasingly narrow categorical grants which nine years directed toward mitigating some of the basic already have become a jungle so dense that only the ills of increasingly troubled urban areas. most sophisticated "grantsmen" in State and local government can enter with any confidence. THRUST OF MAJOR ADVISORY COMMISSION PROPOSALS Overhauling the Local Property Tax. Although cursed and reviled by politician and scholar alike for the past century, the property tax has been and will Restoring Fiscal Balance in the American continue to be the mainstay of local tax revenue and Federal System consequently must be made as equitable as' possible. A massive rearrangement in the scale of fiscal Within the context of a newly balanced system of fiscal resources available to the three levels of government is federalism envisaged by the Commission, all welfare and absolutely essential if the federal system is to remain all or most school costs would be lifted off the property viable, because a strong partnership requires each of the tax so that it would go primarily to support the regular partners to be strong, and this condition cannot be met urban services and meet the local share of Federal or if one partner has the bulk of the resources and the State grants for urban development. other two have the bulk of expenditures to meet. The Primarily involved in property tax overhaul is a rearrangement proposed by the Commission has five key strong State supervisory role, appointed instead of elements: elected assessors, cotltinuing assessment ratio studies to assure accurate following of the market and full publica- urbanization policy and with State, regional and local tion of such ratios, enlargement of assessing areas to at land use plans. least a countywide (or ideally, statewide) basis and Federal and State action for equitable relocation establishment of equitable and expeditious appeals of People and businesses displaced by governmental procedure. activity. One of the fuses leading to social explosion in Achieving greater property tax assessment uni- urban ghettos has been the ruthless bulldozing of homes formity is not enough; it also is necessary for the State and small businesses for highway, urban renewal and to construct and finance a tax relief plan that can shield other public works projects without adequate provision low income families from property tax overload situa- for relocation. Federal and State legislation is needed to tions and at the same time minimize the drawdown on assure the availability of standard housing, prior to the scarce resources. beginning of demolition and to provide adequate financial assistance and advisory services to people being relocated. Adoption of Explicit National and State Increased State role in building regulation. The Urbanization Policies States must begin to bring order out of chaos in building codes through such means as State model codes available Increasingly apparent to political and private sector for local adoption without deviation, by licensing and leadership alike is the necessity for the formulation of training of building inspectors, and by State perform- some conscious public policies which can accommodate ance of these functions where qualified local personnel the tremendous scale of urbanization and redevelopment are not available. bound to occur over the next few years. To continue to Escalation to county level of local zoning auth- leave this pattern to chance and to competitive and contradicting policies of thousands of local governments ority. Authority to zone quite often is a major incentive is to invite economic and social chaos. The Advisory to governmental balkanization in metropolitan areas and Commission has proposed a large variety of individual misuse of this State police power by small local units has measures at all levels of government to begin to fill this often resulted in widening fiscal and social disparities vacuum; they can be summarized as follows: between central cities and suburbs. Formulation of a national urbanization policy. Civilizing the Jungle of Local Government Institutional responsibility would be vested in the Executive Office of the President with an annual Only the State governments have the power to urbanization report from the President to the Congress rationalize and render less harmful to orderly urban and the people. At a minimum such a policy would development the complex array of overlapping local assure that individual Federal programs did not operate governments that characterizes most of the country's contrary to national goals. Some possible new com- major metropolitan areas. This herculean task requires ponents for such a policy are suggested, including State constitutional and statutory changes along the fmancial incentives for industrial location in large city following lines: poverty areas and rural growth centers; migration allow- Removing the shackles that frustrate local efforts ances to facilitate population movement from labor to marshal the resources required to meet local surplus to labor shortage areas; preference in the award needs by clarifying the legal powers of general- of Federal contracts to areas to which it is desired to purpose local governments, authorizing them to attract population and similar preferences in the location determine their own internal structure, modern- of public buildings and other facilities; expansion of izing outdated means of controlling local govern- governmental assistance for family planning information ment tax and debt levels, and liberalizing mun- to low income families; and initiation of new types of icipal annexation procedures. Federal support, under certain conditions, to large scale Arming local governments with an "arsenal of urban development and to the creation of new commun- weapons" for meeting the challenges of urban ities. growth by facilitating county consolidation, auth- Formulation of an urbanization policy by each orizing counties to perform urban functions and State. State urbanization policies would be expected to to establish subordinate service and taxing include components comparable to those suggested for a areas, empowering major cities and urban national policy with the extremely important addition counties to create neighborhood "subunits" of of a State land development agency empowered to government in order that disaffected citizens may acquire, hold, site develop and sell off land to private be brought closer to and involved in the process developers for use in accordance with the State's of local government, permitting voluntary transfer of functions between cities and counties, prop up or perpetuate small special purpose units of granting authority for intergovernmental con- government. tracts and joint service arrangements, encouraging Finally, the overall theme of stronger legislative the establishment of metropolitan study com- bodies also is part of this confrontation with the missions, providing for metropolitan functional functional autocrats. The call for periodic Congressional authorities that offer services requiring areawide review of grants-in-aid and increased capability of State handling, and authorizing regional councils of legislatures in the fields of legislative oversight and State elected officials. planning, while directed primarily to other objectives, Halting the proliferation of special districts and should have the effect of helping ensure that the role of small nonviable units of local government in functional specialists is discharged within a govern- metropolitan areas. In the case of tiny localities, mentwide and agencywide context. Moreover, in order this means establishing rigorous standards for the for States to develop their own course of action on incorporation of new municipalities, empowering urban problems, highly important, complex and contro- State or regional boundary commissions to con- versial legislation must be enacted and continually solidate or dissolve nonviable units, and revising amended. Yet relatively few legislatures are equipped State-aid formulas to eliminate or reduce aid constitutionally or administratively to do this, although allotments to local governments that do not meet progress in the past few years has been considerable. The statutory standards of economic, geographic, and Commission's proposals here (paralleling those of several political viability. other organizations) call for annual sessions, year-round 0 In the case of special districts, this means making professional staffing and adequate compensation. Strong them harder to form and easier to consolidate or legislatures are an absolute prerequisite for strong State eliminate, increasing their "visibility" and polit- government and an effective curbing of program spe- ical accountability, and requiring them to coor- cialists. dinate their operations with those of counties and All of these steps and more are necessary if the tasks municipalities. of political leadership and public administration are to The Federal Government, too, has a role to play in be kept manageable. Otherwise each functional category tidying up the local government landscape by modifying with its hordes of professionals at all governmental levels Federal categorical aid programs that encourage special becomes, in effect, a government unto itself-a vertical districts, by providing Federal incentives for local functional autocracy. government modernization in the form of requirements for regional or metropolitanwide review of applications from individual local governments for Federal grants, Massive State Financial and Administrative and by offering bonus percentages in Federal matching Commitment to Urban Problems for projects tailored to regional rather than strictly local " . . . The States are on the verge of losing needs. control over the metropolitan problem; if they lose this control they lose the major responsi- Curbing the Vertical Functional Autocracy bility for domestic government in the United A common theme associated with many of the States and in turn surrender a vital role in the Commission proposals is a move away from functional American federal system . . . ." Eighth ~nnual and special purpose governmental institutions toward Report, ACIR, January 1967. stronger general purpose government and toward greater A major part of the Commission's concern since its reliance upon politically responsible executives and establishment in 1959 has been to urge an awakening by legislators at the Federal, State, and local levels. This the States to their inescapable responsibilities for urban theme is characterized by recommendations for revenue affairs, an awakening by the Federal Establishment to sharing and grant consolidation at the Federal level; the fact that the country simply cannot be run from shortening the ballot and strengthening the planning and Waslungton, and recognition by both Federal and city budgeting processes at the State level; and curbing and officials of the inescapable necessity of increased reli- consolidating special purpose districts and authorities at ance upon those States ready to move ahead on the the local level. It also is marked by proposals for urban front. Specifically, these actions have been urged: reorganization authority for the Governor, for local Establishment of State departments of urban or planning staffs responsible directly to political gov- community affairs. Only by first providing administra- erning bodies instead of independent commissions and tively for a continuing concern and activity regarding for channeling of State aid funds in such a way as not to urban affairs can the State government hope to manage a large-scale involvement in the problems of its cities. Such should obtain with respect to the particular program. If departments can also provide a focus of technical it chooses affirmatively, then the existing Federal-local assistance to smaller municipalities and counties within relationship would be changed to a Federal-State rela- the State. tionship. Financial underwriting of urban functions. The ***** States must begin to pay part of the bill for urban Here then are the major themes underlying the redevelopment, housing code enforcement, mass transit, Commission's philosophy of intergovernmental relations and other major urban functions just as they have been in urban areas and its view of ways in which the federal paying for years a part of the bill for State agricultural system may be made to work for Urban America. In experiment stations, county agents and rural roads. This, applying this philosophy, the Commission has recog- of course, requires a politically painful realignment of nized that completely new institutions and institutional expenditure priorities within the State, but until it is relationships will have to be forged in the years ahead. done, "one man-one vote" is an empty phrase, and the "So, at the beginning of 1969, the Nation chance for a strong State role in the American federal continues its search for a New Federalism- system of the future is diminished. dedicated to balance; designed to correct struc- Channeling of Federal urban grants through the tural, functional, and fiscal weaknesses; and States under certain conditions. The Congress and the rooted in a vital partnership of strong localities, Federal Executive Branch must become selective in strong States, and a strong National Govern- laying down patterns of intergovernmental relations ment. Federalism, after all, seeks to enhance surrounding Federal grants and must stop treating States national unity while sustaining social and polit- like New York, Pennsylvania, and California in an ical diversity. The partnership approach is the identical fashion with less urbanized and under- only viable formula for applying this constitu- developed States like Alabama, Mississippi, and tional doctrine to late Twentieth Century Wyoming. The Commission has proposed that Federal America. Yet, this approach can succeed only if funds for urban purposes flow through the State where, all of the partners are powerful, resourceful, and only where, two basic conditions are met: the State and responsive to the needs of the people. The provides adequate administrative machinery and supplies alternative is a further pulverizing of State and from State general revenues at least half the non-Federal local power, and the consequent strengthening share of the required funds. If the State chooses not to of the forces of centralization." Tenth Annual meet these two conditions, a Federal-local relationship Report, ACIR, January, 1969. Chapter 2 RESTORING FISCAL BALANCE IN THE FEDERAL SYSTEM

References to "the urban fiscal crisis" are common- for local government employees in 1962, and by 31 place. In practically any issue of big city newspapers percent for manufacturing workers in 1965: there are reports about critical budgetary and tax Furthermore, nearly all the Nation's recent popula- problems that face the central city and other local tion growth has occurred in metropolitan areas, a result governments in the metropolis. One mayor, testifying of both natural increase and net in-migration. before the National Commission on Urban Problems in 1967, was only half joking when he observed:' WHY A LOCAL FISCAL CRISIS? Our problems are financial ones. I have sometimes characterized the three major prob- But if it is clear-as so many measures attest-that lems as being money, finances, and revenue. metropolitan areas are so typically "better off," it is no Yet it is nearly as commonplace that major urban less true that most of the problems besetting urban areas account for most of the Nation's wealth and America show up most sharply in these areas. The income. Metropolitan areas, having but two-thirds of the answer to this seeming paradox is to be found in a total population, account for:' growing fiscal imbalance within our federal system-a More than four-fifths (82 percent) of sav- disorder that is most apparent among the jurisdictions in ings and loan deposits; metropolitan areas in general and in the dire fiscal plight Four-fifths (80 percent) of all bank de- of many of the nation's central cities in particular. This posits; intergovernmental fiscal imbalance is the product of More than three-fourths (77 percent) of many factors-conditions that either increase the "tilt" the value added by manufacturing; or prevent a restoration of balance: Three-fourths (75 percent) of all personal A progressive political fragmentation of the tax income in the Nation; base of most metropolitan areas-a fiscal splin- More than seven-tenths (71 percent) of all tering that places powerful constraints on the retail sales; and ability of local jurisdictions to raise revenue and Seven-tenths (70 percent) of all values creates a radical mismatch of resources between officially assessed for property taxation. the "have" and "have not" jurisdictions within Personal income per person averages half again more in the same metropolitan area. metropolitan areas than elsewhere in the United States- Misallocation of responsibility for financing in 1966, $3,314 compared with $2,236 per person.3 education and public welfare programs-a factor Earning rates for various kinds of employment are also that causes a severe tax overload for many typically higher in SMSA7s-for example, by 28 percent jurisdictions. This year the local tax base will be forced to underwrite over half of the estimated $32 billion bill for public elementary and secondary education and approximately $1.5 '~ationalCommission on Urban Problems, Building the billion for public welfare costs. American City (Washington, D.C.: National Commission on The constant local revenue crisis caused by the Urban Problems, 1969), p. 362. fact that .urban expenditure demands and es- 2~.~.Bureau of the Census, Statistical Abstract of the United States: I968 (Washington, D.C.: 1968), pp. 883-886, 4~.~.Bureau of the Census, Local Government in 910, and 911; and U.S. Department of Commerce, Survey of Metropolitan Areas, 1962 Census of Governments (Washington, Current Business (Washington, D.C.: August 1968), p. 32. D.C.: 1964), vol. 5, p. 3; and Statistical Abstract of the United 3~urveyof Current Business (August 1968), p. 33. States: 1968, pp. 901 and 910. pecially big city demands consistently outpace Fiscal Mismatch both the growth in the-nation's income and the "automatic" increase in local taxes. A lopsided Federal aid system, under which, To put the urban fiscal problem another way, despite its steadily growing fiscal superiority, the growing economic unity is inexorably forcing upwards Federal Government has failed to develop a the "revenue cream" generated by our expanding econ- balanced system of support for State and local omy. It can be tapped fairly effectively by the States but government. Heavy Federal emphasis on narrow most effectively by the Federal Government. On the categorical-type aid has unduly restricted State other hand, growing political splintering, based upon and local budgetary powers while intensive Fed- popular attachment to local home rule, forces massive eral use of the personal income tax has discour- and disproportionate expenditure burdens to be borne aged effective State use of this prime revenue by a fragmented and defective local property tax base in source. general and on a severely overloaded central city base in Faulty State aid systems that often aggravate particular. rather than compensate for the growing fiscal This growing fiscal imbalance takes on an even disparities among local governments within the sharper focus when given a State government dimension. metropolitan areas. The more opposition the State throws up against those A defective local property tax, the shortcomings who would encapsulate themselves and their taxable of which (unequal assessments, regressive inci- possessions within suburban jurisdictions and the more dence and adverse land use effects) become willingness the State demonstrates to assume responsi- increasingly apparent as local governments are bility for financing the high cost intergovernmental forced to make more intensive use of this levy. programs (such as education), the less threatening Limited revenue potential to be derived from becomes the local fiscal climate. local nonproperty taxes and user charges due to the limited jurisdictional reach of local govern- This critical State role is reflected in the sharply ments coupled with their extreme vulnerability to contrasting fiscal conditions of two cities-desperate interlocal competition. These limitations, par- Newark, New Jersey, with the highest local tax rate ticularly in metropolitan areas, severely constrict among the nation's major cities and affluent Honolulu, the possibilities of any particular local govern- Hawaii, with the lowest property tax rate (table A-1). ment from mounting an "operation bootstrap," Newark's metropolitan tax base is badly sub-divided, the of which rugged individualists still like to dream. central city population is approximately 50 percent black, and the city's tax base is required to meet most of

the cost of public education and a relatively large- share Countervailing Economic and Political Trends of welfare costs. In contrast, there is virtually no splintering off of the Honolulu metropolitan tax base, While each of these factors has made its contribu- and the State underwrites almost all the cost of public tion to the general state of fiscal imbalance, two education and welfare. countenailing trends-one economic and the other political-merit special attention. These trends are reflected most dramatically in two fiscal facts; with each Fiscal Consequences passing year the fiscal supremacy of the National Government becomes more apparent and the fiscal The worst features of the mismatch of needs and plight of many of America's central cities becomes more resources are now clearly apparent'in the growing social, desperate. The economic trend-the growing inter- economic, and fiscal disparities among local jurisdictions dependency of the nation-gives the Federal tax col- in the great metropolitan areas of the Northeast and lector, equipped with the most productive tax and the Midwest. At one extreme are the "big losersv-usually broadest geographical reach, the best opportunity to tap the central cities-"stuck" with an extremely anemic tax the growing affluence of the national economy. The base and confronted with rapidly mounting expenditure political trend-the progressive subdivision of the metro- demands incident to the governing, educating and politan area into more and still more governmental "welfaring" an increasing proportion of relatively poor, units-works in precisely the opposite direction. It both black families. At the other extreme are the "big constricts the tax reach of the local jurisdictions and winners7'-those white suburban jurisdictions wealthy saddles the "have nots" (usually the central cities) with enough to be able to underwrite a superior public enormously disproportionate burdens. educational system with a below average tax effort. The Political-Fiscal Dilemma in the sense that they encompassed within their boundaries, virtually all of the urban area's residential, com- The ultimate cause of this radical mismatch of needs mercial, and industrial development. and resources is political-State and Federal policy- Because they possessed social and economic unity, makers are unable to muster sufficient support necessary our municipalities were, also generally characterized by either to prevent this head-on collision of economic and fiscal balance. The municipality's "deficit" areas-the political forces or to provide sufficient compensation for low-income residential areas-were offset by the damages to the local victims. This inability to engineer "surplus" areas-the high tax producing districts asso- consent, in turn, can be traced to a political-fiscal ciated with the central business area,. the industrial dilemma. A strong tradition of local home rule ordi- section, and the high income residential neighborhoods. narily blocks any attempt to bring needs and resources By far the most important social function per- into better alignment via the administrative centraliza- formed by the great "balanced" municipalities was tion approach-i.e., creation of a metro-type government political in the Aristotelian sense-that of keeping the or the shifting of all responsibility for certain high cost public peace by moderating the competing demands of functions such as education or welfare to the State or the various classes that comprise the urban body politic. National Government. On the other hand, popular support for a "Puritan" ethic that discourages the divorce of tax and expenditure responsibility ordinarily The Rise of the Lopsided Communities stands in way of a "fiscal" decentralization solution- i.e., the transfer of Federal funds to State and local In many of our metropolitan areas the twin forces government on a "no strings" basis or for State of urban expansion and social segregation have com- assumption of virtually all the responsibility for finan- bined to burst the shell of the old "balanced" com- cing education while leaving wide policy discretion in munity and in the process have profoundly altered the the hands of local school boards. social and political character of the urban municipality. Whereas the old municipality was socially and economically balanced, the new municipalities are "lopsided," POLITICAL BALKANIZATION OF THE i.e., the wealthy estate and industrial enclaves and the METROPOLITAN AREA upper, middle and lower income bedroom communities. Prior to the great post-World War I1 exodus of the While the sprawling and subdivided metropolitan area middle and upper income families to suburbia, our still has a central or "core" city, typically it is becoming system for governing urban America appeared to con- smaller, poorer and blacker when compared to the form to Aristotle's view of the "most perfect" way to burgeoning economy of white suburbia. shield the community from the perils of political The political leadership of the old "balanced" extremism. municipality was under constant pressure to blur and "In every city the people are divided into moderate the conflicting demands of the urban rich, three sorts: the very rich, the very poor and poor and middle class. In contrast, the leaders of the those who are between them . . . . The most new "lopsided" municipalities are virtually forced by perfect political community must be amongst their narrow-gauged constituencies to sharpen and rein- those who are in the middle rank, and those force the divisive elements within our uptight urban states are best instituted wherein these are a society. large and more respectable part, if possible, This political transformation becomes even more than both the other; or, if that cannot be, at ominous because our highly decentralized system of least than either of them separate; so that being government historically has relied almost entirely on the thrown into the balance it may prevent either cohesive powers of the municipality to hold together the scale from preponderating."' highly segregated components of our urban population. Within the city's boundary were found the relatively few Moreover, the nation has leaned heavily on the local tax rich, the preponderate middle class, and the poor who base in general and the property tax in particular for often lived on "the other side of the tracks." The great financing its domestic needs. It is ironic that the political cities of America, however, were more than social balkanization of our urban areas occurs in the face of a "melting pots." They were also balanced economically growing need for social cohesion in an increasingly interdependent society. The tendency for metropolitan areas to split poli- '~ristotle, Politics, Book IV, Chapter XI, pp. 126-127. Madison advanced essentially the same thesis in The Federal tically along their income and racial seams is most Papers, Number 10. apparent in the Northeast and Midwest, and least noticeable in the Southwest. More and more rare in the dictions. By 1965, the suburban jurisdictions had Northeast quadrant of the United States, is the large city forged far ahead-$574 to $449 for the central that still encompasses within its boundaries most of the cities. This growing disparity between the central residential areas occupied by the white middle class let city and suburban school districts takes on a alone those of the wealthy. In striking contrast stand more ominous character in light of the fact that Houston, San Antonio, and Phoenix. Their vigorous the central city school districts must carry a annexation policies may be prompted by the spectacle disproportionately heavy share of the educa- of the older Eastern cities slowly being choked to death tional burden-the task of educating an in- by the "white noose" of suburban municipalities. creasing number of "high cost" underprivileged children. Children who need education the most are receiving it the least! Grim Fiscal Outlook for Central Cities On the municipal service or "cu~todial~~front, A few successful annexations, however, cannot the presence of "high cost7' citizens, greater mask the grim fiscal prospects for most of the nation's population density, and the need to service the great cities. The findings of a recent Advisory Commis- needs of commuters force central cities to spend sion study of metropolitan fiscal disparities clearly far more than most of their suburban neighbors substantiate the widespread belief that most of our for police and fire protection and sanitation major cities are now in a desperate situation. services. The 37 largest central cities had a 1. The central cities, particularly those located in noneducational (municipal) outlay of $232 per the industrial Northeast and Midwest, are in the capita in 1965-$100 greater than their suburban throes of a deepening fiscal crisis. On the one counterpart^.^ hand, they are confronted with the need to satisfy rapidly growing expenditure requirements The situation for most central cities takes on an triggered by the rising number of "high cost" even more dismal cast because there is little prospect for citizens. On the other hand, their tax resources a voluntary solution arising from within the metro- are increasing at a decreasing rate (and in some politan area. Suburban political leaders can generally be cases actually declining), a reflection of the counted upon to oppose stoutly any proposal that exodus of middle and high income families and would call for a significant redistribution of resources of basiness firms from the central city to such as an area-wide tax with a strong equalization twist suburbia. to aid the central city. By the same token, suburban 2. The concentration of high cost citizens in the leadership can be expected to view with a jaundiced eye any major redistribution of burdens, i.e., the rezoning of central city is dramatically underscored by pub- suburban land to permit low income central city families lic welfare statistics. For example, 27 percent of to obtain public or low cost housing in suburbia. Maryland's population is located in Baltimore, yet 72 percent of Maryland's AFDC expenditures is to be found in that city. By the same Cracks in Suburbia's Picture Window token, Boston, with 14 percent of Massachusetts' Comparing the fiscal behavior of the central city population, accounts for 40 percent of that with the entire suburban area, however, tends both to State's AFDC expenditure. obscure and to distort the disparity story because it 3. A clear disparity in tax burden is evident lumps together diverse suburban jurisdictions. Anyone between central city and outside central city. familiar with the fiscal landscape of suburbia is keenly Local taxes in the central cities are 7.5 percent aware of the fact that it does not present a uniform of income; outside the central cities only 5.6 picture of affluence. On the contrary, suburbia fairly percent of income. Higher central city taxes are bristles with contrasts between rich, poor, and middle reinforcing the other factors that are pushing income jurisdictions.' upper income families and business firms out of In most metropolitan areas, the range between the the central city into suburbia. most affluent and impoverished suburban jurisdiction is 4. On the educational or "developmental" front, considerably greater than that between central city and the central cities are falling farther behind their suburban neighbors with each passing year. In 1957 the per pupil expenditures in the 37 6~hisanalysis was conducted by Professor Seymour Sacks of Syracuse University and appears as a part of the Advisory metropolitan areas favored the central city Commission's study Fiscal Balance in the American Federal slightly-$3 12 to $303 for the suburban juris- System (A-3 1 ;October 1967), Vol. 2. FIGURE 1 Public Welfare Contributes Significantly to "Urban Pathology"-Some Extreme Cases

Income. Population and Number d Public Welfare Recipients Relative to State Aggregates

SWFOLK COUNTY (BOSTON) COOK COUNTY (CHICAGO)

/*I /*I m

40 - -

20 - -

> All AFDC GA 1960 1960 R.sipimh, February 1968 I960 1960 Recipient6 February IW

PHllALYLPHlA ESSEX COUNTY (NEWARK) lrn 1

0 Inca. Population All AFCC GA lnsae Ft+wl~tion All AFCC GA 1960 1W Recipimh, F*bruar/ 1968 I%O 19x1 bsipi.nh, Fekmry 1968 suburbia in general. For example, elementary school Advantaged-A community that can provide a districts in Cook County, Illinois, reveal a range of about superior level of service with an average tax 3040-1 in their property tax base per pupil in 1964 and burden. various studies have reported ranges of 1040-1 or more Highly advantaged-A community that can pro- in the per capita tax base of municipalities within vide a superior level of service with a minimal tax various metropolitan areas.' effort. Because they lack a diversified tax base, most of the most or all of the communities within metro- lower to middle income residential suburbs can also politan areas fell in the "balanced" category there would expect a steady deterioration in their fiscal prospects. be little cause for concern with the fiscal health of the There is evidence which indicates that, as nation's cities, or little need for State and National the suburban expansion grows, it is increasingly governments to enact fiscal equalization measures. But the lower middle class white collar worker and that is not the case. Serious widespread disparities do the blue collar worker who is fleeing the central exist. Many of the largest central cities are in the "highly city for suburbia, giving increasing rise to the disadvantaged" category. And some of these disparities demand for suburban development which caters continue to grow.9 to the economic capabilities of these groups. The composite of these trends all seems to Beggar Thy Neighbor indicate that the newly developed suburban community of the future will be developed Ever mindful that no community within the metro- with tax bases which fail to provide adequate politan area "stands still" in relation to its neighbors, fiscal capacity for the support of municipal and local policymakers are under unremitting pressure to educational services8 adopt a highly aggressive policy in order to maintain or obtain a favorable competitive position. As it enters the A Few Winners and Many Losers metropolitan arena, each governmental unit has three prime weapons-the power to tax, the power to spend, Because the concept of local fiscal disparities is of and the power to determine land use. necessity a relative matter, the political splintering of This fiscal contest among municipalities in the same Urban America along income and racial lines produces metropolitan area might be described as the local Tax its share of municipal winners as well as losers. While and Zoning Game. In order to hold down education difficult to measure with precision, it nevertheless costs, suburban legislators are under strong temptation appears possible to detect several gradations along the to use a low density approach to residential zoning. disparity spectrum ranging from the big winners at one Although the one-acre suburban lots can be denounced end (i.e., Scarsdale, New York, and Lake Forest, Illinois) as an example of "snob" or restrictive zoning, they are to the big losers at the other end (Newark and East St. also hailed as an act of local financial prudence-the only Louis). Most metropolitan communities can be placed in sure way of placing a lid on school costs and property one of five categories: tax rates. The zoning of great stretches of suburban land 1. Highly disadvantaged-A community that falls for commercial and/or light industrial purposes is far short on the public service side even though it another example of fiscal zoning. There is always the makes an extraordinary tax effort. hope that a large share of the local tax burden can be 2. Disadvantaged-A community that must make an exported to neighboring communities by snagging the extraordinary tax effort to break even or provide giant shopping center, the industrial research park or the an average level of public service. massive public utility installation. In brief, the name of 3. Balanced-A community that can bridge the gap the game is cutthroat intergovernmental competition, between resources and needs by providing an and the object of the game is to "zone in" urban adequate level of service with an average tax resources and to "zone out" urban problems. effort. Operating under a logic that goes back to the Domesday Book of William the Conquerer, each autonomous principality has the unchallenged and exclusive '~ickNetzer, Economics of the Property Tax (Washington, D.C.: Brookiigs Institution, 1966), pp. 24-25. See also, Advisory right to protect and to exploit all taxable resources Commission on Intergovernmental Relations, Fiscal Balance in within its domain. While this "winner take all" philos- the American Federal System, Vol. 2, Appendix D. '~ames M. Banovetz, W. John Pembroke and Peter J. Fugiel, "Fiscal Disparities in the Chicago, Illinois Metropolitan Area," in Fiscal Balance . . . , Vol. 2, p. 243. ophy makes good sense in terms of the old "balanced" jurisdictions tends to serve as a brake on higher taxes community, it takes on a harsh and inequitable color in throughout the metropolitan area. This braking action a sprawling metropolitan area inhabited by aggressive takes place despite the fact that higher taxes may be and lopsided governmental units. One jurisdiction can urgently needed in other jurisdictions. reap all the tax benefits of an industrial location while Inter-community fiscal competition, however, is not the neighboring communities are often required to pay restricted to the tax side of the equation. "Stayingin line" the costs of educating the children of the new employ- with neighboring jurisdictions also forces each munici- ees. pality and school district to re-examine constantly its expenditure policies.' ' Whereas municipalities are fear- "Staying in Line": An Exquisite ful lest their tax rates become too high, they also are Tax-Expenditure Calculus concerned lest their public service standards in general and their education standards in particular fall too far Local policymakers competing in a metropolitan below those set by their neighbors. This keen concern arena are keenly sensitive to inter-community tax rate for maintaining a competitive educational position often differentials. There is a constant fear that an above results in local school boards being played off against average tax rate will act as a powerful deterrent to one another when it comes time to negotiate revised pay economic development within the local jurisdiction. scales for teachers. While this fear may be exaggerated, the local concern for The fortunate fiscal position of the more affluent a "competitive" tax position is very real; it cannot be jurisdictions within the metropolitan area, therefore, dismissed as foolish. creates a bitter dilemma for their less well endowed The effect of local tax differentials upon industrial neighbors. The below average tax rates of the affluent location within a metropolitan area was underscored in a jurisdictions piwide aid and comfort to those persons recent Advisory Commission report. advocating a tough, "hold-the-line" tax position. On the The relative importance of the lax differential other hand, the high educational standards of the more factor in industrial location decisions *wars to fortunate jurisdictions provide heavy arnrnunifion to increase as the location process narrows down those persons advocating larger appropriations for the to a particular jurisdiction within a general schools. region. As among regions of the country, the Caught in this crossfire, the policymakers in the less non-tax factors such as access to markets and to fortunate jurisdictions must attempt to frame both a tax labor and comparative transportation and sup- policy that will underwrite a "fairly decent" brand of ply costs stand out as the primary location public services and an expenditure policy that will not considerations. As between neighboring States, force taxes to "confiscatory" levels-a painfully ex- there appears to be no direct relationship quisite form of political-fiscal calculus. between industrial growth and tax differentials due largely to the fact that States are careful TOO LITTLE AND TOO LOPSIDED not to get "too far out of line" with their THE STATE AND FEDERAL AID RESPONSE immediate neighbors. As among local governments within a State and especially within a In theory at least the States and the National metropolitan area, tax differentials exert dis- Government-armed with superior fiscal resources- cernible plant location pull-the industrial tax could have intervened and radically reduced local fiscal haven stands out as the most conspicuous tensions. They could have responded to the challenge example. In almost every metropolitan area created by the widespread collapse of the balanced there exists wide local property tax differen- municipality and the rise of the lopsided metropolitan tials-~ cost consideration that can become a jurisdiction by rifling high-powered aid on the basis of "swing" factor in the final selection of a need and local fiscal capacity into the coffers of the particular plant location. ' most "disadvantaged" localities and school districts. Because of the desire to "stay in line," the relatively low level of taxation that is possible in the more affluent Poor State Equalization Performance In practice, there is little evidence to suggest that State and Federal aid combined has materially slowed 1°~dvisory Commission on Intergoven~mental Relations, State-Local Taxation and Industrial Location (A-30; April 1967), pp. 78 and 79. (Underscoring added) down (let alone reversed) the forces working to increase Financing Education and Public Welfare: metropolitan fiscal disparities. On the contrary, there is Misallocation of Financial Responsibility considerable evidence to suges't that State school aid and tax sharing policies in particular have had the effect In addition to chalking up a rather poor equaliza- of throwing gasoline on the fires. Federal mortgage tion record, most of the States have demonstrated little insurance, highway and other grant-in-aid policies have interest in assuming primary responsibility for the had an equally incendiary effect. In addition, so-called financing of education. As a result, the local property "impact aid" to school districts often has tended to tax base will be forced this year to underwrite slightly widen fiscal and social disparities in urban education. more than one-half the cost of the nation's $32 billion Because of little or no explicit recognition of elementary and secondary school program-a function educational and municipal overburdens, most State aid that long ago lost most of its local character. programs increase the central city-suburban educational Slowly but surely the claims of public education are resources gap. By the same token, the not uncommon driving other local or municipal-type demands-i.e., State practice of sharing a part of its tax receipts with police, fire-to the fiscal wall. Prior to World War 11, local government on the basis of taxpayer residence also about 33 percent of the total $4 billion tax collection both promotes the cause of metropolitan political went to the educators; this year more than 50 percent of splintering and increases the g\ap between the "have" and estimated $31 billion property tax collection is ear- "have not" communities. marked for education. To put the issue more sharply, One of the dramatic illustrations of this anti- the school boards are pushing the municipalities and equalization effect is found in Wisconsin's present counties off the property tax preserve. In many sub- system for sharing personal income tax receipts with its urban districts, the property tax has virtually become a municipalities. In 1966, the high income residential school tax with as much as 75 cents of every property suburbs in the Milwaukee metropolitan area received a tax dollar going for education. In fact, the quality of $100.94 per capita share of the State personal income local education is often largely determined by the tax compared to $18.62 for the central city of Mil- accidents of local property tax geography. waukee and $18.47 per capita share for the area's low In a number of States, the local property tax is still income residential suburbs.' In order to provide a slim required to underwrite a considerable part of the fare for its poorest jurisdictions Wisconsin has to set out non-Federal share of public welfare. As a result, the local a banquet for its richest municipalities! tax base will produce approximately $1.5 billion for this To the extent that State and Federal aid programs purpose in 1969-a most flagrant example of misal- have equalizing effects they are usually indirect-the location of financial responsibility. by-products of a specific program designed to help poor If most States have fallen short on the education people rather than direct results of programs designed to front, the same can be said about the National Govern- find and to help poor local jurisdictions per se. Because ment's role in financing public assistance programs. the poor increasingly tend to cluster together in the Despite the vastly superior fiscal resources of the same municipality within a metropolitan area, any State National Government, and in the teeth of mounting or Federal program with a direct poverty orientation is evidence that only a truly national welfare program can bound to have an inter-local equalization effect, albeit of distribute costs and benefits equitably across the land- an indirect nature. despite all of this, State and local governments were It may also be argued that any Federal program required to pick up almost half of the nation's $10 designed to prevent indigency also has a beneficial and billion welfare tab in 1968. The Congress which lost indirect equalizing effect on local and State finances. In little time in 1965 in enacting the Medicaid program this case the Federal social insurance program- (actually it was developed and added onto Medicare with OASDI-must be cited as an important force working in but a very few weeks for legislative consideration) has the right direction. been slow indeed to admit and react to the tremendous Nevertheless, even after all of the State and Federal pressures the program has placed upon State treasuries. programs with the most indirect equalization effects are Many State officials have with much validity termed the thrown on the scales, the fact remains that outside action of the Congress in this field the height of financial help has not come in sufficient magnitude to intergovernmental fiscal irresponsibility. turn the fiscal tide for the nation's hard pressed central The ultimate, however, in the misallocation of cities. financial responsibility among levels of government is to be found in the grim spectacle of a regressive and heavily overburdened local property tax (Newark's) being forced FIGURE 2 of grants, their dollar magnitudes or their effects on School Systems are Laying Claim to an Ever-Increasing intergovernmental relationships, Federal categorical Share of the Local Property Tax grants-in-aid have had near explosive growth since 1963. The number of separate grant authorizations has skyrocketed from 161 in 1962 to 429 in 1969. Percent Oistibution of Local Property Tax Collections, by Type of Govefment The impact of Federal aid on State and local government over the past two decades has been felt most acutely by Governors, State legislative leaders and budget officers. The increasing number of grant programs, they insist, has led to greater Federal interference in their administrative and policy roles and the later grants have tended to be less stimulative and more coercive in their impact. Refreshingly, for the health of the American federal system, there has also been a growing recognition at the national level of problems associated with manageability and administration of a large number of narrowly defined categorical aids, with a frank admission by tax officialdom and even some of the Federal bureaucracy that the country really can't be run from Washington! A hard look at the Federal aid system reveals a second major deficiency: a failure to sort out clearly the basic purposes for which the National Government should extend aid to State and local governments. The classic objectives of fiscal aid-equalization, stimulation, demonstration and general support-are not clearly differentiated under the present aid system. In the Commission's view, the need is urgent to sort out these basic aid objectives, to introduce a greater degree of lurce: AClR computations based on data from the Bureau of the Censu "flexibility" into the entire aid system. Just as the growing number of lopsided municipal- to underwrite a substantial part of the cost of its own ities reflects the inability of most State legislative bodies extra heavy public welfare case load. to contain the explosive power of urban expansion By forcing a limited and defective local revenue within the shell of the balanced municipality, so also the system to produce almost $18 billion for public educa- growing number of narrow categorical grants clearly tion and welfare, the States and the Federal Government reflects the inability of the Congress to harness its rapidly not only intensify the urban fiscal crisis with a ven- expanding fiscal power in behalf of federalism-a system geance, they also turn the logic of of federalism upside of shared powers. Just as the political integrity of the down. In theory, the superior revenue system of the nation's first line of domestic defense-the municipal- States and the National Government should reinforce ity-clearly is jeopardized by metropolitan growth so the limited revenue capabilities of local government but also the political integrity of federalism's second line of in practice the opposite situation obtains. The local defense-the States-clearly is threatened by the growing property tax is forced to serve as the general backstop fiscal superiority of the National Government and the for State and Federal programs! Federal failure to develop a balanced system of support. If States are to move forward, to assume primary Lopsided Federal Aid System responsibility for financing education and to develop effective aid programs for local government, their fiscal While State sins of omission have been largely powers must be strengthened. An ever growing number responsible for the proliferation of lopsided municipal- of Federal categorical grants with detailed expenditure ities across the metropolitan landscape, Federal sins of strings attached will not do the job and State vulnera- omission and commission have created a massive but bility to interstate tax competition places powerful lopsided $25 billion aid program to State and local constraints on their revenue raising capabilities. Clearly governments. Whether measured in terms of the number States must be permitted to tap the Federal income tax flow if they are to play a key role in financing the existing levies. As a result, local revenues from own growing needs of an urbanizing America. sources have absorbed an increasing proportion of personal income-rising from 5.1 percent in 1950 to 6.6 THE LOCAL GOVERNMENT REVENUE GAP percent in 1967. There are many reasons underlying the rapid rise in Given the general slicing up of the urban tax base, local government expenditures. Like most of the private a third rate revenue system, and the task of financing sector, these governments entered the postwar years most of the school bill, it is not surprising that the with a large backlog of expenditure needs. At the same demands for public services simply outstrip the growth time, forces associated with national economic develop- of revenues in the nation's cities, counties and town- ment and growth have been operative. In the main, such ships. forces have included a rise in prices, growth in popula- With a population growing both in numbers and in tion, urbanization and suburbanization of the country, concern for the quality of life, local governments expanding opportunities and requirements generated by throughout the nation have sharply increased their technological advance, rising incomes and standards of spending-from $14.8 billion in 1950 to $59.5 billion in living and increased responsibilities undertaken by gov- 1966-67. Part of these increased expenditure ernmental authorities. Although it is difficult to specify requirements are, of course, financed from "outside" the particular influence that each of these factors has sources by intergovernmental transfers from Federal and had on the growth of local expenditures, it is clear that State governments. Even so, the proportion of local these are the forces of the future as well as of the past. government expenditures financed by these upper gov- The urban dimension of the local fiscal problem is ernmental levels has increased quite modestly during the particularly acute both because these urban governments postwar period-rising from 30.0 percent in 1950 to are required to perform public services of a wider range only 34.2 percent in 1967 (table 1). Thus two out of and more intense degree than their rural counterparts every three dollars of local expenditure still are raised but also because of the sheer size that many urban units through local taxes. have attained. Continuing migration from farm to city has accelerated the need for additional police and fire Table 1-Proportion of Local General Expenditures Financed protection as well as for added water and sewage From "Outside Sources," Selected Years, 1950-1967 facilities. And the more densely populated the urban (Dollar Amounts in Millions) centers become, the more complicated and expensive it Local Intergovernmental Revenue is to provide these services. Furthermore, the recent Local General as percent of acceleration in movement from city to suburban com- Year Expenditures Amount general expenditures munities has forced state and local authorities to meet comparable needs in these newly developed areas, without eliminating the need for services in the center city where the population is, by and large, also still rising.

Source: U.S. Bureau of the Census, Historical Statistics on Governmental Finances and Employment, 1962 Census of Governments Vol. VI, No. 4; and 1967 Census of Size Makes A Difference Governments, Vol. VI, No. 5. With the exception of some large central cities and The size of the local government has also been urban counties, the sole significant tax source of local found to affect per capita expenditures and employment governments is the property tax. Currently yielding even after other relevant determinants were accounted about $31 billion, the property tax has withstood for. The number of people or city size may be directly periodic waves of critical assault and continues to be the related to expenditures per capita and employment mainstay of local finance. Despite its revenue produc- levels either because population size leads to disecon- tivity, one of the limitations of the property tax is that omies of scale or because it makes more or better public the "automatic" revenue increase barely keeps pace with services necessary or feasible. Diseconomies can emerge economic growth while expenditure demands increase as a city expands beyond its "optimal" size and enters faster than economic growth. This then is the genesis of that part of the expenditure or employment curve where the yearly dilemma facing local policymakers-how to unit costs or labor needs increase with additional close next year's budget gap? To do so, these officials numbers. Alternatively, population size may lead to have had to seek new tax sources and to raise rates on economies of scale in the provision of certain public services as costs are spread over a larger number of Nevertheless, it is becoming apparent that believers people, thereby reducing unit costs. in the federal system will have to take certain corrective The Commission's analysis of local government actions because two powerful and closely related spending and employment in Ohio, New Jersey and forces-urbanization and growing economic interde- Texas suggested that for cities of 25,000 to 250,000 pendence-are making it increasingly difficult to recon- population, size more often than not had no casual cile the twin goals of governmental decentralization and effect on per capita spending and employment. Despite fiscal equity. this result for smaller cities the effects of population size With each passing day the growing economic inter- showed up clearly for larger municipalities. By com- dependence of the nation enhances the fiscal and tax paring average expenditures and employment in small vs. superiority of the National Government. This fact and larger cities it appeared that for most functions of a the predisposition of the Congress to attach detailed typically local nature the larger municipalities spent or expenditure strings to its grants threaten the goal of employed more per capita.' decentralized decision-making. On the other hand, the forces of urbanization have burst municipal boundaries Property Tax Defects Become Tax Brakes in most areas leaving in their wake glaring fiscal disparities among jurisdictions within the same metro- The call for property tax relief has become more politan area. The political splintering along income and strident as the average residential property tax burden racial lines is akin to giving each rich, middle class, and has gradually increased from approximately 2.5 per cent poor neighborhood the power to tax, spend, and zone. of household income in 1960 to an estimated 4 per cent Such decentralization of power can and does play hob in 1969. The growing dissatisfaction with the property with the goal of social justice. tax reflects the classic indictment of thislevy. In those metropolitan areas where the forces of 1. It imposes a heavy burden upon housing-a form urbanization have ruptured the local governmental shell, of consumption that is essential and socially it is becoming increasingly apparent that federalism's desirable. second line of defense-the States-will have to take on 2. It places a greater burden on poor households in many of the classical political and fiscal functions once relation to their income, than upon more affluent performed by the old balanced municipality. ones. 3. It is a difficult tax to administer as legally AClR Recommendations-A Summary intended; that is with all taxable property tapped uniformly in relation to its value. The Advisory Commission's proposals for restoring From a regressivity standpoint this levy takes its fiscal balance call for strong positive action by both heaviest toll among the elderly homeowners. An esti- Federal and State governments: mated 3 million of the nation's 26 million homeowners To insure an equitable distribution of the costs now turn over more than 10% of their total household and benefits of public elementary and secondary income to the local residential property tax collector. education and public welfare by broadening the Pulling the regressive stinger and securing greater assess- geographic base of support for these two pro- ment uniformity stand out as dual priority items in any grams. Specifically this involves: effort to overhaul the property tax. - As a long-range objective, State assumption of virtually all of the cost of financing public RESTORING FISCAL BALANCE elementary and secondary education. - National Government assumption of complete Two great goals-decentralized decision-making and financial responsibility for public assistance, the equitable distribution of the costs and benefits of including medicaid. domestic government-challenge any effort to secure To harness the growing fiscal power of the fiscal balance in our federg system. Add to this National Government in behalf of our system of perennial dilemma the remarkable political, social and shared power, the Commission, in its report on economic diversity to be found across the land and it Fiscal Balance in the American Federal System, becomes readily apparent that there is no sure-fire has called for the development of a balanced formula for fiscal salvation in our fgd@ system. program of Federal support for State and local governments that includes: 13~dvisoryComrn~ssion on I~teygoy,e~nmentaIRelations, - Federal revenue sharing with State and local Urban and Rural America: Policies for Future Growth (A-32; April 1968), p. 52. governments. - Streamlining of the Federal categorical aid have nearly two-thirds of all the pupils enrolled in system. American public schools-in 1966, more than 29 million To expedite the development of an effective and out of 44 million students. The public school systems in equitable State and local revenue system: these areas employ 2 million people, or somewhat more - Federal income tax credit for State income tax than the number engaged in all other local government payments. functions combined. - Balanced State use of income and sales taxes. In most metropolitan areas school administrative - Property tax rehabilitation. patterns contribute significantly to the problems of local To enable the States to play a key role in government proliferation and layering. Of the nearly equalizing local resources, State aid programs 21,000 local governments in metropolitan areas as of should: 1967, about 5,000 were independent school district - Take account of variations in local fiscal units, while only about 500 public school systems in capacity. SMSA's operated as part of a county, municipal, or town - Develop "a systems approach" to State grants government. Less than one-fourth of all the metro- to local government. politan area school systems were geographically coterminous with any other government. The central cities of metropolitan areas were served by 509 school systems, of which four-fifths were independent districts BROADENING THE GEOGRAPHIC BASE TO and less than one-third were geographically coterminous SUPPORT EDUCATION AND PUBLIC ASSISTANCE with either the central city or the entire county in which they were located. Education-A State Responsibility FIGURE 3 The U.S. Supreme Court, in its unanimous 1954 decision on school segregation (Brown vs. Board of Public School Systems in Standard Metropolitan Education) made the following observation: Statistical Areas, by Enrollment Size: 1967 Today, education is perhaps the most NUMBER important function of state and local govern- 3200 1 ments. Compulsory school attendance laws and the great expenditure for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment. In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. Education ranks second only to national defense in terms of total public spending-Federal, State and local. It is by far the most costly domestic function of government. Expenditure for public elementary and SIZE GROUP rPuPlLs ENROLLED) secondary schools is now at a rate of about $35 billion a U S DEPARTMENT OF COMMERCE. BUREAU OFTHE CENSU! year, and makes up nearly half of all local government spending. Because of the pressure of other public service There has been a material reduction in numbers of needs in metropolitan areas, a somewhat lesser share of school districts within metropolitan areas, as elsewhere: all governmental spending in such areas is devoted to the count in SMSA's dropped from 7,000 to 5,000 schools, but even there educational costs typically between 1962 and 1967, while districts outside SMSA's average about 40 percent of the total. Metropolitan areas were being reduced from 28,000 to 17,000. Never- theless, many small units continue; more than 40 FIGURE 4 percent of the school systems in metropolitan areas had fewer than 1,200 pupils in 1966-i.e., typically involving communities with a total population of under 5,000 RI Capita Lwl Expndifor Edumtion each. and Othu Purpo~ain the 38 Lwgml WopdknAnrr: In some instances there is even a dual layering of 1857 and 1915 school districts, with separate units to the elementary and high school grades. This helps to account for the multiplicity of local governments in such areas as Cook County, Illinois, which contained 150 school districts in 1967, as well as 3 15 governments of other types.

Toward Equalization of Educational Oppor- tunities and Burdens: Children Needing Education the Most Receiving the Least The failure of' traditional financing arrangements to deal fairly and effectively with public school needs in metropolitan areas was vividly disclosed in the Commis- sion's report on metropolitan fiscal disparities.' Exam- ining educational expenditure in the 37 largest SMSA's, the Commission found that per capita spending averaged 30 percent less within the central cities than in outlying parts of these areas: $99 as compared with $141 per Cities Central Citier Citiea Central Citia capita (Figure 4). Furthermore, the gap had been rapidly increasing; in 1957, central-city spending had been below that of outlying territory by only $18 per capita, or 24 percent. suburban parts of these major metropolitan areas than Some of this disparity can be traced to high levels of for their central cities. The difference between the two new school construction in suburbia, and some to the comparisons, of course, results because the cities gen- fact that outlying territory typically has a larger part of erally have a somewhat smaller proportion of their total its total population enrolled in public schools. But even population attending public schools. The per-pupil dif- with these factors eliminated, when a comparison is ference results partly from a common feature of State made of current public school expenditure per pupil, the "equalizing" grants which tends to work against very 196445 figures show a suburban average 28 percent higher than that of the central cities. And this differen- large school systems (including those of the central tial also had increased: essentially comparable data for cities), relative to smaller ones, unless the plan is so 1959, covering most of the same areas, showed relatively generous that even the best-off units qualify for some equalizing aid. Affluent pockets in large districts bolster little difference between central cities and suburbia in current school spending per pupil. The direction of their calculated tax base per pupil, which the State grant disparity was also highly consistent: only 2 of the 37 is designed to supplement. However, pockets of high largest SMSA's showed current school spending per pupil fiscal capacity that raise some small suburban school lower in suburbia than in the central city in 1964-65. districts above the minimum capacity level needed to The Commission summarized this situation in its qualify for aid are not, of course, taken into account in Ninth Annual Report: "It is the paradox of education in computing the grants that go to other suburban school metropolitan America that where the needs are greatest, districts in the same metropolitan area. the resources are scarcest; the children needing educa- In considerable degree, the central cities' "have not" tion the most are receiving the least!" situation in educational spending reflects their far higher The Commission's study also showed that State aid costs for other public services (averaging $232 per capita for local schools in 1964-65 averaged somewhat more for the central cities in 196445, as compared with $132 per pupil, and materially more per capita for the per capita for noneducational purposes in outlying parts of the major metropolitan areas). This "municipal - overburden," together with the relative and growing '4~iscal~alance . . . , Vol. 2, p. 10. disadvantage of the central cities as measured by levels of personal income, severely limits their capacity for Specifically, the Advisory Commission has suggested school financing. At the sme time, however, since the State legislation to help deal with the problem of fiscal metropolitan central cities usually have a dispropor- disparities in metropolitan areas by:' tionate share of disadvantaged chJdren who particularly . . . authorizing an appropriate State need enriched school offerings, any reasonable evalua- agency to mandate the establishment of county tion of relative public school "requirements" in dollar or regional school property taxing dis- terms would call for greater spending within central tricts . . . where school financing has not al- cities than in suburbia. Yet, as the figures reviewed ready been placed on a countywide or regional above indicate, exactly the reverse has been taking place basis. and there is every prospect-in the absence of a major Something of a precedent for such action exists in shift in the assignment of responsibility for public school several States, which provide for countywide taxes to be financing-that the resulting disparity of educational imposed for school purposes, allocable to individual offerings within metropolitan areas will continue to districts on a formula basis. Generally, however, these widen. supply only a small part of all local educational The Commission has made a number of specific financing and the allocations are usually made on a recommendations to deal with this critical situation. crude per-pupil basis that includes no allowance for Although aimed broadly at a single set of consistent special-need factors. The Commission's proposal looks objectives, they reflect the Commission's awareness that toward a more basic adjustment, whereby the bulk of one or another of various alternative approaches may be any local taxation for school purposes would be pro- especially applicable to conditions in a particular State. vided on a regional or countywide basis, even though But these several proposals, as adopted at various times, actual school administration would continue to be also reflect increasingly urgent concern for the persistent handled by smaller units.' inequalities of educational opportunity and resources which show up most strikingly in metropolitan areas. Equalizing Educational and Municipal Thus, the Commission has contemplated both early Overburden action to improve existing fiscal arrangements and more far-reaching steps toward fundamental change in recom- State fiscal aid for public schools can be broadly mending that: grouped as providing either "flat-grants" or "equalizing" States authorize regional or county taxing dis- aid. Flat grants deal uniformly across the board, without tricts to provide most of the local financing for regard to the fiscal capacity of the aided school schools in metropolitan areas; system-e.g., providing a certain amount per pupil, or a States overhaul their school-aid formulas to certain proportion of particular costs. "Equalizing" equalize educational and municipal "overburdens" more effectively; and 'S~iscalBalance. . . , Vol. 2, p. 9; Governor Rockefeller States, as a long-range objective, move to assume dissented. substantially all responsibility for financing pub- 16~draft bill has been prepared to carry our this recommendation. It provides that: (1) The Governor order the lic schools. formation of a metropolitan educational equalization authority for the urbanized portion of any metropolitan areas where there is a marked disparity among school districts in the relations Regional Taxing Districts between fiscal capacity and educational needs, as shown by various specified indicators; (2) The authority consist of a In some States, as noted, public schools are already member designated by each of the school district boards; (3) The administered by countywide systems. However, the authority levy an areawide property tax sufficient to yield the total amount needed to meet the minimum local support typical metropolitan area has more than a dozen school requirements for all the individual districts under regular State systems per county, differing widely in their financial school aid provisions; (4) The authority adopt a formula for capacity and, thus, in the tax rates they must impose for distribution of the resulting tax proceeds among the districts which takes account of certain specified need characteristics; (5) an acceptable educational program. Well-designed equal- If the authority cannot devise a formula acceptable to members izing State grants are one way to overcome the resulting representing districts with a preponderance of total pupil enroll- disparities; reorganization of school administering units ment, the distribution shall be made according to a formula specified in the law; (6) If the authority can agree on an into considerably larger and less fiscally diverse areas is acceptable formula, regular State-aid allocations for individual another. The device suggested here is still another, which school districts shall also be paid to the authority for similar may in some instances be more feasible than drastic distribution; (7) Individual operating districts would continue to have power to levy their own additional taxes for school restructuring, even though from a financial standpoint it purposes. See 1970 Cumulative ACIR State Legislative Program would operate in a similar direction. (M48, August 1969), Code 6140-00. grants may be of various types, but commonly they count higher per pupil costs in slum areas), and involve a payment that makes up the difference between to reflect such measurements in the allocation the yield of some specified rate of local property tax and of aid funds.' a State-specified measure of local need, such as a certain . . . that States add to their school aid number of dollars per pupil, per teacher, or per formulas appropriate factors reflecting higher "classroom unit ." costs per pupil among disadvantaged as com- During the several decades that such equalizing pared to advantaged children . . . [and that grants have evolved, they have gradually been expanded Congress amend] the Elementary and and refined. This process has especially involved the Secondary Education Act of 1965 to authorize upward adjustment of the "foundation support" levels the utilization of otherwise available Federal to be guaranteed (the amounts per pupil, teacher or funds for incentive grants to States that make classroom), and improvement of the "local effort" part such revisions in their school aid formulas.' * of the formula. For example, many earlier provisions . . . States that have not assumed substan- that measured effort in terms of the tax applied to tially full responsibility for financing educa- assessed valuations have been changed to take account of tion . . . construct and fund a school equaliza- assessment differences, with effort now measured more tion program so as to extend additional finan- equitably according to the tax rate that applies to some cial assistance to those school districts hand- approximation of real taxable value. icapped in raising sufficient property tax rev- But these improvements have been far from uni- enue due to the extraordinary revenue demands versal. In many States the "guaranteed" foundation level made on the local tax base by city and county of support is considerably below that needed to insure jurisdictions.' an adequate school program even under average circum- The Elementary and Secondary Education Act of stances. And above all, relatively few States have built 1965 ("ESEA") marked recognition by the Federal into their major grants any significant allowance for the Government of the special educational needs and costs ------additional costs-the educational overburden-that associated with disadvantaged children. Under Title I of should be met if something approaching real equality of the Act, approximately $1 billion has been made educational opportunity is to be provided for disadvan- available annually, to be allocated through the States for taged children-those for whom the schools need to public school use in areas having a high concentration of provide enriched offerings to compensate at least par- low-income families. Availability of these funds has tially for serious inadequacies in background and home undoubtedly helped to offset a part of the great environment. In the absence of any provision in State disparity of public school spending between central aid formulas for such additional requirements, there is cities and suburbia. But far larger amounts would be either a public failure to approach effective equalization needed to close the gap completely, much less to reverse of educational opportunity or else the costs involved fall the comparative relationship. Hence the pressing need especially upon central cities and other communities for restructuring State aid provisions, to help redress the that have a higher-than-average proportion of disadvan- imbalance by taking account of the additional costs of taged children. compensatory education for deprived children and the Furthermore, as already noted, this extra burden is impact of the "municipal overburden" on local school commonly associated with considerably greater require- financing in urban centers. ments for other public services in large cities, which limit Before the passage of ESEA, the Office of Educa- their capacity to provide reasonably comparable school tion could identify only three States-California, New offerings throughout the State-the municipal over- York, and Massachusetts-that were making any invest- burden. ment in compensatory education for socially deprived Several Commission recommendations, with in- children. By the end of 1967, that Office reported that creasing urgency and explicitness, have dealt with ihese conditions by urging: . . . that each State make a critical review of its present school grant formula to insure 17~dvisoryCommission on Intergovernmental Relations, Metropolitan Social and Economic Disparities: Implications for that it provides for an educational level below Intergovernmental Relations in Central Cities and Suburbs which no community should fall and that it (A-25; January 1965), p. 125. contains factors designed to measure as ac- '*~iscal Balance. . . , Vol. 2, p. 12. curately as possible local tax effort and diverse 19~dvisoryCommission on Intergovemmentai Relations, educational requirements (e.g., taking into ac- State Aid to Local Governments (A-34; April 1969), p. 20. another 9 States had followed suit." In most instances, years (table 2). By taking over most of the financing of however, these programs are only supplementary-they ,elementary and secondary education, the States would are not directly built into the States' principal school-aid be able to take direct action to deploy school funds in formulas. Moreover, the amounts involved (some $200 accordance with needs. The support of local educational million in fiscal 1968) represent a very small proportion programs would no longer depend on the accidents of of all State grants for public schools. Thus, considerably local property tax geography. The bleeding off of more widespread and significant action is needed to taxable resources from the declining city to the increas- accomplish the basic restructuring of State aid provisions ingly affluent suburb would no longer be relevapt to which the Commission has urged in the four recom- their educational programs. The opportunity for a high mendations just described.' ' quality education would be available to all residents of the State in substantially equal measure-regardless of State Assumption of Responsibility for the locality in which they happened to live. Substantially All School Financing Thus, in taking a close look at education and In light of an exhaustive study of State Aid to Local welfare financing in 1969 the Commission took a major Government, the Advisory Commission concluded that step toward the objective of restoring fiscal balance in in the long run substantially all the non-federal financing the federal system by proposing a shift of substantially of elementary and secondary education should be all financial responsibility for education from local shifted from the local property tax to the superior tax government to State government, stating: resources of the State governments. In order to create a financial environment Local school taxes have played an important role in more conducive to attainment of equality of the widespread rise in local property taxation. The share educational opportunity and to remove the of local property tax revenue going to education has massive and growing pressure of the school tax grown from one-third to over one-half in the past 25 on owners of local property, the Commission recommends that each State adopt as a basic 20~he9 States were: Connecticut, Illinois, Maryland, objective of its long-range State-local fiscal Michigan, Nebraska, Ohio, Pennsylvania, Washington, and policy the assumption by the State of substan- Wisconsin. tially all fiscal responsibility for financing local "Draft bills have been prepared to implement these schools with opportunity for financial enrich- recommendations. See I970 Cumulative State Legislative Pm gram. ment at the local level and assurance of

Table 2-Education has Displaced General Local Government As the Chief Claimant for Local Property Tax Dollars

Distribution of local property tax collections by type of government Fiscal Primary units of year general local government Townships &

All local governments ' School districts1 ~otal' cities2 counties2 special districts

Amount (millions) 1942 $ 4,347 $ 1,429 $ 2,571 $1,696 $ 875 $ 347 1952 8,282 3,246 4,351 2.71 1 1,640 685 1957 12,385 5,307 6,052 3,678 2,374 1,026 1967 25,418 12,433 11,006 6,295 4.71 1 1,979 1969 est. 31,500 15,800 13,480 7,720 5,760 2,220

Percent 1942 100.0 32.9 59.1 39.0 20.1 8.0 1952 100.0 39.2 52.5 32.7 19.8 8.3 1957 100.0 42.8 48.9 29.7 19.2 8.3 1967 100.0 48.9 43.3 24.8 18.5 7.8 1969 est. 100.0 50.2 42.8 24.5 18.3 7.0

'Includes est. amounts allocabla to dependent city and county school systems. '~xcludesest. amounts allocable to dependent school systems. Source: AClR staff compilation (including 1969 estimates) based on US. Bureau of the Census data. retention of appropriate local policy-making assistance expenditure more than doubled. Nation-wide, auth~rity.~ about half these costs are financed from State and local Four States (New Mexico, North Carolina, Dela- government revenues, with the balance covered by ware, and Louisiana) are within striking distance of this Federal grants. However, the Federally-provided propor- goal. The governor and the leaders of both parties in the tion of all public assistance ranges widely: from 76 California legislature have proposed action approaching percent in Alabama and Georgia to about 41 percent in the goal in that State. Hawaii, lacking a tradition of local New Jersey and New York. control, has gone beyond this limited objective and A big element in the recent rapid growth of public assumed complete responsibility for both the financing assistance expenditure, as broadly defined, has been the and operation of schools. Thus, a recommendation for "Medicaid" program, which mainly accounts for the State assumption of complete responsibility for finan- increase in medical vendor payments by State and local cing education is not utopian or academic; it deals with governments from less than $700 million in 1961 to an the "here and now." annual rate of about $4.5 billion at the end of 1968. The Commission emphasizes that the long-range This program finances medical care not only for individ- goal of substantial State financing need not be a uals so needy as to qualify for cash public assistance but wrenching experience; that while budgetary considera- also for persons who are somewhat better off, but tions may well dictate the gradual rather than immediate "medically indigent" in terms of prescribed standards. substitution of State income and sales tax dollars for local property tax receipts, there is evidence to suggest The second main factor in the growth of public that perhaps as many as 20 States could assume welfare spending has been the rising scale of the program complete responsibility for public school financing for aid to families with dependent children (AFDC). immediately if they were willing to make as intensive use Expenditures for this program have nearly tripled in the of personal income and sales taxes as the "top ten" past 8 years, to an annual rate of about $3 billion at the end of 1968. For all other public assistance programs, States now make on the average. While calling for State assumption of "substantially the rise has been considerably less-from $1.7 to $2.7 all" responsibility for school financing, the Commission billion, with most of this resulting from the upward assumes that there would be a limited opportunity for adjustment of per-person payments in response to local enrichment of the educational program. However, increased living costs. The largest of these other programs, failure to circumscribe the amount of local enrich- old age assistance (OAA), has actually shown about a ten ment-by limiting it to 10 percent of the State grant, for percent decline in number of recipients during the past example-would undermine its two-fold objective-"(to eight years, despite the increase in the total number of create) a fiscal environment more conducive to educa- elderly persons in the nation. Much of this trend, like tional opportunity and (to relieve) the property tax base the even larger decline in OAA recipients that had of most of the school finance burden."23 occurred previously, took place because the Federally- administered system of Old Age, Survivors and Disability Public Assistance-A Federal Responsibility Insurance (OASDI) now affords support to a much larger proportion of elderly people. In early 1969 the Commission addressed itself to Aside from the recent development of "Medicaid," one of the other major elements in "the urban fiscal the various public assistance programs that operate crisis": the financing of public assistance. through State and local governments largely took shape About 9 percent of all expenditure by State and in the mid-30's. Under the Federal Social Security Act local governments is for public welfare-mainly public adopted then, the National Government undertook to assistance and related medical assistance programs. De- assist in financing public assistance to four defined types spite the generally high and rising level of economic of needy people-the elderly, dependent children, the activity in recent years, public assistance costs have been blind, and the totally disabled. However, no Federal mounting. Between 1960 and 1967, when total State- sharing was provided for public assistance to needy local expenditure rose by about 80 percent, public people falling outside these particular categories; the entire cost of any such socalled "general assistance" was "state Aid. . . , p. 14; Governor Daniel, Congressmen left for financing by State and local governments. Also, Fountain and Ullman and County Commissioner McDonald while certain standards and procedural requirements dissented. Senator Mundt abstained. were authorized for the various Federally-aided "cate- 23~uggested State legislation (1970 Cumulative. . . , Code 16-12-00) has been drafted to implement this recom gorical" programs, no corresponding standards exist for mendation. general assistance. Table 3-Total Public Assistance Expenditures, by Source of Funds, and Recipients and Monthly Payments for Selected Programs, Selected Years 1950 to 1968 (Dollar amounts in millions, except monthly money payments)

Item 1968 1965 1960 1955 1950

Expenditures for year Total ...... By source: Federal ...... Percent ...... State ...... Percent ...... Local ...... Percent ...... Selected Programs: Old age assistance ...... Aid to families with dependent children1. . Medical assistance2 ...... General assistance ...... Number of recipients of money payments3 (000) Old age assistance ...... Aid to families with dependent children1 ... General assistance (cases) ...... Average monthly money payments3 Old age assistance ...... Aid to families with dependent children .... General assistance (per case) ......

'Includes the children and/or both parents, orlcaretaker other than a parent in families where the needs of suchadultswereconsidered in determining the amount of assistance. 2~riorto the enactment of "Medicaid," medical and hospital vendor payments were included in the basic categorical programs. 3~sof December, except 1968 as of June. Note: Beginning October 1950, includes Puerto Rico and Virgin Islands, and beginning 1960, Guam. Number of recipients and average monthly payments exclude vendor payments for medical care (i.e., payments made directly to suppliers of medical care) and cases receiving only such payments. Total expenditures for year include vendor payments for medical care and expenditures for administration, services, and training. Source: Department of Health, Education, and Welfare, Social and Rehabilitation Service.

There is considerable interstate variation in both the assistance, which might help to insure some reasonable scale of public assistance expenditure and the way degree of comparability and adequacy in the aid so responsibility for non-Federal financing is divided be- provided. To rectify this condition, the Commission tween the State and local government levels. In about recommended in 1965 that State governments finance at half the States the most costly programs are directly least half of the cost of general assistance, and that they State-administered, with little or no local share in their prescribe specific standards for such aid where its financing. Elsewhere local administration applies, but administration is left to local government^.^^ with a varying degree of State support to supplement Federal financing of public assistance. Since 1965, Federal aid. Consequently, the State share of all public public welfare costs have continued to mount rapidly, assistance costs that are not Federally-financed ranges and the many serious flaws in existing arrangements for from 100 percent-or nearly that much-in a few public assistance and its financing have become even instances to less than 40 percent in several States. more glaringly evident. The Commission in 1969 con- Even the States that administer or substantially help cluded:' s to finance the Federally-aided "categorical assistance" programs, often play a far lesser role with regard to general assistance. Some States do not participate at all; 24~etropolitanSocial and Economic Disparities. ... p. 126. Since 1965, at least three States-Maine, Massachusetts, and in a handful, the State government foots the whole bill; New Jersey-have provided for a @eater State role. in most others, a major part of the load falls upon local 2s~tateAid.. .. p. 16; Congressmen Uliman and Foun- government. Furthermore, many States have set no tain, State Senator Knowles, and County Commissioner guidelines or standards for local provision of general McDonald dissented; Senator Mundt abstained. . . . that maintaining a properly functioning would go to the States, and about one-third to local and responsive public assistance program as governments. Where much of the load is now carried presently operating is wholly beyond the locally-and this includes some of the most urbanized severely strained financial capacity of State and States, such as California, New York, and New Jersey- local government to support. The Commission local fiscal burdens would be very significantly light- therefore recommends that the Federal Govern- ened. ment assume full financial responsibility for the The proposed type of action undoubtedly would provision of public assistance. The Commission operate to narrow the present gap between aid for needy further recommends that the States and local people who do not qualify for help under any "categori- governments continue to administer public cal assistance" programs and for those who do. With assistance programs. partial Federal participation in financing of categorical These recommendations are designed to programs, there is a strong incentive for States and local relieve inequities of resource capacity among governments to bias their own welfare dollars in the the levels of government and apply until such direction of the Federally-aided programs (where they time as Congress and others shall determine a will typically be supplemented by from one-half to three more efficient and appropriate method of times as many Federal dollars), and to neglect and welfare administration applicable to the com- underfinance "general assistance." plex social problems of our time. Full Federal funding undoubtedly also would raise The main thrust of this recommendation is to the level of aid in areas where it now is tragically below relieve State and local governments of an onerous any reasonable standard of need, even with full allow- financial burden. However, as indicated by the conclud- ance for the other resources of those receiving aid. The ing portion, the Commission is keenly aware of the most figures in table 4 illustrate the wide interstate range in widely criticized aspects of traditional public assistance: average payment levels for various assistance programs. its tendency to discourage efforts toward increased A local-area comparison would disclose even wider self-support by those aided persons who might obtain disparities. gainful employment. This criticism has little relevance to the many people on assistance rolls who are so physi- Table &Average Monthly Payment Per Aidd Person cally or otherwise handicapped, or so completely tied October 1968 down by parental duties, that they could not take on Number of paying jobs. But for those who are potentially employ- States able, the usual public assistance arrangements operate averaging at Highest Lowest like a 100 percent income tax, since any earnings are Program US. least $60 State State fully deducted in calculating the aid to be provided- Old Age assistance $69 32 $1 15 (N.H.) $36 (Miss.) surely a strong disincentive to efforts at self-support! Aid to the blind 91 47 140 (Calif.) 45 (Miss.) Aid to the disabled 82 43 129 (Iowa) 44 (Miss.) (Recent amendments to the AFDC program, to take full Aid to families with effect in 1969, reduce the marginal "tax" rate to 67 dependent children 42 3 66 (N.Y.1 9 (Miss.) percent.) Further, the person with a chance for a paying General assistance 45 5 68 (Utah) 4 (Ark.) job that would cut or end his public aid can reasonably Source: Social Security Bulletin, vol. 32, no. 2, January 1969, fear that, if he later loses the job, he might face p.4. uncertainty and delay in again getting needed assistance. "Data not available for 9 States It is little wonder then that traditional forms of public aid, at least for potentially employable people, are so Such differences among States and local areas in widely charged with tending to promote continuing program benefits and eligibility requirements work in a dependency. perverse direction. Areas unable or unwilling to provide Fiscal Implications. The Commission's recornrnenda- a minimum level of public assistance compatible with tion, while implicitly recognizing this problem, is more actual need are likely to find their share of caseloads directly addressed to the fiscal burdens and other diminishing while areas that do meet this obligation find undesirable aspects of public assistance as now in their welfare rolls expanding rapidly. Between 1959 and operation. If the Federal Government were to assume 1967, the 10 States with the highest per-case payments the entire cost of existing public assistance programs under the AFDC program experienced a 149 percent (including Medicaid), State and local governments would increase in caseload, or twice the average nationwide rate be relieved of nearly $5 billion of their present financing of increase. Meanwhile, Puerto Rico and the 9 States load. Nation-wide, about two-thirds of this benefit with the lowest level of AFDC payments experienced a caseload growth of only 11, percent, so that their share Table 5-Percent of the Counties Containing 50 of the national total fell from 30 t6 19 percent .2 Largest Central Cities with Disproportionate These developments were related to broader shifts Public Assistance Programs in population and economic activity, and it would surely Percent of 50 counties containing be to conclude that large numbers of people have a larger relative share of welfare migrated with the deliberate expectation of "going on Program (Feb. 1968) recipients or payments than of: welfare" somewhere else. In fact, during the 1959-67 Population l ncome period, most of the States, as a condition for assistance ( 1960) ( 1960) eligibility, applied minimum local-residence require- Total Recipients ments which would surely dampen any such expecta- Total Payments Aged, Blind and Disabled tions (in April 1969, the US. Supreme Court outlawed Recipients such residence requirements). Nonetheless, with public Aged, Blind and Disabled assistance as now provided and financed, differences in Payments AFDC Recipients program benefits both among and within States un- AFDC Payments doubtedly distort the distribution of both individuals General Assistance and businesses from what it would be in the absence of I3ecipients1 General Assistance such variations: needy people Ge encouraged to move to payments1 or remain in "generous" jurisdictions, and businesses and better-off people have an added incentive to locate 'calculated for few& than 50 counties as some did not have this where taxes for welfare purposes may be lower. program or because data were not available. Thus, because of their limited jurisdictional reach comparisons down to the central metropolitan cities, and their economic competition, State and local govern- considerably higher relative concentrations of public ments are inferior agencies to finance public welfare. assistance would undoubtedly be found. For example, Furthermore, they rely heavily upon property and sales New York City, with less than half of the State's taxes, which generally hit the poor harder than those population and income, has about three-fourths of the better off; in contrast the Federal Government depends State's welfare recipients and public assistance costs. mainly upon progressive personal income taxation. The In sum, then, the assumption by the Federal use of State and local revenues to provide for costly government of responsibility for full rather than only income-redistributing purposes such as public assistance partial financing of public assistance would materially is thus particularly questionable and economically ineffi- ease the urban fiscal crisis and, particularly in States cient. where much of this burden must now be borne locally Except where States have entirely relieved local would reduce the unfortunate effects of the prevailing governments of any share in the financing of public geographic mismatch between social needs and available assistance (a relatively unusual situation), the existing fiscal resources. arrangements often contribute to the disadvantaged position of central cities and counties of metropolitan areas, where welfare needs tend to be concentrated. This is illustrated by Advisory Commission data for each of Upward Shift of Educational and Welfare the 50 counties that include cities of over 250,000 Financing-Combined Fiscal Effect population. In two cases out of three, these areas show a The combined effect of transferring substantially all higher proportion of general assistance recipients, and in educational financing to the States and all public three cases out of four show a higher proportion of assistance financing to the Federal dovernment for the general assistance payments, than their respective pro- nation as a whole would be to relieve local budgets of portions of total statewide population. Similar extra $13 billion and to add $9 billion to State government loads were found also for the individual "categorical" revenue requirements (table A-2). These calculations, aid programs (table 5). If it were possible to narrow such which relate to 1967, assume an immediate rather than a phased State assumption of elementary and secondary 26~ewYork Times, October 4, 1968, p. 28, reporting a school financing. With the solitary exception of Hawaii, study by the Citizens Budget Commission of New York. The 9 local governments would find their financial responsi- States with lowest payment levels were: Mississippi, Alabama, bilities diminished while States would find their fiscal Florida, South Carolina, Arkansas, Texas, Georgia, North Caro- lina, Missouri. The 10 States with the highest payment levels needs augmented. The magnitudes differ vastly among were: New York, New Jersey, Connecticut, Massachusetts, the States and localities reflecting, as they do, the widely Illinois, Minnesota, Wisconsin, Iowa, North Dakota, Hawaii. disparate State-local financial patterns presently existing. To meet their expanded revenue needs, State Table 6--Federal Aid in Relation to StateLocsl General Revenue, 1958-1970 governments would undoubtedly have to tap the freed- up taxpayer capacity made available by the local As percent of government tax relief. Presumably, State income and Federal aid Statelocal sales tax revenues would replace local property tax (millions) general revenue dollars to a significant extent-a desirable achievement in 1958 ...... $ 4.935 12.0 itself. Even so, the combined State-local tax require- 1959 ...... 6,669 14.6 1960 ...... 7,040 13.8 ments, in 1967, would have been reduced by about $4.0 1961 ...... 7,112 13.2 billion. Thus the taxable capacity is there, though 1962 ...... 7,893 13.5 extensive changes in State tax programs would be 1963...... 8,634 13.7 1964 ...... 10,141 14.8 required for the States to recapture a portion of the 1965 ...... 10,904 14.8 freed-up tax capacity. Further, assistance by the Federal 1966 ...... 12,960 15.7 Government in the form of revenue-sharing with States 1967 ...... 15,240 16.7, 1968...... 18,599 17.8 and localities and the long-range nature of the State 1969 estimate .... 20,813 159' assumption of the education objective serve to assure the 1970estimate .... 25,029 Commission that the financial shifts called for are 'Estimate. attainable goals. 2~atanot available. Source: U.S. Bureau of the Budget, Budget of the United States, CREATING A MORE BALANCED 1970, Special Analysis 0,Jan. 1969. FEDERAL AID SYSTEM for a broader and more flexible system of Federal grants In meeting their fast-mounting public expenditure to State and local governments by (1) adding to the needs, States and local governments have benefited by present package a general support (revenue-sharing) both the marked expansion of Federal grants-in-aid and grant and (2) simplifying the categorical grant system Federal action that does not operate through intergov- through the consolidation of existing grants. The full ernmental payments. The latter includes (1) provision text reads as follow^:^' for old age and survivors insurance which has vastly The Commission concludes that to meet curtailed the extent of poverty that otherwise would the needs of twentieth century America with its have added to the "public assistance" load; and (2) critical urban problems, the existing intergov- economic policies that have contributed to a sustained ernmental fiscal system needs to be signifi- period of rising production and income, and thereby to cantly improved. Specifically, the Commission the growth of the State-local tax base. recommends that the Federal Government, In dollar terms, Federal aid to State and local recognizing the need for flexibility in the type governments, estimated at $25 billion for fiscal 1970, of support it provides, authorize a combination has roughly doubled in the past five years, almost of Federal categorical grants-in-aid, general quadrupled in the past decade, and multiplied tenfold in functional block grants, and per capita general the past twenty years. Because of the rapid rise in support payments. Each of these mechanisms is State-local expenditure and own-source revenues, the designed to, and should be used to, meet growth of Federal grants is less striking-though still specific needs: the categorical grant-in-aid to significant when measured in relative terms, climbing stimulate and support programs in specific areas from 12 percent of all State-local general revenue a of national interest and promote experimenta- decade ago to 15 percent five years ago, and about 18 tion and demonstration in such areas; block percent now (table 6). grants, through the consolidation of existing The Advisory Commission has dealt with various specific grants-in-aid, to give States and locali- aspects of the Federal grant-in-aid system, ranging .from ties greater flexibility in meeting needs in broad studies of the broad implication of equalization formulas functional areas; and general support payments and planning requirements to the specifics of particular on a per capita basis, adjusted for variations in functional areas such as mass transportation, water and tax effort, to allow States and localities to sewer grants and the war on poverty. None, however, has devise their own programs and set their own as significant a bearing upon the allocation of resources priorities to help solve their unique and most to deal with metropolitan problems as does one far- reaching recommendation in Fiscal Balance in the American Federal System. That recommendation calls '~iscalBalance. ...Vol. 1, pp. 5 and 6. crucial problems. Such general support pay- governments in metropolitan areas (a type of allocation ments could be made to either State or major which has apparently not been proposed), the fully local units of government if provision is made developed plan would increase the present revenue of for insuring that the purposes for which they these governments by only about one-sixth. are spent are not in conflict with any existing The "pass-through" issue is harder to quantify, but comprehensive State plan.28 probably involves less potential difference for urban local governments than would appear from the heat of Adding General-Support Payments- the arguments that have raged about it. Dr. Heller "Revenue-Sharing" original4y advocated Federal revenue-sharing only with the State governments, pointing out that they would be While some States provide general-support grants to under strong public pressure to pass along a considerable their local governments, and some other countries part of the resulting benefits to the hard-pressed local provide them to their local or provincial governments, governments in major urban areas. More recently, he has such action by the United States Government would be expressed hope that the Federal plan might include some a new departure. Nonetheless, pointing to the pressing means-despite the diversity of State-local fiscal arrange- financial needs of State and local governments, the ments-to assure that such areas are not short-changed. constraints under which they operate, and the superior On the other hand, even an arrangement designed to capability of the Federal tax system, the Commission target an important share of all Federal allocations finds the case compelling "for Federal general support toward metropolitan local governments could be sub- payments to State and local governments on a per capita stantially offset, if some State governments adjusted basis adjusted for variations in tax effort."29 their own grants to local governments to include a The Commission did not spell out a detailed plan to contrary bias against urban and metropolitan units. This implement this recommendation. It referred, however, would especially be possible unless or until any Federal to problems involved in the so-called "pass-through" revenue-sharing system was supporting more than a small issue-i.e., as to means for assuring that local govern- fraction of the amounts that States distribute to their ments (and particularly, hard-pressed major cities) would local governments-and even the full-scale program benefit directly or indirectly through such a system of specified by Heller would involve only about one-third "no strings" aid.3 as much as such present State distributions. The potential early benefit of such a new system of Clearly, then, Federal revenue-sharing cannot be Federal general support grants for the financing of local viewed as a prospective panacea that could wholly government in metropolitan areas would depend upon "solve" the urban fiscal crisis, no matter how the various factors, including the total sum provided, and "pass-through" issue might be resolved. The Commis- treatment of the "pass-through" issue-i.e., the participa- sion's recommendation logically views general-support tion of local governments or major urban governments. grants as only one of several Federal aid devices, and it On both counts it is important to avoid exaggerated takes into account-at least implicitly-the close interde- hopes or claims. pendence of State and local finances and the fact that Walter Heller, the former Chairman of the Council the State governments must inevitably play an important of Economic Advisors and a strong advocate of revenue- role in the solution of urban financing problems. sharing, has suggested that it be expanded by stages so as within a few years to distribute annually an amount Streamlining Federal Aid equal to 2 percent of the Federal income tax base. Such an ultimate distribution would equal only about 7 In addition to broadening the Federal grant base percent as much as State and local governments now with revenue sharing, the Commission's recommendation obtain from their own revenue sources, or roughly as aims at nothing less than a sweeping overhaul and much as their recent year-to-year increase in tax revenue. simplification of ,the present system-an increasingly Even if all such aid were somehow directed only to local imperative requirement. This mainly involves the "categorical" grants-providing funds for a particular purpose or activity, often quite narrowly defined, and with 28~hairmanBryant and Secretary Fowler dissented from detailed expenditure conditions attached. The number the portion of the recommendation calling for Federal revenue sharing, and Mayor Naftalin did not concur in the portion of the of such separate categorical grant programs has multi- last sentence which deals with comprehensive plans. plied in recent years from a few score to several hundred ~iscalBalance . . . , Vol. 1, p. 7. and there has been a parallel growth in the diversity of 30~bid.,p. 8. their matching requirements and other features. These developments are related to another. The need for more intensiveState use of the personal income multiplication of direct Federal-local grants stands out as tax. Two of its major proposals were as foll~ws:~' a departure from the earlier practice of providing fiscal . . The Commission. . . recommends.. aid through the States. In dollar terms, the Federal-State [that] States without the personal income grants are still overwhelmingly predominant (by about 7 tax give early and careful consideration to to I), but local aid arrangements account for much of incorporating it into their tax system and that the increase in number and variety of programs. Federal those presently employing a relatively ineffec- grants to local governments, and a growing number of tive tax strengthen it. those to States, are on a "project" basis-i.e., to help The Commission condudes that extensive fmance a particular project or operation that the use of the Federal personal income tax since applicant government must plan in a way to meet 1940 has retarded the State personal income Federal statutory requirements, as administratively inter- tax movement and that this deterrent effect preted. Compared with the more traditional "formula should be neutralized. . . The Commission rec- type" grants to States, the selection of aided projects is ommends, therefore, that the Congress amend likely to involve a considerable degree of discretion by the Internal Revenue Code. . . to give Federal the grant-administering agency (especially if appro- income taxpayers an option to either (a) priated funds fall short of total grant applications), with continue itemizing their income tax payments a resulting opportunity for controversy. to State and local governments or (b) claim a Altogether, these developments have complicated substantial percentage of such payments as a intergovernmental fiscal relations for all three levels of credit against their Federal income tax liabil- government. Hence the Advisory Commission's basic it^.^ recommendation-backed by other more .detailed pro- The report also included various recommendations de- posals-for efforts toward a simpler Federal aid system signed to foster taxpayer convenience by closer con- with fewer, less diverse, and more broadly targeted formity of State income tax provisions with those of the categorical and functional grants that would serve Internal Revenue Code and increased Federal-State recognized national objectives but would not stifle the cooperation in income tax administration. exercise of responsibility by State and local officials. The Commission observed that nearly all the States with personal income taxes took action before World STRENGTHENING THE STATE AND LOCAL War 11, when Federal income tax rates were far lower REVENUE SYSTEM than now; and that the rmst important and widespread expansion of State revenue systems in recent years has If all of the aforementioned Commission's recom- involved general sales taxes. The Commission concluded mendations for broadening the geographic base to that the Federal Government's heavy reliance on per- support education and welfare and for a more balanced Federal grant system were accomplished, more still sonal income taxation tended to bias State pol&y- makers against this revenue source. The suggested type would be needed. For, under our federal system, the of .special tax credit could help to neutralize this provision of domestic services still would rely heavily on deterrent effect, ahd by encouraging greater State use of the revenue resources of the States and their localities. the income tax create more productive and better As things stand, the State governments depend to a balanced State tax considerable extent on consumer taxes-general sales and system^.^ excises. They must be given the opportunity to broaden their base by strengthening income taxes where they Advisory Commission on Intergwernmental Relations, Federal-State Coordination of Pmnal Income Taxes (A-27; have them and adopting such taxes where they have not October 1965), p. 14. Senator Ervin, Senator Mundt, Governor yet done so. Local governments, which derive seven- Dempsey, Congresswoman Dwyer and Congressman Fountain eighths of their tax revenue from property taxes, need to dissented. reform that workhorse and, in addition, need more 32~bid.,p. 18-19; Secretary Fowler and Governor Dempsey adequate and more effective help from the States. The abstained. 33~raftbills have been prepared for the foregoing propos- Advisory Commission has addressed itself to these als that involve State legislation: A suggested personal income problems on a number of occasions and has recom- tax act (I970 Cumuhtfve . . . , Code 15-62-21) which includes mended ways and means of correcting the fiscal imbal- provision for a salestax credit; a broad-based State sales and use tax (Code 1562-30); and a measure (Code 15-6248, modelled ance. after the Wisconsin law) that would pmvide, through income-tax credits and cash payments, State reimbursement to low-income Federal Income Tax Credit households for part of their residential property tax costs that exceed a specified percentage of their total income from all In a 1965 report, the Commission recognized the sources. Balanced State Tax Structure: Income and considerable use of an income tax, the proportion runs Sales Tax Combination considerably higher. A general sales tax is particularly burdensome for Until rather recently, many State governments low-income people because they spend a much larger managed to get along by relying on selected sales taxes fraction of their income for taxable purchases than do and either a general sales tax or a personal income tax. better-off consumers. This is especially true if the tax is But increased public requirements, and the demands for limited to sales of commodities, rather than also property tax relief have obliged more and more States to covering services, which take a larger part of consumer use both general sales and personal income taxes, and 33 expenditures at higher-income levels. To deal with this States now do so (figure 5).34 Most States, however, problem, the Commission favors use of a broad-based still make anemic use of the personal income tax-a general sales tax that does include services, but with prime revenue source; only about a dozen States collect special treatment for certain "necessities of life"-i.e., from this source as much as one-fifth of Federal income either through the exemption of food and drug sales (as tax collections from their residents. is done by more than a dozen States) or preferably by a Unless a State makes significant use of personal system of income tax credits (as provided in seven income taxation, its revenue system will be seriously sales-tax States) to offset the sales tax on such basic biased against low- and moderate-income people. Nor consumption items. ' will the State government be able to shoulder an Thus, to be effective and equitable a State tax appropriate part of the overall State-local financing system must make use of both personal income and burden. Nation-wide, State taxes average 52 percent of retail sales taxes. State-local taxes. but in 8 of the 11 States that make A State makes effective and equitable use of the 34~n1969, Vermont adopted a general sales tax. Illinois personal income tax if it meets at least three critical and Maine adopted income taxes. tests: FIGURE 5 Use of Personal Income and General Sales Taxes by States, 1969

0Neither Tax Sales Tax Only Income Tax Only Sales and Income Tax

AClR To insure tax fairness, a personal exemption by local governments (only a handful of State govern- schedule that is at least as generous as the ments rely on it significantly), the States have a vital Federal; interest in it. As the Commission has emphasized: To promote taxpayer convenience and adminis- The property tax is rooted in State constitutional trative simplicity, a system for withholding and statutory provisions, which control its poten- income at the source and a set of tax definitions tial coverage and operation. that conforms closely to the Federal; and The extent of local reliance on the property tax is To insure productivity, a willingness to use this strongly influenced by the States' delegation to revenue instrument as evidenced by State tax local governments of functional responsibilities collections equal to at least 20 percent of the and financing powers, and their grant-in-aid Federal personal income tax collections in that arrangements.- State. Property tax valuations typically enter into State States can make effective and fairly equitable use of grant formulas, and (often excessively) into State a sales tax if two prime conditions are met:' controls over local taxing and borrowing powers. 1. To insure productivity, a broad base that covers Some of the most widespread and serious reme- most personal services as well as retail sales of diable defects of the property tax as it now tangible items; and operates cannot be met by local governments and 2. To insure fairness, some provision for pulling officials acting alone and without changes in the regressive stinger-either a system of income State-controlled provisions and arrangements. tax credits and cash refunds-or an outright In short, States have a vital stake in making the property exemption of food and drug purchases to shield tax a more equitable and respectable part of the subsistence income from the sales tax collector's State-local revenue system. Moreover, the most impor- reach. tant steps that should be made in that direction can only be taken by the States, by appropriate constitutional, Rehabilitating the Property Tax legislative, and administrative action.

In metropolitan areas, as generally elsewhere, the Pulling the Regressive Stinger from the property tax is the prime means of local government Property Tax financing. Within metropolitan areas, it accounts for most local tax revenue, or about two-thirds of all If a State legislature desires to exercise tax policy locally-raised revenue. Moreover, it produces nearly half powers positively, it makes good sense for it to use the of the total general revenue of local governments from State tax system, and particularly the personal income all sources, including that supplied by States and the tax, as a coordinating mechanism. The tax credit-tax Federal Government. rebate mechanism working through the personal income The Advisory Commission has strongly urged a tax is an effective instrument to promote equity without more balanced revenue system, to reduce urban govern- excessive jeopardy to revenues. ments' dependence on the property tax, and to relieve The Advisory Commission cites an arrangement first the regressive and onerous burdens it inflicts on many. adopted in Wisconsin as a prime example of the Even if education and welfare costs are shifted to higher coordinate use of personal income and property taxes levels of government, there is no reason to assume a for alleviating local property tax burdens on low-income precipitous and everlasting decline in reliance on the families. Under the Wisconsin system, poor elderly property tax. Needs accumulated by general local households-whether homeowners or renters-are governments, while they competed with schools for allowed income tax credits or cash rebates for that part scarce resources, would move from the category of the of their residential property tax costs that exceeds a "desirable" to that of the "feasible." Thus, the property modest percentage of their total income (table 7). This tax must surely continue to be relied upon in the future arrangement provides significant property tax relief at for a considerable part of local government financing modest cost to those who need it most, without and the urgency remains to improve it as a revenue disrupting the regular property tax system. It is thus to instrument. be distinguished from the more common kind of The property tax is a major element in the entire "homestead exemption," which may reduce the official State-local revenue system. It produces nearly as much tax base considerably, provide a benefit to high-income revenue (over $30 billion in 1968) as all other State and homeowners as well as others, and afford no relief to local taxes combined. Moreover, while it is used mainly households living in rented homes. Table 7-Wisconsin's "Circuit Breaker" System for Protecting Low Income Householders from Property Tax Overload Situations, 1966

Average Average Percent Tax Tax Household Average Taxes Taxes of Tax Burden Burden l ncome Number of Household Before After Burden Before After Class Beneficiaries lncome Relief Relief Relieved Relief* ReliefC

*Tax burden is expressed as the percent of household income allocated to pay taxes before and after the relief program. Property taxes include rent paid in lieu of taxes. Source: Wisconsin Department of Revenue-Kenneth E. Quindry and Billy D. Cook, "The Effects on Income Redistribution and Resi- dential Property Tax Regressivity of the Wisconsin Homestead Relief Program-Its Antipoverty Role and Possible Extensions" (manuscript to be publislkd).

The Wisconsin approach for shielding low-income emphasized that State financial planning should deal families from the full impact of the local property tax with the State-local revenue structure as a whole, also reduces interlocal social fiscal disparities among including appropriate strong concern for the property jurisdictions within the same metropolitan area. Because tax as a major element .3 the poor tend to cluster together the mailman delivers most of the tax refund checks to the inhabitants of the low income jurisdictions-virtually none to the citizenry The Reach of the Property Tax Can be Improved of the wealthy suburbs. Moreover, this tax relief plan is Most people think of the property tax as a tax on financed entirely from State funds derived in large real estate, and it is true that realty accounts for most of measure from a progressive State personal income tax its yield. But, States differ in the extent to which they thereby enhancing its attractiveness from an income have provided for various types of exemptions from redistribution standpoint. property taxation. Property holdings of governments and of nonprofit educational and charitable institutions States Must Become Involved in Local Property are wholly or substantially exempt everywhere. About Tax Administration half the States provide legally for "partial" exemptions of some privately-owned property that would otherwise While understandable in historical terms, the States' be taxable, in the form of preferential provisions for limited direct concern for the property tax makes little veterans, homeowners, elderly property owners, and the sense, in view of the close interdependence of local and like. In most States, the local tax base also includes some State finances. Furthermore, while other sources have types of "personal property": most commonly business grown in relative importance, in most States the prop- and farm equipment and inventories, not infrequently erty tax still yields more than ariy other single State- household furnishings and motor vehicles, and in nine local revenue source and in nearly half the States it States (at least legally) intangible personal property such approaches or exceeds the yield of all other taxes as stocks, bonds, bank deposits and mortgages. combined. In retrospect, the near disappearance of statewide property taxes which began in the 1920's is a mixed blessing, for the use of such levies to provide additional 35~draft bill (1 970 Cumulative. . . , Code 15-62-411) has aid to local governments would not only help to alleviate been prepared providing for a temporary property tax survey commission. The bill provides for members to be appointed by existing disparities in local fiscal capacity but would the Governor, and enumerates various subjects to be examined stimulate State interest in the quality of assessments and by such a commission. About half the States have established make more evident the States' rightful authority to revenue or tax study commissions during recent years. In most instances these comrhissions have been given a rather broad regulate local property tax administration. Even without assignment, but with the property tax generally included as a such a statewide levy, however, the Commission has significant element. The Commission finds that two kinds of State "Giveaways" should be stopped. The Commission action as to property tax coverage are widely and has expressed indignation and concern about "property urgently needed: tax give-aways" as reflected in various types of exemp- (1) Reconditioning of the tax laws to eliminate tions. Few States or metropolitan areas have reliable outmoded features that are not enforceable on statistics about the property values involved in the most an equitable basis; and prevalent of exemptions-those involving the holdings of (2) Restraining and where possible reversing the non-profit religious, educational, and charitable agencies. tendency toward excessive and unmeasured More data are available for the various "partial" exemp- "giveaways" through property tax exemptions. tions provided in about half the States, thraugh prefer- Taxation of business personalty should be curtailed. ential treatment accorded to homeowners (by "home- Probably the classic example of an "unenforceable" and stead" exemptions), veterans, elderly property owners, inequitable tax is that on business personalty. The and the like; altogether, these reduce the nationwide Commission has therefore, urged that States move base for local property taxation by about three percent- toward elimination or major curtailment of property age points, and in each of five States they cut the total taxation of business personal property. In a few States, tax base by more than 15 percent.3 business inventories and non-fured business equipment The widespread "complete" exemptions for prop- are already outside the coverage of general property erty of nonprofit agencies are, of course, firmly rooted taxes. Elsewhere, these types of property are often very in tradition. They are defended as a way in which poorly assessed, to the degree that many observers government can assist organizations which operate on despair of their equitable treatment as part of the behalf of the public interest without interfering with property tax system. Major legislative steps along these their desirable freedom of action. Exemptions of this lines have recently been taken by California and type complicate the task of property tax administration; Colorado. The California enactment considerably for example, many States are struggling with their tightens provisions governing the assessment of business relevance to burgeoning "non-profit" organizations that personal property. Several other States have also enacted provide housing for the elderly. Exemptions also affect related legislation, particularly to eliminate some types local jurisdictions very unevenly; for example, the of personalty from property tax coverage. exemption of educational institutions' property may In many States similar action would materially cut involve little loss in statewide terms, but it has a strong the local property tax base. Of the 30 States for which impact on the tax base for "college towns." Further- the 1967 Census of Governments reported detailed data, more, because of the common lack of meaningful figures ten showed locally-assessed business personalty making about the property exempted from taxation, exemptions up at least ten percent of the total property tax base, involve not only indirect but largely "invisible" sub- and eight showed this component supplying between sidies. The commission's report comments that "indirect five and ten percent. The proportions are no doubt subsidies thus conferred . . . do not appear on a State's considerably more in some local jurisdictions. The budgets or accounting records, and thus tend to receive Commission therefore urges that, in taking action with approval with much less scrutiny than appropriations for regard to property taxation of business per~onalty:~ the same purpose would receive. They appear, in a . . . States reimburse local governments for bookkeeping sense, to be without cost to the State and the attendant loss in revenue by making more local governments; they do, in fact, impose a forced intensive use of State-imposed business taxes.3 expense on the taxpayers to whom the burden has been Nearly half the States have modified their laws in shifted, complicate the work of property tax admin- recent years to eliminate or reduce the application of istration, and progressively weaken the property tax local general property taxes to business personal prop- ~ystem."~ erty (table A-3). In some instances, this has included To a considerable extent, much the same can be said provision for offsetting State replacement of the result- about benefits provided to some taxpayers through ing local revenue losses. homestead, veterans', and elderly property owner exemptions. Where these provide for generous allow-

36~tate-~o~alTaxation and Industrial Location, p. 82. 38~hesefive States are: Florida, Georgia, Louisiana, Missis- 37~bill has been drafted (1970 Cumulative.. . , Code 15-62-49), based largely on a New Jersey enactment, which sippi, and Oklahoma. would eliminate business inventories from the property tax base, 39~dvisoryCommission on Intergovernmental Relations, and provide for State replacement of the resultant revenue The Role of the Srates in Strengthening the Property Tax (A-17; losses. June 1963), Vol. 1, p. 11. ances, they not only cut drastically into the overall tax erty to be officially valued at 100 percent of its current base but may operate perversely from the standpoint of market value in about half the States (table A-4). sound social policy. For example, Census of Govern- Elsewhere, some minimum fraction of full value-usually ments data show that in States with sizeable homestead 35 percent or more-is stipulated. Yet, Census of exemptions there is far heavier taxation on rental Governments data based on sample "arms-length" sales housing-largely occupied by poor people-than upon of taxable real estate show that assessments average less owner-occupied homes. than one-third of actual sales value in the nation as a In light of these considerations, the Commission has whole. Practically all the statewide averages fall well urged several steps to hold property tax exemptions below the legal requirement and only eight States run within bounds:40 above 50 percent (see table A-8). Fractional assessment . . . each State should require the regular is not a new development; similar assessment ratios were assessment of all tax exempt property, compila- reported for 1962 and 1957. Less firmly based data tion of the totals for each type of exemption indicate the prevalence of the practice at intervals back by taxing districts, computation of the percent- to the 19th Century (figure 6). ages of the assessed valuation thus exempt in each taxing district and publication of the FIGURE 6 findings. Such publication should also present summary information on the function, scope and nature of exempted activities. Lmbof Ammmant for Nonfarm Hwrr in 684 Aoning Jurbdiom in Mmopoliin Arar: 1866 . . . outright grants, supported by appro- Asament priations, ordinarily are more in keeping with ratio*-. sound public policy and financial management,

more economical, and more equitable than tax Lsn than 15% exemptions and should be used in preference to the latter. . . [except as] clearly indicated by the public interest. No tax exemption for secular purposes should be initiated or continued which would not be justifiable as a continuing State budget appropriation. . . . in the instance of mandatory tax exemptions extending to individuals for such purposes as personal welfare aid and expres- sions of public esteem, the States should reimburse the local communities for the amounts of the tax "los~."~'

Fractional Assessment: A Convenient Graveyard 50 or more for Assessors' Mistakes

The level of assessment that is reflected by official 0 5 10 15 20 valuations for property taxation and that called for by Percent of Jurisdictions constitutional or statutory provisions 'stand in sharp contrast in most States. Legal provisions call for prop- Effects of fractional assessment. No automatic impairment in the revenue-raising power of property- 40~he ole of the states. . . , Vol. 1, p. 11-12. taxing governments 'is implied by the practice provided 'One section of the Commission's draft bill regarding neither tax nor debt restrictions tied to assessed valua- property tax organization and administration (1970 Cumula- tions apply to them. The level of assessment under these tive. . . , Code 15-62-412) would require the regular develop conditions is of no particular moment so long as it is ment and publication of data on the value of various types of tax-exempt property. At least two States, Michigan and Oregon, uniform with respect to taxable property. in authorizing partial exemptions for elderly property owners, Even where legal tax and debt limits are based on have followed the policy suggested above, in providing for State official valuations, some would argue that fractional reimbursement of local governments for the resulting revenue losses. The long-standing Iowa arrangement for "homestead tax assessment does not necessarily restrain local financing credits" similarly involves State government financing. power. They contend that legislatures, in setting limits, tend to take into account, implicitly, that assessed of assessment and degree of uniformity of valuations run below the level called for constitutionally assessment overall and for each major class of or by statute. Moreover, some legislatures have limits property, in all assessment districts . . . [and] based upon "equalized full value," rather than directly to publish the findings of each study . . . in upon taxable assessed valuations. clear, readily understandable form." Nevertheless, fractional assessment is an extremely In Florida and Kentucky, the courts have mandated unfortunate practice mainly because it undermines drastic upgrading of assessments to approach legal efforts to achieve equitable assessment-valuing all tax- requirement for "full-value" assessments. Oregon has able property at substantially the same proportion of its provided by statute for a similar shift. In a number of actual worth. Many careful studies, including the 1957, other States, however, earlier "full-value" provisions 1962 and 1967 Censuses of Governments, have shown have been amended so as to authorize assessment at a that assessment uniformity is far more llkely to appear fractional level more similar to that actually prevailing. where official valuations are at a relatively high level, in In at least one instance (Louisiana) this follows the relation to actual market value, than where they are at a Commission proposal for a specified minimum level. lower average level. A recent Census Bureau survey indicates that some Low-level assessment thus tends to hamper efforts 33 States now conduct assessment ratio studies annually toward a reasonable degree of assessment uniformity. It or "continuously," and six do so biennially. About half obscures the actual working of the property tax system the States reporting such activity were not making ratio and makes it unduly difficult for individual taxpayers to studies before 1960. In a majority of instances, but not judge the fairness of official valuations placed on their all, the ratio findings are being published. Also in most property holdings. .I but not all of the States involved, the ratio findings are Commission proposals. Some observers of this con- reportedly used for equalization of assessments as among dition have argued that the States should attempt various areas. vigorously to carry out the full-value approach that in The Commission's proposals (together with other many cases is legally called for, and court decisions in a factors) have stimulated more widespread and effective few States have recently so specified. Other observers, use of assessment ratio studies by the States. It should noting the long stubborn history of fractional assess- be recognized, however, that such measurement efforts ment, have urged that the States change their laws to are likely to be most feasible and useful where assessing conform to prevailing practices and then concentrate on areas are relatively large (at least county-wide). The effective enforcement in terms of that assessment level. continued existence of numerous separate small assess- The Advisory Commission has proposed a middle ment jurisdictions remains a serious handicap to mean- cour~e:~ ingful ratio studies in some States. . . . the States should eliminate all constitutional and statutory requirements for fiied "Full Disclosure" Assessment Policy-A Blow levels of assessment except for specifying the for Property Tax Equity minimum assessment ratio . . . below which assessments may not drop . . . One requirement for equity in general property . . . [each] State should conduct a taxation is that all pieces of taxable property in a thorough re-evaluation of all regulatory and particular area be assessed at substantially the same partial tax exemption provisions that have been fraction (or at 100 percent) of their current worth. This related to assessed valuations . . . [and] make is an extremely difficult target, since current worth is such adjustments as are called for by the new seldom precisely determinable: competent appraisers are market value relationship. likely to evaluate a particular property somewhat differ- . . .because there is a tendency for non- ently, and very similar houses in a particular neighbor- uniformity of assessments to increase when property is assessed at low fractions of full value, it is important to use as high a floor as is 43~draft bill (1970 Cumulative.. . , Code 1562-413) has feasible in setting minimum assessment levels. been prepared which is designed to implement the foregoing . . . the State supervisory agency should be proposals. The bill provides for specification of a minimum assessment level, in relation to current market value, with means required to conduct, annually, comprehensive for its enforcement by State order; regular development and assessment ratio studies . . . of the average level publication of assessment ratio data; equalization of assessments among various classes of property; and the use of assessment ratio findings for apportionment of taxes levied by jurisdictions 42~he ole of the States. , . , Vol. 1, pp. 10-11 and 23-24. that overlie more than one assessing area. hood often change hands at differing prices. But . . . to aid the taxpayer in proving discrimina- disparities in the assessment of individual properties in tion in his assessment, (1) the State supervisory many areas go far beyond the range of tolerance that agency should be required . . . to make and such judgmental differences or market vagaries would publish the findings of annual assessment ratio justify. studies which, in addition to sewing the pur- The Importance of Public Surveillance. These dis- poses of supervision and equalization, will parities thrive upon limited popular understanding of the inform the taxpayer of the average level of workings of the property tax and especially upon the assessment in his district; and (2) the legislature complications that arise from the widespread practice of should provide that the assessment ratios thus low-level fractional assessment. And, while the primary established may be introduced by the taxpayer responsibility for equitable assessment properly belongs as evidence in appeals to the review agencies on with public officials, their work should, in the public the issue of whether his assessment is inequit- interest, be subject to a reasonable degree of popular able. surveillance and appeal. Measuring assessment performance. Judging by find- This objective is widely reflected in legal require- ings of the Census of Governments, about half of the ments that individual property valuations be a matter of present primary local assessing areas in the Nation each public record, appropriately available for inspection by have no more than a dozen "measurable sales" of real any interested citizen, as well as in provisions that estate per year; and in three-quarters of such assessing authorize taxpayers to appeal valuations they consider areas the annual number of realty transfers is less than excessive. The usefulness of such provisions, however, is 50. Even if all assessing areas were entire counties, seriously limited (1) by the lack in most parts of the one-fourth of them could be expected to have less than country of understandable and readily available data 100 real estate transfers annually-and, of course, very which would enable individual property owners to gauge few of these transfers would involve sizable properties the level of assessment applied to their own holdings in that make up a small fraction of all items on the tax roll relation to the prevailing assessment level of their but a considerable fraction of all assessed valuations. The community; and (2) often by costly, complex, or Census of Governments also has shown that where burdensome assessment-appeal arrangements, which may considerable numbers of transactions are involved, close put relief from inequitable treatment beyond reach of all estimates of assessment level for transferred realty can but the most affluent and sophisticated property be obtained from only a limited sample of sales. owners. Thus these proposals for annual measurement and Commission Recommendations. The Commission publication of meaningful assessment ratios, by property believes that efforts toward more uniform and equitable class, for individual assessment districts, can only be property tax assessment should include a full-disclosure fully and efficiently carried out if such districts are policy, and a well-designed arrangement for assessment relatively populous areas.45 appeals, in each instance making use of careful and A majority of the States that conduct regular widely publicized statistical studies concerning assess- assessment ratio studies also publish findings, according ment levels. It therefore has recommended that:44 to the recent Census Bureau survey previously men- . . . the State agency responsible for supervision tioned. A 1966 California enactment makes more of property .tax administration should be explicit the duty of its central property tax agency to empowered to require assessors and other local conduct and report on such studies, and includes a officers to report to it dataon . . . the property tax . . . in adequate detail to serve its needs for supervision and study . . . he ACIR draft bill concerning assessment organization . . . the present . . . agencies for assessment and administration, includes provisions concerning the conduct of assessment ratio studies and the publication of these findings and review and appeal in most States should be other property tax data. Another draft bill, patterned after objectively evaluated and reconstituted, as Maryland and Massachusetts laws, (1970 Cumulative. . . , Code necessary, to provide the remedies to which the 15-62-414) is designed to implement the foregoing proposals with regard to assessment appeals. It provides for local boards of taxpayers are entitled, but do not now receive, review and a State tax court; specifies appeal procedures; calls under the uniformity provisions of State laws for establishment of a small claims procedure; provides for the and the equal protection clause of the Four- appeal of tax court determinations to the State supreme court; authorizes taxpayers to rely upon State assessment ratio findings teenth Amendment. to demonstrate discrimination, with a provision that "a proven deviation of ten percent or more from the relevant county assessment ratio shall establish conclusively" the existence of 44 The Role of the States. . . , Vol. 1, pp. 23-25. such discrimination. requirement that county assessors notify property The Commission has not examined in detail the owners whose assessment had been raised above the revenue potential of all nonproperty tax sources. How- county's average assessment level. A 1967 Illinois law ever, it gave a general review to this subject in a 1961 provides for a property tax appeals board at the State study and a closer look at local income taxes in a 1965 level. report. The power of local government to impose nonprop- Making Better Use of Local Nonproperty erty taxes, as in the case of the property tax, depends on Tax Sources State authorization, and there is marked interstate variation on this score. Such power has generally not In preceding portions of this chapter Commission been granted to school districts, special districts, or rural proposals have been reviewed that, taken together, townships. In most States also, counties' use of nonprop- would help ease the problems of public finance in erty taxes involves only various types of licenses. Thus, metropolitan areas by broadening the State-local tax local use of nonproperty taxes mainly involves munici- system, and by making more and better use of Federal palities and to a lesser extent New England-type town- and State resources to carry some of the fiscal burden ships. For municipal governments altogether, nonprop- that now is localljr borne. We must also be concerned erty taxes provide about one-third as much as property however with the possibility of shifting to other local taxes, but for most municipalities and especially small revenue sources some of the load that now typically falls ones the proportion is generally far less. on local property taxation. In a scant handful of States, local nonproperty taxes In metropolitan areas? as in the nation as a whole, yield at least a third as much as local property taxes; at about two-thirds of all general revenue of local govern- the other extreme, nonproperty taxes supply less than ments from their own sources (i.e., excluding State and five percent of all local tax revenue in nearly half the Federal aid) comes from the property tax. Although the States. dollar amounts involved more than doubled in the past The Commission's study of this subject noted major decade, this proportion dropped only slightly-from limitations to widespread heavy reliance upon local 69.3 to 66.3 percent. nonproperty taxes. These limitations result in large part A major part of other locally-raised general revenue from the prevailing atomized pattern of local govern- is from user charges and miscellaneous nontax sources, ments in metropolitan areas. The Commission observed including special assessments and interest earnings. Non- that:46 property taxes, yielding local governments $3.9 billion in 1967, provide about one-tenth of all their general 46~dvisoryCommission on Intergovernmental Relations, revenue from own sources-12 percent in metropolitan Local Nonproperty taxes and the Coordinating Role of the State areas, and about 6 percent elsewhere (Table 8). (A-9; September 1961), p. 6.

Table 8-Local General Revenue from Own Sources Within and Outside of Standard Metropolitan Statistical Areas, by Source, 1967

- Amount ($000,000) Percent distribution Revenue source Total Within SMSA's Outside SMSA's -Total I Within SMSA's Outside SMSA's General revenue from own sources 38,045.6 28,722.6 100.0 Tax revenue: 29,074.1 22,308.6 76.4 Property 25,185.7 18,932.9 66.2 Sales and gross receipts 1,955.6 1,750.6 5.1 General 1,200.7 1,082.6 3.2 Selective 754.9 668.1 2.0 Motor fuel 35.0 28.9 0.1 Alcoholic beverages 38.1 30.9 0.1 Tobacco products 111.3 99.6 0.3 Public utilities 410.1 356.9 1.1 Other 160.3 151.6 0.4 Motor vehicle licenses 142.6 90.4 0.4 l ncome 91 6.5 879.5 2.4 Other and unallocable 873.8 655.1 2.3 Nontax revenue 8,97 1.4 6,414.0 -23.6 Source: US. Bureau of the Census, Census of Governments, 1967, Vol. V. Local Government in Metropolitan Areas.

3 7 . . . many local nonproperty taxes distort com- ent taxes, none of which produces enough to petitive business relationships'because the local warrant reasonably good enforcement . . . taxing jurisdiction, even the very large city, is (6) States should provide their local units typically smaller than the economic area of with technical assistance by sewing as a clear- which it is a part. Its taxes, therefore, handicap inghouse of information . . . by providing train- local business firms in their competition with ing facilities for local tax personnel, by giving firms beyond the city line. Local taxes typically them access to State tax records, and where entail high administrative costs for government appropriate, by employing sanctions against and heavy compliance burdens for taxpayers, State taxpayers who fail to comply with local and all the while are not well administered. tax requirement^.^^ Furthermore, the widespread use of these taxes Since the Commission made these suggestions in handicaps State government itself, through its 1961, use of the "piggyback" approach for joint adverse impact on the State's economy and by State-local use of particular nonproperty taxes has limiting its freedom in shaping its own tax grown. Of the 17 States where local general sales taxes system. are now used, about half require this approach, with In view of the great interstate diversity in relevant State collection and return of amounts derived from conditions, the Commission hggested a number of local supplemental rates; also, several of the others guidelines for State policy concerning local nonproperty provide for this method of administration at the option taxes, including these:47 of tax-levying local governments. Two States-Maryland . . . (1) the case for most nonproperty taxes is and New Mexico-have also recently authorized certain strongest in the large urban places. Even here, types of local governments to levy "piggyback" supple- these taxes are best imposed cooperatively by a ments to State-imposed individual income taxes, and in a group of economically interdependent jurisdic- few States similar provisions apply to local taxes on tions. Therefore, the city and the other jurisdic- cigarettes or motor fuel sales. tions comprising an economic area should be Altogether, according to unpublished Census Bureau provided with (a) uniform taxing powers and data, about one-third of all revenue from locally- (b) authority for cooperative tax enforce- imposed nonproperty taxes in 1968 came from such ment.. . Statecollected supplemental rates. (2) In States where a particular tax, such as the sales or income tax, is in widespread use TOWARD MORE EFFECTIVE STATE AID by local governments and is simultaneously SYSTEMS used also by the State, the most promising coordinating device is the local tax supplement States could ease urban government financing prob- to the State tax . . . lems by providing a material part of all the costs of (3) In situations where a particular non- domestic public services in either of two ways-through property tax is widely used locally but the direct State provision of certain costly sewices that State does not itself use the same tax, the State would otherwise have to be locally supplied, or through can nonetheless help local jurisdictions by the distribution of State funds to local governments to facilitating the pooled administration of the help finance their expenditure needs. Either approach separate local taxes by a State administrative offers an opportunity to overcome some of the serious agency . . . difficulties arising in the typical metropolitan area, (4) States can minimize needless variety which otherwise must rely heavily upon taxes that apply among local nonproperty taxes by accompany- competitively to various minor areas likely to have wide ing the authorization for using them with variations in need-and-resources relationships. However, generally applicable specifications with respect the extent to which State intergovernmental fiscal aid to their structure (tax base, exemptions, etc.) may actually meet such difficulties will depend not only and administrative features . . . on the total sum distributed and the purposes for which (5) Individual States' tax policy should it is available but also on the allocation methods applies. aim to limit local government to the more productive taxes. Local jurisdictions should be discouraged from levying many kinds of differ- 48~raftbills (1970 Cumulative. . . , Codes 15-62-30 and 32-22-00) have been prepared that would help to implement State action along these lines. Some Background Dimensions the local portion ranged from less than 30 percent in the New Orleans area to 73 percent in the Newark area Great diversity characterizes the State response to (table A-9). picking up part of the sizeable "urban government" bill either directly or through fiscal aid. This can be Most State aid is provided to help finance particular generally illustrated-though not directly measured-by programs or functions. Education tops the list, ac- figures on the State governments' proportion of total counting for 62 percent of all State payments to local State-local taxes. In 1967, this fraction ranged from 35 governments in the nation as a whole, and for more than percent in Nebraska to 79 percent in Hawaii, or, if one any other aid component in nearly every 'state. Public considers only the dozen largest States, from 38 percent welfare ranks next nationally, at 15 percent, but with in New Jersey to 75 .percent in North Car~lina.~~The 38 largest metropolitan areas show similar diversity. this fraction ranging widely from State to State, depend- Among such areas, the fraction of all general revenue of ing mainly on whether public assistance programs are local governments supplied by State aid in 1966 ranged administered directly or through local governments. from 11 percent for the PatersonCliftonPassaic area to Highway aids average 10 percent of the total, and over 39 percent in the case of the Baltimore, Rochester, payments for various other specific functions represent 5 and Milwaukee SMSA's. When per capita amounts of percent. Thus, nearly 92 percent of all State payments local taxes in these 38 areas are simply added to per to local governments are functionally earmarked, with capita averages for their respective States, it appears that only 8.3 percent distributed for "general local government support." While nearly every State provides some such undesignated aid, in most instances it is a relatively 49~.~.Bureau of the Census, Covernmentcll Finances in 1966-6 7, p. 51. minor component.

FIGURE 7 Same States Aid their Localities Considerably More Than Others

Pa Capita Payments to Local Governments: 1967

ms150or more (Less than $50 As would be expected in the light of the foregoing Improvements in State Aid facts, State aid -is a particularly large resource for local school districts. In 1967, they received $9.6 billion of A partial substitution of "State aid" for local the $19.1 billion of State payments to local govern- financing is, obviously, one means to dampen the bad ments, and this was three-fourths as much as the school effects that otherwise result from an atomized local tax districts obtained from their own taxes and other local base and the geographic "mismatch" of needs and revenue sources. State aid to counties totalled $4.7 resources commonly found in metropolitan areas. The billion, or about three-fifths of the amount obtained effectiveness of this approach hinges most directly on from their "own" sources. Municipalities received $4.1 the methods of allocation. State distribution formulas billion, or about one-third as much as their "own" can and have operated to bolster numerous small units sources supplied. Considerably smaller amounts, also that might, without aid, be forced toward consolidation equalling a minor fraction of local revenue yields, went into larger and more balanced governments having to townships and special districts. greater capacity for self-support. The generalized notion that the fiscal problems of metropolitan areas can and FIGURE 8 should be eased through greater reliance on State School Districts Receive More Aid Than Cities financing offers scant help. Any "solution" must be and Counties Combined tackled with deep concern for issues of local government structure to fashion formulas that are likely to make the State Payments to Local Governments, by Type of additional financing most effective from the standpoint Government: 1967 of the objectives to be served. Elsewhere in this volume specific functional aspects $19.1 BILLION of State aid (education and public welfare) are dealt with and Appendix D deals with the functions of water supply and sewage disposal and mass transportation. Various Commission recommendations reviewed here concern the use of State aid as one means of limiting the diversity of local property tax loads and the various steps to improve and systematize the planning, design and ongoing administration of State programs for fiscal aid to local governments.

Taking Account of Local Fiscal Overloads The geographic mismatch between service needs and taxable resources causes a considerable variation in property tax rates within most metropolitan areas. This rang6 can be narrowed in various ways: by replacing numerous very small taxing jurisdictions with a lesser

'DETAIL OF OTHER (IN MILLIONSI number of larger ones; by shifting responsibility for the TOWNSHIPS $588 SPECIAL DISTRICTS $104 performance of some costly functions "up" to the county, State, or Nation; or by using aid from such broader jurisdictions to help finance localized services thus minimizing the amount of support that must be These nationwide figures mask major variations supplied on a small-area basis. among the States. Aside from New York and Wisconsin The first two of these approaches are preferable, in where sizable "general support" distributions have been that they would deal most fundamentally with the developed and those exceptional cities and townships mismatch problem. They are, however, likely to be more that administer public schools, the bulk of State aid difficult to accomplish. The "fiscal aid" approach flows to school districts and counties. This may be therefore merits consideration as one means to limit viewed in part as a reflection of the States' particularly differences in local tax loads. To help deal with such close identification with the public school function and of the traditional role of county governments as "instru- condition^:^ mentalities of the State" rather than highly autonomous O~tropolitanSocial and Economic Disparities. . . , p. units. 124. The Commission recommends that the institutional arrangements works magic on this score. States consider the merit of using State grant Nor is there any substitute for courage, intelligence, and funds to equalize local property tax loads judgment by responsible officials and their supporting among local jurisdictions in metropolitan areas. staffs. The general principle underlying this recom- The urgent need for better planning, design, and mendation has been applied for a long time in State aid administration of State grants-in-aid deserves strong programs for public schools, which in many instances emphasis. More than one-third of the average State provide relatively more assistance to poor school dis- government budget goes toward supporting joint State- tricts than to rich districts, but with such aid condi- local activities. This reflects the intimate fiscal interde- tioned to a specified degree on local taxing effort. pendence between States and their local governments. In Wisconsin has made a broader and more pertinent State our increasingly interdependent society, more govern- effort to level off excessive local peaks of property mental needs of urban areas in the future will be taxation. It distributes a part of its State sales tax financed from State and Federal sources rather than revenue to local taxing jurisdictions where the total locally, and much of this may be channeled through property tax rates (with due allowance for differences in State-local fiscal aid. Thus, because of its present scale assessment levels) are considerably above the statewide and complexity and its prospective further enlargement, average. the State-local aid system demands more effective handling than it has received from State policymakers and administrators. Toward this objective, the Comrnis- Systematizing State Grant Programs sion suggests several types of State action. In its study of State Aid to Local Governments, the To create a policy environment conducive to the Commission cut through functional lines io look at such development of an effective State-local fiscal partner- questions as: ship:' ' How can State fiscal aid to local governments, . . . The Commission recommends that each which typically involves a large number of sepa- State undertake to: (1) codify all State aid rate grant arrangements developed on a piecemeal plans; (2) review and evaluate periodically all basis, be constmctively reordered into a more State aid programs in terms of their capacity effective instmment for State-local partnership? to meet fiscal, administrative, and program What tools must governors and legislatures have objectives; (3) develop in conjunction with the to develop and apply consistent policies with planning and budget officials an information regard to desirable grant-in-aid arrangements? system with respect to local fiscal needs and What aid policies will prevent continuance, or resources; and (4) evaluate all Federal aid even the worsening, of unsound patterns of local programs in terms of their compatibility to government structure-the bolstering up of nu- State aid objectives and their fiscal and admin- merous units unsuited to presentday conditions? istrative impact on State and local programs. How can State policymakers gear grants for Recognizing the impact State aid arrangements particular programs or activities to provide relief have on local government structure, the Commission to local fiscal burdens without interfering with has urged that :5 intended levels of service and other aspects of the . . . In order to avoid bolstering ineffective aided activity? local units of government with State aid and to How can aid be used to promote more effective move toward a more orderly system of local and coordinated long-range planning by local government structure . . . States enact legisla- governments, and to support the State's related tion setting forth specific criteria for assessing efforts toward better forward planning and policy the political and economic viability of their formulation? local governments . . . such criteria including The challenges in aid policy formulation are to but not being limited to (a) measures of fiscal balance competing objectives, clear away outworn and capacity to raise revenues adequately and equi- undesirable arrangements, achieve consistency among tably; (b) measures of economic mixture such related policies and programs, and provide for future as minimum or maximum proportions of resi- conditions and needs. Moreover, like Sisyphus with his rolling stone, policymakers' efforts to do these things must be. continuous, and without any hope that they can be "finally" or "completely" achieved. No set of dential, industrial or other tax base com- provide for the proper relationship of func- ponents; (c) measures of minimum population tional and comprehensive plans and planning and geographic size sufficient to provide an for various geographic areas and specify a adequate level of services at reasonable cost; review procedure; and (d) provide that required and (d) other appropriate measures designed to plans use a common data base.' ' reconcile competing needs for political account- The suggested actions have an important bearing ability and community cohesiveness on the one upon fiscal problems within metropolitan areas although hand with those for variety and reasonable their major thrust relates to the design and administra- balance in economic and social composition on tion of the overall State aid system. Specifically, the the other. proposed periodic re-evaluation of aid programs should To draw together the numerous strands of legiti- promote changes that would take account of the mate concern about objectives and results of State aided growing needs of metropolitan jurisdictions. Action programs and activities:' relating grant-in-aid programs to tests of local govern- The Commission recommends that, in en- ment viability would be likely to have important acting or modifying functional grant-in-aid implications for metropolitan areas with numerous small legislation, States include not only fiscal stan- units. The proposed linkage of grant arrangements to dards such as those establishing accounting, planning is especially pertinent to metropolitan areas auditing and financial reporting procedures but since that is where most rapid development action also, to the maximum extent practicable, per- occurs. formance standards such as minimum service levels, client eligibility, and where appropriate, This round-up of Advisory Commission recom- guidelines for citizen participation such as the mendations to improve fiscal relations in metropolitan holding of public hearings. areas testifies to the fact that our federal system can Beyond these administrative criteria, the States' thrive only by continuous and unremitting effort on the larger concerns relate to physical and human develop- part of all Americans to adjust to changing circum- ment, thus: s4 stances. The growing fiscal disparities among jurisdic- In order to maximize the effectiveness of tions in our great metropolitan areas constitute the State grant-in-aid programs and to assure that starkest challenge to federalism-a system designed to such programs will promote statewide eco- provide both wide scope for decentralized decision- nomic, social and urban development objec- making on the one hand and a tolerable relationship tives, the Commission recommends the in- between fiscal needs and resources on the other. clusion in such programs of appropriate requirements for conformance of aided facilities and activities to local, regional, and statewide plans. "A draft bill has been prepared (1970 Cumula- Generally, State grant-in-aid legislation tive. . . , Code 16-19-00) to carry out these recommendations. The stated purpose of the measure is "to establish an organiza- should (a) use a common definition of compre- tional and procedural framework governing the formulation, hensive plans, incorporating the necessary evaluation, and continuing review of all State aid programs; to human resource, economic and physical devel- provide statutory standards for local government viability; and to establish general policy governing the administration of State opment components; (b) require that there be aid." Under this bill, the governor would be authorized, subject local functional plans to which major State- to notification and judicial review upon appeal, to withhold aided projects and programs can be related; (c) State and from a local unit of general government which fails to meet viability criteria set in accordance with the act. The governor would also be required to submit proposals to the legislature periodically with regard to desirable changes in grant-in-aid arrangements and other possible improvements in State-local fiscal relations. Chapter 3

THE METROPOLIS OR MEGALOPOLIS - WHOSE FUTURE WILL IT BE?

By 1985, at least 178 million Americans will be tive, more peaceful, and more pleasing urban condition- living in metropolitan areas, or nearly half again more now and in the decades ahead. than today. Practically all that population growth is likely to take place in metropolitan suburbs, for which a SOME DYNAMICS OF URBAN DEVELOPMENT 1985 population of 113 million is projected, as compared with 55 million in 1960.' Moreover, future The first national census was taken in 1790, when estimates indicate an overall population increase of there were four million people in the new nation. Now, about 73 percent by the year 2,000, nearly all of it the population exceeds 200 million, and projections urban. suggest we shall pass the 3 10 million mark by the end of Every level of government will feel the pressure of the century. this growth. Public programs and activities will inevitably have a strong influence on the course of future The Pace and Pattern of Population Growth urban development, the style and quality of future urban living, and whether the current pattern will Where do these people live? In 1790, 95 percent continue or not. In turn, the scale and pace of changes were rural residents and 85 percent lived on farms. under way-not to mention any efforts to rechannel During the nineteenth century, a steady shlft toward these changes-will place added stress on traditional more concentrated settlement occurred, and the balance governmental structures, functions, and relationships. tipped in the second decade of this century-the 1920 The problems of governmental structure and financ- Census was the first to show an urban majority. By ing in metropolitan areas are taken up in other chapters. 1960, 70 percent of our citizenry lived in urban places Here the physical development of cities and suburbs is and 63 percent in metropolitan areas. Quite clearly the probed, and Commission recommendations relevant to metropolis is now the dominant pattern of urban growth promoting more orderly and humane future growth are and over the next 16 years, 90 percent of our population considered. growth is slated to occur within metropolitan areas as Here, the complex of contemporary intergovern- presently defined. By 1985, approximately seven out of mental challenges facing us in metropolitan areas is every 10 Americans will live in these areas2 brought into sharp focus; the ill effects of fiscal and All regions of the United States have not experi- political fragmentation; the wasteful, wandering and enced comparable population growth. Despite a con- unwise pattern of land use and urban development; the tinuing movement westward, the Southeast, Great faltering role of most States; the comparative weakness Lakes, and Middle Atlantic States experienced the of general policy-makers and governments as against the greatest absolute increases in population during the long strength of special districts, interests, and programs; and span from 1870 to 1960. The Northeast, with an earlier the unbalanced and balkanized fiscal conditions of urban period of development, has recently shown a consider- jurisdictions. These and a host of related difficulties- ably slower rate of population growth than other including racial strife and rural decline-must be faced as regions. all governmental levels seek to assume a more produc- Departure from rural areas also has been speedier in some regions than in others. By 1960, only the South still had a majority of its people living outside metropoli- '~atriciaLeavey Hodge and Philip M. Hauser, The Challenge of America's Metropolitan Population Outlook-1960 to 1985; Research Report No. 3, National Commission on Urban hob- lems (Washington, D.C.: 1968), p. 7. tan areas. But if present trends continue, a Southern suburbia has been growing faster than the central cities. metropolitan majority will emeige by '1985. This decade, of course, also marked the beginning of widespread automobile ownership. Even in the earlier period, streetcars had permitted employees to live at some distance from their jobs, but still within the city or

Proportion of the Population of Individual States in closely-settled nodes strung along the tracks. The Rasiding in Metropolitan Areas: 1966 arrival of the automobile ended the need to adhere to a Percent linear and close pattern of settlement. Highways, water mains, sewer trunklines, and even electric power and gas Callfornla utilities still limit the direction of settlement and induce New York clustering. These constraints, however, provide nowhere Rho& Island'

Massachusetts' near the limitations that applied in the days before Maryland I-1 widespread automobile ownership. Metropolitan population growth (like that of the nation as a whole) slowed considerably during the

Nwada depression years of the 1930's. Since then, however, it

I I has soared, with suburban growth increasingly outpacing Ohio - I I that of the central cities. Witness the following figures New Jersey for the 2 12 metropolitan areas (designated in 1960).

Michigan Arizona Table 9-Average Annual Population Increase (Percent) Colorado Texas Total, 212 Central Suburban Delaware Period SMSA's Cities Ring Fmor oa 1900-1910 2.8 3.2 2.5 ldYl ngcon 1910-1920 2.3 2.5 1.8 M WLI 1920-1930 2.4 2.2 2.8 Indiana 1930-1940 0.8 0.6 1.4 Orepn 1940-1950 2.1 1.4 3.1 1950-1960 2.3 1 .o 4.0 1960-1966' 1.8 0.5 3.1

'In terms of 1960 city boundaries. U.S. Census of Population 1960, Final Report PC(3)-1D; and Current Population Reports, Series P-20, No. 163 (March 27, 19671, p. 1. Oklahoma Kentucky What increase there was in central city population Nebraska between 1950 and 1960 was largely the result of Kansas South Carolina annexation activities and largely for those with SMSA's North Carol~na under 100,000. Larger central cities experienced little ~OWB growth and few annexations. Ninety-seven percent of Arkansas

West Virginia the net rise in total metropolitan area population during New Mexico this interval occurred outside the 1950 boundaries of Montana core cities. Maine* These developments merely underscore the well- New Hampshire' Idaho known fact that a majority of metropolitan population South Dakota now lives in the suburbs. As recently as 1960, core cities Mistsippi retained a 5 1 percent edge, but by 1966 their proportion North Dakota of the metropolitan sector had slipped to 47 percent. Alaska The suburban share of the metropolitan populace is Vermont

Wyoming projected (on the basis of 1960 boundaries) at 63

.Based on I%o wouiatlon data. percent for 1985, with each of the four major regions slated at above 60 percent. Small and medium-sized Initially, rural migrants tended to move directly to cities outside of metropolitan areas have not grown as cities. Since the twenties,r however, metropolitan fast as those within-static core cities excepted-while towns and rural hamlets in these areas as a rule have South to northern and western urban centers. In general, experienced the least growth of all. migration (crossing county or State lines) was higher for white persons, college educated, professional people, and Mobility, Migration, and Immobility unemployed men." Not unexpectedly, motivational and other research Alongside the picture of Americans as a restless suggests that the lure of improved economic opportuni- people, repeatedly picking up their goods and moving ties is a major factor prompting migration. At the same on, is the contradictory image of middle-class families time, those with better educational backgrounds and domestically settled for generations in small towns and better job skills are more likely to respond to the lure of rural poor rooted in the countryside and the than those lacking these traits. Areas of high economic mountain hollows. activity, for obvious reasons, are major focal points of In a sense, both pictures are true. The Bureau of the in-migration. But the converse is not necessarily true, Census has drawn a distinction between mobility, since areas of lower level activity do not always representing short-range moves within county or city encourage out-migration at rates higher than those for boundaries, and migration, meaning a move across an other areas. This is explained in part by the fact that SMSA boundary, across intrastate county lines, or from certain groups-including some blue collar workers, some one State to another. Each year, one American in five of the less educated, many Negroes, and many oldsters- moves, but about two-thuds of these moves are made simply do not move merely because of the chance for within the same county, and less than one-sixth are economic betterment. Several other factors-largely non- across a State line. Mobility is extensive then, but economic in nature-condition their decision to move migration much less than is generally assumed. What is and quite clearly a cluster of non-economic motives more, long-distance moves are not proportionately much influence decisions not to move from areas of limited greater than they were over a century ago. opportunity. Moreover, when out-migration does occur Regionally, Western States have experienced a high in such areas the result usually is a reduction in the most rate of net in-migration in recent decades, although the productive sector of their respective work force. latest figures indicate that this westward shift has dropped off markedly. Metropolitan areas in the cres- Cities as Economic Types cent formed by the States of the South, Southwest, Mountain States and Pacific Coast have experienced The International City Management Association has rapid recent growth and about half their growth between classified cities and other urban places of over 10,000 1960 and 1965 resulted from in-migration. By contrast, population by type and intensity of economic activities metropolitan areas in the Northeast and Great Lakes carried on within their borders. The most recent States owe their recent growth almost entirely to natural tabulation, based mainly on 1963 data, covers 1,849 increase among their own resident^.^ such urban places. Mobility figures-those for short-range moves- The ICMA analysis suggests that as cities grow larger cannot be obtained for the last century but if they they tend to become more diversified in their activities. could, they probably would show that short-range A related finding is that unless some cities break out of moves, especially from one job market to another, have the mold of their principal activity they are unlikely to increased in this century. Surveys for the years 1963-66 attain larger size-dormitory activity is one example and show that young adults (18-34) have a much higher mining another. At the metropolitan level, similar mobility rate (34 percent) than older people (12 generalizations are suggested by the survey data. percent) and move greater distances. These standards Very recently, the Department of Commerce has also indicate that non-whites have a higher mobility rate used newly assembled personal income data as a basis for (24 percent) than whites (19 percent). In terms of classifying metropolitan areas by economic type.' This long-range moves, it was found that although fewer classification is based primarily upon the relative propor- non-whites proportionately moved longer distances than tion of personal income arising from various types of did whites, when they did cross State lines they moved "export" industries-those which export the bulk of farther-a reflection of the continuing exodus from the

4~.~.Bureau of the Census, Current Population Reports, 3~dvisory Commission on Intergovernmental Relations, Series P-20, No. 156 (December 9, 1966), p. 2,3. Urban and Rural America: Policies for Future Grawth, (A-32; 'U.S. Department of Commerce, Survey of Current Busi- April 1968), p. 17. ness, (Washington, D.C.: August 1968), pp. 25-46. their output, as distinct from "residentiary" industries income levels among metropolitan areas, and between that mainly meet local needs. It should be noted that the metropolitan areas as a whole and the rest of the nation. "industry" concept here is a broad one and includes Yet, this tendency to grow more alike does not hold as government and that "output" covers services as well as between central cities and the outlying portions of their commodities. metropolitan areas. Large urban areas, it was found, generally involve During the past four decades, the interstate range in more diversified economic activity and a strong role for income per capita has dropped materially. In 1929, the distributive and service industries as well as for manu- lowest-ranking State (South Carolina) was at only 38 facturing. Of the five most populous SMSA's in the percent of the national average, and the highest-ranking nation, four were classed as national economic centerq6 (New York) was at 165 percent-a spread of more than with much of their income based on distributive and 440-1. By 1950, this range had narrowed to 49 and 130 service activities that include a substantial export sector. percent, respectively, a spread of less than 3-to-1. And Twelve other SMSA's were classed as regional economic by 1967, it had narrowed further to about 2-to-1, with centers;' most of these also are relatively large as well as the poorest State (Mississippi) at 60 percent and the diversified. Clustering in the lower population range are highest-income State (Connecticut) at 126 percent of SMSA's with sizable proportions of income coming from the national-average level. mining, agriculture, recreation, and government military A similar development has been reported for metro- activities. When the 223 SMSA's covered by the Com- politan areas (as defined in 1967). Among such areas, merce Department study are grouped according to the range in average per capita income narrowed from a population size, the median-population SMSA of each 540-1 spread in 1929 to a little more than 340-1 in economic type is located as follows: 1966. The income differential withm States between SMSA Size Group Type of SMSA metropolitan and non-metropolitan areas has also been (000 population) (and number) narrowing. In 1929, personal income in areas now 1,OOO+ National economic centers (4) defined as metropolitan averaged 2.3 times as much as 300-499 Regional economic centers ( 12) personal income in the rest of the country. By 1966, it 300-499 Manufacturing-moderate intensity (69) 200-299 Manufacturing-intensive (28) was down to a little below 1.540-1. 200-299 Government, other than military (21) Averages of per capita income are not similarly 100-199 Agriculture (10) available for the central-city and outlying portions of 100-199 Government, military (26) metropolitan areas. Accordingly, somewhat different 100-199 Recreation (4) measures must be used to examine their relative income 100-199 Mixed (40) 50- 99 Mining (5) status and trends. The 1960 Census of Population showed a considerably greater proportion of low-income The remaining group of 40 mixed SMSA's consists of families (under $3,000) in metropolitan central cities those whose economy is relatively diversified, with an than in suburbia-17.6 versus 12.5 percent; and, at the industrial mix that generally resembles the nationwide other extreme, a smaller proportion of families with an composition for SMSA's as a whole. income of $10,000 or more-16.5 percent in the central Clearly, while metropolitan areas have many eco- cities compared with 21.2 percent in suburbia. nomic similarities-particularly a dependence upon some The median 1959 income of suburban families was sizable "exporting" industries-they differ considerably 14 percent above that of central-city families. Recent in the extent and actual content of their specialization. sample surveys indicate a widening of this gap, so that by 1967 the median family income for suburbia was 20 percent higher than that for the central ~ities.~ Income Differences-Convergences and Divergences In reviewing historical trends, the Advisory Commis- The Growth Cycle and Industrial Change sion has documented a gradual narrowing of average Professor Wilbur Thompson of Wayne University has analyzed various factors affecting the location of 6~ewYork, Los Angeles, Chicago, and San Francisco. industry and business, and concludes that there are '~tlanta, Ga.; Billings, Mont.; Boise City, Ida.; Charlotte, N.C.; Dallas, Texas; Des Moines, Iowa; Fargo-Moorhead, N.D.-Minn.; Houston, Texas; Memphis, Tenn.-Ark.; Portland, 8~.~.Bureau of the Census, Current Population Reports, Ore.-Wash.;Sioux Falls, S.D.; and Springfield, Mo. Series P-23, No. 27, (February 1969), p. 36. "near inexorable" forces for further growth of urban Dr. Thompson observes that "both the larger areas with a population ranging upward from "perhaps industrial centers from which, and the small areas to 50,000 and certainly from 200,000.'' He points out that which, [slow-growth] industries filter down must run to "the large urban area is especially likely to give birth to stand still at the national average growth rate." His new industries and is especially likely to attract income- analysis suggests that scattered small towns-unfortified elastic se~ices."~Such an area has important advantages with the infrastructure and economies of larger areas, or in producing economies that induce industries to locate with the amenities that would attract business manage- there, as pointed out in the Commission's report on ment-are likely to fall farther and farther behind, often urban growth and development.1° These include the at best dependent upon "the hand-me-downs, the availability of the necessary city infrastructure, an cast-offs of the industrial system. . ."' industrially-oriented labor supply, proximity to markets, It is important to observe, however, that this and proximity to materials. prospect applies to communities that are outside present On the other hand, Professor Thompson suggests or emergent metropolitan areas. A very different pros- that the very large metropolis is likely to reach a stage pect would be indicated for satellite cities and towns where its growth rate drops back to something like the within such areas, as well as other parts of the national average or below. This he traces to a "filtering metropolitan fringe. There is ample evidence that a down" process by which industries, as they mature, tend growing share of industry and commerce is locating in to move: such areas, which may offer many of the advantages of from places of greater to places of lesser the metropolis without all of the costs and possible industrial sophistication . . . Skill requirements disadvantages of a centralcity location (Tables A-5 and decline steadily as the production process is A-6). rationalized and routinized . . . the high wage In brief, with market forces operating normally, rates of the more industrially sophisticated suburbia is a magnet not only for people but business innovating areas become excessive, relative to and industry as well. Increasingly, central cities are skills needed. The aging industry seeks out shunned because of taxes, other high costs and civil industrial backwaters where the cheap labor is disorder, while rural areas are avoided as "Dullsvilles9' not up to the lesser demands of the simplified where corporation executives, professionals and their process.' ' wives are loath to settle. Also, as the Commission noted in its report, the built-in tendency for further concentration of economic THE BLEAK SIDE OF activity in given areas may be counterbalanced by BURGEONING URBANIZATION diseconomies of scale, such as higher land rents.' As a result, the very large metropolitan area is likely With the growth of urban areas, a way of life has to experience a relative slowing in its economic growth emerged that is economically productive, in many ways rate, as its industry mix becomes more diversified and stimulating and, for many who live it, thoroughly 66average," unless it can continue to attract a consider- satisfactory. Yet there is a darker side, characterized by able proportion of innovative, fast-growing types of physical disorder, wastefulness, and human distress. business. It would appear that the largest metropolitan areas generally have not managed to accomplish this in The Lust for Land recent years; personal income in the ten largest SMSA's grew somewhat less (48 percent) between 1959 and The shape of settlement in metropolitan areas 1966 than that in the other SMSA's (53 percent). Of reflects the great growth in suburban population, the these ten largest areas, only three (Detroit, San impact of the automobile and the FHA mortgage Francisco-Oakland, and Washington) showed an income insurance program, the desire of some to escape the city, growth rate faster than that of the nation as a whole. and the obsolescence of areas in the central city. Each year some 400 to 500 thousand acres, mostly in the outskirts of metropolitan areas, are converted to "ur- g~rofessorWilbur Thompson, Remarks in "National Growth and Its Distribution," Symposium on Communities of Tomor- ban" use.14 A majority of Americans apparently want, row (U.S.Department of Agriculture, December 11, 12, 1967), as Daniel Elazar notes, to become urbanized but not p. 16. lo Urban and Rural America, . . . , pp. 43-45. ' 'Thompson, Symposium. . . , p. 14. '3~hompson, Symposium . . . , p. 16. Urban and Rural America . . . , p. 44. '4~rbanand~ural~merica... , p. 12. citified, for "they have clearly sought the suburban is the tendency of some localities to "overzone" for conditions of lawns and automobiles."' All too com- business-to put long strips of vacant highway frontage monly, however, the resulting outward growth involves in business zones. unsightly patterns of settlement in many metropolitan In older settled areas, on the other hand, another fringe areas. kind of development problem emerges. The "gray areas" One type of growth, sometimes referred to as in large cities and in adjacent suburbs are not yet slums, scatteration, consists of very low density development but neighborhoods where signs of deterioration are with single-family homes built on lots of two to five beginning to appear. Here, pressures develop to allow acres or more. This low-density settlement consumes commercial and residential uses that often cast blight: large amounts of land that might be better used in the rooming houses, garages, filling stations, bars, lunch future at higher density ratios. Because it is uneconomic counters, and second-hand stores. to service the homes with sewer and water lines, "Gray areas" frequently have highly mobile popu- development tends to depend upon wells and septic lations and lack the community cohesion to resist these tanks. But this is what millions of Americans prefer and commercial encroachments. Where rapid transition is will continue to prefer, regardless of how much profes- taking place in the population-where, for example, sional planners, economists, and other "experts" inveigh middle income and especially white residents are moving against urban sprawl. out-political influence and involvement often wanes. A second form consists of more intensive, asterisk- New residents may lack the means and the sophistication shaped growth out along major highway routes from to insist on enforcement of housing regulations, and to built-up areas. Although the wedges of space between oppose requests for rezoning. Persons anxious to sell and the strips are underdeveloped, utilities can be installed move out may, in fact, encourage a change in zoning to along the corridors. widen their potential market. Once these new uses are Finally, suburban settlement is also characterized by permitted and appear, the floodgates usually open wide. "leapfrog" development, where relatively compact urbanization takes place in nodes, with substantial tracts When is Big, Bad? of raw land left between them. The relatively compact Is there a point in the growth of urban areas where areas usually require the greatest initial capital expendi- concentration ceases to be an advantage and becomes a tures for urban services. Here is where small independent serious handicap? Are there important diseconomies of water and sewer systems are often found. As develop- urban scale? ment begins to fdl in the spaces these local systems Obviously it is "more expensive" to live in a city compete uneconomically until they are absorbed by a than a rural area; for one thing, people in cities pay cash larger system. for some goods and services that rural residents pay for Unplanned development, scattered or leapfrogging partly in their own labor. But there are more goods and over the countryside, can destroy natural open space more services-more amenities-available in cities than in needed for recreation and other purposes. It can set off a suburbs and small towns, and higher incomes too. An spiraling of public service costs for sewer and water lines, examination of whether, in fact, "diseconomies" occur highways and school bus transportation; also it can after cities grow to a certain size must be very carefully frequently destroy any possibility of an efficient and handled. As mentioned earlier, an Advisory Commission economic mass transit system. study of this question indicated that for cities over Many a suburbanite and city dweller is familiar with 250,000 population per capita expenditure for certain the garish ribbon along major streets and highways public services may tend to stabilize at a significantly composed of drive-in restaurants, gas stations, car lots, higher level than for less populated places. motels, by-passed vacant lots, and an occasional small The question then shifts to possible diseconomies of shopping center. A large number of recent court metropolitan scale. As made clear earlier, most of the decisions on land-use matters has involved zoning along growth in coming decades will come not in the great these roads. Pressure for such development and the central cities but in the suburbs and satellite cities notion that lots fronting heavily traveled streets are not around them. Residents in these parts of the metropolis ideal for any other use sometimes cause even the most feel that they may capture many of the advantages of high-minded of communities to buckle. A related factor urban life without its liabilities. But are there other liabilities which arise from the size of the modern "spread city"? "~aniel J. Elazar, "Urbanization and Federalism," in A Nation of Cities, Public Affairs Conference Center (Chicago: Big metropolitan areas seem to reach a stage of size University of Chicago, 1966), p. 9. "maturity" after which they are no longer attractive to industrial location, and their population-growth rate Third, it can be argued that the strong thrust toward levels off to considerably less than that of smaller increasingly metropolitan growth would at least be metropolises. From this, we might conclude that the dampened if government were more conscientious in "free market" of locational competition can be counted charging the parties responsible for economic costs that upon to prevent the development of excessively large arise from concentrated urban development. It can metropoiitan areas. This would argue against any delib- hardly be doubted, for example, that some decisions erate governmental effort to influence locational forces, about the location of particular industrial plants would for example, by trying to steer further urbanization be different if the owners had to provide for costly mainly toward areas other than the largest ones. But installations to minimize their pollution of the air, or to such an optimistic laissez faire view might be questioned foot the entire bill for highway facilities to deal with on several grounds. traffic congestion they create. First, physical problems may reach crisis propor- Such considerations suggest that some of the tions well before diseconomies of scale deter further minuses of large-scale urbanization receive inadequate industrial concentration and thereby stop continued attention in the myriad of decisions which produce the population growth. Air pollution-a "sickness of modern metropolis. This does not, however, offer any citiesw-is an example. The earth as a whole has an directly useful guide to optimum or maximum urban enormous volume of air (a million and a half tons per scale, and, as the Regional Plan Association has pointed person), with great capacity for containing pollutants. out: But most air pollution arises in urban centers, which . . . Many of the negative aspects of large city commonly have more than ten times the weight of living are not inevitably linked to size but are, air-carried particles found elsewhere. Even with present rather, socially, institutionally and politically population densities and fuel-using practices, according determined. Their drawbacks can be alleviated to the experts, cities "are coming uncomfortably close or eliminated through the political process by a to using up all their available air,"16 while a fourfold more equitable distribution of public invest- rise in the capacity of power-generating plants that burn ment, through pricing policies that make indi- fossil fuels is projected by the year 2000. viduals more responsive to the consequences of Secondly, some contend that huge size and com- their actions, through technological advance plexity purchase private economic efficiency at too great and through imaginative and rational planning a cost from the standpoint of human values and effective and design. governmental and social institutions. As one writer has expressed this view: ' Metropolitan Heterogeneity, Municipal Homogeneity All of this (population concentration in huge urban centers) has raised some very The dominant central city of earlier decades was a serious questions not only about the impact heterogeneous one with people of different ethnic upon the physical needs to be met but about backgrounds, races, and incomes. With suburbanization, the kind of society it implies. Is the multi- however, marked jurisdictional differentiation has oc- million population urban agglomeration likely curred. The metropolis as a whole has wide socio- to offer the kind of physical, social, and economic variations but individual governmental juris- aesthetic environment which will stimulate a dictions within it reflect a far more homogeneous rise in the cultural level of the individual and character. As mentioned earlier, the central city typi- awaken his latent talents for participation in cally retains most of the nonwhites and the majority (63 social, political and intellectual activities? Will percent) of the metropolitan poor. Even in the suburbs, such agglomerations achieve societies of high however, there are sharp social and economic differences quality and enduring vigor? Does this kind of among political jurisdictions. It was pointed out that the development offer enough variety and choice view from "suburbia's cracked picture window" shows for people of the next two generations? residents of the wealthy bedroom community differing markedly from the people in the industrial enclave and 16~ogerRevelle, "Pollution and cities," in The Metro- both differing from the people in the "poverty pocket" politan Enigma, James Q. Wilson, ed. (Washington, D.C.: Chamber of Commerce of the Uz@d States, 1967), p. 87, or other lower-income suburban neighborhood. quoted in Urban and RuralAmerica, . , , p, 57. 1701iver C. Winston, "An Urbanization Pattern for U.S.," reprinted in U.S., Congressional Record, 90th Cong., 1st Sess., he Regional Plan Association, The Region's Growth, A October 10, 1967, p. S 14506-7, quoted in Urban and Rural Report of the Second Regional Plan (New Yark: 1967), p. 22, America.. . , p. 56. quoted in Urban and Rum1 America. . . , p. 57. Race adds a special.dimension to this picture of whites, members of families headed by a woman, urban people. As recently as 1940, 77 percent of all members of large families, the aged, and families whose American Negroes still lived in the South. Between 1940 heads are unemployed or under-employed. and 1966, a net total of 3.7 million nonwhites joined in Contrary to a widespread impression, only three out a great exodus to central cities of other regions. Of all of every ten poor people live in the central cities. Nearly American nonwhites, 65 percent now live in metropoli- half the poor live in rural America, though very few tan central cities, while most of the remainder still live in (only 8 percent) of the poor are on farms. Of the the rural South. estimated 51 percent of the American poor in metro- About 17 percent of the residents of central cities politan areas, as of 1966, the majority lived in the were black as of 1960. Six years later the proportion had central city (9.4 million out of 15.2 million, or 63 climbed three percentage points and if recent trends percent), partly because that is where the majority of continue the 1985 figure will be nearly 31 percent. By nonwhites live. Almost half of the white poor in contrast, only 5 percent of the urban fringe population metropolitan areas live in the suburbs-demonstrating, was nonwhite in 1960 and this proportion slipped to 4 incidentally, that suburbia shows more racial than percent by 1966. According to present projections and economic prejudice." These intrajurisdictional social barring any major breakthrqughs on the urban housing disparities clearly accentuate the fiscal crisis of core front, the 1985 figure will come to about 6.1 percent.' cities with burgeoning budgets and eroding revenues (treated in Chapter 2).

Bulldozers, Progress, and People Pushed Aside

Metropolitan-Area Population Within and The process of urban development, in and out of Outside Central Cities: 1966 cities, has meant displacement of large numbers of

Millions people, currently involving as many as 100,000 families and individuals annually, according to some estimates. This displacement on more than one occasion has been the match that touched off a riot. Displacement actions by local governments include 80 Iurban renewal, public housing construction, and con- demnation of substandard structures under local housing codes. State governments also have caused widespread displacement in building State and interstate highways, and both levels have been assisted in these efforts by Federal grant programs. Within metropolitan areas, the brunt of dislocation falls mainly upon the poor, the near poor, the lower middle class, the non-white and the aged. Physical change and development-whether under private or governmental auspices-obviously cannot avoid some impact upon those whose homes or busi-

'O~ata in this section are drawn from various articles by White Nonwhite White Nonwhite Mollie Orshansky for the Social Security Administration, not- Within Central Cities Outside Central Cities ably "Counting the Poor: Before and After Federal Income Support Programs," in Old Age Income Assurance, (U.S. Congress, Joint Economic Committee, December 1967) Part 11, p. 197. The criterion of poverty which the Social Security Different groups in our society bear the butden o Administration has developed is an income meesurement which poverty unequally. The most poverty-prone are non- takes into account family size, number of children, and farm-nonfarm residence. It is annually adjusted to reflect price rises, but does not distinguish between rural nonfarm life and "1950 and 1960 data from U.S. Bureau of the Census, metropolitan life. Unquestionably, living costs are lower outside Current Population Reports, Series P-23, Nos. 24 (October metropolitan areas, while incomes tend to be higher within. Thus 1967) and 26 (July 1968); 1985 estimates (using 1967 SMSA the rural nonfarm poor are better off relative to their neighbors boundaries) from Hodge and Hauser, The Challenge of America's and compared to the metropolitan poor; but by what degree it is Metropolitan . . . , p. 26. not possible to say. nesses are in its path. But government with its unique public services will hasten the erosion of significant power of eminent domain has a special obligation to sectors of rural America. There are, of course, excep- soften the blow and fully underwrite burdens that result tions to this predominant picture. Some towns and from its own developmental and housing-related activi- independent small cities are experiencing a modest ties. Yet, the record to date indicates that government population growth and can anticipate a viable future has only begun to consider the human factor in its ever existence, fed by their locational advantages for certain increasing land acquisition activities. types of production or services. Moreover, numerous moderate-sized, non-metropolitan cities no doubt have a real potential for sound development. But a drastic The Rural Remainder-and Its Plant change in recent trends would be needed for such The shift from'rural to metropolitan America has situations to be widely spread. depopulated farms and drawn young people out of the Within metropolitan areas the expansion of industry small towns and the cutover, strip-mined, automated- and commerce-especially those of the labor intensive farming, and mechanized mining areas of our country. type-along the suburban fringe seems likely to con- Many scattered small towns, with under-occupied tinue, thus widening the gap between the declining housing, abandoned or half-used schools, empty stream- economy of the central city and the dynamic one of side factories and under-used utility facilities, present a many of its suburban neighbors. What growth there has black picture of wasted "fixed plant." The idea is been in central cities has tended to offer employment sometimes expressed that some of these towns carry the opportunities in the professional managerial, technical, seeds of expansion and, with assistance, could absorb and highly skilled sectors-in short, jobs for subur- some of the development that otherwise would occur banites. elsewhere. Yet, in many cases, their governmental With the relative drop in central city job opportuni- institutions, originally designed to handle the less diffi- ties, the migrating poor, less educated, and nonwhite cult challenges of an earlier age of greater self- logically should shift to the suburbs. But the scarcity of sufficiency, frequently are unable to provide the kind of older low-cost suburban housing and the persistent public services needed today. Local government expendi- barrier of discrimination in the case of blacks tend to tures per person in many rural jurisdictions are dispro- sustain the white noose around the central cities. For portionately high for frequently inadequate levels of some migrating poor-whites, small settlements along the service. To complicate matters, the limited administra- metropolitan periphery also prove attractive. tive machinery and scarcity of leadership often combine to hinder the planning and development necessary to overcome their handicaps. Throughout tlus brief assessment of the broad With a static overall population growth since 1950, contours of the metropolitan challenge runs the general a declining farm sector and a generally less favorable theme of the paradoxical nature of recent urban position (as compared to metropolitan areas) regarding development. In probing the many facets of this its educational and health facilities, housing, poverty, challenge, we encounter a series of major public policy and income levels, rural America at this point in time questions stemming from paradoxes such as these: faces a highly uncertain future-a future which in various the emergence of an urban nation, but an major respects is closely linked to that of her urban economic and social decline in our nation's larger brethren. cities; the romantic, traditional notion of an America Jobs Here-Unemployment There with limitless amounts of land, but an urban If present trends continue, the rural population will America of today with a scarcity of this much- continue to shift-though at a reduced rate given its needed factor of growth; reduced number-away from many rural areas and from the hymnal ideal of gleaming "alabaster cities," small towns that are remote from metropolitan areas. but the reality of blight, slums and slurbs; Attractive job opportunities there will continue to be the venerable Jeffersonian tenet of the resolute scarce, and the areas will experience further siphoning and resourceful agrarian, but the here-and-now off of the young and able work force. The resulting fact of rural decline; greater concentration of older and unskilled workers the cultural ideal of social heterogeneity but the among those remaining and the further decline in the jurisdictional fact of greater socio-economic capacity of many towns and hamlets to support basic homogeneity; the presumption that government should be one governmental and fiscal arrangements with the of the guardians of our collective social con- fact that many problems can only be solved by sciousness, yet the reality of governmental harsh- joint action must be a balanced effort; any ness and injustice when it proceeds to acquire approach that fails to consider simultaneously the land; and fears as well as the hopes of our urban citizens the elemental American democratic precept of and their governments, the traditional institutions equal opportunity, but the evident geographic, as well as innovative devices and programs, the transportational, and housing barriers facing varying and always slow pace of attitudinal many of the disadvantaged in rural and core-city change with respect to metropolitan awareness, America, severely restricting their freedom of will fail. choice. Strong special interest pressures both in the private and public sectors are a critical condi- THE COMMISSION'S THEME OF BALANCE tioner of urban chaos-whether it be in the area of land use, construction, governmental acquisi- What steps can be taken to resolve these tough tion of property, program planning, unifunctional paradoxical problems? Several of these difficulties have authorities, or public finance; an equitable bal- been probed in various Commission repork2 While ance must be struck between these forces and these reports, for the most part, tackle separate sectors those seeking a broader, more representative, of the overall urban development dilemma, a broad more long-range, more responsible vision of the underlying theme of balance pervades each of them and public good in our metropolitan areas; this, in turn, envelops certain inferred pivotal ideas that In terms of geography, legal and fiscal authority, condition the Commission's approach to recommending the States are in a unique balancing position to specific solutions to specific urban problems. Among move in a number of constructive ways to these ideas are the following: provide assistance and leadership on the urban The nature of the urban development crisis is so frontier; as sources of direct fiscal and program vast, so complex, and so great a challenge to initiatives, as expanders of the local revenue base, political and governmental ingenuity and cour- as umpires of interjurisdictional bickering, as age-no one of the traditional levels of govern- possessors of strong actual or potential power in ment has the talent, the time, the funds, and the the land use and urban development areas-in power to cope successfully with it alone; hence a short as legal parents of metropolitan govern- balanced, multi-level approach is needed; mental jurisdictions, the States can and must be In a physical sense, vast metropolitan economies confronted with an agenda of responsibilities have emerged in recent years, but most of these relating to achieving a more viable pattern of are not metropolitan polities in the sense of urban growth. communities with common social and economic Finally, given the fiscal, administrative, political institutions, a common governmental system, a and moral power of the National Government, citizenry having a sense of community that this level cannot escape its roles as balancer, embraces the area as a whole; instead these stimulator, abettor, reconciler, and in some in- metropolitan entities are fragmented jurisdic- stances, direct intervenor in the urban problems tionally, fiscally, socially, and economically, and of the nation. most of their citizens are moving at a very slow The recommendations that follow are linked by the pace toward recognizing the problems and oppor- broad theme of balance and reveal the Commission's tunities they share with fellow citizens in the general preference for the four derivative precepts area; any attempt to reconcile the traditional discussed above. The proposals involve: Ending the balkanization of building requirements through such measures as (a) use of 2'~mpactof Federal Urban Development Prdgrams on Local performance standards, (b) a program of building Government Organization and Planning (A-20; May 1964); research assisted by both Federal and State Metropolitan Social and Economic Disparities: Implications for Intergovernmental Relations in Central Cities and Suburbs governments, (c) establishment of a single na- (A-25; January 1965).; Relocation: Unequal Treatment of tional advisory model building code, (d) State People and Businesses Displaced by Governments (A-26; January enactment of model code and product approval 1965. ; Building Codes: A Program for Intergovernmental Re- form (A-28; January 1966).; Urban and Rural America: Policies procedures, and State licensing and training of for Future Growth (A-32; April 1968). building inspectors. Aiding people displaced by urban change, by and social groups. The provisions of building codes adoption of uniform and equitable relocation significantly affect such availability. policies by the Federal government and the Building Codes: A State of Chaos. The appli- States. cation of a code of building regulations traditionally has Improving urban development planning and land- been delegated by the State to its local governments as use regulation through (a) providing responsible an exercise of police powers. A recent study for the metropolitan planning bodies; (b) strengthening National Commission on Urban Problems also known, and systematizing Federal planning requirements after its chairman, former Senator Paul H. Douglas, as and related provisions; (c) curbing "fiscal zoning" the "Douglas Commission," showed the widespread, practices; (d) upgrading local land use and de- decentralized, and diverse nature of local building velopment controls via state authorization of regulation within metropolitan areas.2 "planned unit development," or "official map," It found that less than half of all local governments and the like; (e) authorizing State regulation of had adopted building codes by early 1968 (see Table land use at points of access along major highway 10). However, 40.5 percent of the 7,609 local govern- rights-of-way under certain circumstances. ments within SMSA's had not adopted such codes. In a Formulating urban development policies includ- further breakdown, the study showed that 69 percent of ing (a) establishing a national balanced urbaniza- the municipalities within SMSA's had adopted building tion policy with industrial location, manpower codes while 61 percent outside SMSA's had adopted retraining, uniform public assistance, resettle- codes. The record of New England-type townships is ment, and large scale urban development provi- poorer: 41.9 percent within SMSA's and only 18.7 sions; (b) related revamping of multistate plan- outside SMSA's.~~Finally, the survey shows that ning and development agencies; (c) development county adoption of building codes is even worse with of State urbanization policies. only 39.4 percent of these jurisdictions within and 9.7 Exploring new public approaches to urban de- percent outside SMSA's reporting adoption. velopment including (a) alternative approaches to Each jurisdiction, large or small, typically has the influencing industrial location; (b) varying ways right to determine its own building code provisions. of neutralizing factors sustaining adverse migra- Few, however, have the capacity to develop these codes tion trends and of strengthening factors geared to "from~scratch." Practically all local building codes have viable dispersion; (c) an assessment of the diverse, been copied to a considerable degree either from a larger indirect and direct ways the Federal government jurisdiction or, more commonly, from a "model" build- and the States can fashion a meaningful large- ing code. Four model codes, developed by various scale urban and new community development national or regional organizations, deal especially with component of their respective urbanization poli- building construction and certain national model codes cies. for plumbing and electrical installations. A few States, such as Connecticut, New Jersey, and New York, have developed model building codes for optional adoption Ending the Balkanization of Building Requirements by their local governments. The various model codes reflect general agreement Public regulation of building construction interacts on many aspects of construction. If the provisions of a with several of the problems of metropolitan develop- model code were applied fully and consistently by local ment. Such regulation operates mainly through building governments, diversity would be greatly limited or codes, which have been enacted by local j'urisdictions. At rendered insignificant. However, this is not the case. Half least nine-tenths of the people in metropolitan areas and of the regulating places of 5,000-plus population, it is most of the non-SMSA urban populace reside in com- estimated, have a code based "closely" on one of the munities having- such codes. A 1966 re~ortof the Advisory Commission examined the intergovernmental - ~" ------problems "~~enD. Manvel, Local Land and Building Regulation, code preparation and administra- Reseuch Report No. 6, National Commission on Urban Rob- tion, including maintaining up-to-date code provisions lems Washington, D.c.: 1968). Tables 1 and 2, and uniformity of requirements among code jurisdic- 23~he"total" number of communities tabulated in the tions. The emphasis of the report is on the impact of Douglas Commission study relates to governments subiect to building codes on dwellings, than on com~ercid sample survey representation, and this omits (a) all mu2cipali- rather ties and townships of less than 1,000 population located outside and industrial structures, because of the broad, general of SMSA'~;and (b) township governments located in States interest in the availability of housing for all economic where these governments lack municipal-type powers. Table 10-Proportion of Local Governments mainly designed to favor particular construction Adopting Building Codes: projects or labor practices and groups; and 1968 Builders and developers incur a considerable Percent burden and expense in tracing and complying Number Adopting of Building with the great diversity of local regulations. Governments Codes Builders' testimony to the Douglas Commission Total 17,993 46.4 cited examples of extra costs running to several hundred Within SMSA's 7,609 59.5 dollars or more per house as a result of local building Outside SMSA's 10,384 36.8 County Governments 3,049 13.6 codes more exacting than those of immediately neigh- Within SMSA's 404 39.4 boring parts of the same metropolitan area. Diverse Outside SMSA's 2,645 9.7 regulations also hamper large-scale operations and stand- Municipalities 9,984 64.9 Within SMSA's 4,977 69.0 ard marketing approaches and this can hike costs. Land Outside SMSA's 5,007 60.9 and financing costs, however, are also important factors. New England Type And the manner in which the industry is organized Townships 4,960 29.1 Within SMSA's 2,228 41.9 should not be ignored. An estimated 125,000 building Outside SMSA's 2,732 18.7 contractors, most of whom are small-volume businesses Note: The "total" number of communities tabulated in the and are operating in a single metropolis, may be the Douglas Commission study relates to governments sub- most critical single factor in this high cost of housing ject to sample survey representation, and this omits (a) all municipalities and townships of lea than 1,000 popu- practice. lation located outside of SMSA's; and (b) township gov- No one really knows how much code variety costs ernments located in States where these governments lack within a metropolis. No one knows how much it may be municipal-type powers. hindering the growth of large builders who might, in Source: The National Commission on Urban Problems, Local Land and Building Regulation, Research Report No. 6, turn, hire a large and permanent work force, and (Washington, D. C.: 19681, p. 24. concentrate more on innovative and low-cost building techniques. four national or regional models. One-seventh of the Laying Some Firm Foundations. To deal with total started from a model but made important depar- these problems, the Advisory Commission has made a tures, and more than one-sixth settled for a code based number of specific propo~als.~ upon a State model. To complicate matters, only about Better construction research. In order to provide a one in four of those working from a model have kept better basis for increased use of performance standards their codes up to date by incorporating changes recom- in the public regulation of construction, the Commission mended recently by the code organizations. Thus many urged that Congress authorize and finance an immediate of the reported "model-code" jurisdictions actually cooperative program, drawing upon recognized public prohibit various construction features that are permis- and private efforts, to develop national performance sible under the model codes. criteria and standards and testing procedures for building Local building code practices have been criticized construction. vigorously for years. Among the charges most frequently made are these: Many individuals and groups concerned with build- Local building codes regulate construction exten- ing are working out performance requirements for sively by reference to particular materials, rather building materials which can be incorporated in codes, than in terms of performance requirements, thus and each segment of the building industry has developed tending to favor traditional products and meth- its own approach for application to its own special ods as against innovations that might perform as requirements. While these individual approaches are well or better at less cost; legitimate and necessary, progress has been slow. Mar- Extreme decentralization of building-code powers shalling the collective effort of the entire building makes it possible for small enclaves to impose industry could permit more wide-spread application of excessive standards which may effectively "zone the performance concept. out" new building materials and construction methods and thereby add to the cost of urban housing; 24~heseproposals were made in the Advisory Commission It is difficult for even the best-intentioned local report Building Codes: A F'rogmrn for Intergovernmental Reform (A-28; January 1966). Senator Ervin, Senator Mundt, State governing body, which lacks access to objective Representative Crank and State Senator DeStefano urged the technical advice, to detect regulative proposals Commission to delay action on the recommendations. . . . that a continuing national program of build- of government to develop a model code with the ing research be established to: (a) identify and participation of the model code groups and other define areas within the building field requiring interested public and private groups."2 * The drafting research; (b) fill gaps in existing knowledge group should be charged with recommending "appro- through encouragement and support of re- priate permanent machnery for keeping the code revised search; (c) formulate a continuing program for and up-to-date as well as a products-approval program to the integration and continuity of knowledge certify new products as to their conformance with code and experience; and (d) provide for demonstra- provision^."^ Despite the current Federal involvement in various tion projects that would contribute signifi- efforts to achieve better housing technology-including cantly to building technology. research, testing, and some technical help with code Because of the potential importance of the Federal drafting-a federally sponsored nationwide model code role in stimulating building technology, the Commission has long been the subject of hot controversy. Most of urged:2 the building industry agrees that the Federal government . . . the President to direct Federal agencies ought to spend much more than it does for building having major policy program responsibilities for industry statistics, but the industry generally has viewed construction And urban development . . . to governmental involvement in building techniques and cooperate in the developing of knowledge methods with some alarm, in that Federal administrative applicable to the solution of building problems. or legislative actions in this area might lead to favoring A national building research program is needed to accompany development of the performance-standard one building product over another. concept. Current research, as diverse as it is, generally The Advisory Commission, however, concluded that reflects a narrow range of interests. Government, indus- the need is pressing enough to warrant the establishment try, academic institutions, and nonprofit research and of a voluntary national model building code. The professional institutions all carry on separate and often development of such a code, of course, would require uncoordinated programs. the advice and assistance of model code groups and The States, too, have a potential role in construc- representatives of consumers, users, builders, architects, tion research, and the Commission has recommended labor, and all levels of government. A national code that State agencies and institutions of higher education commission could bring together persons of high reputa- actively promote research programs, including establish- tion and competence from interested public and private ment of a technical information service for public groups, representing many different points of view, officials and private busine~ses.~ without domination or appearance of domination by the The State-sponsored program should complement Federal government. the national program. The State university has a special The full potential of a national model code can only position and responsibility to encourage research in be realized if the model is widely adopted throughout building construction. It is, after all, ideally suited to the nation. Federal and State actions to promote that bring together government, industry, labor and com- objective are set forth in two Commission recommenda- munity groups to focus on problems of building tech- tions. At the Federal level, all construction agencies such nology. Especially appropriate fields for State research as the General Services Administration and the Depart- are those arising from the special geographic, climatic, ment of Defense, and agencies responsible for establishing standards over federally-aided constructions such and economic characteristics of particular regions. as the Federal Housing Administration and the Farmers Greater unqonnity of building requirements. Pro- Home Administration, should apply consistent standards gress toward this objective requires action at all three wherever possible.30 This would directly affect a signifi- levels of government. The Commission recommended cant portion of the construction market in the country two major types of Federal action. The President was and would, in addition, serve as a "yardstick" in urged to appoint a drafting group "representing all levels influencing decisions regarding the regulation of all construction.

25~uildingCodes.. . , p. 85; implemented in part by Section 1010 of P.L. 89-274, which directs the Secretary of HUD to conduct research and studies to test and demonstrate new and improved techniques and methods. 281bid., p. 89; Representative Crank dissented. 261bid., p. 85. 291bid., p. 89. 271bid., p. 87. 301bid., p. 91. As a consequence of this recommendation, the U.S. sion outlined an alternative approach which would work Bureau of the Budget set dp an interdepartmental study toward uniformity through a State construction review group to consider ways to make Federal agency stan- agency. In the words of the Commission proposal, this dards more uniform. In a preliminary report, the group would involve : suggested several steps in this direction that might be . . . legislation creating a building construction taken by the agencies on an individual basis. review agency at the State level to consider At the State level, legislation was sanctioned by the appeals by affected parties from the decisions Commission that would authorize and direct a State of local government. Through its decisions the agency to prepare and promulgate a comprehensive review agency would establish uniform interpre- model building code.3 ' In related recommendations, the tation of standards. Commission also urged that State and local agencies Such an arrangement would be designed to facilitate the responsible for construction programs ". . . incorporate introduction of new materials of construction and the standards of the State model code as their rules and building systems by providing an alternative to the regulations for public c~nstruction."~~State loan and costly and time-consuming procedures of approval estab- grant program policy might be conditioned upon local lished in each individual community. government conformance of aided projects to the State Most local building codes provide some type of model code. machinery for local appeal from the decisions of the State governments and their local units occupy a administering officials, and welidrafted codes also in- key position in efforts to modernize building codes and clude specific provisions for court review. Yet, the to achieve uniformity. Federal action can be significant availability of a State appeal agency should not only where direct Federal grant or loan programs are in- help prevent arbitrary or discriminatory action locally volved, but still will not directly touch the great bulk of but, in time, promote greater consistency in code the nation's building construction activity. The broad provisions and their interpretation by various jurisdic- police power to regulate all phases of building constructions. tion, after all, is lodged at the State and local level. As an alternative to a statewide appeals body, State The development of a State model code then can be legislation might provide for a review agency to deal a major step toward more modern and uniform building with metropolitan areas only. This would promote regulation. The State can maintain its own research greater uniformity where problems of diversity are most facilities and a staff of trained architects, engineers and troublesome, without affecting the traditional structure other specialists. It could evaluate new building materials of local building code adoption, interpretation, and and devices and adopt appropriate standards, model enforcement elsewhere in the States. The draft legisla- codes and product approvals of national groups to keep tion incorporates all of these options.3s the State abreast of the developments of the building Much of the existing variation in building codes is, industry. State-level testing of new products and new as we have seen, a result of localized departures from methods would bypass cumbersome local processes, as model code provisions. To help meet this immediate well as occasional local reluctance to entertain new problem and until development of a national model and ideas3 additional State model codes, the Commission recom- Recognizing that some States may not be prepared mended that: to enact legislation for a State model code, the Cornrnis- . . . the States enable local jurisdcitions to adopt a recognized uniform building code by reference and permit future changes in the recognized model code to be adopted by administrative action.' 33~draft bill has been prepared to implement these recommendations, based on the New York State Building Code 34~uildingCodes. . . , p. 96. Law adopted in 1964. It provides for the development and adoption of a State building construction code, and code "part of Code 35-10-00, mentioned above. (1970 Cumula- standards, with the help of a wide range of consultants from tive . . .) other State agencies, local governments, industries, and interest 36~uildingCodes. . . , p. 97. A draft bill to implement this groups. It would require a State-level agency to test and approve recommendation follows in large part a model act developed by materials, devices, and methods of construction. Under the draft the National Institute of Municipal Law Officers. The legislation bill, adoption of the State model by localities would be would permit adoption not only of a State or nationally- permissive; however, local departures from the code could be recognized model code, but of a code prepared by a county, made only with the approval of the agency. A State board of metropolitan, or regional agency. A number of States-including review would be established to hear appeals from the provisions Kansas, Montana, Utah, and Vermont-recently have granted of the code. See 1970 Cumulative ACZR State Legislative authority along the lines suggested, and Minnesota has expanded Program (Code 35-10-00) (M-48; August 1969). preexisting authority. 1970 Cumulative . . . .Code 32-40-00. This proposal, if adopted, would greatly facilitate action causes demolition, and takes place in older, more keeping local codes up to date. rundown parts of the metropolitan area-above all in the Improving administration of building codes. Effec- core city. It displaces the low-income tenant and tive enforcement of building regulations depends largely homeowner and the owners of little businesses who need upon the competence of building officials and in- low-rent quarters to survive. These are the people who spectors. The Commission has recognized this and urged find it hardest to relocate, because the supply of that a State supervisory agency be empowered to low-cost housing and store sites are diminished by the establish professional qualifications for building in- very program that displaces them and because, too spectors and license candidates as to their fitness for often, their race effectively limits their choice of living employment on the basis of examinations given by it, or areas. of examination satisfactory to it given by a State or local Renewal and Relocation. The total number of agency. The State agency should be able to revoke people displaced by the accelerating pace of demolition licenses for good and sufficient cause.37 State salary and reconstruction in recent years is difficult to esti- supplements for local building code inspectors would mate. The Senate Subcommittee on Intergovernmental compensate for the higher pay scales that probably Relations7 hearings on relocation legislation suggest that would result from the licensing program.3 the present annual rate is somewhere in the vicinity of Many local building officials are not qualified at 100,000 for federally aided programs. A study under- present to administer a performance-type code. While taken by the National Association of Home Builders put these officials might deal competently with traditional the total amount of housing torn down because of buildings, advances in building technology demand more public action between 1950 and 1968 at 2.39 million expert knowledge of a wide variety of building practices dwelling units! The greatest bulldozers were the fed- and materials. The Commission, therefore, urged State- erally aided programs of urban renewal, highways, and supported programs for the training of building public housing, and the local enforcement of housing inspector^.^^ Pre-entry and in-service training is an codes. The authors estimated that demolition by private indispensable prerequisite for effective code enforce- action totaled almost the same amount-another 2.35 ment. State support and Federal grants to States under milli~n!~ Title VIII of the Housing Act of 1964 could help Of course, all this is not a net loss. Much private underwrite the cost of such training. housing has been built on urban renewal sites and public Jurisdictional fragmentation, a balkanized building housing on other sites, and when private owners tear industry, conflicting private interest, and oblivious pub- down buildings it is often to replace them with lic opinion-these are some of the elements of the costly, apartments. But the match for the residents, both in chaotic building codes picture found in most urban price and quantity, between what was there and what settings. goes up instead is not very close. Development Programs and the The housing demolished has primarily sheltered the Displacement of People poor, the near-poor, and the lower middle class. Public The American creed calls for righting the human housing construction and most urban renewal naturally damage caused by urban physical growth: so far as occurs in areas with large amounts of substandard possible, improvement in the lives of the majority should housing, where by definition few of the upper income not come at the cost of uncompensated loss for the groups live and where, according to a study undertaken majority. This tenet presumably should apply when for the National Commission on Urban Problems, at government acquires private property to advance public least 57 percent of the families are poor.41 Highways programs. also tend to push through the lower-income parts of But does it? cities, partly because the property values there are often Inevitably, people are displaced by public action in lower than in the better sections and partly because the urban areas: by highway construction, central city residents have been less articulate and effective in their renewal, housing code enforcement, and the construc- opposition. tion of schools and other public works. Much of this 40~ichaelSumichrast and Norman Farquhar, Demolition and Other Factors in Housing Replacement Demand (Wash- 37~uildingCodes. . . , p. 99; State Senator DeStefano and ington, D.C.: National Association of Home Builders, 1967), p. Mayor Goldner dissented. 17. 38~draft bill (Code 35-26-00) suggests the procedure for 41~obertGroberg, Urban Renewal Programs Assisted by setting up such an agency, categories for licenses, and operating Title I of the Housing Act of 1949, Research Report, National methods (1970 Cumulative. . .). Commission on Urban Problems (Washington, D.C.: 1968), 39~uildingCodes. . . , p. 100. (unpublished). Prospects for the future call for more demolition. Subsequent to the issuance of the Commission's The plans for urban renewal, according to the study just report some encouraging developments have occurred. mentioned, call for the removal of 360,000 more California has required assurance of replacement housing housing units. The Bureau of Public Roads estimated in redevelopment projects; Massachusetts has required a that highway construction in the three-year period showing of availability of housing wherever the occu- commencing July 1, 1967 would demolish urban hous- pants of more than five units are displaced by any ing units at the rate of 49,000 a year. Additional project; New Jersey has required certification that a demolitions will take place from public housing con- workable relocation assistance program exists before any struction and local code enforcement. displacing action can occur and the program must Needed: Uniform and Equitable Relocation Poli- include assistance in obtaining comparable replacement cies. According to a survey taken by the Advisory housing; and Michigan has required relocation for urban Commission and the United States Conference of renewal displacees. Michigan also requires that public Mayors, the single most important obstacle to speedy housing projects composed of 200 or more units provide and humane relocation is the inadequate supply of housing within the new project for the former residents. housing, both private and public. Many cities have Even where an adequate supply of housing exists, it delayed their property acquisition for urban renewal may be unavailable to displaced families because of because they cannot find housing for the people who racial discrimination. With the genera1,problem of racial would be displaced. This prompted the Commission to barriers in mind, the Commission in a 1965 report urged reco~nrnend:~~ the Federal Government and the States to cooperate in . . . that Congress require that State and local enforcing Federal and State laws against discrimination governments administering Federal grant-in-aid in hou~ing.~Considerable progress has occurred since programs assure the availability of standard that report; with the signing of the Civil Rights Act of housing before proceeding with any property 1968, racial or religious discrimination in the advertising, acquisition that displaces people. This require- sales or rental of the bulk of housing was forbidden. ment should be at least comparable to that in Applying the ban to various classes of housing will existing Federal urban renewal legislation, as- proceed in stages but by 1970 is slated to cover 80 suring that (i) there is a feasible method for percent of all h0using.4~ In June, 1968, a Supreme temporary relocation of displaced families and Court ruling (Jones v. Mayer Co.) forbade racial individuals, and that (ii) there are or are being discrimination in the sale or rental of property and this provided standard housing units at least as great provides injunctive relief for citizens. in number as the number of such displaced Yet, the existence of these two strong legal weapons families and individuals, available to them, probably will not ensure rapid disappearance of discrimi- within their financial means, reasonably acces- nation in access to housing. Where arbitrary action sible to their places of employment, and in continues, only the slow process of appeal on the basis areas that are not generally less desirable.in of the new law and the new interpretation will overturn regard to public utilities and public and com- the practice. mercial facilities than the areas from which In January 1965, 18 States had laws against they are displaced. discrimination in publicly-assisted housing, and 12 of Legislation that would establish this requirement these forbade discrimination in private housing. By was introduced in Congress in 1965 and 1967 and again mid-1968, the District of Columbia, Puerto Rico, and 24 in 1969.4 The Commission also urged States to enact States had passed laws forbidding private discrimination, equivalent legislation for State and local programs.44 although coverage and enforcement procedures varied widely.47 Until the enactment of the 1968 Civil Rights 42~dvisoryCommission on Intergovernmental Relations, Act, the effectiveness of these State laws depended to Relocation: Unequal Treatment of People and Businesses Dis- some extent on cooperation with Federal agencies placed by Governments, (A-26; January 1965), p. 114. 43~.1,9lst Congress, 1st Sess., Title 11, Sec. 231. 44~elocation. . . , p. 116. A comprehensive re~dcationdraft 45Advisory Commission on Intergovernmental Relations, bill has been drawn up for the consideration of State legislatures. Metropolitan Social and Economic Dispan'ties: Implications for One of its sections provides that State and local governments Intergovernmental Relations in Central Cities and Suburbs acquiring property shall provide not only temporary relocation (A-25; January 1965), p. 104. but assurance of standard housing at rents or prices within the 46~.~.90-284, Title VII. means of those displaced and reasonably accessible to their places of employment. See 1970 Cumulative . . . , Code 47~actsand Issues (Washington, D.C.: League of Women 35-60-00. Voters of the United States, Publication No. 333, August 1968). aiming at the same goal. Individual States had been assistance. If his income is low, he has priority in working out "memoranda of understanding" starting in admission to public housing. 1963. The new Act supersedes State and local laws, but Enactment of the Federal-Aid Highway Act of 1968 where State laws are in substantial conformance with the put relocation assistance for those displaced by the Federal statute, agreements will be worked out to interstate and regular highway programs almost on a par enforce the law at the State level?' with that offered to urban renewal displacees, although Cost can be just as effective a barrier to procuring the urban renewal program provides more generous housing for low-income groups as discrimination. The reimbursement to localities for payments made. Reloca- Commission suggested several actions in 1965 to help tion payments are now mandatory, and standard housing ease the supply of low-cost housing$9 and Federal laws must be made available prior to displacement "to the have implemented them since: authority for lease or extent that can reasonably be accomplished." Thus the purchase of existing private housing by public housing two Federal programs causing the most displacement authorities; rent supplements to low income families (together, they dislocate 65 percent of the people and which permit them to move into housing owned by 90 percent of the businesses) are now generally uniform, private non-profit owners;50 and grants to private with respect to basic moving costs. organizations to help them buiM or otherwise provide Yet other Federal programs with a measurable low-cost housing.' ' impact still remain with relocation provisions substan- The government has recognized that it owes help to tially different than those of the urban development and those it displaces. But the assistance provided varies highway programs. The Commission urged that Congress greatly from program to program and jurisdiction to establish a uniform policy of relocation payments and jurisdiction. The Federal urban renwal program has advisory assistance for persons and businesses displaced displaced the most people, but it also has provided the by Federal grant-in-aid and direct programs, and that the most assistance. A man displaced from his residence by President direct that the necessary steps be taken to urban renewal and other programs of the Department of formulate uniform regulations for carrying out such a Housing and Urban Development can collect moving fees poli~y.~Title I1 of S. 1 (91st Congress) would achieve up to $200. If he is a low-income person, he is entitled this across-the-board uniformity in relocation payments to an additional sum of up to $1,000 over a two-year and assistance. period to supplement his income for the payment of The States should assume similar responsibility for rent in adequate quarters. If he owns his home, the repairing the dislocation brought on by its programs and displacee may get up to $5,000 to help him purchase those of localities and the Commission so recom- another home of modest standards and size to meet his mended.' In Maryland, Massachusetts, Minnesota, New needs. Jersey, New York, Pennsylvania, Tennessee, and A businessman displaced by these HUD programs Wisconsin general statutes require relocation payments may claim the full cost of moving expenses without in cases where requirements differ from those in Federal limit, but everything above $25,000 requires personal renewal programs. In other States, State law requires approval of the Secretary of HUD. Small independent relocation efforts be made for specific projects, as in businesses-i.e., with annual net earnings of under Rhode Island where payments for displacements caused $10,000 and not part of a chain-may in addition receive by reservoir construction are required by State law. a flat relocation payment of $2,500. Businesses are also Local government displacements are much more entitled to additional payments for the cost of transfer- substantial than those of the States-resulting from ring property similar to those paid to residential dis- housing code enforcement, school building, and various placees. property acquisitions for parks, streets, off-street park- The displacee can call on an experienced office ing, and general public works. The mayor of Baltimore which must find him a house comparable to his present testified before the Senate Subcommittee on Inter- home in price and other characteristics, and assist him in governmental Relations in 1969 that nonfederally as- relocating and in obtaining loans and other kinds of sisted projects would displace 15 to 20 percent of the 10,000 families and 1500 businesses to be displaced in the next six years in his city. The ACIR-U.S. Conference 48~.~.90-284, Section 810 (c). of Mayors 1964 survey found that about one-half of the 49~etr~politmz. . . Disparities . . . , p. 99. SO~overnorAnderson, Mayor Gofdner and Mrs. Wicox dissented. 'P.L. 90-448. cities reporting were paying relocation expenses on local Of equal significance, the Commission urged that projects. Federal, State, and local governments authorize and From the standpoint of the man displaced, his encourage all agencies causing displacements in urban injury is the same no matter who inflicted it, and in areas to centralize in one agency in each major urban equity he should receive the same money, the same jurisdiction, the job of determining the availability of counseling and assistance, and the same access to relocation housing and the types and amounts of comparable housing-whether he is displaced by the housing needed; of administering payments to displaced Federal, State, or local government. Draft legislation, persons and businesses; and of providing counseling, previously noted, to implement the Commission's information, and other assistance to such displacees.' ' recommendations provides for a uniform State and local In focusing on the inequities and inanities of policy. Five States in recent years have legislated such a governmental relocation programs, the Commission has state-wide policy: New York, Massachusetts, California, demonstrated that sound public administration need not Indiana, and New Jersey. necessarily conflict with sensitive and humane public The Federal Government also has a responsibility to policy. On the contrary, in urging simplification and assure adequate relocation payments for persons dis- standardization of the many existing programs, the placed by federally-aided projects. Hence, the Com- Commission has sought to humanize governments- mission proposed that under Federal grant programs, the especially urban government-at a time when they full costs of payments to any person for relocating a appear most cold and impersonal. family, and the costs of payments up to $25,000 to any relocating business be completely reimbursed by the Urban Development Planning Federal Government. The business relocation costs in and Land Use Regulation excess of that amount should be shared according to the cost-sharing formula governing the particular program. Urban land is an enormously valuable national Federal grant programs administered by the Depart- resource, but given our approach to urban planning and ment of Housing and Urban Development reimburse land use regulation, one might assume its supply is localities for the payment of all household moving limitless. Privately-owned land devoted to urban uses, according to one study, was worth about $320 billion in expenses up to $200 and business moving expenses up to 1966, or more than $1,500 for each person in the $25,000. Highway programs, however, require a State Nation.' contribution on the same matching basis as the overall Local governments are directly concerned with project costs. urban land use in two major ways: (1) through their own Similarly, in State-financed or aided programs, the land needs for streets and roads, parks, and other public Commission urged that the States share in local reloca- facilities-altogether typically demanding nearly one- tion costs when they are incurred in programs involving third of the land area in sizable cities;' ar 1 (2) through State aid or Federal grants to whch the State contri- ' their power to regulate private uses of land, in the butes a portion of the local share.' interest of public safety and welfare. The latter is most Better administration of relocation assistance would clearly reflected in local zoning ordinances, pioneered in greatly ameliorate the ill-effects of displacement and the 1916 by New York City and now applied in practically Commission sanctioned the proposal that Congress and all incorporated places of consequential size and by State legislatures assign to administrative agencies some county governments. A related development has responsibility for determining the amount of relocation involved the widespread creation of local planning payments, subject to specific statutory maximums. agencies, having as a minimum responsibility the study Massachusetts and California have assigned the determination of moving costs to specific agencies; North of prospective uses of urban land and their implications Carolina and Alabama have assigned determination of for governmental programs and policies. More recently, total compensation to their highway departments. areawide planning efforts, requirements, and agencies

s5~elocation. . . , p. 122. 54~hedraft relocation legislation (1970 Cumulative . . . , Code 35-60-00) incorporates this provision with regard to 56~~enD. Manvel, Three Land Research Studies (Research state-aided programs of property acquisition. Ohio and North Report 12, On Urban ROblems Carolina have since authorized State sharing in displacement washington, D.C.: 1968) p. 2. costs of highway programs; Indiana and New Jersey have bid., p. 22. In the typical city of 100,000-plus, streets provided State aid for relocation under a uniform aid program. alone occupy 17.5 percent of the city land area and other public Alabama, as mentioned above, aids highway displacees directly. uses take 13.7 percent. have emerged as a result of combined Federal-State-local zoning, including more than nine-tenths of the metro- action, and have commanded major attention. politan sector. Yet, the area subject to such municipal Plans, Plans, Plans. What is a plan? According to efforts is only a tiny fraction of the Nation's land mass one definition, a plan is a term used generally to describe and only a slightly larger proportion of our metropolitan "a proposed method of action or procedure." This broad areas. In 1960, as a matter of fact, municipalities usage is reflected in some of the subsequent discussion. encompassed less than 7 percent of the total land area of More often, however, the term is used here in a SMSA's. governmental context and refers to what is frequently called a "comprehensive plan." Such a plan is a statement, in words and graphics, of a government's determination as to how its area should be developed Local Gmrnmsnk Engaged in Planning, Zoning, and appear at some future date. It usually specifies the and Building Regulation in Meuopolitan Arm: 1868 preferred use of all land, anticipated traffic patterns, and lumber the location of public facilities, and historically it was With a With a With a wholly concerned with these physical development planning zoning building matters. Today, it uses not only an inventory of physical agency ordinance code stock (streets, buildings, and community facilities), but social and economic data including population density, incomes, and educational levels. Thus, while it is expressed in physical terms, it is based on assumptions and goals concerning people: their expected or desired density of settlement, their location, and their requirements for public facilities and amenities. The plan then is at once a description of current physical and human resource conditions; an assessment of the direction in which the community is developing; an expression of desired goals; and a recommendation of governmental steps required to reach those goals, including stages of suggested capital improvements. Planning Bodies, Planners, and Their Powers. A recent study issued by the National Commission on Urban Problems indicates that about half the county governments in the nation, including four-fifths of those in metropolitan areas, have a planning board-a marked increase over the figures of an earlier, 1966 survey conducted by the American Institute of Planners. Only about half of these boards, however, control land-use Municipal planning then in the vast majority of through zoning or subdivision regulation^.^ At the instances relates to relatively small local areas. Of the same time, the overwhelming majority of municipalities nearly 5,000 incorporated places in SMSA's, only about and New England-type townships of 5,000 population or 150 cover 25 square miles or more. Less than 500 of more have planning boards and various types of land-use them include 9 square miles. controls. The 3,600 municipal planning boards average Areawide planning agencies have cropped up on about 7 members each, indicating a total of over 25,000. nearly every metropolitan landscape in recent years. This About three-fourths of these municipalities with development has been stimulated by an increase in State planning boards and zoning ordinances reportedly have permissive legislation; the 70 1 planning grant program, prepared a "master plan" for future land-use. In about including its extension to COG'S; and by Sec. 204 of the one third of these instances, the plan was published Metropolitan Development Act of 1966. This Section- within the past two years. originally proposed by the Advisory Commission in Approximately three-fourths of the nation's popula- 1961 -makes certain'Federa1 grants to local governments tion lives in jurisdictions having local planning and in metropolitan areas conditional upon advance review and comment by an areawide agency whose functions 58~anvel,Research Report No. 6, Local Land and Building include planning (or, lacking such, by a State agency Regulations. . . , Tables 1 and 2. designated by the Governor). By late 1968, there were 171 locally established individual community are circumscribed by the rights of "areawide" planning agencies auihorized to handle this other communities. review task, with respect to all or part of 208 SMSA7s, Toward More Effective Planning and Land Use leaving only 22 SMSA's without such a locally-estab- Regulation. The Advisory Commission is strongly com- lished metropolitan planning agency." Most of these mitted to an effective system of planning and regulation agencies have jurisdiction over a single entire "standard of land-use within metropolitan and other areas. metropolitan statistical area," as defined by the Bureau Providing responsible metropolitan planning bodies. of the Census. But 25 cover less than an entire SMSA One of the earliest Commission reports emphasized the and a similar number have broader scope, including 14 pressing need for consistency of planning and zoning involving two or more SMSA's. efforts within metropolitan areas and the value of Thirty six percent of these review bodies are single authorizing establishment of responsible and representa- county or citycounty agencies. A nearly comparable tive areawide bodies vested with appropriate powers, proportion (35%) are regional planning commissions including the development of areawide plans for land-use made up of two or more counties. Over one fifth of the and capital facilities and the review of zoning ordinances total designations are voluntary councils of government. proposed by the component units of government in the The remainder are metropolitqn transportation or State area.60 planning agencies. While several SMSA's have more than Improving Federal provisions that affect local and one agency involved in planning, this Sec. 204 break- State planning. The Commission has sanctioned various down suggests the relative strength and scope of various proposals to upgrade Federal program requirements kinds of areawide planning instrumentalities. affecting State, regional and local planning endeavors. Public control of the use of privately-owned land To strengthen areawide planning and cooperation and to operates mainly through zoning provisions and related upgrade Federal agency processing of its urban develop- subdivision regulations. The balkanization of land-regula- ment grants, the Commission advanced the concept of ting power within metropolitan areas is highlighted by review and comment by an areawide agency (discussed the fact that some 5,200, or more than two-thirds, of above in connection with Section 204) some eight years the 7,609 general-purpose governments located in ago. The significance and impact of this approach is now SMSA's have local land-zoning regulatory authority. linked with part of Section 204's history. After its first Most of these, however, are small jurisdictions and year of operation, the Bureau of the Budget reported: include some 829 municipalities and townships of less Generally spealung, the Section 204 require- than 1,000 population and another 1,977 in the 1 to 5 ment has been implemented with fewer prob- thousand bracket. Only 2,194 fall in the 5,000 plus lems than might have been expected, consider- category, and only 199 (out of a possible 404) are ing (1) the limited time between the passage of county governments. While these various land-regulating the Demonstration Cities and Metropolitan jurisdictions possess about nine-tenths of the metropol- Development Act of 1966 (11/3/66) and the itan population, they cover only a minor portion of all effective date (711 167); (2) the confusion metropolitan territory. To complete matters, less than caused by the "Cramer amendment"; (3) the one-third of them have any full-time employees engaged unfamiliarity of the metropolitan review pro- in zoning or related planning and building regulation cess to some agencies; and (4) the large number activities. Only one in ten has a full-time person assigned of SMSAYswith no areawide agency. Some these responsibilities and paid at an annual salary rate of Federal programs are now only getting geared $12,000 or more. Whether large or small, these jurisdictions typically 60~ovemmentalStructure. . . , p. 32. A draft bill (1970 have the legal authority to exert their zoning powers Cumulative. . . Code 31-32-00) on this subject calls for State without regard to the needs or opinions of their authorization of metropolitan planning bodies by formal interlocal agreement among municipalities or counties in the area. neighbors. The officials of each municipality naturally Their membership would consist largely of local elected officials feel that they are using their municipal powers for their representing the participating governments. Their responsibilities town's best advantage. But a basic tenet of the Advisory would include preparation of a comprehensive plan for the metropolitan area coordinating the planning activities of locali- Commission's philosophy is that with increasing size and ties in the area with each other and with those of the Federal complexity of metropolitan problems, the rights of the and State levels. The agency also is empowered to review and comment on the local application for State and Federal aid and on State plans for highway and public works affecting the area. The draft bill, however, provides for adoption of the metropol- 59~.~.Bureau of the Budget, Section 204-The First Year itan plan by local units of government and gives review power to (Washington, D.C.: September 24, 1968, processed). the agency overall local plans, ordinances and projects. up to implement the requirement, and for some The Commission believes then that planning require- few metropolitan areas, implementation by the ments should be made more uniform and consolidated areawide agency is nominal at best. Yet the into a lesser number of separate enactments. It also requirement now has become widely known believes that Federal planning assistance should and, by and large, accepted as a fact of life in strengthen comprehensive planning as an arm of elected most metropolitan areas.6 ' chief executives, at State, areawide and local levels; Five years ago, the Commission after an extensive should require a closer interlinking of planning, program- probe of the impact of Federal urban development ming, and coordination at those levels; and should relate programs on local governmental planning and organiza- Federally aided functional planning to comprehensive tion urged-among other things-that Congress and planning at such levels6 These recommendations for relevant Federal agencies "require and promote effective revamping the 701 planning grant programs also are planning at all local levels" where appropriate in Federal incorporated in the proposed Balanced Urbanization urban development program^.^ Congressional endorse- Policy and Planning Act. ment of the principle of interagency program coordina- Curbing "fiscal" zoning practices. Much of the tion was sanctioned as was adoption of a unified urban development taking place in urban areas today is development policy within the Executive branch. These influenced by local zoning ordinances but this is largely then were the foundations of Title IV of the Inter- on a city-by-city basis. What is missing is coordination of governmental Cooperation Act of 1968 (P.L. 90-577) zoning actions that have an impact beyond local which requires that all viewpoints-national, regional, boundaries. State, and local-be considered in planning Federal and The consequences of this parochialism are unfortu- federally assisted programs: nate. Competition among municipalities for land use Federal urban and other development grants shall developments which are productive of large tax revenues be used for purposes consistent with those of is apparent in many metropolitan areas. Local zoning local, areawide, and State comprehensive plan- policy here lies in fiscal competition rather than in a ning; and desirable arrangement of uses. Federal agencies administering development In addition, fiscal zoning is also geared to keeping grants shall consult with other affected agencies governmental costs at a minimum and protecting ex- in order to assure fully coordinated programs. isting general surroundings by zoning exclusively for . The Bureau of the Budget has prepared rules and homes on large lots. Elaborate relationships between regulations for this and other titles of the law.63 By housing costs, family incomes, number of school translating its program and planning theme into practical children, and other governmental services are figured in procedures, the BOB guidelines, in effect, constitute a as arguments for or against zoning changes. Local new breakthrough in Federal efforts to buttress the officials frequently rationalize this kind of zoning as intergovernmental dimensions of regional planning- action to carry out local fiscal policies. The result of especially in urban areas. such a policy is to reinforce socio-economic disparities as To bring some order out of the one hundred thirty it virtually ensures construction of homes which can be or more planning requirements in Federal grant pro- purchased only by high-income families. Other adverse grams, the Commission has urged enactment of general effects of fiscal zoning were detailed in the preceding legislation consolidating insofar as possible into a single chapter of this volume. Suffice it to say such zoning Congressional enactment a set of planning require- policies are self-defeating and may result in a reduction ments-both functional and comprehensive-to be appli- of total metropolitan economic resources, as well as cable to grant-in-aid programs, especially those dealing greater intergovernmental conflict-instead of coopera- with or affecting urban development. Draft legislation to tion-in these areas. carry out this recommendation has been introduced in To help correct tlus imbalance between power and the 91st C~ngress.~~ responsibilities, the Commission has urged State legislative action to restrict zoning authority in metropolitan areas to larger municipalities and in many places to 'section 204-The First Year. county government, and to require that such zoning 62~dvisoryCommission on Intergovernmental Relations, Impact of Federal Urban Development Programs on Local Government Organization and Planning (A-20, May 1964), p. 34. BOB Circular A-95. 65 Advisory Commission on Intergovernmental Relations, 64"~heBalanced Urbanization Policy and Planning Act" of Fiscal Balance in the American Federal System (A-3 1 ; October 1969, (H.R. 13217). 1967), Vol. 1, p. 34. authority be exercised in a manner to permit a wide tions and agencies which may undertake large-scale and range of housing prices within the area ~overed.~ new community development. If the larger units of government encompass most- Roviding for extratemmtorialplanning and zoning. if not all-of the metropolitan area, sufficient legal Other means also may be used to improve land-use power representing a diversity of viewpoints can be control for urban fringe areas. Where effective county brought to bear on development decisions. Areawide planning, zoning and subdivision regulation do not exist coordination of planning and zoning matters then is in the fringe area, State legislatures should enact made possible by establishing a review procedure over legislation making extraterritorial planning, zoning and municipal actions. Of course, many municipal planning subdivision regulation of unincorporated fringe areas and zoning matters have little effect outside municipal available to their m~nicipalities.~~ boundaries. But many do! Action by municipalities to Extraterritorial power may hold only limited poten- change the types of land use for property bordering tial for resolving basic intergovernmental problems in major county or State highways and parks can have an metropolitan areas containing a large number of jurisdic- impact. Decreasing the front yard setback or minimum tions. However, in such areas where there are few lot width of any property abutting any such highway or incorporated jurisdictions and where counties do not park clearly can have an effect. Connecting a new street exercise land use controls in the unincorporated fringe with such highways or connecting new drainage lines area, extraterritorial planning, zoning and subdivision into existing channel lines may create spill-over prob- regulation can be important tools for preventing the lems. Finally, reducing residential densities to less than development of problem areas around individual cities. three families per acre can easily have an effect beyond To provide a measure of protection against arbitrary the corporate boundaries. These local actions should be action by the municipality, residents of the incorporated reviewed by the larger unit of government for consis- areas should have a voice in the imposition of the tency with areawide planning objectives, and especially regulations applying to their own territ~ry.~~Over for their tendency toward exclusive or fiscal zoning. thirty States have authorized extraterritorial subdivision These proposals were supplemented by a 1968 regulation and nearly half the States have authorized Commission recommendation that the States in imple- extraterritorial zoning. menting their balanced urbanization plans consider Upgrading local land-use and development con- strengthening county governments and vesting them trols. Recent developments in land-use regulation offer with appropriate powers, including authority for plan-' new potential for guiding and regulating urban growth. ning, zoning, subdivision and building regulation and States should consider enL -ting enabling legislation to other powers associated with control of urban growth, realize fully the potential of local land-use and develop- with special reference to the rapidly urbanizing fringe ment programs emphasizing large-scale development, portions of metropolitan areas.67 Such powers are such as planned neighborhoods and new communities. especially critical for county governments, since they Localities should be empowered to adopt official maps, usually exercise sole responsibility below the State level planned unit development and unmapped or floating for the unincorporated areas where such development zone ordinances, and be permitted to require developers generally takes place. If given these powers, counties to dedicate or make cash payment-in-lieu of such then must hire the personnel and establish the organiza- dedication for parks and school sites. tional structure capable of dealing with public develop- The adoption of an "official map" specifically ment authorities, private developers, and other corpora- identifies future locations for streets, public facilities, parks, playgrounds and other public uses and officially reserves the sites for future public acquisition. Used in 66~etropolitan.. . Disparities . . . , p. 94. Draft legislation has been prepared to carry out the Commission's proposal. coordination with other measures as part of an over-all (1970 Cumulative. . . Code 31-34-00). It places primary respon- development program, the official map is a major tool to sibility for areawide coordination of zoning matters in the assist governments in directing growth and providing county. The draft bill provides that counties in metropolitan areas may exercise planning and zoning authority for municipal- adequate services at a reasonable cost. The enabling ities with less than 5,000 population, and for new municipalities legislation should permit localities to reserve for a stated until they reach the 30,000 mark. The county further has the period of time land for future public acquisition for right to review and approve certain planning and zoning actions for all existing municipalities between 5,000 and 30,000 people. The bill also provides for intermunicipal coordination of planning and zoning, including specific opportunity for an 68~dvisoryComndgsion on Intergovernmental Relations, abutting municipality to be notified of and comment upon Alternative Approuthes to Governmental Reorganization in certain actions that would affect property in its territory. Metropolitan Areas (A-1 1; June, 1962). p. 24. 67~rbanand Rural America . . . , p. 166. 69~ee1970 Cumulative. . . Codc 31-31-00. streets, public facilities, parks, playgrounds and other zoning ordinance but not located on the accompanying public uses? map. This new technique is well-suited to large-scale In most States, subdivision developers can be projects that could be located in any of several different required by local governments to provide streets, curbs, places. It is particularly appropriate for neighborhood, gutters, sidewalks, sewer lines, water lines and storm community, and regional shopping centers, where there drainage facilities to service their own subdivisions. Thus will be only one or a few such projects within a fairly far, however, "mandatory dedication" requirements well-defined overall area. Advance specification of loca- have been much less frequently used to assure land for tional standards will, of course, limit the range of parks and school sites although open space is a vital possible placement of such centers, but explicit zoning feature of sound subdivision design and is as necessary as for a particular tract does not occur until a developer or the provision of such facilities as streets and sewers. owner takes the initiative to seek such action. Under- Suggested legislation for mandatory dedication of park taking a project at one of the possible locations would and school sites has been drafted as an amendment to eliminate several of the alternative sites. This approach existing legislation authorizing local subdivision regula- reduces the scattering of commercial uses which often ti~n.~ leave surrounding land undesirable for many uses. Land-use regulatory provisions for large-scale and Authorizing State regulation of the use of highway- new community developments have been authorized in finge land. Highways, along with water and sewer lines some local jurisdictions in the form of "planned unit and facilities, are among the major determinants of the development" zoning provisions. Local enactment of location of urban development. Public decisions as to such regulations is probably one of the most significant the location of these facilities can be a major method of steps that can be taken to encourage. new community channeling and influencing where and when urban development. It is particularly appropriate for appli- growth will occur. Use of development controls along cation in developing areas. highways, coupled with an access policy related to Lot-by-lot regulation under existing zoning pro- areawide development plans, can exert a significant cedures may be adequate for controlling development in influence upon developmental patterns. Highway plan- built-up areas. It is designed primarily to prevent the use ning then should be an integral part of overall physical of one lot from injuring the present or future use of an planning conducted by the State and its localities. adjoining lot. However, such regulation may be inap- Special problems are created by the extension of propriate and unduly restrictive where development of major limited-access highways through rural countryside. all lots occurs at about the same time and is done by a In such areas, local governments often do not have single party. The planned unit development approach adequate land-use controls to regulate the increased allows a developer more design flexibility in lot size, commercial, industrial, and home-building activities building site location, and housing types as long as generated by the highways. Although the immediate overall land-use intensity is maintained and open space is rights-of-way of Federal interstate highways are rigidly pr~vided.~' regulated, the areas just beyond and particularly along A fourth tool that should be made available by the access roads are becoming dreary, unsightly, honky-tonk States to their local jurisdictions is the authority to strip developments of the worst sort. The very rigidity of adopt "unmapped or floating zones." This innovation is the highway controls generates clustering of motel, a type of zoning district that is defined in the text of a restaurant, drive-in and other types of activities along the rights-of-way at access points and at interchanges. The ten-story-high filling-station sign looming up above 70~ee1970 Cumulative. . . Code 31-35-00. all the natural features of the countryside has become a h he draft legislation (1970 Cumulative. . . , Code symbol of such development. The real problem comes 21-37-00) requires that dedication be limited to areas subject to approved park and school site plans and that the locality must from the fact that, once established, many of these uses take into account differences in market value of property that can legally continue as "nonconforming uses," even may be included in any dedication. When a development is not when controls are finally inaugurated. large enough or where there is no satisfactory site within the development for dedication of a park or school site, the Governmental action to encourage economic growth proposed legislation provides for payment-in-lieu by the de- might intensify these problems if adequate controls are veloper. not provided along interstate and other major highways. 72~draft bill, (1970 Cumulative. . . , Code 31-36-00), Where municipalities or counties do not exercise effec- based largely on a New Jersey law and a 1968 Virginia proposal, tive land-use and development controls at access points authorizes lo& governments to adopt "planned unit development".regulations, Which combine zoning, subdivision control, and along major highway rights-of-way, an appropriate and other land-use procedures to allow greater design flexibility. State agency should be authorized to do so, pursuant to criteria and standards set forth in the authorizing most suburbs and to the ever widening gaps-in personal legislation.' income, education, health, and economic terms- between urban and rural areas. They castigate the Formulating Urban Development Policy willy-nilly gobbling-up of land on the urban fringe. They cite these and other imbalances in the existing urbaniza- The pattern of metropolitan development today tion process and seek a new life style for future results from the separate decisions of many private generations of Americans. citizens-consumers, builders, landowners, developers, Critics condemn proponents of the national policy financial institutions, and many other groups and indi- on several grounds. A debate between representatives of viduals. It also results from various governmental deci- the two camps might well run something like this: sions (or non-decisions) including those relating to Critic: But a national policy geared to stem- planning, land use regulations, land acquisition, and ming the tide of urbanization runs counter to all building codes, as we have seen. history, to human nature, and to the voluntarism of Most of these decisions-including those made in the our governmental system. public sector and even those ostensibly concerned with Proponent: This is not the goal of such a orderly urban growth-are discrete, frequently discon- policy-or, at least the one I advocate. What we seek nected, and often disappointing. And no wonder, given here is a policy that seeks to channel future urban the multiplicity of governmental programs and jurisdic- growth. It is not a matter of balancing rural and tions operating in this area, the weakness of areawide urban populations. But it is a question of seeking to mechanisms and the absence of any real policy at the locate some of our future urban populace in what national, State, or areawide level to help provide the now are rural areas. framework for coordinative program action and for the Critic: Even if this is your basic goal and I targeting of long-range urban goals. The question arises concede it to be a good one in theory, how in then: should governments scrap their sporadic, fre- heaven's name can you achleve it in a governmental quently conflicting approaches toward metropolitan system as decentralized, as multi-centered as ours? development? Should they seek to give sustained focus Proponent: That's an outdated point. Even to their existing programs and policies insofar as they unitary systems in Europe-Britain, France, and affect urban growth? Above all, should governments go Sweden-are seeking out techniques of devolution beyond this and attempt to hammer out an overall and decentralization to cope with their urban policy regarding the location of future urban growth-in planning and development. The American system short, a national urbanization policy? then is at least as adaptable to the needs of such a Advocates of affirmative responses to these tough policy as any other. Some would say-more so! questions usually contend that if present urban growth Critic: I doubt if either type can do it. In any trends are permitted to continue, greater imbalances, event, how can you expect to heap up additional greater pressures, greater inequities will arise. These planning, programming and management responsi- ambitious urbanologists point to the growing dis- bilities on a governmental system that already is equilibrium resulting from more and more people creaking under the weight of numerous badly heading into our largest metropolitan centers and of administered intergovernmental programs? higher personal and public service costs in such areas. Proponent : Admittedly, intergovernmental They warn of ihe perilous pressures of more intense administration at present is in a sorry state. But social and psychic stress that greater and greater conges- efforts are afoot at all levels to upgrade it. More- tion can generate. They point to the already wide gaps over, I'm convinced that the focus, priority-setting, between the economies of central cities and those of and long term direction involved in a national policy is just what is needed to energize the efforts of those seeking to better Federalstate-local admin- 73 Urban and Rural America . . . , p. 159. Draft legislation (1970 Cumulative. . . , Code 31-39-00) provides that a State istrative relationships. regulatory commission within an appropriate agency or depart- Critic: I don't follow you. ment of local affairs be empowered to decide whether local Proponent: Let me put it this way: It's difficult controls for particular areas are effective. If the agency finds they are ineffective it authorizes the establishment of a highway to push administration changes at the national level, interchange planning district, which applies zoning controls, to achieve interagency program coordination, to regulates the subdivision of land around interchanges, and issues curb the disjointed but dynamic efforts of the building permits. Finally, provision is made for establishing or professionals. It's tough to achieve State govern- reestablishing local controls when the county or municipality shows itself ready to exercise them. ment reorganization and significant involvement in urban problems and programs. But with a national local areas and jurisdictions in an attempt to identify strategy, these various undertakings will be related those suitable for intensified developmental effort: to broad, basic problems like where and how will Labor-surplus rural counties generally are ireas 115 million more Americans live between now and of underemployment, with an older, underskilled, the year 2000? The old good government, economy and undereducated population, resistant to moving. and efficiency arguments are thread-bare. My argu- However, absence of transportation and comrnuni- ment is quite the reverse. cation links as well as natural resources make their GZc: Maybe, yet your policy-if it is to economic prospects unpromising. achieve any reversal of present trends-obviously Labor-surplus city neighborhoods in large urban must involve the private sector and an expansion of areas display considerable under- and unemploy- the governmental role vis-a-vis this sector! ment, recent out-migration of blue-collar industry Proponent: You are partly right here, partly and difficulty of resident job seekers in traveling to wrong. Of course, the private sector will be in- blue-collar jobs in suburbs; but are close to large volved. It is now, and frequently responds to existing markets and have a large public investment in governmental urban policies that are conflicting and facilities essential to industry. counter-proddctive. My pet idea is: we need co- Sma! rural growth centers generally are "urban ordinative mechanisms regarding housing policies, places" located in essentially rural counties not part highways, agricultural programs, defense contracts of any metropolitan area. They have typically and base locations-as much as we do new programs experienced some population and job growth in and policies. We need to remember that govern- recent years; serve as major trade, transportation, ments-State and local included-already condition service, and social centers for their surrounding urban and economic growth. We seek here a more areas; and are relatively free of major socio- rational playing out of this government role-not economic problems. any gigantic shift toward greater governmental Medium-size cities with job opportunities gen- interventionism. erally have substantial physical plant in place, Critic: All this sounds soothing, but how can steadily growing population and economic activity, you devise a national policy without hammering out socio-economic problems still open to solution, and a hard and fast locational strategy? And even if you strong links to sizable surrounding areas through can produce a strategy, how can you make it stick? good transportation and communication. Proponent: I concede a genuine national policy Labor-short suburbs in large urgan areas are on urban growth must have a geographic founda- major growth points with a high level of economic tion. I also admit that it will be difficult to work activity, and an expanding demand for many kinds out-since ultimately it involves all three levels of of labor, including blue-collar. government, as well as the Congress at the national Of these various areas, two types would appear to level. merit special public efforts to stimulate private development: "small rural growth centers" and "labor-surplus Critic: You admit then that the whole idea of city neighborhoods." Of the rest, all but the labor- national policy is infeasible because it would have surplus rural counties will grow of their own accord. no locational features. Rural growth centers outside metropolitan areas Proponent: No, not quite! I think we are could provide a handy destination for some job seekers reaching a point where the dangers of sparsity as from rural poverty areas who might otherwise head for well as those relating to greater congestion are being the big urban centers. Some out-migrants from the recognized by more and more people. Moreover, to central cities might also profitably head for these rural be frank about it, there's something in a genuine growth centers. "Rural growth centers" start with some national urbanization policy for every major sector. important advantages. Even with these pluses, however, There's political appeal here, I'm convinced of it. small size means that growth is not a sure thing. These Critic: Well, maybe, but I'm very, very skepti- communities must still compete against the strong pull cal. of large urban centers;with their advantage of diversifi- As this dialogue would suggest, geography, eco- cation. Outside (private and governmental) help then is nomic growth, and density have much to do with a probably needed to turn potential into actual growth. national urbanization policy. The Advisory Commission, It may seem shortsighted to urge measures for in its report-Urban and Rural America: Policies for bringing industrial employment into (or back into) Future Growth-differentiated among certain kinds of central cities, where congestion is already heavy. Yet dispersion is a long-range policy; the exigencies of the in the formulation of the national policy, moment indicate a need for 'simultaneous focusing on consult with and take into account the views of "gilding the ghetto." One of the basic dimensions of this State and local governments. is the challenge of the increasing concentration there of Many elements of a national policy exist separately, unskilled, low-income, frequently nonwhite people. right now. Major components include the Employment Inner-city joblessness and underemployment are by- Act of 1946 and the Housing Act of 1949. Each deals products of the flight of industry to the suburbs, the with a basic national goal affecting urbanization. But lack of adequate transportation service between central these are only the more obvious. Federal departments city and suburbs, and suburban discrimination in hous- and agencies administering programs influencing urban ing. Encouraging industrial location in core cities, or economic growth include virtually all of the major however, will not stem in-migration. domestic ones and DOD should never be overlooked in But the people are there; so is the great investment this regard. of many decades in physical plant, and the continuing Yet no single agency in the national government advantage of central location. Leaving the residents to now has a continuing assignment to develop and monitor shift for themselves, when they cannot get to the jobs, is an urbanization policy, although the Urban Affairs to fuel further city explosions, like those of the summers Council currently is exploring the general question. At of' 1966-68. Yet, it must be stressed that on-site ghetto present the many national decisions relating to Federal measures need to be complemented by other measures programs directly affecting urban growth rarely are relating to dispersion. made in a context wherein their total or long-range Weighing all the pros and cons, the Commission has impact are weighed. concluded that the potential advantages of national and Reliable social and economic statistics also are vital, State policies on urban growth clearly outweigh the and developing a national policy would stimulate their disadvantages. Today, in an increasingly interdependent assembly and analysis. Much of the needed information society, significant private actions relating to urban for a system of social accounts is now available from the development are likely to have important public con- Bureau of the Census, the Department of Labor, the sequences, and few major governmental actions occur Justice Department, the Department of Health, Educa- without affecting the private sector. The question then is tion and Welfare, and other Federal agencies. Yet, there not whether government should be involved, but how it is no central responsibility for extracting the significant can be involved most intelligently and effectively. information, and for promoting its analysis in relation to The Commission advocates governmental actions urban problems. toward: Reorientation of Multi-State Economic Planning Formation of a national policy on urbanization. and Development Agencies. At a regional level, the Related adaptation of the programs of multi- Commission has recommended that the President reas- State planning and development agencies. sess the policies and structures of multiState economic State efforts to develop and implement a consid- planning and development agencies insofar as they affect ered policy concerning urban growth. the location of economic and population Formulation of a National Urbanization Such agencies, it was proposed, should take national Policy. At the national level, the Commission policies into account when formulating regional pro- has urged:74 grams and should help develop regional components of . . . the development of a policy incorporating national urban growth policy and programs. social, economic, and other considerations to National planning for urban growth must be tailored guide specific decisions at the national level for the differing growth patterns of the various regions which affect the patterns of urban growth. of the country. The earliest efforts to handle regional . . . that the President and the Congress assign growth dealth with natural resources: the Tennessee executive responsibility for this task to an Valley Authority was the first of several river basin appropriate executive agency. commissions. Under the Area Redevelopment Act of . . . that the Congress provide within its stand-, 1961 and its successor, the Economic Development Act ing committee structure a means to assure of 1965, as well as the Appalachian Regional Develop- continuing systematic review and study of the ment Act, economic planning has taken form in multi- progress toward such a national policy; [and] State regional districts to help depressed areas with . . . that the executive and legislative branches, relatively high unemployment and under-employment.

74 urban and ~ural~merica . . . ,p. 13 1. "urban and Rural America . . . ,p. 134. Development and Implementation of State Urbani- only a continuing, sometimes conflicting, but hopefully zation Policy, Parallel to these actions, at the State cooperative relationship between these forces will pro- level, the Commission urged the development of basic duce a State planning process that is really resourceful, policy to guide specific State decisions which affect the relevant, and responsive to the long-term growth needs patterns of urban Implementing legislation, it of its citizens. A suggested State act incorporating these was recommended, should provide for coordination by various features has been drafted.77 It already has an appropriate State agency of State, multi-county, stirred up considerable debate and disagreement. It is a metropolitan, and local planning, and relating such bill that merits careful consideration. planning to regional and national considerations. Con- The planning activity of the State government formity of programs and projects of State agencies to should go beyond a general classification of existing and the State urbanization pfan should be required as well as future land use. State programs for highway construc- formal review by an appropriate State agency of tion, parks, air and water pollution abatement, water areawide plans and of those local comprehensive plans conservation, and health facilities should be coordinated and implementing ordinances having an impact outside with the State urban development policy. The establish- the jurisdiction's borders. The Commission also recom- ment of a conscious policy on urbanization would also mended that multi-county planning agencies be assigned provide the background for other forms of State action the task of reviewing applications for Federal or State (discussed below), such as land banks, urban develop- physical development project grants in nonmetropolitan ment authorities and corporations, industrial location, as well as metropolitan areas. public purchase of development rights, new community If States are to play a key role in the development building programs, urban renewal, and housing. of 'urbanization policies, they must have a planning capability that will produce the components required to Possible Components of Urban Growth Policies channel effectively their future growth. No State at the present time possesses the kind of planning process Political reality, as well as long term considerations, called for here-though a few approach it. dictates that the specific components of a national What kind of a process would be productive, policy must deal with the immediate problems of central politically relevant, and potent-in the urbanization as cities and rural areas, while simultaneously planning for well as other policy areas? Administratively, its staff a more balanced geographic distribution of the next should be responsible and easily accessible to the urban generation and for a more innovative approach to governor. Procedurally, comprehensive planning should housing these future citizens. The overall policy-or, be linked closely to budgeting; despite the jealousies of better put, policies-must consider and deal specifically these two staffing sectors, both are in the job of with the three most dynamic conditioners of urban programming, priority-setting, and projecting ahead, and growth: the economic forces, the demographic factor, the skills of both must complement-not conflict with- and the actual pattern of physical development. each other. Operationally, the process should produce a The Economic Front. Several possible specific hard-not a hazy-product which can be acted on by the program alternatives should be considered by policy- legislature and serve as a guide to decision-making on makers confronted with devising effective urbanization specific urban and economic growth issues. Function- policies. At the national level, financial incentives such ally, the planning unit should serve as the master as tax credits, below market rate loans, or direct grants coordinator of line agencies' programming and a similar could be used to stimulate industrial and business responsibility should be assigned to it vis-a-vis planning location in rural growth centers and labor surplus districts at the sub-state regional level. Intergovern- neighborhoods of central cities. mentally, local or areawide plans, projects, and ordi- The tax credit approach has several virtues when nances having a spill-over effect should also be reviewed compared to alternative Federal subsidy arrangements. by this unit for their impact on the State's urbanization Tax policy changes are less likely to occur than changes policy. Finally, an ongoing dialogue must be established in policy respecting the other forms of subsidy, depen- between the governor and his planning staff and the ding as the latter do on the overall Federal financial relevant standing committees of the State legislature. condition. Tax credits would not subject business to the Despite the controversy this last proposal generates detailed scrutiny normally associated with Congressional among many planners, the Commission is convinced that appropriations or Federal lending activity. Tax credits

76 urban and Rural America . . . , p. 134. 77197~Cumulative. . . ,Code 14-41-00. have greater appeal to business simply because they dollars a year, significantly affect economic activity in permit greater flexibility in managerial decisions. Be- particular areas. Federal contracts in particular have an cause tax credit incentives represent a cost to all extremely uneven geographic distribution, and it appears taxpayers not directly benefiting from them, they that both defense and research-and-development con- should not and need not be permanent. By incorporating tracts are especially concentrated in the wealthier and a termination date in the law, review of the program more urbanized States. The National Government could after a trial period would be assured, and would forestall by statute provide for (1) a credit in evaluating any continuing drawdown on Federal resources in the competitive bids for public contracts on the price absence of strong indications that the arrangements offered for goods produced or services performed in contribute to desired objectives. certain areas, and (2) in negotiated procurement, prefer- As an alternative, federally subsidized below- ence to bids from such areas. States, too, could allow a market-rate loans might be considered. The Federal credit or other preference in bids for public contracts government has made below-market-rate loans for busi- from specified areas.7 ' ness ventures to serve various objectives: to deal with A major instrument at the State level for influencing disaster situations; and to aid small businesses, veterans industrial location is the industrial credit agency. Using seeking business ventures, economically-depressed areas, appropriated and borrowed funds, such an agency could and rural electrification. A loan program related to complement the Federal loan programs, and focus more urban-development objectives might be designed to fill directly on State urbanization policies. State industrial the margin between what firms can arrange for them- finance authorities are of two types. One guarantees selves and what is needed to assist an otherwise sound industrial loans made by private lenders, and the other venture. Such loans make available additional funds makes direct loans out of State funds.79 without threatening the equity or control of the entrepreneur, yet can protect the public investment. Many State constitutions forbid lending public The most straightforward Federal incentive arrange- funds to private organizations, or using public credit to ment would involve direct subsidy payments to entrepre- guarantee loans made by private organizations, no neurs who locate in designated areas. To establish an matter what the purpose of the loan or the character of effective direct subsidy program, a payment that would the lender. In many cases these prohibitions resulted offset either higher capital outlay or operating costs from 19th Century scandals involving the overextension could be made. A direct subsidy based on cost differen- .of public credit for canals or private railroad building. tials would put areas of desired economic growth on a Yet it is now possible to design safeguards into constitu- par with other areas as far as direct business costs are tions and statutes to ensure that public funds or credit concerned. made available for programs specifically designed to Fiscal propriety and the basic goal of a national serve public goals would be so applied, rather than to urbanization policy dictate that, regardless of the incen- enrich the nongovernmental participants. tives utilized, only those firms that qualify under the The industrial or highly urbanized States should specific location provisions of the overall policy should remove existing constitutional and statutory barriers to benefit. Also, whatever the subsidy route-tax, expendi- involvement of private enterprise in efforts directed ture or loan-the subsidy costs should be set forth toward enlarging and revitalizing the economic and fiscal clearly each year in the President's Budget as either direct or informational items, depending on the approach used. "A draft bid (1970 Cumulative. . . , Code 16-33-00) for At the State level, assistance could be authorized to State consideration which would apply this approach provides make loans more readily available to expanding firms that an apparent deduction of a specified percentage shall be seeking to locate in areas designated under State policy made from the price bid for goods or services rendered from a rural growth area or labor surplus city neighborhood, designated for more intensive economic development. Model bills pursuant to the State urbanization plan. The deduction would have been drafted for implementing this and other not, of course, affect the actual price paid, but would be entered proposals which call for a positive State role in charting illto the determination of the "lowest and best" competitive bid. \ the course of future urban growth. 79~draft bill (1970 Cumulative. . . , Code 34-31-00) has ' been prepared, under which a State Urban Industrial Develop At all levels, public procurement contracts and the ment Corporation would be authorized to do both: lend directly construction of new public facilities can and should be and guarantee up to 80 percent of a loan made by a private geared to fostering more orderly urban growth in order lending institution. It is intended to focus the efforts of State financing authorities on particular areas designated by State to further their respective urbanization policies. Federal urbanization policies as places where urban growth should be and State contract awards, totalling many billions of encouraged. base of their major cities?' After such action positive variations in benefit levels not justified by cost of living steps should be taken to enhance private-public coopera- differentials presumably would disappear. tion in these endeavors. Birth rates also should be considered by urbaniza- Not to be ignored, however, are the many existing tion policymakers. Despite the decline of the national governmental programs that already influence industrial rate, the high figure for families who suffer most from location decisions. These should be reviewed and, where the consequences of heavy congestion as well as of rural necessary, amended to conform to such politices. sparsity dictate that, as a minimum, the existing pro- The Human Element. In developing a specific grams of voluntary family planning for low-income urbanization policy, attention must also be given to persons should be funded at a much higher level than forces influencing migration patterns, and this means they are at present. focusing on ways and means of neutralizing those factors The Physical Pattern of Future Urban Growth. A that have produced excessive population concentration really effective urbanization policy must come to grips in some areas and that have contributed to stifling sparse with the form and quality of urban growth and not patterns in others. The industrial location proposals merely focus on the geographic location and distribution would help encourage the selection of less congested of future economic and population development. One locations for work and residence. At the same time, the hundred and fifteen million Americans will be added to Federal Government and States might also consider our population between now and the year 2000. This establishing a joint program of resettlement allowances means massive building and rebuilding must occur to for low-income persons migrating from surplus labor meet future as well as existing housing needs. areas in core cities and in the countryside to specific The economic and resettlement provisions of an locations designated for economic growth under their overall urbanization policy-if enacted and successfully respective urban growth policies implemented-will shift the location of much of this The National Government might well expand the building to less congested areas. Yet, a basic question Department of Labor's on-the-job training program by remains: What kind of measures are necessary to establishing a supplementary training assistance program promote a more pleasing, productive, and less pressured for employers located in labor surplus rural counties, pattern of future urban growth-a pattern whose design labor surplus city neighborhoods, and rural growth cen- considers the long term national interest? This qualita- ters. Moreover, the interarea job placement, counselling, tive concern is not a feature of all balanced urbanization and information services of the Federal-State Employ- strategies. It is a basic component of the ACIR's ment Service could be revamped and computerized so program and it should command the attention of all who that job seekers will be able to get full and accurate recognize that a narrow focusing on the quantitative information on definite employment opportunities in dimensions of urban growth will not produce a genu- other parts of the Nation. inely balanced policy. In developing this people-related component of an Innovations in the large-scale urban development urbanization policy, serious consideration should be field, however, will require strong and effective land use given to national legislation that would eliminate or at planning and regulation, and paradoxically more flexible least reduce the "migrational pull" of interstate varia- developmental controls. States then should enact legisla- tions in public assistance standards and benefits. If the tion to strengthen governments in this area by broad- basic goal of this policy is to maximize the locational ening their powers for controlling urban growth and by alternatives available to all our citizens, then Congres- consolidating those jurisdictions that lack the authority sional reform of the public assistance program is an and resources to deal with the dynamics of the urbaniza- indispensable and integral step in hanimering out this tion process. States should authorize municipalities to program. As described in the preceding chapter, the exercise extraterritorial control of planning, zoning, and Commission has urged that financial responsibility for subdivision regulation in cases where counties lack these public welfare and medicaid be assumed entirely by the controls. States also could legislate to permit municipal- Federal government. If this is done, any interstate ities to annex adjacent or non-adjacent unincorporated territory for new community and urban development- sO~iscalBalance. . . , vol. 2, p. 21. Wording for a constitu- subject to approval of a State or local boundary tional amendment has been prepared that would permit the commission. Furthermore, if States are really serious State, its political subdivisions, and any public corporation, as about exercising strong leadership in the area of develop- provided by Law, where a public purpose would be served, to grant or lend funds to an individual, association, or private mental controls, an appropriate State agency should be corporation to further economic and community development. given regulatory authority over highway interchanges 1970 Cumulative . . . , Code 34-30-00. and rights-of-way, since these are major locational determinants of urban development. This authority in the borders of municipalities. In order to, avoid would be used only in instances where municipalities or eroding the local property tax base during the holding counties do not exercise effective land use and develop- period, States should provide for appropriate in-lieu ment controls at these highway points. payments to reimburse localities for lost revenue. More effective guidance and regulation of urban The operations of such land development agencies development then is a basic necessity at the State and could be financed thrsugh direct appropriations, charges local levels and should be a major feature of their and rents, grants, sales of land, and borrowing, if respective growth policies. Much more controversial is authorized. Borrowing authority might be granted on a the proposition that governments should go beyond this revenue basis in anticipation of land sales and rents. and subsidize new large-scale urban developments, spe- Revenue from land sales and rent could provide a major cifically including new communities. But if future urban source of income, and a significant part of the operation America is to enjoy the qualitative benefits of new could be on a revolving fund basis after an initial communities, their record thus far indicates that some appropriation of working capital, supplemented only as form of subsidy is required. needed by subsequent direct appropriations or bor- In its report on Urban and Rural America, the rowing. Advisory Commission urged governments-Federal, The suggested exercise of land purchase and emi- State, and local-to explore various ways of encouraging nent domain powers would probably face legal barriers and participating directly in such large-scale develop- in some States. Yet, nearly all States have accepted the ments in furtherance of their urbanization plans. The urban renewal power to acquire land and clear it of Commission also made it quite clear that subsidies blighted development, for subsequent sale to private should be restricted to those new developments that developers, as a public use and a permissible exercise of clearly promote broad public objectives, such as accom- public authority. modating their pro-rata share of low-income housing. Moreover, several State courts have accepted the Bearing these reservations in mind, what can government broad view that the type of public use necessary to do to foster a more innovative pattern of large-scale justify exercise of eminent domain powers extends not urban development? only to "use by the public" but also to "use for the Direct Federal involvement might be launched by a public advantage" or "public benefit." According to this mixed public private corporation, a new Federal land dictum, anything that "leads to the growth of towns and development agency, or HUD. Such an agency could be the creation of new resources for the employment of authorized to acquire land, and sell it-improved or capital and labor, manifestly contributes to the general unimproved-to private developers, or make it available welfare and prosperity of the whole community" and is to State or local land development agencies. On a more encompassed by the concept of public use.' ambitious scale, it could be empowered to undertake, on More indirect forms of Federal involvement might its own initiative or in partnership with State or local take the form of expanding the existing land purchase agencies and private developers, large-scale urban and and development mortgage insurance programs to in- new community projects in conformance with an overall clude direct low interest loans to new community policy. developers or amending the Internal Revenue Code to In a like fashion, States could help shape our future allow this special breed of entrepreneur a longer loss urban terrain by creating their own land development carryover period to help wipe out the red ink of the long agencies and empowering them to acquire land, arrange and lean early years against the black ink of later years. for site development and basic physical improvements, Similarly, States could provide indirect assistance by establish a "land bank" operation, dispose of land to adopting legislation permitting deferred payment of developers or to local public agencies, and charter local property taxes and requiring State reimbursement subregional or local land development unik8' to the jurisdictions affe~ted.~ In its holding role, the State agency, in effect, could The prospective new community also faces special acquire strategically-located land and retain it in a "land governmental problems. First, some public authority bank" for future public or private development in must guide its growth. Second, the new community accordance with the State's urbanization policy. In still must develop a level of public services proper to a another role, the State agency might work with existing municipalities in developing areas destined for ultimate annexation or for new-town-in-town developments with- 82~hilipNichols, Eminent Domain (New York: Bender, Matthew & Co., 1950-53) Section 7.2, p. 63. ' See 1970 Cumulative . . . , Code 34-3 3-00. 83~ee1970 Cumulative. . . , Code 156244. concentrated urban community. Third, the developer's which can be lifted at any time by a "parent" objectives and pattern for the community must not be government-which in this case might be the county. thwarted. Finally, the residents both there and in the Another way to protect the original intention is to jurisdictions affected by it must be able to take part in continue development under the county government some of the basic decision-making. which originally approved the new community project. In practice, single-purpose special districts have But the county should be equipped to deal with sometimes been used to provide utilities. In other cases, concentrated urban growth, in order to reduce pressures special homeowners' or developers' organizations have for premature incorporation or annexation and the provided services on a special fee or assessment basis. resulting fragmentation of urban areas. Sometimes, such homeowners' associations manage open Another alternative is to provide adequate powers space, provide recreation, and enforce certain regulations for annexation, with appropriate safeguards-broad legis- incorporated into the by-laws of the association develop- lative guidelines, arrangements for citizen participation ing the community, or into deed covenants on the from the "new community" area, and review by property. boundary commissions or other appropriate agencies. An Although special districts can make possible a higher existing major municipality might handle the responsi- level of facilities and services for a new community, they bility for sustaining a new community's development also present a number of problems. They form a special objectives, if it is large and efficient enough itself. level of government, in effect, and may not properly The variety of involvement possibilities then is vast. preserve the interests of the residents, or even of the But Federal, State, and local policymakers should developer, as the area grows. carefully weigh each of these options in developing a Another approach is the creation of a county- meaningful large-scale urban development component subordinate service or taxing area. With this device, the for their respective growth policies. levying of special taxes or charges in specific areas is authorized, and the area remains under the county government. Past experience has documented the difficulties of To conclude, the peril of pressured cities and the independent incorporation without enough preparation. plight of eroding rural areas are immediate and inter- The problem of balancing the basic objectives of the related. They must be confronted. Yet, long term developer's plan with the accepted powers of local solutions must focus on a grand design of encouraging an government raises problems. The interests of the "early urban growth that is more balanced, more beneficient, settlers7' in maximizing their own investment and pro- and less bumptious than has been experienced to date. tecting the character of the town as they view it may not By establishing a national urbanization policy, the fit the objectives of the developer and of neighboring three traditional levels of government-along with the governmental jurisdictions. private sector-can join in a bold venture of ending the One possibility might be an adaptation of the stagnation of sparsity and curbing careening congestion. powers proposed by the Commission for "Neighborhood Such a policy can begin to unshackle the nation and Sub-units of Government" in large cities (see Chapter its people from conventional approaches to urban 4), in which a local administrative sub-unit is set up with development-to free them from the near determinism the clear understanding that it does not have govern- that has sapped their sense of mastery over physical mental autonomy and is given certain limited powers environment and social problems. Chapter 4

CIVILIZING THE LOCAL GOVERNMENT JUNGLE

"The crises of the urban environment welfare assistance and public transportation are among today suggest the depth and complexity of the cradle-to-grave services and facilities so essential to issues in the management of our society. The urban life that people expect their local government city is a thicket of problems, each difficult in institutions to provide. its own right, each made more difficult by its In cost and scale metropolitan local government interweaving with other nearly intractable prob- continues to mushroom. Expenditures climb at a much lems. . . . faster pace than population or overall economic activity. "Why have we had such enormous diffi- Social problems grow more complex, more pressing, culty, steadily mounting difficulty, in getting at more explosive. Local governmental institutions creak these problems? . . . One might blame our along from crisis to crisis constantly threatened with apathy, or our unwillingness to spend, or our catastrophe or collapse. fondness for outdated solutions or our resis- Too often, the structure of government in the tance to change. . . . But something else is metropolis has little in common with the area's econ- wrong, something central, something cru- omic unity. Rather, it is a jungle of competing, cial. . . . I think we are driven to a significant overlapping, uncoordinated independent political units. conclusion: there are some things that are If a "final confrontation between institutions that refuse gravely wrong with our society as a problem- to change and critics bent on destruction" is to be solving mechanism. The machinery of the averted, this jungle must be civilized; local government society is not working in a fashion that will in metropolitan America must become an effective permit us to solve any of our problems effec- problem-solving mechanism. tively. Would-be "civilizers" face three basic questions. he "That reality is supremely boring to most first is straightforward and factual: "Where are we now social critics. They are extremely reluctant to and how did we get here?" But that is only the prelude. think about the complex and technical pro- They also must tackle the far more complex and cesses by which the society functions. And in controversial issue: "Where would we like to be?" And, the end their unwillingness to grapple with finally, they must struggle with the practical, political those processes defeats them. . . . realities inherent in: "How do we get from here to "The true task is to design a society (and there?" institutions) capable of continuous change, continuous renewal, continuous responsiveness. THE PAST IS PROLOGUE We can less and less afford to limit ourselves to routine repair of breakdowns in our institu- Paradoxically, diversity is the only feature that tions. Unless we are wdling to see a final really is common to all metropolitan areas. Few sweep- confrontation between institutions that refuse ing statements can be made about local government in to change and critics bent on destruction, we large urban concentrations that would not be subject to had better get on with the business of rede- important qualifications and exceptions. Partly this is signing our society." (John W. Gardner, The because of the wide range in size and other character- Godkin Lectures; Harvard University; March, istics of metropolitan .areas; partly it is because of the 1969.) differing historical background of governmental institutions in various parts of the country. Nonetheless, some Most domestic public services are provided by and very common-though not universal-features can be paid for through local government. Education, recrea- identified, and their roots traced. tion, fire and police protection, construction and main- Common Features. One very common feature is the tenance of streets and roads, protection of public health, existence of many different local governments in a single Table 11 - Local Governments in Metropolitan Areas, by PopulationSize of Area: 1967

Local governments, 1967 Land- area Per 100,000 SMSA size group Number of ( 1.000 Population, Per 100 Population 11960 population) SMSA's sq. mi.) 1960 Number sq. mi. ( 1960)

All SMSA's 228 377.8 118,181 20,745 5.5 17.6

1,000,000 or more 24 64.3 61,598 7,367 1 1.5 12.0 500,000 to 999,999 32 88.0 22,012 3,878 4.4 17.6 300,000 to 499,999 30 46.0 1 1,359 2,734 5.9 24.1 200,000 to 299,999, 40 69.4 10,083 2,919 4.2 28.9 100,000 to 199,999 74 78.4 10,848 3,123 4.0 28.8 50,000 to 99,999 28 31.6 2,282 724 2.3 31.7

Source: U. S. Bureau of the Census, Governmental Organization 1Vol. 1, 1967 Census of Governments). Includes adjustments of tabular data for a final footnoted correction of the census findings. metropolitan area; the average is 91 governments per SMSA average only 29 in number, compared with the SMSA, and 48 governments per metropolitan county. nationwide average of 91 ; most local government ser- The average for metropolitan counties is 12 school vices are provided through townshps and sizable munic- districts, 12 municipalities, 7 townships, and 16 special ipalities. The South relies more on counties and there are districts in addition to the county government itself. no townships at all; here the number of local govern- These averages, of course, conceal wide variations, ments averages 40 per SMSA. Two strong trends have especially in the Midwest and Far West, where numerous emerged in metropolitan governmental structure in metropolitan counties have more than 100 local govern- recent years: The number of school districts has dropped ments each. In the ten metropolitan areas with the most sharply, and the number of special districts has sky- numerous local governments (ranging from 269 in the rocketed. Denver area to 1,113 in the Chicago area) the number Tmditional Local Governments. Two major classes per county runs from 35 to 186 (Table A-7). of local governments developed in the very earliest days The fact that the overwhelming majority of these of the Republic. One, typified by counties, was-and still local governments are relatively small in population and is-statewide in coverage. With rare exceptions there are geographic size is another common feature. For exam- no geographic gaps between counties; every square inch ple, about half of the nearly 5,000 municipalities in of territory is in one county or another. Their SMSA7shave less than a single square mile of land area, boundaries are spelled out in State constitutions or and only one in 5 is as large as 4 square miles. statutes. Counties traditionally have been responsible for Two-thirds of them have fewer than 5,000 residents; various kinds of public services that were needed one-third fewer than 1,000 (Table A-8). everywhere throughout the State but were not readily A third common feature is multiple layering-the subject to direct State handling. In some parts of the geographic overlapping of separate local governments. nation townships were similarly statewide in their Most residents of metropolitan areas are sewed by a geographic coverage; they too offered services needed minimum of four separate units-a county, a municipal- throughout the State. ity and a school district, plus one or more special The second general class of local government con- districts. The average central city has more than four sisted of municipalities-villages, towns and cities. These overlying local governments, and in parts of some came into existence one by one, sometimes by direct metropolitan areas the number of layers is much greater. State legislation but more often by local action taken in As a rule the boundaries of various local government accordance with an authorizing general law. Set up in units are not coterminous; less than one-fifth of the closely-settled areas that needed urban-type services not school districts and only oneeighth of the special available from the counties (or townships), they were districts in SMSA's coincide geographically with a authorized by the State to provide added services and municipality, township, or county. facilities and to finance them through taxes, user In two parts of the country-New England espe- charges, and bond issues. cially and to a lesser degree the South-metropolitan In the 19th century the development of public areas have much less diffused and layered patterns than education led, in most parts of the country, to another elsewhere. In New England, local government units per distinct type of local government-school districts. Like Local Governments in Standard Metropolitan Sta- Local Governments in Standard Metropolitan Sta- tistical Areas, by Type: 1962 and 1967 tistical Areas, by Population Size of Area: 1967 (THE 227 SMSA'S AS DEFINED IN 1967) NUMRFR NUMBER 8000 0

THER THAN SCHOOL

" 50.000. 100,000. 200.000- 300.000- 500.000. 1,000,000 " 99,999 199,999 299,999 499,999 999.999 OR MORE 1962 1967 SIZE GROUP OF SMSA'S (1960 POPULATION)

U S DEPARTMENT OF COMMERCE, BUREAUOf THE CENSUS /I2 U.S. DEPARTMENT OF COMMERCE. BUREAU OF THE CENSUS the counties or townships these were geographically pattern, has made relatively little use of such limita- comprehensive-that is, taken together they covered the tions.) The tax rate ceilings often were detailed, spelling entire area of a State. But, unlike the counties, town- out limits for particular funds or activities-roads, ships, and municipalities, they were responsible for only libraries, fire protection and the like. one function. School districts in the early days were By constitutional edict of statutory enactment the typically far smaller and more numerous than counties. States typically have specified also various details of the Most of them at first were no larger than about four internal structure of these traditional classes of local square miles each, so that rural children could walk to government-including, in particular, the size of their school. Within the recent past, most of the very small governing bodies and the nature of various additional school districts have been merged into much larger units. offices to be filled by popular election. For a long time then, most of the nation has had Special Districts. A development of more recent two or three layers of local government in rural areas vintage has been the proliferation of special districts, a (county and school district, sometimes plus township); group of local governments now more numerous in and three or four layers in incorporated urban areas SMSA's than any other type. As the term implies most (county, municipality, and school district, sometimes of these units are like school districts in that they are plus township). concerned with only a single function, such as fire With their overlapping boundaries and growing protection, water supply, or public housing. On the needs for property tax revenue and borrowing capacity, other hand, they are' geographically like municipalities in the questions that arose were how to safeguard each that they do not blanket the entire State. And they have type of unit from the competing demands of the others, come into existence one by one, for particular local and how to exercise some control over their total areas and in most cases by local action under a general combined demands upon taxpayers. In much of the State law. country thk reaction of the States was to impose specific Unlike the more traditional types of local govern- ceilings on property tax rates and to place limits on the ments, not all special districts can levy taxes. In fact, debt incurring powers of these several types of local about half of them-including some of the largest, such governments. (New England, with a far less layered as the Port of New York Authority-are limited in their own revenue-raising power to the imposition of service cally feasible way-for local areas to get around such charges or benefit assessments. Nearly all of them, limits. Significantly, the number of special districts is however, can incur debt and receive grants from other greatest in the States that have tight tax and debt limits. governments. A further strong reason for the mushrooming of There is no territorial overlap among counties, special districts is the limited role county governments among municipalities, or among townships. But, with are permitted to play in providing urban services. In their single-function nature, special districts can and very most parts of the Nation, counties traditionally have often do overlie one another in bewildering variety. been viewed as agents of the State for the performance They account for much of the complex layering of local of services needed everywhere, and with most of their governments found in many metropolitan areas- support drawn from uniform countywide taxes. Con- sometimes adding as many as another half dozen tiers to sequently, most counties lack the authority and the the usual four layers of more traditional kinds of capacity to supply the additional services demanded by governments. residents of the urbanizing parts of their territory. Thus In 1967, special districts in SMSA's numbered when service needs expand beyond municipal bounda- 7,049-1 5 percent more than in 1962-and constituted ries, and given the rigid annexation laws in many States, over one-third of all local governments in metropolitan the special district often is the only legal-perhaps the areas. While the Nation's metropolitan areas have less only constitutional-way of providing the needed ser- than one-fourth of all the school districts and multipur- vice. pose governments (counties, municipalities, and town- Still another reason is the common practice of ships), they have one-third of all the special districts. States to specify in detail the organizational structure Nationwide, the number of special districts has and the elective offices of traditional types of local nearly doubled in the past 15 years, with much of the governments. For counties in particular, this typically change taking place in SMSA's. A small portion of the results in a highly diffused internal pattern. In 1967 the proliferation can be traced to the need-arising from the average county .government in a metropolitan area had sprawling nature of the large modern metropolis-for 31 elective officials, including 9 members of the gov- public agencies equipped to handle specific public erning board and 22 additional officials. (Table 12). This services for areas larger than a single county. Of the diffusion of policy making responsibility, along with 7,049 special districts in SMSA's, 527 are multicounty other factors has lessened the potential feasibility of districts that deal with "large-area" functions such as air using the county-rather than special districts-to meet pollution, airports, and mass transportation. the developing public service needs of metropolitan Yet, there are far more compelling reasons for the suburbia. alarming proliferation of special districts. One of these, An alternative to special districts, obviously, would very clearly, is the refusal of many States to relax or be geographic enlargement of existing municipalities remove their restrictive tax and debt limits on traditional through annexation of newly urbanized fringe territory. types of local governments. The creation of special Once this was the traditional way for local government districts has been one way-sometimes the only politi- to adapt to urban growth; it still is an important tool in

Table 12 - Local Governments and Local Elective Officials in Metropolitan Areas, by Type of Government

Local governments Elective local officials Increase or decrease Governing Number (-1, 1962 to 1967 Total bodies Type of government 1967 Percent Number Percent Number Per gov't only All types 20,745 100.0 -1,113 - 5.1 134,012 6.5 87,062 School districts 5,033 24.3 -2,057 -29.0 29,090 5.8 28,882 Other than school districts 15,712 75.7 944 6.4 94.922' 6.0 58,180' Counties 405 2 .O - 3 - 0.7 12,498 30.9 3,753 Municipalities 4,990 24.1 75 1.5 45,222 9.1 29,603 Townships 3,255 15.7 - 27 - 0.8 30,480 9.4 8,002 Special districts 7,062 34.0 899 14.6 17,683 2.5 16,822

Source: U. S. Bureau of the Census, Popularly Elected Officials of State and Local Governments (Vol. 6, 1967Census of Governmentsl. Includes adjustments of tabular data for a final footnoted correction of the census findings. 'Net of duplication between governments having certain elective offices jointly. Local Governments and Elective Local Officials Per County in Metropolitan Areas: 1967'

Number of Governments Number of Elective Officials 20 15 10 5

County Government

Municipal- ities

School Districts

Townships

Special Districts

*Averages based on areas other than in New England, where SMSA's do not comprise entire counties

some parts of the country. However, the laws of many especially since they may still benefit from many of the States sharply limit the feasibility of annexation. The city's services-such as police and fire protection, traffic 195040 record is revealing. In 1960, there were 130 regulation, and street maintenance and lighting, as well cities (located in 38 States) with a population of as municipal parks, beaches, and museums-when they 100,000 or more. Of these, 44 annexed no territory at go to the city to work, shop, or visit. The trade-off is all in the 195040 decade, and another 36 added less even less attractive if the county provides some of these than 10 square miles apiece. The 22 cities that annexed services, at a lower level, perhaps, but also at a lower 30 square miles or more each during that decade were cost. Moreover, if the city, as is usually the case, has a located in only a dozen States. And in all but a few higher proportion of relatively poor "high cost" resi- instances, the territory thus annexed was only a small dents than the outlying territory with the resulting extra fraction of the cities' entire outlying urban fringe. drain on the tax base, the trade-off will have almost no The recent natuie of urban fringe settlement-often appeal. These are among the strong forces impelling involving shoestring or leapfrog patterns of develop- newly urbanized areas to choose the piecemeal special ment-frequently does not lend itself to annexation. district approach rather than annexation to the metro- Much nearby territory is so thinly developed at the politan area's central city. outset that it clearly is not fully urban but truly suburban, with emphasis on "sub." The metropolitan The resulting complex layered pattern of suburban fringe needs more varied and intensive public services government is rarely stable. As thinly settled parts of the than the sparsely settled rural areas, but less than the metropolitan fringe become more fully developed, their range and level normally provided by a municipal early minimum needs for urban-type services, perhaps government. involving only fire protection, expand to include also Yet annexation tends to be a matter of all or water supply, sewerage, and often other additional nothing. The annexed area receives all the city's services services. The upshot is a crazy quilt pattern of small, but it also must bear a full share of the cost of running disjointed, uncoordinated, and unresponsive, special the city. To many suburbanites the price is too high, purpose local governments. PATTERNS FOR TOMORROW required for efficient handling. Some, such as public schools or fire protection, can be carried out for rather It is not hard to identify some important character- small areas; others, such as air pollution and public istics of a "good" pattern of local government for the transportation, clearly demand large-area handling; still modern metropolis. Insofar as possible, local govern- others fall between these extremes. This suggests that ments should be so structured that they are able to: there should be a variety of specialized governmental Provide a hlgh degree of political unity to match units, each tadored in size to the nature of its function the area's economic unity; (Figure 14, Type A). Supply efficiently a wide range of public services On the surface this "cafeteria" approach to govern- and a variety of community facilites; mental structure for the metropolis appears to have a Provide on an equitable basis (through taxation, certain logic. But it obviously would lack other desirable charges, and borrowing) for at least a large part of characteristics. Even if public education can be provided their financial requirements without predominant efficiently for rather small areas, there still is likely to be reliance upon State or Federal assistance; a wide range among such areas in the relation of school Be clearly accountable to the people they serve, needs to tax base; the quality of schooling will suffer in tax, and regulate; the poorer districts and this will have a strong impact on Establish reasonable priorities among the com- neighboring areas. Thus, considerations of adequate and peting needs of various public programs, and equitable financing to support a desirable level of promote consistency in the planning and conduct educational quality throughout the metropolitan area of interrelated government activites; clearly calls for considerably larger school unit than Adapt basic public policies to the diverse condi- would be dictated solely on grounds of minimum size tions of various parts of the metropolis, and for feasible operation. The same is true for other public reconcile conflicts between areawide and local- services. ized needs; The "cafeteria" approach has other serious deficien- Anticipate emerging problems, and modify gov- cies. The specialized units presumably would rely mainly ernmental programs accordingly; for their financing upon taxation within their respective Stimulate enlightened civic interest and participa- boundaries. The result would be a multiple layering of tion in public affairs; and separate tax levies. In the absence of some overall Serve as a socially cohesive force, helping to control mechanism there would be no orderly way to promote harmony and reconciliation rather than limit the total tax burden for any particular area or to conflict among various elements of the popula- determine the reasonable share to be supplied for each tion. public purpose. The voters would be hampered seriously But it is far easier to list desirable characteristics in applying fiscal brakes to their tax base as a whole than to build them into specific local governmental because of the wide variety of bodies confronting them. structural arrangements. For one thng, opinions may- This structural pattern also offers little promise that and do-differ as to how well a particular governmental public functions which are closely interrelated but under form will serve one or another of the objectives. A more independent auspices will be planned and carried out in basic difficulty is that the objectives compete with one a mutually-reinforcing way. Furthermore, the resultant another. The choice of structural patterns must depend layering of units requires the voting citizen to select on the relative importance given each of the several numerous officials to represent him on the many desirable characteristics. Thus the introductory phrase governing boards. In the resulting complex, political "insofar as possible" is of key importance; even a accountability and responsiveness are dangerously theoretically ideal structure of "metropolitan govern- weakened. Finally, such a geographic decentralization of ment"-a scare word to many-really requires compro- government tends to separate rather than to unify the mises among the competing needs for efficiency, finan- people of the metropolis, emphasizing their differences cial capability, equity, civic participation, social reconcil- rather than their common interests. iation, and the rest. The "cafeteria" approach takes far too little ac- The "Cafeteria" Approach. One line of logic about count of the need for equitable financing, functional metropolitan governmental structure, starting with coordination, political accountability, promotion of major concern for the operating efficiency and localized areawide interests and matching areawide economic adaptation of particular services, might run as follows. unity with a large measure of political unity. The metropolis has to have a great variety of public The "Package" Approach. At the other end of the services, and these differ widely in the minimum scale spectrum is a metropolitan government in which all local Some Hypothetical Patterns of Local Government for the Modern Metropolis (With "layers" denoting particular functions or services)

Total area

Highly urban part of area

1 t I I TYPE A: Specialized particular-function governments: I I I I Areawide -I ! (L I Localized, but not

TYPE 6:Single comprehensive areawide I I 1 I I I I f I I I I TYPE C: Several geographically separate comprehensive governments:

I I I I TYPE D: Two basic layers of multi-purpose governments: I I I I I

TYPE E: Some areawide financing of separate multi-purpose governments: I

(For financing only) public services for the metropolis are "jointly pack- otherwise be the case. Or a combination of "Type C" aged," under a single jurisdiction. (Figure 14, Type B.) and "Type E might apply, with the areawide govern- Such an approach, by making urban government more ment aiding localized units as well as carrying out certain highly visible, should increase its public accountability. functions directly. Furthermore, the problem of diversity in efficient operating scale for particular functions could be handled by providing for decentralized operation of certain OBSTACLES TO CHANGE services-through police precincts, fire station districts, schools and the like. The would-be "civilizer" of the local government But this seemingly simple alternative also has serious jungle cannot draw organizational charts to suit his drawbacks. In the first place, today's metropolis is not a personal tastes and order his preferences into effect by clearly defined and stable area, but one with rather waving a wand. To find out "How do we get from where indefinite, irregular and changing "boundaries." Sec- we are to where we would like to be?" he must identify ondlyp the metropolis typically includes great variations and cope effectively with forces in the real world that in population density and resulting needs for certain strongly resist change. public se~ces;at the very least, this casts doubt on the Tax Level Differences. Among those likely to equity of a completely uniform level of taxation oppose change are the people who now benefit from the throughout such a, diverse jurisdiction. Also, some differences in tax levels that characterize almost all present-day metropolitan areas are already so big (and metropolitan areas. The disparities can be seen readily more will be in the future) that comprehensive govern- by comparing taxes within a central city with taxes in its . ments for them would have to be very large and surrounding suburban area. In most instances, the bureaucratically layered. Such governments likely would central city is more heavily burdened than suburbia have high overhead costs and would encounter difficulty whether the comparison is in terms of total local taxes in achieving effective functional coordination "down- per capita or as a percentage of personal income, or in the-line," even though various departments were tied terms of effective property tax rates. Even more together at the top by a single chief executive and a diversity can be found among particular minor parts of single governing body. Finally, and perhaps most dif- the metropolis. A recent study of 70 large metropolitan ficult, is the question whether-and how-such a large counties showed a withincounty range in property tax and multi-faceted government can be responsive enough rates of at least 2-to-1 in one-third of the counties and a to the divergent needs, conditions, and expectations of range of at least 1.5-to-1 in three-fourths of them. To all elements of the large modern metropolis; present big eliminate or narrow such tax differences by govern- city governments often seem remote and alien to many mental restructuring would, of course, benefit some of their citizens. metropolitan residents; but, it would increase the taxes Intermediate Approaches. Between the two ex- of others-and the latter group is likely to include tremes is a multitude of organizational patterns. Some influential members of the area's power structure. emphasize certain desirable characteristics; some empha- Social Disparities. Poor and disadvantaged people, size others. One possible compromise would be to break including a considerable proportion of Negroes and the metropolitan area into several geographic parts, each other ethnic minorities, tend to be concentrated in with its own comprehensive all-function government "poverty areas." The central cities typically have far ("Type C" in Figure 14). Another possibility would larger proportions of such "highcost citizens" than does provide two separate layers of local government-one suburbia as a whole, though sizable poverty areas also areawide to deal with functions and activities that are found in outlying parts of many SMSA's. Efforts at require such handling, and another involving a set of restructuring that would enlarge local jurisdictions are smaller-area units to deal with localized governments likely to face resistance from the better-off communities within the metropolis ("Type E" in Figure 14). within the metropolis, that now can avoid concerning These oversimplified alternatives are subject to themselves with the problems of disadvantaged people. further variations, including some that might deal with Moreover, in a growing number of metropolitan areas special problems or limiting factors. For example, the Negroes have managed, or expect soon, to attain a two-level arrangement (Figure 14, Type C) might be significant measure of political power in a central city or "federated" by providing formal ties between the a satellite community. These groups may well fear that areawide and localized units, in order to promote governmental restructuring-whatever its possible advan- coordination of interrelated functions and to focus tages in other ways-will considerably reduce their stronger attention on areawide factors than might political muscle. Established Interests. As with any set of social THRUST OF ADVISORY COMMISSION PROPOSALS institutions, ongoing governmental arrangements accu- mulate a host of persons who rely heavily on the The Advisory Commission on Intergovernmental continuation of the status quo: officials, employees, Relations ever since its establishment a decade ago has contractors doing business with present governments, given priority attention to the critical problem of businesses subject to governmental regulation, and the fragmented govermental structure in metropolitan areas. like. For these people the prospect of major structural In seven policy reports released over a six-year period change at best involves uncertainty, and at worst the the Commission underlined again and again the crucial possible loss of familiar advantages of status or economic role the States must play in civilizing the local govern- benefit. Furthermore such "directly-affected" elements ment jungle. It emphasized over and over the critical of the community are likely to be a sizable and need for State government to take vigorous, decisive influential part of the population. Local government action to tidy up the local government lands~ape.~It employees average about 1 in 12 of all gainfully pinpointed ways for the National Government to prod employed people in metropolitan areas. Elective local laggards into action. And it stressed the need for officials in these areas number 134,000 nationwide, or organized civic groups to arousing citizen concern at the nearly 600 per SMSA. Suburbia probably averages at local level. least one elective local official per 100 families, and the The Commission's proposals target in on both proportion is much higher than this in many suburban short-term and long-range goals. They call for strong, sections. positive action by State government: Public Uncertainty. Unlike the limited but impor- to provide machinery at the State level to help tant groups just mentioned, most metropolitan residents local governments help themselves by (a) creating lack close acquaintance with the local governments that State urban affairs agencies, (b) removing consti- serve and tax them. Even if they feel a strong concern tutional barriers to State legislative action, and about social problems and public service needs, their (c) developing improved data on governmental concern is not likely to promote structural change unless performance and social conditions; they can be convinced that: to discourage the helter-skelter proliferation of existing organizational arrangements contribute small, nonviable multipurpose local governments seriously to the problems involved; by (a) limiting new incorporations, (b) empower- other kinds of action-such as more grants from ing State or regional boundary commissions to the State or Federal governments-would be consolidate or dissolve nonviable units, and (c) inadequate; and withholding State aid from nonviable jurisdic- the proposed structural change offers promise of tions; major improvement and is clearly better than any available alternative. ~overnrnental Structure, Organization, and Planning in Metropolitan Areas (A-5 ;July 1961) These are hgh hurdles for a would-be "civilizer" to State Constitutional and Statutory Restrictions on Local surmount, especially in view of the complexity of Government Debt (A-10; September 1961) Inherited patterns and the difficulty of predicting future Alternative Approaches to Governmental Reorganization in Metropolitan Areas (A-1 1; June 1962) conditions and foretelling the probable effect of pro- State Constitutional and Statutory Restrictions Upon the posed changes. Popualr concern for "crime in the Structural, Functional, and Personnel Powers of Local Govern- streets," to cite one example, is far more likely to trigger ment (A-12; October 1962) Impact of Federal Urban Development Programs on Local expansion of all the many separate police forces found Government Organization and Planning (A-20; January 1964) in the typical metropolitan area than it is to stimulate Metropolitan Social and Economic Disparities: Implications efforts to combine them into a more effective unified for Intergovernmental Relations in Central Cities and Suburbs (A-25; January 1965) instrument for public protection. And some who oppose Fiscal Balance in the American Federal System (A-31; change are likely to circulate unprovable or exaggerated October 1967) predictions of the dire effects of reorganization-seeking Three information reports, issued during the same period, provided further background information: to exploit the common human tendency to "rather bear Factors Affecting Voter Reactions to Governmental those ills we have than fly to others that we know not Reorganization in Metropolitan Areas (M-15 ; May 1962; out of of.''l print, but summary available) Performance of Urban Functions: Local and Aremvide (M-21; September 1963) ' Advisory Commission on Intergovernmental Relations, A Handbook for Interlocal Agreements and Contracts Factors Affecting Voter Reactions to Governmental Reorganita- (M-29; March 1967) tion in Metropolitan Areas, (M-15; May 1962), p. 23. Metropolitan Councils of Governments (M-32; August 1966) to limit the alarming growth of single-purpose problems of local government planning, struc- special districts by (a) controlling the formation ture, organization and finan~e."~ and facilitating the merger and dissolution of Wherever feasible, the Commission said, the State special districts, and (b) assuring greater visibility urban affairs agency should not be limited solely to and compelling coordination of special districts dealing with metropolitan areas; rather it should be with multipurpose governments; concerned with local government problems throughout to remove the shackles that cripple local efforts the State. In the 20 States that now have urban affairs to meet local needs by (a) clarifying local departments this broader approach has been ad~pted.~ government powers, (b) permitting local determi- In a closely related recommendation, the nation of organizational structure, (c) removing Commission also has urged the States to pro- unrealistic tax and debt limits, (d) freeing up vide: "financial and technical assistance to municipal annexation procedures, and (e) encour- metropolitan areas in such fields as urban aging the formation of metropolitan area study planning, urban renewal building code moderni- commissions; zation, and local government organization and to arm local governments with an arsenal of finance ."' weapons to meet the challenges of urban growth State urban affairs agencies not only offer a central by (a) strengthening urban counties, (b) authoriz- clearing house and a point of contact for local governing subordinate service areas and neighborhood ments and their officials, they also provide research, "subunits," (c) permitting interlevel transfer of coordination, and technical assistance. A few of these functions and interlocal joint service agreements, agencies have important planning responsibilities and and (d) providing for metropolitan functional administer urban renewal, redevelopment, housing, or authorities; and urban poverty programs. In addition, they may influence to foster metropolitan area-wide cooperation and local government structure through their research and coordination by (a) authorizing regional councils advice on annexation, charters, and fiscal arrangements, of local officials, and (b) empowering the gover- although as yet few of them have played a really nor to resolve interlocal disputes. significant role in stimulating basic restructuring. In the long run, however, through their broad knowledge of To Provide State-Level Machinery. . . existing conditions and problems, their familiarity-with applicable State laws, and their contacts with official- To strengthen the State's capacity to help local dom at both local and State levels, they may serve as governments to cope more effectively with the trauma catalysts for basic structural change. of urban growth the Advisory Commission has proposed Remove Constitutional Barriers to Legislative Ac- that the .States: (1) establish State-level urban affairs tion. The Advisory Commission believes that the tradi- agencies; (2) remove constitutional barriers to State tional concept of "home rule" should be modified to legislative action on urban problems; and (3) encourage take account of its limited relevance to conditions within the compilation of comprehensive data for the evalua- the modern metropolis. "Functions which in the 19th tion of social conditions and governmental performance. and early 20th centuries could be dealt with separately Create State Urban Affairs Agencies. In most States, by local areas may now be matters of concern to a large a major and growing proportion of the population metropolitan community or the State as a whole." resides within metropolitan areas where both money Constitutional provisions that confer absolute home rule problems and social problems are especially pressing and on local governments have the effect of handcuffing the complex. Traditionally, States have followed functional State government; they frustrate efforts by the legisla- lines in dealing with local govemment-demonstrating ture and the governor to help meet functional problems concern for public schools, roads, health, and welfare, that have grown too big for local government to handle for example. Largely ignored by the States, however, unaided. were the interrelationships among these activities at the Accordingly, the Commission has recommended local level, and the related problems of the structure and that States "considering either general constitutional functioning of local government. To fill this void the Commission has urged that the States: 3~dvisoryCommission on Intergovernmental Relations, (Governmental Structure, Organization and Planning in Metro- . . . enact legislation establishing "an agency of politan Areas, (A-5, July 1961), p. 35. the State government for continuing attention, 4~eeAppendix C. review, and assistance with respect to the '~overnmental Structure.. . , p. 37; Secretary Ribicoff metropolitan areas of the State and associated abstained. revision or undertaking constitutional changes with tics, employment, poverty and unemployment, housing, regard to local home rule, reserve sufficient authority in health, education, crime, and the like. Observing that the legislature to enable legislative action where neces- although "we have made great strides in the measure- sary to modify responsibilities of and relationships ment and analysis of our Nation's economic well-being among local units of government located within metro- we have only begun to scratch the surface in our efforts politan areas in the best interests of the people of the to gauge our Nation's social well being." The Commis- area as a ~hole."~ sion recommended: "a national system for the collec- Improve Data on Governmental Performance and tion, analysis and dissemination of social statistics . . . Social Conditions. A major barrier to intelligent with special emphasis upon the development of such appraisal-much less restructuring-of local government data for sub-state geographic areas."' in metropolitan areas is the difficulty of measuring The Commission also recommended that the "Inter- current conditions. The complex overlapping of govern- nal Revenue Service expand its reporting of income mental jurisdictions makes it hard to compare even the statistics for Standard Metropolitan Statistical Areas to relative costs and tax burdens of various parts of the provide data [separately] for the units of general local metropolis. Still greater obstacles must be surmounted government within such area^."^ to compare the "output" of local government units in Progress along these lines would, of course, improve various parts of the metropolis, or from one metropoli- the basis for public policy and program decisions at tan area to another. Yet the quahty of urban life rises every level of government, as well as for private decisions and falls with the quality of public services and facdities. affecting urban life. It would also supply some of the "If the Nation is concerned about what is happening information so urgently needed for the intelligent to the 'quality of urban life,' " the Commission has appraisal and overdue restructuring of government observed, "then the Nation needs to be equally con- arrangements in metropolitan America. cerned with the inability to measure this 'quality' and to draw meaningful intercommunity comparisons with any To Discourage Non-Viable Local Governments.. . reasonable degree of objectivity . . .We have not pro- gressed far in measuring the 'social health,' or even the To discourage the helter-skelter proliferation of 'economic health' of our local governments." small, non-viable units of local government the Advisory Underscoring the many billions of tax and invest- Commission has proposed: (1) the establishment of ment dollars going into metropolitan areas, the Commis- vigorous standards for new incorporations within metro- sion points out that "private investor, governmental politan areas; (2) the creation of local government legislator and executive alike need to be able to find out boundary commissions; and (3) the withholding of State how one unit of government compares with another in aid from non-viable units of local government. the adequacy and cost of services being provided." Limit New Incorporations. More than one-fourth of In effect what is needed is a "Dun and Bradstreet" all the municipalities in the United States are in for local government "functional health" as there has metropolitan areas-an average of 21 per SMSA, and 12 been one for fiscal health for a long time. Accordingly, per metropolitan county. The number is far greater in the Commission has recommended that "Federal, State many instances, of course. Cook County, Illinois heads and local officials work toward the establishment of data the list with 119 and seven other metropolitan counties facilities for measuring for major urban functions the have more than 50 each. Most of these "metropolitan" comparative performance levels of individual local units municipalities, moreover, are very small: one-half of of government." To achieve greater objectivity the them include less than a square mile of land area; Commission has suggested that thls effort should be two-thirds have a population of less than 5,000 and undertaken by a "nongovernmental organization and one-third have fewer than 1,000 residents each. should look toward the establishment of optional This feature of the metropolitan scene is a carryover standards, the collection and analysis of data, and from the past. Many statutory provisions for municipal periodic publication of comparative figures."' incorporation date from the time when, for the most A related proposal emphasizes the need for better part, settled communities were widely separated; it was measures of social conditions-population characteris- not unreasonable then to allow the formation of a separate village or town for only a few people. But the 6(~overnmentalStructure), p. 20; Secretary Ribicoff abstained. 8~dvisoryCommission on Intergovernmental Relations, Fiscal Balance in the American Federal System (A-3 1; October, 'Advisory Commission on Intergovernmental Relations, 1967), vol. 2, p. 23. Fiscal Balance in the American Federal System (A-31; October 1967), vol. 2, p. 25. 'lbid., vol. 2, pp. 22-23. Figure 15 1 The St Louis Urbanized Area (as of 1960) One Example of the "Governmentally-Crowded" Modern Metropolis

An urbanized area with more than 100 municipalities The heart of a 7-county standard metropolitan statisti- (dark-shaped part), plus adjoining unincorporated terri- cal area (as defined in 1967), served by 474 local tory (lighter-shaded) with at least 1,000 persons per governments - 232 in Missouri and 242 in Illinois. square mile. Land area 1960 population St. Louis City...... 6 1 750,026 Urbanized area ..... 323 1,667,693 SMSA ...... 4,119 2,104,669

I /,

4 71t lack of a reasonable size standafd for new municipalities ties and stand in the way of orderly and equitable can be extremely damaging in today's growing metro- adaptation of local government to expanding urbaniza- politan areas. It permits the creation of preferential "tax tion. havens" or of units that are too small to operate States have the power-and the responsibility-to effectively. These small islands accentuate fiscal dispari- halt the chaotic spread of mall municipalities within Figure 16 Create Boundary Commissions. The Commission also has outlined another means for halting the prolifera- Municipal Governments in Standard Metropolitan tion of non-viable local governments and encouraging Statistical Areas, by Population Size: 1967 much needed boundary adjustments. States should NUMBER empower a State agency or a local agency formation commission, the Commission has advised, to "order the dissolution or consolidation of local units of government within metropolitan areas . . . pursuant to specific statutory standards, with adequate public notice and hearings, and subject to judicial review."' ' As a minimum, boundary commissions would assure that proposals for new municipalities and special districts or for municipal annexations are scrutinized intensively from the standpoint of their long-range and intergovernmental effects. Had there been effective review of this kind in the past, many of the crazy quilt governmental arrangements that clutter the metropolitan scene today could have been avoided. But such agencies also should be able-guided by statutory standards and criteria-to proceed toward the harder tasks of cleaning up some of the patchwork that already exists. "The State or local regulatory agency," the Com- O LESS 1,000- 2.500- 5,000 10.00D. 25.000. 50.000 mission observed, "should examine closely those units of THAN 1.000 2,499 4,999 9,999 24.999 49,999 OR MORE SIZE GROUP (1960 POPULATIONI local government that appear to be least viable under the terms of the statute [and] . . . be empowered to man- /13 U S DEPARTMENT OF COMMERCE, BUREAU OF THE CENSU date the dissolution or otherwise. This procedure would expose the more obvious enclaves and tax havens to metropolitan areas. The Advisory Commission has public scrutiny and provide a basis for meaningful strongly urged that States review and update their action."' standards and criteria for new incorporations, specify- Use Grants-in-Aid as a Weapon. School district ing appropriate minimums of population and population consolidation has been achieved in many States by density, and providing tighter standards for territory fashioning school aid formulas that reward the districts within a designated distance of large cities. that reorganize, and penalize small inefficient ones that Focusing on the urgent need for such action with regard to metropolitan areas, the Commission recommended that States enact legislation "providing "~iscal Balance. . . , vol. 2, p. 14; Governor Rhodes and rigorous statutory standards for the establishment of Governor Rockefeller dissented. Suggested State legislation to new municipal corporations within the geographic implement this proposal (1970 Cumulative. . ., Code 31-91-60) would vest authority in a State board to propose and review boundaries of metropolitan areas and providing further petitions for all types of municipal and special district boundary for the administrative review and approval of such adjustments. Boundary adjustment proceedings could be origi- proposed new incorporations by [an appropriate State nated by affected municipalities, by areawide planning bodies, through local initiative action, or, under specific circumstances agency] ."' O involving metropolitan areas, by the boiird itself. Hearings and States that recently have moved toward the estab- action in any particular case would be taken by a committee lishment of more stringent standards for new municipal including local representatives as well as members of the board, but with the latter having a majority of the total committee incorporations include California, Colorado, Georgia, vote. The draft bill includes standards and criteria to be applied Kansas, Nevada, New Mexico, Ohio, Oregon, Tennessse, in boundary adjustment proceedings. It also suggests alternative Virginia, and Washington. provisions if local boundary commissions are to be authorized, rather than a State boundary commission. The draft legislation draws upon experience with boundary commissions in Minnesota 'O~overnmentalStructure . . ., p. 39; Secretary Ribicoff (at the State level) and in California (operating locally). It adapts abstained. A suggested bill to implement this proposal provides methods that have been used in some States to accomplish in part for a state board to set criteria for, and to review and pass extensive reorganization of local school districts. Legislation judgment on requests for new municiapl incorporations. See along these lines has been enacted in Alaska, Michigan, and Washington. 1970 Cumulative ACIR State Legislative Program (M-48,August 1969), Code 31-91-60. '* ~iscal~alance . . ., vol. 2, p. 15. do not. But State aid programs for other types of local Table 13 - Special District Governments in Metropolitan Areas, by Funtional Class: 1967 governments rarely include financial incentives toward desirable structure. As noted in chapter 2 distribution Percent of formulas in some instances actually operate in the Functional Class Number Percent U.S. totals opposite direction; they shore up governments that All types 7,049 100.0 33.1 otherwise might dissolve or merge and even promote the Single-function districts: further multiplication of small "tax haven" units in and Fire protection 1,383 19.6 37.7 Natural resources1 1.275 18.1 19.5 around metropolitan areas. Water supply 964 13.7 37.7 In light of these considerations, the Commission, in Sewerage 778 11 .o 63.1 a 1965 report, recommended that each State "examine School-building 588 8.3 61.5 Housing and urban renewal 522 7.4 33.4 its present system of.grants, shared taxes, and authoriza- Parks and recreation 305 4.3 49.8 tion for local nonproperty taxes, and remove all features Other single-function that aggravate differences in local fiscal capacity to deal districts2 953 13.5 23.3 Multi-function districts: with service requirements in metropolitan areas and that Sewerage-water supply 192 2.7 64.4 encourage or support the proliferation of local govern- Other multi-function ments within such areas."' s More recently, in its study districts 89 1.3 57.4 of State aid completed in 1969 (described more fully in Chapter 2) the Commission expressed the view that Source: U. S. Bureau of the Census, Governmental Organization (Vol. I, 1967 Census of Governments). State aid formulas should provide positive disincentives ' Including drainage, flood control, irrigation, water conservation, to the creation or continuation of small units of local soil conservation and miscellaneous natural resources. 'government in metropolitan areas. Specifically, the 21ncluding districts for cemeteries, highways, health, hospitals, Commission urged "amendment of formulas providing libraries, electric power, gas supply, transit, and "other" purposes. State aid to local governments so as to eliminate or reduce aid allotments to small units of local government special district device can properly be used. With this in not meeting statutory standards of economic, geo- mind, the Advisory Commission has urged State action graphic, and political viability."' (1) to limit the creation of new special districts to appropriate circumstances and provide means for the elimination or consolidation of those districts which To Limit Special Districts . . . have outlived their usefulness, and (2) to increase the Special districts account for much of the growing "visibility" and public accountability of special districts complexity and layering of local government in metro- and promote coordination of their operations with those politan areas; their number mushroomed from less than of counties and municipalities. The Commission also has 9,000 in 1942 to more than 21,000 in 1967. In recommended Federal action (3) to modify existing metropolitan areas alone, special districts increased from Federal categorical aid programs that promote and favor 6,153 in 1962 to 7,049 in 1967-an average of one new special districts rather than general purpose local govern- district every other day. ments. Special districts are not all bad. Sometimes they These recommendations reflect the Commission's offer the only convenient way to meet important public view that in the absence of compelling conditions that service needs, particularly where traditional multipur- make it impractical, local public services should be pose local governments-counties, municipalities, and provided through multipurpose units of general govern- townships-are unresponsive or lack the legal elbow ment. Assignment of rresponsitdity for some services to room needed to adapt to changing circumstances. independent specialized units tends to reduce the Various other Advisory Commission recommendations, public's effective control over local government, to reviewed in this chapter, aim at the removal of State interfere with an orderly evaluation and reconciliation of imposed shackles on multipurpose local governments. competing demands for the local revenue dollar, and to However, action along those lines takes time, and in any hamper coordination of interrelated services. In addi- event there will continue to be circumstances where the tion, use of special districts often tends to increase local government costs-they are likely to involve at least some duplication of administrative overhead and to '3~~~~report A-25, (Metropolitan Socinl and Economic Disparities: Implication for Intergovernmental Relations in promote excessive use of revenue bond financing, with Central Cities and Suburbs, January 1965), p. 123. higher interest costs than otherwise might be incurred. '4~iscalBalance, vol. 2, p. 14; Governor Rhodes and Control Formation; Encourage Merger and Dissolu- Governor Rockefeller dissented. tion. To help insure that new special districts are established only where no better alternative action is ments, an average of 22 per State. Only half of the available the Commission has recommended that States special districts have governing bodies that are popularly "enact legislation to provide that no special district be elected; the rest are run by appointed boards. Even if the created prior to review and approval of the proposed district officials are subject to election, the vote typi- district by a designated agency consisting of representa- cally is very light, suggesting lack of popular knowledge tives of the county or counties and city or cities within or interest. which the proposed district will operate."" The potential impact of special district operations The Commission has advised further that consent to upon other local governments is far greater than might the creation of a new district be given only where the appear. This is particularly true for units that provide local approval agency, after careful investigation, deter- such urban-type facilities and services as water supply, mines that "no unit of general local government or sewerage, fire protection (making up about half of all existing special district, acting singly or jointly, is willing the special districts in metropolitan suburbia). Not only and able to provide the service and the approval agency do these units represent a response to the outward thrust finds a need for the proposed service [which the district of urbanization, they also strongly influence the location is to provide.] "' and nature of new development, with all that implies for If the proposed district is to perform functions the central city and satellite municipalities of the affecting State programs (such as natural resource modern metropolis. Short-sighted, illconceived, or un- development or pollution control), the Commission feels coordinated action by special districts is likely to create that the proposal also should be subject to advance difficult problems for other governments-such as school review by the appropriate functional agency of the districts whch must provide educational facilities, and State. Decisions resulting from these reviews should be county and municipal governments that are expected to subject to court review upon appeal. furnish roads and streets, handle traffic, regulate land Observing the special districts often continue to use, and provide other essential services. exist after an appropriate unit of general local government, or a'single district rather than several, could very To fill these gaps the Advisory Commission has well assume their responsibilities the Commission also recommended that the States require that a designated has recommended that States "enact legislation: (1) State agency-and the appropriate county governing providing a simple procedure for consolidation of special body-be informed of the creation of all special districts, districts performing the same or similar functions; [and] and that budgets and accounts of special districts be (2) permitting an appropriate unit of general government formulated and maintained according to uniform proce- to assume responsibility for the function of the special dures determined by an appropriate State agency which district."' would arrange audits of district accounts at regular Increase Visibility and Compel Intergovernmental intervals. Coordination. Other Commission recommendations con- The Commission also suggested that the units of cerning special districts take account of their usual general government must approve any acquisition of remoteness from public view and the need to relate their land within their boundaries by a special district, and programs and operations to those of general-purpose that any proposal for special district capital improve- governments. ments be submitted for comment to the units of general The need for "visibility" arises from various factors. government where the proposed improvements would Most States even lack an overall inventory of their local occur. special distlicts. Special districts are legally authorized The Commission also advised counties and munici- by a vast and complex array of State authorizing palities to include in each individual property owner's statutes. A Commission study based on Census Bureau tax bill an itemization of special district property taxes data for 1962 counted more than 1,100 such enact- and special assessments and to include pertinent information on the activities of all special districts in the county or municipal annual reports. 'SAdvisory Commission on Intergovernmental Relations, The Problem of Special Districts in American Government Further, the Commission urged that service charges (A-22, May 1964), p. 75. levied by special districts be reviewed and approved by I6lbid., p. 77. the governing body of a unit of general local government I7~dvisoryCommissio~ on Intergovernmental Relations, or by an appropriate State agency. The Problem of Special Districts in American Government And, finally, the Commission recommended that (A-22, May 1964), p. 80. For implementing legislation see 1970 Cumulative.. .,Code 31-9169. each State undertake a comprehensive study of all special districts to ascertain their number, type, func- obstacles: the opposition of those who feel they benefit tion, and financing.' from existing geographic differentials in tax levels and Recast Federal Aid Programs. The multiplication of from existing social disparities; the resistance of those special districts has been encouraged by some Federal who consider themselves "in" with the status quo aid programs, especially those concerned with public governments; and the basic reluctance of people gen- housing, urban renewal, soil conservation, reclamation erally to exchange something mediocre but familiar for and irrigation. When these programs were first offered, something better but unknown. These barriers to suc- they often encountered legal incapacity or indifference cessful reorganization efforts tax the political ingenuity, by established multipurpose governments such as coun- dedication, and energy of the "civilizers" even within ties, municipalities, and towns. The most expeditious metropolitan areas that are favored by liberal State way to stimulate local action, it seemed then, was constitutional and statutory authority to refashion local through newly created special district units. This devel- governments according to the will of the local electorate. opment helps to account for the fact that metropolitan Where the framework of State laws and constitutional areas now include some 1,300 special districts concerned provisions is restrictive the task of effective reorganiza- with natural resources, and more than 500 involved in tion is all the more formidable. public housing or urban renewal. In most States such restrictions do exist, forming Some of the legal barriers to the conduct of these legal barriers to the adaptation of multipurpose govern- Federally aided activities through multiprupose governments-counties, municipalities, and New England-type ments now have been eliminated; and others will be as townships-to meet gowing and changing needs. Recom- efforts to civilize the local government jungle go mendations of the Advisory Commission in this area forward. These changes means that Federal agencies zero in on unshackling local government by relaxing or administering particular grant and loan programs can and eliminating State-imposed restrictions and encouraging should work increasingly with and through multipurpose basic restructuring of local government in metropolitan governments, rather than through special districts. Thls areas. These proposals call for statutory or constitutional policy has clear advantages from the standpoint of action to: governmental simplicity, visibility, and functional coordination at the local level. The Commission in 1964 Clarify the legal powers of general-purpose local recommended' that Congress and the executive agen- governments; cies "remove from Federal aid programs for urban Authorize cities and counties to determine their development all organizational limitations which require own internal structure, subject only to basic or promote special-purpose units of local government to guidelines; the disadvantage of general-purpose units . . . Other fac- .Eliminate State provisions that mandate popular tors being equal, general purpose units of government election for various types of county and munici- should be favored as Federal aid recipients. Special- pal administrative officials; purpose recipients should be required to coordinate their Lift legal barriers to adequate local taxation; aided activities with general-purpose governments. Modernize State controls over local government In response to this proposal, Congress enacted the borrowing and indebtedness; Intergovernmental Cooperation Act of 1968 which, Liberalize provisions for municipal annexation of among other things, directs Federal agencies administer- unincorporated territory; and ing grant or loan programs open to both types of units 6 Authorize official metropolitan study comrnis- to accord preference to local general-purpose govern- sions to plan restructuring of local government. ment "in the absence of substantial reasons to the Clarify Local Government Powers. It is a familiar contrary." rule of law that local governmental units may exercise only those powers affirmatively granted them by State To Unshackle Local Government.. . constitutional and statutory provisions. In actual appli- As we saw earlier, the would-be "civilizer" of the cation, however, this rule has been diversely interpreted, local government jungle is confronted with formidable and several kinds of problems have appeared. Some narrow judicial rulings have so limited the power of he Problem of Specinl Districts . . ., p. 84. For iniple- existing multipurpose governments that separate special menting legislation see 1970 Cumulative. . ., Code 31-69-00. district units have been necessary to handle demands for 'g~dvisoryCommission on Intergovernmental Relations, new or added services. At the other extreme, broad Impact of Federal Urban Development Programs on Local constitutional grants of "home rule" authority in some Government Organization and Planning, (A-20; May 1964), p. 23. States have severely limited the legislature's power to deal with the closely interrelated problems in various The Commission believes that, subject only to parts of a metropolitan area. appropriate general guidelines, there should be broad To counter these difficulties and to encourage local discretion to determine the appropriate internal multipurpose governments to adapt to meet changing form of county and municipal governments, and that conditions the Commission supports the "residual legal barriers to local adaptation and change should be powers" approach. The Commission has recommended: held to a minimum. " . . . that the States in their constitutions grant The Commission has recommended that as a mini- to selected units of local government all func- mum, States provide: "for adoption by municipalities, tional powers not expressly reserved, pre- by ordinance, or pursuant to simple petition or empted, or restricted by the legislat~re."'~ referendum procedures, of optional forms of In addition, the Commission has urged:' ' municipal government, including among others "State legislatures, as a general policy, [to] use the 'strong mayor' form and the 'council- broad language in amending and enacting new manager' form. Such grants of powers should legislation affecting the powers of local govern- (a) be applicable to all classes of municipalities, men.t relating to . . . all modern service func- (b) permit discretion at the local level in tions such as sanitation, public works, planning, determining whether to elect the legislative recreation, etc." body at large or by districts, or both; and (c) Powers delegated to local units, the Commission authorize assistance by the State government, cautioned, should be lodged in general governing bodies, available upon request, to municipalities in the rather than in functional officers or agencies. And, it development of new ordinances and procedures warned, that the delegation of "residual powers" should involved in converting to a new form of be accompanied by a thorough review of existing government." [States also should provide] . . . conditions, a careful determination of the particular "for the adoption by counties, pursuant to types of multipurpose local units best suited to exercise simple petition or referendum procedures, of the powers delegated, and the enactment of a compre- optional forms of county government."' hensive code that spells out the necessary hitations on The Commission does not recommend unlimited the powers granted localities and reserves other powers home rule. Home rule municipalities in metropolitan for the State. In other words, the intent of these areas can and sometimes do stymie efforts to achieve recommendations is not to give to local governments a areawide planning and coordination. As noted earlier, blank check, but, rather, to achieve a considered and the Commission has urged that sufficient authority be orderly clarification of legal authority to replace the reserved to the legislature to allow legislative action, antiquated and often ambiguous provisions found in where necessary, to modify local government responsi- many States. bilities and relationships wihmetropolitan areas, in Florida, Iowa, Massachusetts, and Pennsylvania the best interests of the people of the area as a whole. recently have made constitutional changes along these The recent U.S. Supreme Court decision (Avery vs. lines. Midland County) which extends to local governing Permit Local Choice of Internal Structure. Most bodies the "one man-one vote" principle previously States prescribe in minute detail the organization and mandated for legislative districts, will likely stimulate internal structure of their county and municipal govern- widespread changes in State laws relating to local ments spelling out the exact size and composition of the governing bodies and thus provide an opportunity for governing bodies, how the members are to be elected, action to broaden local authority to determine internal how many other local officials of various kinds are to be structure. elected and their powers and duties. Many of these Recent enactments in Hawaii, Idaho, Massachusetts, provisions are stultifying. They fragment policy-making Missouri, New Hampshire, New York, Vermont and and management responsibilities, mix legislative and Washington provide for more local option as to the executive functions, and hamper the development of internal structure of municipalities or other types of effective local political leadership. local governments.

"/bid., p. 69-71. Two draft bills (1970 Cumulative.. ., 20~dvisoryCommission on Intergovernmental Relations, Codes 31-59-00 and 3142-00) are offered to implement these State Constitutional and Statutory Restrictions Upon the Stncc- recommendations: The one pertaining to municipalities is based tural, Functional, and Personnel Powers of Local Government on New Jersey's Optional Municipal Charter Law of 1950. The (A-12, October 1962), p.72; Mayor Hummel dissented. one pertaining to counties is patterned after a North Carolina '/bid., p. 74. enactment. Nation-wide, the number of popularly elected taxing decisions that should instead be made by local county officials-in addition to the members of their governing bodies. governing bodies-averages 19. In metropolitan areas the It is clearly unrealistic to assume that uniform average numer is a surprising 22. For municipalities, the restrictions can deal equitably on a State wide basis with corresponding average number is only 3, and for existing variations in local needs and locally available tax townships 6,although there are many places where these resources. The inherited jungle of legal limitations has types of governments also have large numbers of elective not prevented a very strong rise in local property tax officials. revenue-it has doubled in the past decade, and multi- Excessive diffusion of responsibility clearly limits plied fivefold since World War 11. In many States the the policy-making role of local governing boards and prescribed limits do not directly constrain the majority hampers executive leadership and coordination. of taxing jurisdictions. Furthermore, the most common Some county officials (particularly judges and other form of limitation is a maximum rate against assessed court officials, sheriffs, and recorders) serve primarily on valuation; any resulting constraint can be circumvented behalf of the State, even though they are locally elected. by boosting the assessment level which is usually only a Recognizing that traditional methods of selecting offi- minor fraction of the market value of taxable property. cials "are deeply ingrained in our mores, and generally This widely used device reveals the crudity of the usual resistant to change," .the Commission does not propose type of property tax limitation. And its use gives the changes in provisions that relate to them in their exercise assessor a policy-determining role with respect to local of State-established law enforcement functions. How- budgeting and taxation that should be reserved for the ever, the Commission believes that local governing governing body. bodies should have substantial control over all other State-imposed limitations upon local property tax local officials-those engaged in administering the broad rates are generally inimical to local self-government. At range of service actihities and "sustaining" functions best they represent an undesirable substitute for effec- such as tax administration. tive budgeting and policy determination by popularly Consequently, the Commission has recommended accountable governing bodies. Accordingly, the Comrnis- that the States enact general legislation to lodge respon- sion has recommended "the lifting of constitutional and sibilities for appointment, tenure, and salary determina- statutory limitations on local powers to raise property tions of welfare and sustaining function officials in the tax re~enues."~ general governing bodies of the appropriate units of local Yet the proposed removal of long-established State government. Similarly, the Commission has recom- restrictions, the Commission recognizes, is not likely to mended that States empower all classes of municipalities occur promptly in all States. As a basis for interim to appoint all city officers other than the mayor and action, therefore, it has offered these guidelines for council mernbem2 liberalizing inherited legal limitations upon local prop- Free Up Local Taxing ~nthority.'~Property taxes erty taxing p~wers:~ are the primary source of local government financing. (1) Statutory limitations are preferable to constitu- State imposed restrictions on the property-taxing powers tional limitations. of counties and municipalities limit the ability of these (2) Tax rate limitations, if imposed, should be in units to meet emerging public needs. This in turn terms of the value of taxable property equalized stimulates the creation of special districts often for the to full market value rather than fractional primary purpose of circumventing the tax ceilings and assessed value. gaining additional local taxing authority. Tax restrictions (3) Broad limitations in terms of all local functions often have other bad effects, too. Sometimes they of government are likely to be less damaging promote short-term financing to cover operating deficits, than those that apply to individual specific or long-term borrowing in lieu of pay-as-you-go finan- functions. cing. They may stimulate voluminous special legislation (4) Limitations on taxing powers, if imposed, in some States, cripple the effectiveness of local budget- should be restricted to the financing of opera- ing, and interfere with sound assessment practices by tion and maintenance costs and should exclude shifting to assessors effective control over budgetary and requirements for servicing capital improvement debt and for pay-as-you-go capital outlays.

23~tnteConstitutional Resfrictfons . . ., p. 75-6. 25Advisory Commission on Intergovernmental Relations, 24~eeChapter 2 for a detailed discussion of Commission State Constitutional and Statutory Restrictions on Local Taxing recommendations in the area of taxation and finance including Powers, (A-14; October 1962), p. 6. the property tax. 26~bid.,pp. 6-9. If limitations are .imposed, provision should be The most common form of legal limitation pegs a made for relief (a) adkinistrativel~by a State ceiling on total debt of a particular local government as a agency and (b) by reference to the electorate. percentage of its assessed valuations, or-even more The electorate should always have the authority rigidly-sets separate ceilings on its debt for various to initiate by petition a vote on proposals to detailed kinds of purposes or facilities. If applied exceed prescribed tax limtations. uniformly "across the board," these limits obviously If property tax limitations are imposed and if cannot deal fairly with the great variations in local governing bodies and citizens have the latitude conditions and needs found within any State. On the to adjust them in compelling circumstances as other hand, if efforts are made to deal with the recommended (Nos. 5 and 6 above), then tax variations by statute, the result is at best a complex limits should embrace all overlapping local maze of provisions, cluttering up State laws with reams taxing jurisdictions. of detail in need of constant adjustment. Furthermore, Home rule charters should be exempted from like tax htsties to assessed valuations, such provisions the application of property tax limitations push assessors into an improper policy-making role with imposed by general law. regard to local government financing. Draft measures 6 imple~centthese ACIR proposals Another common type of State-imposed restraint include a brief constitutional provision authorizing mandates that bond issues be approved by referendum, legislation to regulate local taxation and borrowing; with approval sometimes requiring more than a simple suggested legislation to authorize local imposition of majority of the votes cast. This requirement, obviously, property tax review; and a bill to provide relief from limits the power of local governing bodies which statutory limits through home rule or State administra- ordinarily can act on other matters without specific tive action.* popular authorization. Relax Limitations on Local Debt. Authority to Two main ways have widely been used to get incur debt is a key element in local government around these restrictions: (1) the creation of additional financing. Nearly one-fifth of all local public expendi- specialized types of local governments, having their own ture is for construction and other capital outlays; the separate borrowing limits or, in some instances, less bulk of it initially financed from borrowing. Local demanding referendum requirements than those of issuance of bonds issues total about $8 billion a year, traditional multipurpose governments; and (2) the and interest on the $82 billion of outstanding local issuance of "nonguaranteed" bonds, payable from ear- government debt amounts to about $2.6 billion a year. marked sources other than local property tax revenue-a States have a legitimate and strong concern with the type of debt which the courts have generally held to fall debt status of their local governments. Imprudent outside traditional types of legal restraints. Such State borrowing generates future trouble for the unit involved, constitutional and statutc y restrictions on local govern- and the State may be forced to come to its rescue, as ment debt have contributed substantially to the near- occurred during the Great Depression of the 1930s. doubling in numbers of special districts during the past More immediately, unsound debt conditions may not 15 years, and to the greatly increased proportion of only damage the credit position of the local government "non-debt" debt (now more than one-third of all local directly involved but also that of neighboring local bonds outstanding, as compared with one-sixth in 1952). governments or even the State government itself. There The Advisory Commission believes that the present is a compelling reason, then, for State regulation of local maze of constitutional and statutory restrictions on borrowing and indebtedness. local government borrowing seriously impedes effective As in the case of legal limitations upon local taxing self-government. These restrictions "handicap self- powers, however, most State restrictions on local bor- reliance of local communities and governments, and rowing date from a bygone era when conditions were impel them toward increased financial dependence on very different from those which exist today. In many State of Federal Government resources." Moreover, the instances, these restrictions are onerous in effect, unduly State imposed limitations have "contributed" in many complex, and poorly conceived. They impede sound areas to complexity and deviousness in local debt local government, stimulate the proliferation of special operations. districts, and promote undesirable borrowing practices Accordingly, the Commission has re~ommended:~ that result in excessive debt service costs. "that State provisions with respect to local 28~dvisoryCommission on Intergovernmental Relations, State Constitutional and Statutory Restrictions on Local Gov- 271970 Cumulative . . ., Code 33-21-00. ernment Debt, (A-10; September 1961), pp. 4-5. government indebtedness take cognizance of all to the multiplication of special districts to provide forms of local borrowing and debt.. .The urban-type services in the metropolitan fringe. intended application of such State provisions he-process has gone so far in some metropolitan should be made explicit . . . [and] any condi- areas that, their central cities are encirculed by a noose of tions that attach legally to the borrowing power separately incorporated suburbs. More liberal annexation of an individual local government [should] provisions alone would be of little help to these central apply uniformly-or subject only to specifically cities. But even here the enlargement of satellite munici- defined exceptions-to any type of long-term palities may be far preferable to the creation of still debt it can incur. more separate local governments. Obviously, the many "that authority to issue bonds should be metropolitan central cities which are not already com- leagally vested in the governing bodies of local pletely hemmed in by suburban nooses should be governments, subject to a permissive refer- empowered to accommodate fringe growth in an orderly endum only, on petition, and with participation and equitable way by extending their boundaries. in any such referendum available to all eligible Accordingly the Commission has recommended that local voters and the results determined-except the States "examine critically their present. . . provi- under unusual circumstances-by a simple sions governing annexation of territory to municipalities, majority vote on the question. and that they . . . eliminate or amend . . . at least with "the repeal of constitutional and statutory regard to metropolitan areas-provisions that now ham- provisions limiting local government debt or per the orderly and equitable extension of municiapl debt service by reference to the local base for boundaries . . . . As a minimum, authority to initiate property taxation? annexation proceedings should not rest solely with the "that the States study and consider measures to area or residents desiring annexation but should also be regulate long-term borrowing of local govern- available to city governing bodies . . . Inhabitants of ments by reference to the net interest cost of minor outlying unincorporated territory should not prospective bond issues in relation to the possess an absolute power to veto a proposed annexation currently prevailing interest rate on high quality which meets appropriate standards of equity."3 municipal sec~rities.~O ~ncoura&-~etro~olitan Area Study Commissions. "that States make available technical and In its reports on urban problems the Advisory Commis- advisory assistance to local governments with sion has emphasized that "there is no best single regard to the issuance of long-term debt . . ."3 ' approach to governmental organization, applicable to all Illinois, Michigan, and Pennsylvania recently have conditions and times." In the future, as in the past, eased their earlier restrictions on local borrowing powers, and Alaska and Kentucky have set up new 'Draft measures to implement these proposals include: a arrangements for State technical assistance on local brief constitutional provision to authorize statutory regulation governments debt issuance. of local borrowing powers, and a bill based on Tennessee law Liberalize Municipal Annexation Procedures. Prior outlining local debt issuance procedures; and a bill to provide for State technical assistance with regard to local borrowing which to 1900, the Nation's large cities expanded in size largely includes provision for the type of debt limit suggested above- through annexation of adjacent unincorporated terri- i.e., prohibiting new debt issues that would have an excessive net tory. Over time this process became more difficult. interest cost relative to the current yield rate for high grade local bonds. See I970 Cumulative . . ., Codes 33-21-00 and 33-48-00. Suburbs began to develop and State legal provisions were 32Advisory Commission on Intergovernmental Relations, adjusted to require that annexation could occur only Governmental Structure, Organization and Planning in Metro- with specific approval by residents of the territory politan Areas, (A-5; June 1961). A draft bill measure to involved-sometimes even only at their initiative. Re- implement this recommendation is based upon a North Carolina statues (1970 Cumulative. . . , Code 31-53-00). The nieasure strictive provisions such as these "loaded the dice" would authorize the city council of a municipality of more than against municipal annexation as one of the possible ways a specified population to annex adjoining unincorporated terri- of adapting local government structure to the outward tory which meets stated standards of urbanization and develop ment. The bill specified procedures to be followed, includes thrust of urbanization. These restrictions, along with requirements concerning the extension of municipal services to other factors, contributed to the establishment of the annexed area, and makes provision for judicial review upon separate suburban municipalities-often very small-and appeal. Another possible statutory approach is illustrated by the Commission's draft legislation for State boundary commissions, previously mentioned. Numerous States including Alabama, Arizona, California, Georgia, Kansas, Oregon, Missouri, 29Mr. Burton and County Executive Michaelian dissented. Nebraska, Nevada, New Mexico, West Virginia, and Wyoming 30Mr. Burton, State Senator Cutler, and Mayor Clinton recently have amended their laws concerning municipal annexa- dissented; Secretary Dillon expressed a reservation. tions, in the direction suggested by this Commission proposal. Figure 17 What is "The Urban Community"? Many factors, including legal barriers to municipal annexation or consolidation, have pushed numerous cities into strange shapes, which often have little relationship to patterns of travel and human activity in the modern metropol is. San Jose, California, is only one example of such conditions. Mapped here as of 1960, the San Jose urbanized area included 15 municipalities. The San Jose metropolitan area (all of Santa Clara County) had 74 distinct local governments in 1967.

changes in local government structure are likely to be proposals for revising and improving local government evolutionary rather than revolutionary. Proposals for structure and services in metropolitan area^."^ State legislation to implement Commission recommendations are designed to facilitate desirable adaptations. On the other hand, the Commission is convinced 33~overnrnentalStructure . . ., p. 32, County Executive that in many places structural problems are too serious Michaelian and Mr. Burton dissented; Secretary Ribicoff abstained. Suggested legislation (1970 Cumulative . . ., Code and too complex to be met solely through piecemeal 31-51-00) to implement this proposal provides that the study adjustments. If major changes are necessary, they should commission would be brought into existence by a majority vote follow a searching examination of existing conditions within the area concerned; that study commission members be appointed by governing bodies of the cities and counties conducted in an orderly manner by a properly con- involved; that study commission recommendations be developed stituted body. For this reason the Commission urged the within a limited time and be subject to public hearings; that any States to enact legislation "authorizing the establishment recommendation for abolition, consolidation, or territorial change of existing governments require referendum approval of metropolitan area commissions on local government within the affected units; and that creation of a new unit require structure and services, for the purpose of developing favorable action by voters in the area concerned. This procedure resembles that used successfully in "large-area'' type public services in today's metropolis. many States to achieve a less ambitious objective-the hi; approach caniron out the effect of fiscal disparities consolidation of school districts. However, the few within the county and foster economies of scale.34 notable efforts that have been made in recent years to On the other hand, development of the "urban accomplish the more comprehensive-and more county" as a significant metropolitan government faces difficult-adjustment of local government structure in geographic limitations. It is of limited value in multi- metropolitan areas have operated not under a general county SMSA's. Even in SMSA's that consist of only a authorizing law, but, rather, under special statutes that single county-about one-half of the total number-the focuses on particular areas. Since "local legislation" is inflexibility of county boundaries may hamper later unconstitutional in many States general enabling acts of adjustments needed to deal with further urban sprawl. the kind recommended by the Commission are urgently & County boundaries are spelled out in State constitutions needed. In 1963 Oregon became the first State to or statutes; they usually are far more resistant to change authorize, by general law, the establishment of study than municipal boundaries. commissions to appraise local government structure in The Advisory Commission has recommended that, the States metropolitan areas along the lines of the in "the implementation of State policy regarding urban Commission's proposal. growth," the States should consider various approaches, including "providing urban counties with appropriate To Provide an Arsenal of Weapons. . . governmental authority and organization, [and] encouraging county c~nsolidation."~ So varied are the needs, so intricate the structural Such an opportunity for locally initiated action machinery, so complex the problems ,that no single would broaden the potentiality of the "urban county" pattern of functional authority will be equal to all the as a means for improved local government in metropoli- tasks facing local government in metropolitan America tan areas. It also would simplify county consolidation in today. Rather, in the judgment of the Advisory Commis- rural areas where, with declining population, the need sion, local government must be armed with an arsenal of for such action is evident. weapons that may be employed singly or in combina- Authorize County Subordinate Service Areas. tion. Traditionally local governments impose taxes on a To this end the Advisory Commission proposes 34~dvisoryCommission on Intergovernmental Relations, State action to: Alternative Approaches to Governmental Reorganizotion in Strengthen urban counties and facilitate county Metropolitan Areas, (A-l 1 ; June 1962). A brief suggested bill consolidation; drafted to implement this suggestion authorizes any county of Permit counties to set up subordinate service more than a specified population size and population density to undertake certain municipal type functions in unincorporated areas ; territory. The "urban-service" role of the county may be Authorize major cities and urban counties to broadened further by empowering municipalities to transfer create neighborhood "subunits7' of government; selected functional responsibilities to the county, as suggested in a Commission recommendation. See 1970 Cumulative . . ., Code Allow voluntary transfer of functions between 31-43-00. cities and counties and joint-service arrangements; 35~dvisoryCommission on Intergovernmental Relations, and Urban and Rural America: Policies for Future Growth, (A-32; Empower metropolitan functional authorities to April 1968), p. 159. A draft bill to implement county provide services that require areawide handling. consolidation has been developed. It would (1) authorize the governing bodies of two or more adjoining counties to develop Strengthen Urban Counties. In a 1962 study of an ageement for consolidation of their governments; (2) alternative approaches to restructuring of local govern- authorize initiative petitions to request the development of such ment in metropolitan areas, the Commission noted the a consolidation agreement; and (3) provide for local referendum on the question of consolidation, with approval to require a potential role of the "urban county" as a unit which favorable majority in each county concerned. See 1970 Cumula- might well be vested with a considerably increased range tive . . . , Code 31-41-00. Suggested legislation has been drafted of responsibilities. that would carry out this proposal, and language for a brief constitutional amendment has been developed for consideration The study revealed that many county governments in States where constitutional change may be needed. See 1970 have fuzzy patterns of internal structure, with inade- Cumulative.. . , Code 3143-00. The bill would authorize a county governing body, on its own initiative or in response to quate central direction and coordination. In some States popular petition, to create a subordinate service area with county governing bodies have been unrepresentative- defined boundaries and functions, and later to enluge any such typically favoring rural or suburban areas over major service area. In either instance, action by the county board would be subject to popular referendum, upon petition, within cities. Where these shortcomings can be overcome, the the territory concerned. Kentucky and Utah have recently county holds real promise as an instrument for providing adopted legislation in accord with this proposal. uniform basis throughout their entire jurisdiction. Often units, many of them extremely small. And most pro- this practice is seared into State constitutions and posals for restructuring look toward the substitution of statutes. "Special assessments" are a limited exception fewer, geographically larger, multipurpose governments. to this general rule. They are levied in selected small But action in that direction arouses valid concern as to areas to finance localized capital improvements such as whether such major governments would be sufficiently sidewalks where the direct benefit is readily apparent. responsive to the diverse needs of their various sub- Though generally logical when it first developed, the communities. How can they hope to enlist widespread principle of intra-jurisdictional tax uniformity is ill civic interest and healthy participation in public affairs? suited to an area where spotty or gradual urbanization is Many existing major city and county governments are occurring-a condition that typifies much of the modern hard put to provide acceptable answers. metropolis. It stand squarely in the way of effective use Often the complaint is voiced that, in the modern of the county as an appropriate unit of multi-purpose impersonal metropolis, city hall and the county building local government to fill the demands for added public are far too remote from local neighborhoods and services that follow inevitable in the wake of metro- ordinary citizens. politan growth. Recognizing this basic weakness a The Advisory Commission believes that large cities number of States have authorized county governments and counties can overcome this weakness and still reap to delineate sub-areas or districts in which they levy the important plusses that large units permit by devel- additional taxes and provide additional services not oping and working with and through subunits designed needed elsewhere in the county. And one State, New to stimulate local areas toward neighborhood improve- York, has authorized subordinate specialservice districts ment and active involvement in the governmental pro- for townships. cess. The Commission has urged: "the enactment of This potentially useful device, the Commission State legislation authorizing large cities and county believes, should be widely available. Accordingly, the governments in metropolitan areas to establish neighbor- Commission has advised the States to "enact legislation hood subunits of government with limited powers of authorizing counties (in some States, towns) to establish taxation and of local self-government with respect to subordinate taxing areas in parts of their territory to specified and restricted functions . . . Such subunits enable these governments to provide and finance a would be dissoluble by the city or county governing governmental service in a portion of the county."36 body at any time."37 With such power, the county governing body can Allow Voluntary Transfer of Functions. The pre- limit part of its tax levy-or apply an added levy-to the vailing division of functional responsibilities between subareas in which the residents need or demand counties and municipalities was hammered out in an additional services. Responsibility for basic policies on earlier era when needs and conditiws differed vastly the provision of services remains with the county from those now common in metropolitan areas. governing body. Political and governmental responsi- Today, municipalities in these areas are crowded bility are not fragmented. Services provided to only a together shoulder to shoulder. Many metropolitan portion of the jurisdiction can be properly coordinated with other county government services which might not 37~iscalBalance . . ., vol. 2, p. 16; Governor Rhodes and be the case if independent special districts were utilized. Governor Rockefeller dissented. A draft bill designed to imple- Moreover, the county can respond more readily than a ment this proposal: (1) Defines its potential coverage, and expresses the purpose of encouraging citizen participation special district to additional suburban development that through neighborhood counciis as legal entities of major city and might call for expansion of such service areas. county governments; (2) Provides for the establishment by city This recommendation and the Commission's pro- or county governing boards of service areas and councils for particular neighborhoods, in response to initiative petition from posal that counties and municipalities be authorized those areas; (3) Authorizes the governing boards to change the voluntarily to transfer functional responsibilities comple- boundaries of such areas, or to dissolve neighborhood units, and ment and supplement each other. Transfers of some specifies the procedures to be followed; (4) Provides for popular election of neighborhood council members; and (5) Outlines functions would be impracticable where all county- suggested area-council powers, including limited financing au- imposed taxes must apply uniformly, countywide. thority. Under the suggested legislation, authorization for Permit Neighborhood "Subunits" in Major Urban neighborhood subunits would be entirely at the option of the governing board of the major city or county concerned. Governments. Most examinations of local government Furthermore, they could set up such subunits for some structural ailments in metropolitan areas emphasize the neighborhoods and not for others. The power of the originating large number and complex layering of governmental city of county governing body to dissolve subunits entirely at its own discretion, the Commission emphasizes, is a built-in safeguard against the subunits becoming independent new local 36~heProblem of Special Districts . . ., pp. 82-8. governments. See 1970 Cumulative. . ., Code 31-58-00. counties now are almost entirely urbanized. The earlier On the other hand, such joint agreements have logic of two separate layers of multi-function local important limitation. They rest upon voluntary arrange- governments has largely disappeared. Today's logic ments, reflecting the immediate local interest of the suggests the desirability of "vertical integration" through participating units; changing conditions may lead to citycounty consolidation, and this approach ought to be controversy or withdrawal. Some of the units may be fully explored as a desirable goal wherever restructuring too weak to bargain effectively for a "fair" agreement. of local governments in metropolitan areas is needed. Contracts between some units may serve their interests However, consolidation efforts may encounter stone at the expense of other neighboring units or the wall opposition. If this occurs the Advisory Commission metropolis as a whole. Extensive use of intergovern- suggests as an alternative voluntary transfers of selected mental service arrangements may confuse lines of functional responsibilities between municipalities and responsibility and erode meaningful public account- counties. This approach calls for the States to authorize ability. And joint arrangements sometimes serve to the "legislative bodies of municipalities and counties "prop up" and perpetuate an essentially undesirable located within metropolitan areas to take mutual and pattern of local government, thus delaying efforts coordinate action to transfer responsibility for specified toward more basic structural improvement. governmental services from one unit of government to The Advisory Commission, in its recommendations, the ~ther."~ has taken account of both the usefulness and the Selective adjustment of functional assignments shortcomings of interlocal contract. In a 1961 report, tailored to the needs of particular metropolitan counties the Commission recommended the enactment of legisla- may avoid the stormier battles that often mar locally tion by the States "authorizing, at least initiated efforts at more comprehensive structural within . . . metropolitan areas, two or more units of local change, or State-mandated changes in municipal and government to exercise jointly or cooperatively power county government assignments. Legislation along these possessed by one or more of the units concerned and to lines has been enacted recently in Idaho, Michigan, and contract with one another for the rendering of govern- Tennessee. mental service^."^ Authorize Interlocal Agreements. Another way of A year later noting the differences in relative meeting public service needs in a changing modern bargaining position of individual local governments, the metropolis involves agreements under which certain Commission recommended that the State government activities are carried out jointly or cooperatively by two "make its 'good offices' available in the event of disputes or more local governments, or by one unit on behalf of between or among local units of government in connec- others. The agreements may be continuing or temporary, tion with interlocal contract^."^^ formal or informal, and may be entered into pursuant to More recently, the Commission has expressed con- special act or general law. cern that under some circumstances the interlocal Arrangements of this kind have obviously useful contracting device encourages fiscal disparities within features. Existing local governments that are too small to metropolitan areas, by fostering the creation or reten- carry on certain functions economically may trim costs tion of small non-viable governmental units. Accord- by having services performed on a cooperative pooled ingly, the Commission's proposal (discussed above) that basis or by another larger unit. Use of this practice may the States create effective machinery for controlling and also offer some hedge against the creation of special adjusting local government boundaries includes the districts, with their potential for further complication recommendation that State or regional boundary adjust- and overlapping of local government structure. And ment agencies be empowered to "enjoin the use of an these arrangements also may promote better intergovern- interlocal contract within the metropolitan area when it is found to promote fractionalization of the tax base mental relations. without overriding compensating advantage^."^' Such

38~overnmentalStructure. . ., p. 30; Secretary Ribicoff abstained. A draft bill to carry out this recommendation includes 39~overnmentalStructures. . ., p. 22; Secretary Ribicoff suggested definitions of the geogiaphic areas to be covered, the abstained. functions and services that may be voluntarily reassigned, as well as procedural and other considerations that must receive official 40~lternativeApproaches . . ., p. 32. attention from the county and municipal governing bodies 41Fiscal Balance. . . , vol. 2, p. 14; Governor Rhodes and concerned. See 1970 Cumulative . . ., Code 31-58-00. Governor Rockefeller dissented. action should be taken, the Corpmission recommends. responsible metropolitan service agencies carrying on only "with adequate public notice and hearings, and functions not solely financed by user changes."44 subject to judicial re vie^."^ Draft legislation to implement these recommenda- Empower Metropolitan Functional Authorities to tions seeks to guard against the multiple layering and Handle Areawide Services. The creation of many multi- political irresponsibility of special district^.“^ It provides county agencies to deal with "large area" public services, that: (1) A "metropolitan service corporation" may be such as air pollution, mass transportation, water supply, created on the basis of a majority vote in the area to be 01 sewage disposal, accounts for part of the recent sewed by the corporation, pursuant to an election multiplication of special districts. Such action often is resulting either from resolution of the governing bodies more feasible politically than the merger of existing of major local governments or from petition; (2) The multipurpose governments, and is one way of over- corporation would be empowered by statute, subject to coming "small-area" handicaps. local voter approval, to carry on one or more of several The practice of pulling out single functions for specified metropolitan functions; (3) If responsibility for independent handling, if carried too far, however, can comprehensive planning were voted to the corporation, result in a whole array of powerful authorities, each performance of this function would be required for the operating in its own bailiwiok, unrelated in planning, entire metropolitan area, but other functions could be programming and financing to the other areawide handled for smaller service areas; (4) The corporation agencies and to preexisting jurisdictions. Furthermore, would be governed by a board consisting of representa- such authorities often are controlled by appointive tives from the county governing boards and the councils boards that are not directly responsible to the electorate and mayors of component municipalities; (5) The and may be entirely independent of other local govern- corporation would have power to impose service charges ments in the area. and benefit assessments, and to issue bonds; (6) If Despite these dangers the Advisory Commission responsible for functions appropriate for tax financing, believes that States should permit metropolitan areas to the corporation would also have taxing power. use largearea functional authorities where this device is The Commission suggests that such an authority more desirable or feasible than basic restructuring of the might be empowered to levy a property tax or a existing pattern of local multi-purpose government. "piggy-back" addition to a State-imposed sales tax, States should authorize local units of government within rather than a separate local sales or income tax. Any use metropolitan areas to establish "metropolitan service of property taxation, the Commission warned, should be corporations" the Commission has advised. The corpora- accompanied by equalization of assessments throughout tions should have appropriate borrowing and taxing the area. power, but their initial establishment and any subse- This type of authorizing legislation is designed to quent broadening of their functions and responsibilities permit metropolitan residents to handle appropriate should be subject to areawide voter approval.43 largearea service through a single agency-rather than In a later report, the Commission reaffirmed and several-and to adjust the functional scope of the agency supplemented this proposal urging that "State legislation to meet changing needs and conditions. The makeup of be enacted to authorize the use of taxing powers by its governing board would promote cooperation and coordination between the service authority and the 42~bill to authorize interlocal contracting and joint counties and municipalities within its area. enterprises has been drafted. (See 1970 Cumulative. . ., Code 31-91-00.) Most States now have enacted legislation along these lines. Also available are draft constitutional amendments de- To Foster Area-Wide Coordination . . . signed to remove barriers to intergovernmental cooperation, including inherited constitutional provisions that, in some States, Civilizing the local government jungle in most areas bar certain officials from serving as members of intergovernmental bodies. Another draft bill based upon a Georgia law of most States, the Commission is convinced, will would specifically authorize special State assistance to local require the basic adjustments of local government governments are considering consolidated or joint administration structure and the strengthening of multipurpose govern- of particular functions. (See 1970 Cumulative. . ., Codes 31-91-10, 31-91-11 and 31-91-12.) In addition, the Commission ments outlined above. But this is strong medicine. Angry has published a handbook for local officials which describes the opposition will greet some of the more controversial application of interlocal agreements and contracts and suggests prescriptions for healing locai government's ailments. In points to consider in drafting. (See A Handbook for Interlocal Agreements and Contracts, (M-29; March 1967). 43~overnmentalStructure . . ., p. 26 ; County Executive A-25, p. 120. Michaelian and Mr. Burton dissented; Secretary Ribicoff ab- 44~etropolitanDisparities . . ., stained. 451970Cumulative . . ., Code 31-63-00. the short run, pending more basic changes in govern- the Advisory Commission believes "that the voluntary mental structure and powers, less drastic action aimed at metropolitan council can be a useful means of stimula- promoting coordinated and cooperative action by local ting greater cooperation among governmental officials, governments within metropolitan areas may be the only creating public awareness of metropolitan problems, and politically feasible means at hand to deal with problems developing an areawide consensus on more effective that won't wait. Even in the longer run, effective ways of handling these problems." And so the Commis- coordination will be needed to lubricate the mechanism sion has recommended that the States "facilitate the that emerges as the best attainable structural arrange- formation of voluntary metropolitan councils of elected ment. It is unreasonable to eFpect that all local public officials by . . . legislation authorizing the making of services in every large metropolitan area soon will be interlocal agreements, supplemented by whatever special brought together into a single multipurpose govern- provisions may be required in the particular instance in ment-especially if the area is interstate in nature. according legal entity status to voluntary councils The Commission believes that, in the interim, better desirous of such status."46 Related Commission pro- coordination of existing local governments in metro- posals on metropolitan area planning commissions and politan areas may be achieved by: regional planning and development agencies are reviewed Providing for regional councils of elected offi- in Chapter 3. cials. Empower Governor to Resolve Interlocal Disputes. Gubernatorial action to help resolve disputes In the "governmentally cogested" environment of the among local governments within metropolitan modern metropolis, it is inevitable that conflicts of areas. interest should arise among local governments. Proposals Authorize Regional Councils of Public Officials. In for a State agency of local or urban affairs, for State or the past, formal organizations of governments or public local boundary commissions, and for the authorization officials have generally brought together representatives of regional councils of officials or governments of particular types of governments such as counties, ("COG's") are designed, at least in part, to limit such municipalities, or townships, or administrators con- differences or to aid in their reconciliation. Beyond this, cerned with particular public functions such as public however, the Commission has suggested that the Gov- welfare, highways, education, public health or financial ernor serve as the umpire and mediate major unresolved administration. More recently, another type of organiza- disputes that require settlement. Where needed, the tion has developed, which cuts across these lines and is Commission has said, States should "take legislative or focused at the need for effective communication and administrative action to encourage and facilitate exercise coordination among the various local governments of discretionary authority by the Governor and his operating within particular metropolitan areas. Such office, to resolve those disputes among local units of bodies, often referred to as councils of governments (or government within metropolitan areas which (a) cannot "COG's") have increased in number from a mere handful be resolved at the local level by mutual agreement, (b) in the late 1950's to several score today. are not of sufficient scope or subject matter to warrant COG'S differ in make up and authority but generally special legislative action, and (c) which, however, in the they are composed of elected local officials-mayors and determination of the Governor, are of such moment as designated members of governing boards-in a particular to impede the effective performance of governmental area; some also include representation from the State functions in the area."47 government. As a minimum, they serve as forums for This proposal recognizes the States authority and discussion, research, and recommendation on matters of responsibility for resolving local intergovernmental intergovernmental concern. They typically employ some differences. Stalemates are likely to be severely dam- full-time staff, at least for research assistance. In some aging to people in the metropolitan area concerned, and instances, they have broadened their role to include the governor's duty to see that "the laws are faithfully responsibility for metropolitan planning and for the provision of facilitative services on behalf of member 46~lternativeApproaches. . ., p. 38. Draft legislation to governments, such as employee training in particular implement this recommendation authorizes intergovernmental fields or joint purchasing. agreements for the formation of a regional council, provides for Regional councils rest upon voluntary participation membership on behalf of participating counties and municipali- by legally independent units of governments; they ties, and specifies the council's powers and duties. (See 1970 Cumulative. . ., Code 31-91-50.) Numerous States have enacted cannot be viewed as a substitute for the basic restruc- legislation in accordance with this Commission proposal. turing needed to deal with controversial issues that 47~overnmentalStructure. . ., p. 41; Secretary Ribicoff demand enforceable area-wide decisions. Nevertheless, abstained. executed" properly includes a responsibility to help Civilizing the local government jungle may be insure that intergovernmental disputes do not prevent "pretty boring stuff," but it is a crucial ingredient of the the provision of needed public services. comprehensive program of action required to deal effectively with the complex of ailments that plague the * * * * * nation's metropolitan areas. Antiquated patterns of local "There is no Gordian knot waiting to be government structure and authority often stand squarely slashed. To yearn for apocalypse and reject the in the way of efforts to marshal areawide resources to real task-to reform failing institutions-is cope with areawide problems. simply to sabotage one of the world's few Legally, local governments of every kind are crea- self-governing societies. tures of the States deriving their structure and authority, "The trouble is that most of what needs to their strengths and weaknesses-in short their capacity get done in the U.S. is pretty boring stuff- or lack of capacity to serve as effective "problem solving things like modernizing taxes, zoning, building mechanisms"-from State statutes and constitutional codes and local government^."^^ provisions. Clearly the States have a major role to play in the search for viable solutions to the multifaceted 48~~~~,August 30,1968. p. 21. problems facing urban America today. Chapter 5

MEETING THE CHALLENGE OF FEDERALISM: THE STATES' CRUCIAL ROLE

ACIR recommendations cited throughout this for the proliferation of units of government in metro- volume call for aggressive and imaginative State action to politan areas. State constitutions and legislative enact- help cope with the crises in metropolitan America. These ments have made it possible for so many localities to recommendations far outnumber those addressed to the come into being. Most States have not discouraged the Federal and local governments. Why this emphasis on creation of new nonviable units; they have not really the States? Why not more emphasis on the Federal encouraged the consolidation of existing units. They government and its direct relations with urban communi- have stood by while individual suburbs practice fiscal ties? Why not more stress on citizen responsibility, zoning, admitting high taxpaying industry and excluding where the fate of democratic institutions ultimately large low-income families. They have placed limitations rests? on local taxing and borrowing and have made it The answer, the Advisory Commission believes, lies impossible in many cases for cities to raise adequate in the pivotal role of the States in the federal system, revenues to finance the services that their citizens and the belief that they must play this role forcefully if increasingly demand. the federal system is to survive and flourish. On the positive side, States have the geographic scope required to deal with problems that increasingly THE KEYSTONE ROLE OF THE STATES are beyond the reach of municipalities or even counties. The areawide nature of the problems of air pollution, One respected student of American federalism has water pollution, mass transportation, land use controls, noted:' and water supply are well-accepted. Except where such The sum of a State's constitutional and areas straddle State boundaries, the State government political powers within its boundaries and its possesses the jurisdictional reach to encompass the constitutional position and political role within problem areas. the federal system as a whole places the States On the functional front, States historically and with at the keystone in the governmental arch. In its mounting intensity in recent years have administered central position, the State serves as a stimulator programs of critical concern to citizens of urban areas. of local government activities and as mediator Education, highways, health, hospitals, public assis- between its local governments and Washington tance, conservation of natural resources-the effective and, where necessary, between its local govern- application of State resources in these fields can have a ,merits and other States. . . . When a State gov- major impact on the urban resident's education, job ernment fails to fulfill its role as mediator, in training, employment and access to it, his freedom from this sense, the resulting vacuum leads to a want of basic necessities, and his access to social, serious weakening of the system. physical, and cultural amenities. This becomes increas- The States have life-ordeath legal authority over ingly so, as government becomes more deeply involved their local governments. They determine the localities' in social and economic problems. Moreover, where local powers, boundaries, and very existence. Thus, State governments are responsible for administering similar or government must accept a significant share of the blame parallel functional programs, the States have the adrnin- istrative structure and personnel to offer relevant technical assistance. 'Daniel J. Elazar, "Local Government in Intergovernmental Finally, the States possess far greater taxable re- Perspective," in Lois M. Pelekoudas, ed., Illinois Local Govern- ment (Urbana: Institute of Government and Public Affairs, sources than their localities. In a time of mounting University of Illinois, May, 1961), p. 23. awareness of revenue and service disparities among local units of government in metropolitan areas, the States politan areas to larger municipalities and county govern- have the jurisdictional reach and the authority to ments in order to encourage a wide range of housing equalize effectively the resources among these local prices. units. In terms of revenue, they should encourage local governments to use more productive taxes and discour- MAKING THE MOST OF STATES' POTENTIAL age the smaller jurisdictions from excessive tax diversity. Pending State assumption of substantially all costs of In placing heavy emphasis on State action on elementary and secondary education, the States should metropolitan problems, the Advisory Commission is authorize regional school property taxing districts to urging the States to make the most of their pivotal role assist in equalizing the property tax burdens of school in the federal system. It is asking them to live up to their financing between central cities and suburbs. constitutional and political position of leadership and Third, the States should provide policy and program responsibility for the well-being of all their citizens, leadership by improving the delivery of State services including those living in metropolitan areas. This in- that impact directly on urban citizens, by helping urban volves State action on four fronts. governments improve their revenue systems, by encour- First, the States need to empower appropriate aging areawide approaches, and by providing technical localities to perform more effectively within their and financial assistance to localities. They need to existing jurisdictions and to join with their neighbors to establish offices of community affairs to advise the tackle joint problems. This means giving certain local Governor and legislature on local problems, help coordi- governments "residual powers" to exercise all authority nate State programs affecting local governments, provide except that which is specifically denied by constitution technical assistance to localities, and possibly directly or statute. It means authorizing the creation of metro- administer such State urban assistance programs as politan study commissions, the transfer of functions housing, urban renewal and planning. The Governor between cities and counties, the negotiation of intergov- should make his good offices available to mediate ernmental contracts and agreements (but not among interlocal disputes. States should provide financial incen- nonviable units), the establishment of regional councils tives to localities to establish joint undertakings. To of elected local governmental officials, the use of increase the housing supply for low income groups, they metropolitan functional authorities, and the liberaliza- should authorize local units to purchase existing hous- tion of municipal annexation authority. It means ing, lease quarters in private housing, and permit strengthening county government by broadening its financial assistance to private nonprofit groups for the powers by authorizing it to establish differential taxing provision of subsidized housing to low-income groups. authorities so as to distinguish equitably between urban They should establish uniform relocation assistance and rural service costs, and by facilitating consolidation. requirements for those displaced by State and local It means empowering cities and counties to adopt projects. In the latter case, they should help localities optional forms of government, and allowing them to pay the cost of such assistance. establish neighborhood subunits and set up services to Fiscally, States should equalize general support help rural migrants adjust to urban living. grants as well as health and hospital grants to reflect On the fiscal side, States should remove property varying fiscal capacities and efforts, and improve the tax and debt limits, enable localities to invest idle cash allocation of highway-user revenues in fairer recognition profitably and safely, authorize the addition of local tax of urban needs. They should establish machinery to supplements to States sales and income taxes, and improve the planning, design and ongoing administration provide cities and adjoining jurisdictions in large metro- of all their grant programs. In the education field, they politan areas with uniform taxing powers and authority need to reform school aid formulas to release more for cooperative tax enforcement. funds for disadvantaged children, and move toward State Second, at the same time the States need to restrain assumption of substantially all public school financing. local communities from further complicating the inter- Equally significant, States need to take the leader- governmental chaos of fractionated metropolitan areas, ship in strengthening local units' primary revenue source including the intensification of social and economic -the property tax-by improving the tax's legal cover- disparities. They should establish State or local bound- age, enforcing and publicizing adequate assessment ary commissions; place firmer controls on new incorpo- levels, improving the assignment of assessment responsi- rations and on the formation, merger, and dissolution of bilities, adopting measures for upgrading assessment special districts; discourage nonviable units by withhold- personnel, and providing taxpayer remedies, including ing State aid; and restrict zoning authority in metro- "full disclosure." Fourth, the States need to work with and through the needs of urban areas. Evidence of this response is their local governments and the private sector in shaping found in the adoption by some States of various ACIR the course of future urban development. Better control and similar proposals for greater State attention to and over urban development and the avoidance of more action on urban problems. A few States, of course, acted sprawl necessitate State development of an urbanization long before these prods and these proposals. policy, consistent with National urbanization policies, to Yet, totaling up all these accomplishments, and guide specific decisions affecting the pattern of urbaniza- looking optimistically at the chances for further progress tion. States need to authorize and encourage establish- along these lines, is it reasonable to assume that most ment of metropolitan planning and zoning powers in States will be "in time with enough" or "too little and unincorporated areas lacking county controls of the too late?" To put it more bluntly, can the hard-pressed same kind, encourage greater uniformity in building mayors and city councils, faced with the stark facts of codes and better code administration, and allow munici- racial frictions, eroding tax bases, and constantly increas- palities power to protect open space other than through ing service demands be fairly expected to have faith in land purchase. They should consider the creation of the States' claims of deep concern and pleas for more State and local land development agencies and the time to prove their good intentions and promises? Or regulation of land use around highway interchanges will these local officials be guided by past experience where adequate local controls are lacking. They should with indifferent State legislatures, their long-nourished permit improved iand regulation devices such as official feelings of being discriminated against and neglected, maps, mandatory dedication of land for school and park and their concrete experience of getting some assistance sites, and planned unit development zoning. Finally, from the Federal Government when they really need it? they should remove barriers to joint public-private efforts to solve urban problems. In the judgment of the Advisory Commission on Intergovernmental Relations, our urban citizenry-and the nation-have too much at stake to be asked to count on promises and to yield to a stirring plea to rally to CAN WE RELY ON THE FIFTY STATES? such flags as "decentralization" or "pluralism." What the citizens, the cities, and the nation demand is a positive demonstration by more States that they are willing and While the States have the potential to assume these prepared to play the key role they are constitutionally vital roles in aiding the plight of their metropolitan equipped to play. What they demand is that more States areas, skeptics may well ask: What assurance do we earn their way back into the Federal-State-local partner- have that they will do so? In other words, will they ship. What the cities demand, in plain terms, is massive actually take action on issues involving the bulk of their financial assistance from the States. citizens? Up until quite recently, the record of most This means substantial grants in certain critical States in behalf of their urban areas was not outstand- program areas, such as water and sewer facilities and ing-witness the current crisis of most cities and the mass transportation services as recommended by the anti-State bias of most urban mayors. Going back to the ACIR and others (see Appendix D). It means that the 19th Century, legislatures dominated by rural interests States must move to assume the responsibility for and pervaded by a Jeffersonian suspicion of city people financing most of the costs of public education; and that and an abiding faith in the virtue of the "rural way of State aid programs for highways, health and hospitals, life," not only neglected the cities' entreaties for niore and education be equalized so as to reflect sensitively freedom to order their affairs as they pleased, but in the greater program needs and more restricted resources some cases imposed punitive restraints and requirements of troubled urban areas. What massive fiscal help means, upon them. finally, is that- Since that time vast changes have occurred-swiftly . . . the States assume their proper respon- in some States, more slowly in others. The Federal sibilities for assisting and facilitating urban Government has moved in to provide direct assistance to development; to this end it is recommended local areas, undercutting the original pattern of working that Federal grants-in-aid to local governments through the States. Yet the growing threat of increasing for urban development be channeled through direct Federal involvement, the shift in the makeup of the States in cases where a State (a) provides legislatures as a consequence of the Supreme Court appropriate administrative machinery to carry decision on legislative apportionment, and fears of racial out relevant responsibilities, and (b) provides turmoil have spurred a growing State responsiveness to significant financial contributions, and when appropriate, technical assistance to the local amount commensurate with demands upon governments concerned? their time4 . . . (and) . . . that the States pro- For the State government itself, the Commission is vide for year-round professional staffing of convinced that playing an effective leadership and major committees of their State legislatures.' financial assistance role means a marked upgrading-by As part of its oversight and policy-making role, the constitutional revision where necessary-of both the legislature should participate actively in the formulation executive and legislative branches. For the executive, and revision of major program and policy plans as well as this means giving the Governor a four year term, reviewing and passing judgment on plans proposed by enabling him to succeed himself, and reducing the the Governor in his role as chief State planning officer. number of independently elected executive officials. In We have reached a point in time where Madison's addition, the Commission has proposed- twin principles of separation of powers and checks and . . . State constitutional and statutory ac- balances need application at the State level. All States tion, where needed, to provide a gubernatorial ostensibly adhere to them. But, in contrast to the budget covering all estimated income and ex- decision of the Founding Fathers to create a strong, but penditures of the State government to be balanced National Government, most States-in truth- submitted to each session of the State legisla- have adhered to a theory of pulverized power. At the ture . . . (and) . . . that State constitutions be State level, in contrast to the national, authority is not amended, where needed, to authorize the Gov- responsibly divided and balanced, but is smashed into ernor to reorganize the administrative structure fragments and scattered all over the public and private of State government and to shift functions sectors. Indeed, at this point in time, the pulverization among State departments and agencies with the of the power of most State governments only under- exercise of such reorganization powers subject mines genuine constitutionalism and the entire American to a veto by either house of the State legislature federal system. within a specified time peri~d.~ Finally, Governors should have the responsibility STRONG MEDICINE-BUT A SERIOUS ILLNESS and means for comprehensive planning of State resources and programs. All the pleas for State leadership, Massive State aid to urban areas, State "buying-in" development of an urbanization policy, State involve- to Federal-local programs, State aid equalization more ment in urban problems, will be just so much rhetoric sensitive to urban needs, State assumption of substan- unless the Governor's office is revamped along these tially all public school costs, strengthening the Governor lines. as chief executive and the legislature as policymaker and A strengthened legislature is equally critical, to counterweight to the Governor-for most States this is maintain a proper balance against a strengthened execu- strong medicine. In terms of the illness to be treated, tive as well as to discharge effectively the increasingly however, it is none too strong. The illness, unfortu- complex and critical function of law-making. nately, is a compound one: the problem of making . . . Specifically the Commission recom- metropolitan areas governable and liveable for all of mends that the holding of annual sessions be their inhabitants, described at length in earlier chapters; given serious consideration in those States now and the problem of preventing the dissolution of our holding biennial sessions. Further, in order that traditional federal system. legislative compensation not deter the holding The malaise of our metropolitan areas will not of annual sessions, the Commission recommends lessen if the States ignore the danger. Since the 1930's, that legislators be paid on an annual basis in an urban areas have found a receptive ear in Washington and they are constantly striving to expand this relationship. Yet, from a political standpoint, Washington will 2~mpactof Federal Urban Development Programs on Local not be likely to fully bail out the large cities, especially Government Organization and Planning, prepared by ACIR in in light of the increased strength of suburban delegations cooperation with the Subcommittee on Intergovernmental Rela- tions of the Committee on Government Operations, U.S. Senate in the House of Representatives. State financial aid is a (Washington, D.C.: 1964), p. 30. Illustrative of the skepticism of crucial factor in narrowing the gap between urban needs municipal and other officials concerning the States were the dissents to this Commission recommendation: Secretary Weaver, and urban resources. Moreover, on the structural and Senator Muskie, Mayors Tucker, BIaisdell and Naftalin, and Mr. Hummel. 3~dvisory Commission on Intergovernmental Relations, 4~overnorDempsey dissented. Fiscal Balance in the American Federal System (A-31; October 1967), Vol. 1, pp. 39-40. 5Fiscal Balance . . . , Vol. 1, pp. 43-44 legal fronts, only the State can provide genuine leader- reassert their responsibility and maintain their pivotal ship. The "Feds" simply lack the requisite authority, position in the partnership triangle, they may fatally although no one should assume with certainty that the erode federalism's foundations. In doing this, they will reach of the 14th Amendment has been established for seriously jeopardize the values which sustained the all time. In short, State involvement in the fate of urban system for 180 years: diversity, pluralism, experirnenta- America is as vital as the involvement of the National tion, protection from arbitrary majoritarianism and Government. overcentralization, and a greater degree of citizen The other "illness" is just as grave. Should the participation. That is the ultimate measure of urban States fail to meet this challenge, should they fail to America's challenge to federalism in 1969. Appendix A

TABLE A-1.-ESTIMATED LOCAL DIRECT TAX BURDEN TABLE AZ-EFFECT ON STATE AND LOCAL FINANCING OF 80 PERCENT STATE FINANCING OF FOR A FAMILY OF FOUR WITH $10. 000 GROSS INCOME ELEMENTARY AND SECONDARY EDUCATION AND 100 PERCENT NATIONAL FINANCING OF RESIDING IN THE LARGEST CITY IN EACH STATE. 1968 PUBLIC ASSISTANCE. INCLUDING MEOICAID. 1887 (dolle amounts in millions)

Real estate tax2 Local direct taxes3 Required increase or As a % of Asa % of: dacrean I-) in State Local revenue city' Amount market value Gross Market value State and region rwenue relief of home income of home Amount Percent' Amount Percent'

1. Newark . N . J . $1, 501 7.90% 15.01% 7.90% United States $8.992.3 23.8 $12.996.0 33.9 2 . ~urlin~ion.~t . 77 1 New England ...... 572.4 26.5 849.3 37.7 3 . Boston. Mass . Maine ...... 4 Milwaukee. Wisc New Hampshire ...... Vermont ...... 5 . Philadelphia. Pa . Massachusetts ...... 6 . Indianapolis. I nd. Rhodalsland ...... 7 . Baltimore. Md. Connecticut ...... 8 Manchester. N.H. . Midma ...... 9 . Hartford. Conn . New York ...... 10. Sioux Falls. S.D. New Janey ...... 11. Portland. Me . Pennsylvania ...... 12 Des Moines. Iowa Delawdre ...... Maryland ...... 13. New York. N.Y. Din. of Columbia ...... 14. Detroit. Mich. 15. Omaha. Nebr . Great Lakes ...... Micht$an ...... 16. Portland. Ore . Ohio ...... 17 . Wilmington. Dela. Indiana ...... 18. Providence. R.I. Illinois ...... 19. Wichita. Kansas Wisconsin ...... 20. Miami. Florida Plains ...... 21 . Great Falls. Mont . Minnesota ...... 22 . Denver. Colo. Iowa ...... 23. Fargo. N.D. Missouri ...... North Dakota ...... 24. St. Louis. Mo. South Dakota ...... 25 . Cleveland. Ohio Nebraska ...... 26. Los Angeles. Calif . Kansas ...... 27 Phoenix;Arizona . Southma ...... 28. Louisville. Ky. Virginia ...... 29. Memphis. Tenn . West Virginia ...... 30. Anchorage. Alas . Kentucky ...... 31 Chicago. Ill Tanneasae ...... Nonh Caroli~...... 32. Houston. Texas South Carolina ...... 33. Boise. ldaho Georgia ...... 34 Charlotte. N.C. Florida ...... Alabama ...... 35 . S.L.C., Utah Mississippi ...... 36 . Okla . City. Okla . Louisiana ...... 37 . Las Vegas. Nev . Arkansas ...... 38 . Minneapolis. Min. Southwen ...... 39 . Atlanta. Ga . Oklahoma ...... 40 . Cheyenne. Wyo . Texas ...... 41 . Jackson. Miss. New Mexico ...... Arizona ...... 42. Albuq., N.M. 43 . Seattle. Wash . Rocky Mountain ...... 44. Little Rock. Ark . Montana ...... 45. Norfolk. Virginia Idaho ...... Wyoming ...... 46. Birmingham. Ala . Colorado ...... 47 . Columbia. S.C. Utah ...... 48 . New Orleans. La . Far West3 ...... 49. Charleston. W.Va. Washington ...... 50. Honolulu. Hawaii Oregon ...... Nevada ...... Median California ...... Alaska ...... 'cities are ranked from high to low on the basis of local direct Havaii ...... taxes as a percentage of gross income.

2Real estate tax estimates are based on a home with a $19. 000 'Ar the Medicaid program becomes fully operative in all States. the effect of National Gmmmsnt market value . Amounts were originally computed for 1966 on the auurnptlon of full financial rcrpomibility tor public &stance ineluding Medicaid will become more basis of effective property tax rate data for selected major local pronounced. In firal 1967 . thestateand local expendnure for Medicald war about St billion: in firal 1968 it had lncreased to $1.7 billion . areas. reported by the US. Bureau of the Census in Taxable ' Requwed increare ar a percent of State general revenue from own sources. Property Values. Vol . 2 of the 1967 Census of Governments. The 'Local revenue relief ar a percent of local general wanus from own sources. 1966 estimate for the largest city in each State was reviewed by a 'Exdoding Alda and H-4, . Source: U.S. Department of Health. Education. and Welfare. Social and Rehabflitation Setvm. and Office knowledgeable official in each such city and updated to 1968 for of Education. Digerr of Educsoonal Statistis . 1967; and U.S. Burew of the Cenrur. Goyernmsnel Fi~na. this presentation . In a number of instances. local estimates for 1968 in 1966.67. deviated significantly from the 1966 difference was at least one-third in the following cities: Newark. Detroit. Anchorage. Charlotte. and Atlanta . 3lncludes the following local taxes: real property. personal income. and general sales . In computing personal income taxes. it was assumed that all income was from wages and salaries and earned by one spouse. and that the optional standard deductton was used . TABLE A-3-STATE LEGISLATION EXEMPTING BUSINESS PERSONALTY FROM TAXATION OR REDUCING THE BUSINESS PERSONAL PROPERTY TAX, JANUARY 1, 1969

State Type of Legislation Legal Citation

Arizona 1. Exempts wholesalers ' and retailers ' inventories. Amendment of Constitution, Art. 9, Sec. 2, adopted 11/3/64. 2. Freeport Law. Arizona Revised Statutes, Sec. 42-631.

California Exempts 15% of the assessed value of business inventories S.C.A. 1, 1st. Spec. Sess., Laws of 1968.

Colorado 1. Reduces the assessment of freeport merchandise to 17 l/2% Chap. 290, Laws of 1965 (Colorado Revised Statutes, Sec. 137- for 1966 and 5% thereafter (assessment ratio for all 1-4). other taxable property standardized at 30%). 2. Reduces the assessment of the stocks of merchandise of a Chap. 370, Laws of 1967 (Colorado Revised Statutes, Sec. 137- manufacturer or merchant by 5% a year (from 30% in 1968) 5-9). to 5% for 1973 and each year thereafter.

Connecticut 1. Gradually exempts manufacturers' inventories (assessments Chap. '461, Laws of 1965 (General Statutes of Connecticut, reduced by 10% a year, until fully exempt by 1975). Revision of 1958, Sec. 12-81). 2. Freeport Law. Chap. 603, Laws of 1965 (General Statutes of Connecticut, Sec. 12-91.1 - 12-91.3).

Delaware All tangible and intangible personal property is exempt. Delaware Code of 1953, Sec. 8102, Title 9 and Sec. 102 (a), Title 30.

Dist. of Col. Freeport Law. District of Columbia Code of 1951, Sec. 47-1204. Florida Inventories are assessed at 50% of just valuation for 1968 Chap. 367, Laws of 1967 (Florida Statutes, Sec. 192.05). and at 25% for 1969 and thereafter.

Georgia Motor vehicles in dealers' inventories are assessed at 75% of Act 52, Laws of 1967 (Georgia Code of 1933, Sec. 92-lllA). the assessed value of other motor vehicles. Hawaii 1. Personal property tax repealed in 1947. 2. Exempts machinery and allied equipment used primarily to Act 120, Laws of 1967 (Revised Laws of Hawaii, 1955, Sec. 128- manufacture or produce tangible personal products (assessed 21.6). as real property). Idaho 1. Freeport law broadened to include goods manufactured in Chap. 173, Laws of 1963 (Idaho Code, 1947, Sec. 63-1058). Idaho and destined for out-of-State shipment. 2. Gradually exempts business inventories (assessments reduced H.B. 243, Laws of 1967. by 25% a year, beginning in 1968, until fully exempt by 1971. Illinois Freeport Law. H.B. 1319, Laws of 1963 (Illinois Statutes, Revenue Act of 1939, Sec. 19.21). Indiana Freeport law broadened to include goods shipped into State Chap. 29, Laws of 1963, 1st. Spec. Session, and Chap. 398, Laws with a within-State destination, when held in a public or - of 1965 (Indiana Statutes, Property Assessment Act of 1961, private warehouse. Sec. 503). Iowa 1. Goods stored in a public warehouse and held for sale or Code of Iowa, Sec. 427.1 (29). resale. 2. Freeport Law. Chap. 269, Laws of 1963 (Code of Iowa, Sec. 427.1 (30)). TABLE A-3.-STATE LEGISLATION EXEMPTING BUSINESS PERSONALTY FROM TAXATION OR REDUCING THE BUSINESS PERSONAL PROPERTY TAX, JANUARY 1, 1969 (Cont'd)

State Type of Legislation Legal Citation Kansas Freeport Law. Chap. 456, Laws of 1963; Chap. 512, Laws of 1965 Statutes of Kansas, 1949, Sec. 79-304). Kentucky Personal property held in a public warehouse for trans- Chap. 172, Laws of 1964; H.B. 320, Laws 1966 (K.R.S., 132.095). shipment is exempt from general property taxation but subject to a Statewide special property tax of 1 1/2~per $100 of fair cash value. Louisiana Freeport Law. Act 152, Laws 1960 (Louisiana Revised Statutes, Title 47, Sub- title 111, Chap. 3, Sec. 1951.3). Maine Freeport Law. Maine Revised Statutes Annotated, 1964, Title 36, Chap. 105, Sec. 655.

Maryland Gradual phase-out of county property tax on manufacturer's Chap. 475, Laws of 1963 (Annotated Code of Maryland, 1957, personal property in Frederick County. Art. 81, Sec. 9 (23)). Gradual phase-out of county property on business inventories 1st Spec session; Chap. 4 and Chap 113, Laws of 1965; Chap. in Carroll County, Harford County, and Prince George's 612, Laws of 1966,(-Art. 81, Sec. 15 (b-2, b-3, b-4). County. General authorization for counties to eliminate or phase-out H.B. 378, Laws of 1967. tax on business personal property.

Massachusetts Freeport Law. Massachusetts General Laws of 1932, Chap. 59, Sec. 2. Individuals and partnerships operating as merchants are tax- Massachusetts General Laws of 1932, Chap. 59, Sec. 5(16). able, but business corporations operating as merchants are exempt from taxation on most all types of tangible personal property including merchandise except machinery used in the conduct of the business.

Michigan Exempts special tools used in manufacturing (dies, fix- Act 197, Laws of 1964 (Compiled Laws, State of Michigan, 1948, tures, molds, patterns, guages, etc.). Sec. 211.9b). Exempts mechanic tools up to $500 and personal property Compiled Laws, State of Michigan, 1948, Sec. 211.9(8) and (11). of a householder used in business up to $500. Freeport Law. Compiled Laws, State of Michigan, 1948, Sec. 211.9(12).

Minnesota Taxpayers may elect to have exempt either inventories or Ch.32, Art. IV, Laws 1967, 1st Sp. Sess. (M.S.A., Sec. 272.02 tools and machinery which by law are considered personal (11)) property. Freeport Law. Minnesota States Annotated, Sec. 272.022 and 272.023.

Mississippi Exempts manufactured products owned by or remaining in the Mississippi Code of 1942, Sec. 9697.7(1), (3), and (4). hands of a manufacturer, if ultimately to be shipped or sold to other than the final consumer and not at retail. Freeport Law. Mississippi Code of 1942, Sec. 9699-02. TABLE A-3.-STATE LEGISLATION EXEMPTING BUSINESS PERSONALTY FROM TAXATION OR REDUCING THE BUSINESS PERSONAL PROPERTY TAX, JANUARY 1, 1969 (Cont'd)

State Type of Legislation Legal Citation

- -

Missouri 1. Freeport Law Missouri Revised Statutes of 1949, Sec. 137.093. 2. Exempts Commission merchants with respect to unmanufactured Missouri Revised Statutes of 1949, Sec. 150.040. articles, consigned for sale, in which they have no interest other than their commission.

Montana 1. The taxable property in the State is classified into nine Chap. 294. Laws of 1967 (Revised Codes of Montana, 1947 classes and assessed at various percentages ranging from Secs. 84-301 and 84-302). 7% to 100% of true and full value. Freeport property is assessed at 7%. 2. Stocks of merchandise of all sorts together with furniture Revised Codes of Montana, 1947, Secs. 84-301 and 84-302. and fixtures used therewith, except mobile homes, and all office or hotel furniture and fixtures are assessed at 33 113%.

Nebraska Freeport Law. Revised Statutes of Nebraska, 1943, Sec. 77-1226.01.

Nevada Freeport Law. Revised Statutes of Nevada. 1957, Sec. 361.160.

New Hampshire Exempts goods held for out-of-State delivery by a manufacturer Chap. 239, Laws of 1963 (Revised Statutes Annotated of New when title has passed to the purchaser. Hampshire. 1955, Sec. 72:lS).

New Jersey 1. Exempts business inventories and all other business per- Chap. 136 and Chap. 138, Laws of 1966 (Revised Statutes of,New sonal property, except that used in telephone and telegraph Jersey. 1937, Secs. 54:4-1 and 54:ll A-2). systems, from local property taxation. Subjects certain kinds of business personalty, but not business inventories, to a Statewide tax of $1.30 per $100 of taxable value. 2. Exempts personal property stored in a public warehouse. Revised Statutes of New Jersey, 1937, Sec. 54:4-3.20.

New York All tangible and intangible personal property is exempt. New York Consolidated Laws, Chap. 50-a, Sec. 300.

New Mexico Freeport Law. Chap. 60, Laws of 1963 (New Mexico Statutes, 1953. Sec. 72-2-1.1)

North Carolina Freeport Law (beginning July 1, 1969, until then a freeport Chap. 1185, Laws of 1967 (North Carolina Statutes, Sec. 105-281). exemption is provided only for property held at seaports a- waiting shipment to foreign countries).

North Dakota Freeport Law broadened to include goods acquired or manu- S.B. 302, Laws of 1967 (North Dakota Century Codes, Sec. 57-02- factured in North Dakota and destined for out-of-State shipment. 42).

1. Tangible personalty is assessed at 7C% of its true value Ohio Revised Code, Sec. 5711.22. in money, with several exceptions. Personal property used in business is assessed at 50%. Merchants' inventories are to be assessed at the following ratios: 63% in 1968; 57% in 1969; 52% in 1970, and 50% for the year 1971 and thereafter. 2. Freeport Law Ohio Revised Code, Sec. 5701.08. TABLE A-3.-STATE LEGISLATION EXEMPTING BUSINESS PERSONALTY FROM TAXATION OR REDUCING THE BUSINESS PERSONAL PROPERTY TAX, JANUARY 1, 1969 (Cont'd)

State Type of Legislation Legal Citation

Oklahoma Freeport Law Chap. 501, Laws of 1965 (Oklahoma Statutes Annotated, Title 68, . Sec. 2425).

Oregon 1. Gradual reduction of property tax on inventory by 109. a yea1 Chap. 604, Laws of 1965 (Oregon Revised Statutes, Sec. 310-610). beginning in 1966, until 1970 and thereafter, when tax reduced to 50%. Oregon Revised Staiutes, Sec. 307.810. 2. Freeport Law. Pennsylvania All tangible personal property is exempt. Act of May 18, 1937, P.L. 633; and Act of June 19, 1939, P.L: 413.

Rhode Island Exempts manufacturers' inventories. Chap. 245, Laws of 1966 (General Laws of Rhode Island, 1956, Sec. 44-3-3 (20)).

South Carolina 1. Reduces assessment for merchants' personal property to 12% Code of South Carolina, 196&, Sec. 65-1647.4. for 1968, 11%for 1969, and 10% for 1970 and thereafter. 2. Exempts manufacturers' inventories (except manufactured Code of South ,Carolina, 1962, Sec . 65-1663. articles offered or available for sale at retail). 3. Freeport Law. Code of South Carolina, 1962, Sec. 65-1655.

C c South Dakota Freeport Law. S.B. 26, Laws of 1966 (South Dakota Code of 1939, Sec. 57.0311) 0 Tennessee 1. Exempts articles manufactured from the produce of this Stat6 Tennessee Code ~nnotated,Sec. 67-502. in the hands of the manufacturer. 2. Freeport Law. Tennessee Code Annotated, Sec. 67-502.

Texas Freeport Law. Chap. 208, Laws of 1963 (Revised Civil Statutes, 1925, Art. 7150.9).

Utah 1. Freeport Law. SJR5, Laws of 1963, Amends Constitution, Art. XIII, Sec. 2; Cha 0, Laws of 1965, (Utah Code Annotated, 1953, Sec. 59.3:193. 2. Constitutional authority to exempt business inventories. SJB1, Laws 1967 (approved by electorate November 1968). Vermon Exempts tools and implements of a mechanic or farmer, and Vermont Statutes Annotated, 1959, Title 32, Sec. 3802. motorized highway-building equipment and road-making appliances.

Washington Freeport Law. Revised Code of Washington, Sec. 84.36.170.

Wisconsin 1. 1ncreases.credit for property taxes on merchants' in- Chap. 163, Laws of 1965 (Wisconsin Statutes, Sec. 77.64). ventories and manufacturers' materials and finished products from 50% to 60% (50% credit first enacted in 1961). 2. Exempts mechanics tools, farm,orchard and garden machinery Wisconsin Statutes, Sec. 70.111 (9). and tools, and new farm machinery stocked and owned by a retailer. 3. Freeport Law. Wisconsin Statutes, Sec. 70.111 (10)(a) and (10)(b). TABLE A-3.-STATE LEGISLATION EXEMPTING BUSINESS PERSONALTY FROM TAXATION OR REDUCING THE BUSINESS PERSONAL PROPERTY TAX, JANUARY 1, 1969 (Cont'd)

State Type of Legislation Legal Citation

Wyoming 1. Exempts certain manufacturers' and merchants' inventories after Chap. 199, Laws of 1967. 1/1/72. Wyoming Statutes of 1957, Sec; 39-106. TABLE A-4.-SELECTED FEATURES OF PROPERTY TAXATION, BY STATE

No. of Constitutional and statutory assessment standards3 Conducts I State and local roperty tax primary periodic colle -:ions : 66-675/ State ~ssessinl Elected Legal I ratio Total Per Per thousand areas asses- standard Valuation concept s tudiesftl (millions) Capit: dollars of 1966 1, sorsY (rate) personal income

Alabama Fair and reasonable market value Alaska Full and true value in money Arizona Full cash value Arkansas True market value in money California Full cash value

Colorado Actual value Cohnecticut Uniform % of market value within local district Delaware True value in money District of Col. Full and true value in lawful money Florida Full cash value Georgia Fair market value Hawaii Fair market value or a percentage thereof Full cash value e Idaho - Illinois Fair cash value N Indiana True cash value Iowa Actual value Kansas True value in money

Kentucky 1Q0 Fair cash value Louisiana ot below 25 Actual cash value.. Land at not less than $1 per acre Yaine "Just value" At just value In compliance with the laws of the State Maryland Full cash value less an allowance for inflation Massachusetts 100 Fair cash valuation Michigan 50 Full cash value Minnesota aries by class Market value Mississippi 100 Assessed in proportion to its value. Missouri 100 True value in money.

Montana True and full value Nebraska Required to be valued at its actual value and assessed at 35% Nevada Full cash value New Hampshire Full and true value in money TABLE A-4.-SELECTED FEATURES OF PROPERTY TAXATION, BY STATE (Cont'd)

No. of 1 and statutory assessment standardsy 1 Conducts State & local propert 3 tax primary periodic C -lecticms 1966-67-1 State lssessinj Elected Legal ratio Total Per Per thousand areas asses- standard Valuation concept studieskl (millions) Capit: 1 dollars of 1966 l-, orsL1 (rate) personal -- income New Jersey 567 Uniform percentage at true value New lledco 32 Assessed in proportion to its value New York 990 Full value North Carolha 100 True value in money North Dakota 1,772 Full and true value in money

Ohio 88 True value Oklahoma 77 Fair cash value Oregon 36 True cash value Pennsylvania 67 Actual value (the price for which the property would sell) Rhode Island 39 Full and fair cash value South Carolina 46 True value in money South Dakota 404 Wue and full value in money Tennessee 95 Actual cash value Texas 254 Full and true value in money C C Utah 29 Reasonable fair cash value Vermont 246 Pair market value Virginia 131 Fair market 'value Washington 39 True and fair value West Virginia 55 True and actual value

Wisconsin 1,834 Full value at private sale Wyoming 23 Fair value

Total 4,496 - X -- Signifies "elected." U.S. Bureau of the Census, Primary as sees in^ Areas for Local Property Taxation, State and Local Garernment Special Studies, No. 50, April 1966. U.S. Bureau of the Census, Census of Go~errrments~l967,Vol. 6, No. 1, epularly Elected Officials of State and Local Governments; and Colnoerce Clearing House, State [Cax Rewrter. 2/ Comerce Clearing House, State Tax Reporter. U.S. Bureau of the Census, Goverments Division

(Footnotes continued on the following page.) TABLE A-4.-SELECTED FEATURES OF PROPERTY TAXATION, BY ,STATE (Concl'd)

.- U.S. Bureau of the Census, Governmental Finances in 1966-67. Depending on the class of property. Between 20 and 25 percent of full cash vahe from 1968 through 1971, thereafter 25 percent. Town selectmen may provide for appointment and fix length of term and compensation. In counties with 150,000 to 500,000 population an assessing officer may be appointed in lieu of an elected board. Optional office: currently elected in 6 counties, appointed in 3; in other counites, county clerk is ex officio assessor. Elected county assessors, cities vary according to class, may be appointed, elective, or they may adopt county assessment. Appointed and elected assessors. Election required in counties of 3,500 population or more; may be appointive in other counties. In a multiple of 10 as is established by each county board of taxation. If a county fails to establish a uniform percentage, a 50 percent level of assessment is employed until action is taken. Uniform percentage, determined locally. In 4th to 8th class counties, real property must be assessed at a predetermined ratio not to exceed 75 percent. To be attained by 1/1/73, with increasing percentages on the following schedule: 1968, 15 percent; 1969, 25 percent; 1970, 30 percent; 1971, 35 percent; 1972, 40 percent; 1973 and thereafter, 50 percent. At a fair value in conformity with values and procedures prescribed by the State Tax Commission. TABLE A8.-RETAIL SALES, INSIDE (CC) AND OUTSIDE CENTRAL CITY (OCC) AREAS, 37 LARGEST STANDARD METROPOLITAN STATISTICAL AREAS, 1858 AND 1963

1963 As a Percent of 1958 1963 1958 Area --A CC A CC OCC CC OCC

Loa Angelea-Long Beach, California $ 9,040 $ 4.413 San Bcmardino-Riveraide-Ontario. California 9 13 San Diego, California Son Pranciaco-Oakland, California Denver, Colorado

Washington, D.C. Mami, Florida Tampa-St. .Peterrburg, Florida Atlanta , Georgia Chicago, Illiwicr

Indianapolis, Indiana Louisville, Kentucky-Indiana New Orleans, Louiailna Baltimore, hryland Boaton, H.l~chu#rttl Detroit , Hichigan ~llnneapolia-st. ~aul,ninnesota Un8ss City. Maaouri-Kana.# St. Uuia, Uiraouri-Illinoia Revark, New Jerny

Pateraon-Clifton-Pasaaic, New Jersay Buffalo, New York lev York, New York Rocheater, Rev York Cincinnati. Ohio-Kentucky-1ndi.n.

Cleveland. Ohio Columbus , Ohio Dayton, Ohio Port land. Oregon-Washington Philadelphia, Pennsylvania-Rav Jersey

Pittsburgh. Pennsylvania Providence. Rhoda Ialand Dallaa, Tau# Eouaton, Texaa San Antonio, Texas

Seattle-Everett. Washington Mflvaukae, Wisconsin

Source: 0.5. Bureau of the Cenaua, 0.8. Cams of Buain~aa. 1958, Vol. 11; and 0.S. Census of Buaineaa, 1963, Vdl. 11. TABLE A-6.-MANUFACTURING EMPLOYMENT, INSIDE (CC) AND OUTSIDE CENTRAL CITY (OCC), 37 LARGEST STANDARD METROPOLITAN STATISTICAL AREAS, 1968 AND 1963 (Thousands)

1963 Ar a Per- 1963 ssUL&uL swacc5aAuxL Lor Angeles-Long Beach, California 729.0 San bmrdino-Riverside-Ontario . California 29.2 San Diego, California San Prancisco-Oakland, California Denver, Colorado

Waahington, D.C. Miami, Plorida Tampa-St. Peterrburg, Florida Atlanta, Georgia Chicago, Illinoir Indianapolis, Indiana Louisville, Kentucky-Indiana New Orleans, Louirirna Baltimare, Ilrrylsnd Boston, bbarachuretts Detroit, Michigan Ktnneapolir-St. Paul, Uinnerota Kansas City, Mirlouri-Kansas St. Louis, Uirsouri-Illinoir Newark, New Jersey Patarson-Clifton-Passaic. New Jersey Buffalo. New York New York, New York bcherter, New York Cincinnati, Ohio-Kentucky-Indiana

Cleveland, Ohio Columbus, Ohio Dayton. Ohio Portlund, Oregon-Washington Philadelphia, Pennsylvania-New Jeraey Pittsburgh, Pe~oylvania Providence, Uhode Ialmd Dallas, Texas Eouston. Texan San Antonio, Texas Seattle-hrerett, Waahington Milwaukee, Viaconsin 37 total

Source: 1963 Census of Manufacturing. TABLE A-').-TEN METROPOLITAN AREAS WITH MOST NUMEROUS LOCAL GOVERNMENTS: 1967

Land No. of Population Local governments per- Local SMSA area County 1960 govts. 100 County 100,000 (sq. mi.) areas ( 1,000) sq. mi. area population

Chicago, Ill...... : 30 18 Philadelphia, Pa.-N.J. . . . 25 20 Pittsburgh, Pa...... 23 29 New York, N.Y...... 26 5 St. Louis, Mo.-Ill. . . . . 12 23 Portland, Ore.-Wash. . . . 11 47 San Francisco-Oakland, Calif. . 13 12 Indianapolis, Ind. . . . . 9 30 Kansas City, Mo.-Kans. . . . 10 25 Denver, Colo...... 7 29

Source: U.S. Bureau of the Census, Governmental Organization (Vol. I, 1967 Census of Governments.)

TABLE AS.-MUNICIPALITIES IN METROPOLITAN AREAS, BY 1960 POPULATION-SIZE: 1967

Municipalities in SMSA's 1960 population of SMSA municipalities

1960 Population Percent Percent of Number Number Percent of U.S. Percent all SMSA ( 1,000) totals population

All municipalities......

300,000 or more ...... 200,000 to 299,999 100,000 to 199,999 . . . . . 50,000 to 99,999 ...... 25,000 to 49,999 ......

10,000 to 24,999 ...... 5,000 to 9,999...... 2,500 to 4,999...... 1,000 to 2,499...... Less than 1,000 ......

Source: U.S. Bureau of the Census, Governmental Organization (Vol. 1, 1967 Census of Governments). Includes adjustments of tabular data to reflect footnoted correction of census findings. DIRECTORY LISTING OF THE 228 STANDARD METROPOLITAN STATISTICAL AREAS IN THE UNlTED STATES, AS DEFINED IN 1967 (Excluding Puerto Rid

1960 Land No. of SMSA population area local Component counties or county-type areas (000) (sq. mi.) govts. Abilene, Tex...... 2: Jones, Taylor Akron, Ohio ...... 2: Portage, Sunanit Albmy, Ga...... 1: Dougherty Albany-Schenectady-Troy, N.Y. 4: Albany, Rensselaer, Saratoga, Schenectady Albuquerque, N.M...... 1: Bernalillo Allentown-Bethlehem-Easton, Pa.-N.J...... 3: Lehigh, Northampton, Pa.; Warren, N.J. Altoona, Pa...... 1: Blair Amarillo, Tex...... 2: Potter, Randall Anaheim-Santa Ana-Garden Grwe, Calif...... 1: Orange Anderson, Ind...... 1: Madison Ann Arbor, Mich...... 1: Washtenaw Ashwille, N. C...... 1: Buncombe Atlanta, Ga...... 5: Clayton, Cobb, DeKalb, Fulton, Gwinnett Atlantic City, N. J...... 1: Atlantic Augusta, Ga.-S.C...... 2: Richmond, Ga.; Aiken, S.C. Austin, Tex...... 1: Travis Bakersfield, Calif...... 1: Kern Baltimore, Md...... 6: Baltimore, Anne Amndel, Baltimore City, Carroll, Harford, Howard Baton Rouge, ~a...... 1: East Baton Rouge Bay City, Mich...... 1: Bay County Beaumont-Port Arthur-Orange, Tex...... 2: Jefferson, Orange Billings, Mont...... 1: Yellowstone Binghamton, N. Y.-Pa...... 3: Broome, Tioga, N. Y.; Susquehanna, Pa. Birmingham, Ala...... ;.. 3: Jefferson, Shelby, Walker Bloomington-Normal, Ill. :.. 1: McLean Boise City, Idaho ...... 1: Ada Boston, Masa...... Suffolk plus parts of 4: Eesex, Middlesex, Norfolk, Plymouth Bridgeport, Conn...... Parts of 2: Fairfield, New Haven Brockton, Mass...... Parts of 3: Bribtol, Norfolk, Plymouth Brownsville-Harlingen-San Benito. Tex...... 1: Cameron Buffalo, N.Y...... 2: Erie, Niagara Canton, Ohio ...... 1: Stark Cedar Rapids, Iowa ...... 1: Linn Champaign-Urbana, Ill...... 1: Champaign Charleston, S.C...... 2: Berkeley, Charleston Charleston, W. Va...... 1: Kanawha Charlotte, N. C...... 2: Mecklenburg, Union Chattanooga, Tenn.-Ga...... 2: Hamilton, Tenn.; Walker, Ga. Chicago, Ill...... 6: Cook, Du Page, Kane, Lake, McHenry, Will Cincinnati, Ohio-Ky.-Ind. .. 7: Clermont, Hamilton, Warren, Ohio; Boone, Campbell, Kenton, Ky.; Deerborn, Ind. Cleveland, Ohio ...... 4: Cuyahoga, Geauga, Lake, Medina Colorado Springs, Colo. .... 1: El Paso Columbus, S. C...... 2: Lexington, Richland Columbus, Ga.-Ala...... 3: Chattahoochee, Muscogee, Ga.; Russell, Ala. Columbus, Ohio ...... 3: Delaware, Franklin, Pickaway Corpus Christi, Tex...... 2: Nueces, San Patricio Dallas, Tex...... 6: Collin, Dallas, Denton, Ellis, Kaufman, Rockwall Davenport-Rock Island-Noline, Iowa-Ill...... 3: Scott, Iowa; Rock Island, Henry, Ill. Dayton, Ohio ...... 4: Greene, Miami, Montgomery, Preble Decatur, Ill...... 1: Macon Denver, Colo...... 5: Adams, Arapahoe, Boulder, Denver, Jefferson Des Hoines, Iowa ...... 1: Polk Detroit, Mich...... 3: Macomb, Oakland, Wayne Dubuque, Iowa ...... 1: Dubuque Duluth-Superior, Him.-Wia. . 2: St. Louis, Minn.; Douglas, Wis. DIRECTORY LISTING OF THE 228 STANDARD METROPOLITAN STATBTICAL AREAS IN THE UNITED STATES, AS DEFINED IN 1967 (Cont'dl (Exduding Puem Rim)

1960 Land No. of SMSA population area local Component counties or county-type areas (000) (sq. mi.) govts.

Durham, N.C...... 2: Durham, Orange El Paso, Tex...... 1: El Paso Erie,.Pa...... 1: Erie Eugene, Oreg...... 1: Lane Evansville, 1nd.-Ky...... 3: Vanderburgh, Warrick, Ind; Henderson, Ky. Fall River, Mass.-R.I...... Parts of 2: Bristol, Mass.; Newport, R.I. Fargo-Moorhead, N.Dak.-Minn. 2: Cass, N. Dak.; Clay, Minn. Fayetteville, N.C...... 1: Cumberland Fitchburg-Leorninster, Mass. . Parts of 2: Middlesex, Worcester Flint, Mich...... Genesee, Lapeer Fort Lauderdale-Hollywood, Fla. Broward Fort Smith, Ark.-Okla...... Sebastian, Crawford, Ark.; LeFlore, Sequoyah, Okla. Fort Wayne, Ind...... Allen Fort Worth, Tex...... Johnson, Tarrant Fresno, Calif...... Fresno Gadsden, Ala...... Etowah Galveston-Texas City, Tex. . Galves ton Gary-Hanmrond-East Chicago, Ind. Lake, Porter Grand Rapids, Mich...... Kent, Ottawa Great Falls, Mont...... Cascade Green Bay, Wis...... Brown Greensboro-Winston-Salem-High Point, N.C...... Forsyth, Guilford, Randolph, Yadkin Greenville, S. C...... Greenville, Pickens Hamilton-Middletom, Ohio .. Butler Harrisburg, Pa...... Cumberland, Dauphin, Perry Hartford, Conn...... Parts of 3: Hartford, Middlesex, Tolland Honolulu, Hawaii ...... Honolulu Houston, Tex...... Brazoria, Fort Bend, Harris, Liberty, Montgomery Huntington-Ashland, W. Va.-Ky.- Ohio ...... Cabell, Wayne, W. Va.; Boyd, Ky.; Lawrence, Ohio Huntsville, Ala...... Lfmestone, Madison Indianapolis, Ind...... Boone, Hamilton, Hancock, Hendricks, Johnson, Marion, Morgan, Shelby Jackson, Mich...... Jackson Jackson, Miss...... Hinds, Rankin Jacksonville, Fla...... Duval Jersey City, N. J...... Hudson Johnstown, Pa...... Cambria, Somerset Kalamazoo, Mich...... Kalamazoo Kansas City, Mo.-Kans...... Cass, Clay, Jackson, Platte, Mo.; Johnson, Wyandotte, Kans. Kenosha, Wi8...... Kenosha Knoxville, Tenn...... Anderson, Blount, Knox Lafayette, La...... Lafayette Laf ayette-West Lafayette, Ind. Tippecanoe Lake Charles, La...... Calcasieu Lancaster, Pa...... Lancaster Lansing, Mich...... Clinton, Eaton, Ingham Laredo, Tex...... Webb Las Vegas, Nev...... Clark Lawtence-Haverhill, Mass.-H.H. Parts of 2: Essex, Mass.; Rockingham, N.H. Lawton, Okla...... Comanche Lewiston-Auburn, Maine ..... Part of Androscoggin Lexington, Ky...... Fayette Lima, Ohio ...... Allen, Putnam, Van Wert Lincoln, Nebr...... Lancaster Little Rock-North Little Rock, Ark...... Pulaski, Saline Lorain-Elyria, Ohio ...... Lorain

DIRECTORY LISTING OF THE 228 STANDARD METROPOLITAN STATISTICAL AREAS IN THE UNITED STATES, AS DEFINED IN 1967 (Cont'dl IExdudii Pum RkoJ

19. 60-~ Land- No. of SMSA population area local Component counties or county-type areas (000) (sq. mi.) govts.

Pueblo, CO~O...... 1: Pueblo Racine, Wis...... 1: Racine Raleigh, N. C...... 1: Wake Reading, Pa...... 1: Berks Reno, Nev...... 1: Washoe Richmond, Va...... 4: Richmond City, Chesterfield, Hanover, Henrico Roanoke, Va...... 2: Roanoke City, Roanoke Rochester, N. Y...... 4: Livingston, Monroe, Orleans, Wayne Rockford, Ill...... 2: Boone, Winnebago Sacramento, Calif...... 3: Placer, Sacramento, Yolo Saginaw, Mich...... 1: Saginaw Salem, Oregon* ...... 2: Marion, Polk Salinas-Monterey, Calif...... 1: Monterey St. Joseph, Mo...... 1: Buchanan St. Louis, Mo.-Ill...... 7: St. Louis City, Franklin, Jefferson, St. Charles, St. Louis, Mo.; Madison, St. Clair, Ill. Salt Lake City, Utah ...... 2: Davis, Salt Lake San Angelo, Tex...... 1: Tom Green San Antonio, Tex...... 2: Bexar, Guadalupe San Bernardino-Riverside- Ontario, Calif...... 2: Riverside, San ~ernardino San Diego, Calif...... 1: San Diego San Francisco-Oakland, Calif. 5: Alameda, Contra Costa, Marin, San Francisco, San Mateo

San Jose, Calif...... 1: Santa Clara Santa Barbara, Calif...... 1: Santa Barbara Savannah, Ga...... 1: Chatham scranton, Pa...... 1: Lakawanna Seattle-Everett, Wash...... 2: King, Snohomish Sherman-Denison, Tex...... 1: Grayson Shreveport, La...... 2: Bossier, Caddo Sioux City, Iowa-Neb...... 2: Woodbury, Iowa; Dakota, Neb. Sioux Falls, S. Dak...... 1: Minnehaha South Bend, Ind...... 2: St. Joseph, Marshall Spokane, wash...... 1: Spokane Springfield, Ill...... 1: Sangamon Springfield, Mo...... 1: Greene Springfield, Ohio ...... 1: Clark Springfield-Chicopee-Holyoke, Mass.-Conn...... Parts of 4: Hampden, Hampshire, Worcester, Mass.; Tolland, Conn. Stamford, Conn...... Part of 1: Fairfield Steubenville-Weirton, Ohio-W.Va. 3: Jefferson, Ohio; Brooke, Hancock, W. Va. Stockton, Calif...... 1: San Joaquin Syracuse, N. Y...... 3: Madison, Onondaga, Oswego Tacoma, Wash...... 1: Pierce Tallahassee, Fla...... 1: Leon Tampa-St. Petersburg, Fla. .. 2: Hillsborough, Pinellas Terre Haute, Ind...... 4: Clay, Sullivan, Vermillion, Vigo Texarkana, Tex.-Ark...... 2: Bowie, Tex.; Miller, Ark. Toledo, Ohio-Mich...... 3: Lucas, Wood, Ohio; Monroe, Mich. Topeka, Kana...... 1: Shawnee Trenton, N. J...... 1: Mercer Tucson, Ariz...... 1: Pima Tulsa, Okla...... 3: Creek, Osage, Tulsa Tuscaloosa, Ala...... ;.. 1: Tuscalooaa DIRECTORY LISTING OF THE 228 STANDARD METROPOLITAN STATISTICAL AREAS IN THE UNITED STATES, AS DEFINED IN 1967 (Cont'dl (Excluding Pu.rto Rico)

19 60 Land No. of SMSA population area local Component counties or county-type areas (000) (sa. mi.) govts. Tyler, Tex...... 86 922 19 1: Smith Utica-Rome, N. Y...... 331 2,669 152 2: Herkimer, Oneida Vallejo-Napa, Calif...... 200 1,585 71 2: Napa, Solano Waco, Tex...... 150 1,034 42 1: McLennan Washington, D.C.-Md.-Va. ... 2,077 2,347 84 10: District of Columbia; Montgomery, Prince Georges, Md.; Alexandria City, Fairfax City, Falls Church City, Arlington, Fairfax, Loudoun, Prince William, Va. Waterbury, Conn...... 186 219 16 Parts of 2: Litchfield, New Haven Waterloo, Iowa ...... 122 567 11 1: Black Hawk West Palm Beach, Fla...... 228 1,978 75 1: Palm Beach Wheeling, W. Va.-Ohio ...... 190 948 67 3: Marshall, Ohio, W. Va.; Belmont, Ohio Wichita, Kans...... 382 2,442 137 2: Butler, Sedgwick Wichita Falls, Tex...... 130 1,519 30 2: Archer, Wichita Wilkee-Barre-Hazleton, Pa. . 347 891 134 1: Luzerne Wilmington, De1.-N.J.-Md. .. 415 1,139 83 3: New Castle, Del.; Salem, N. J.; Cecil, Md. Wilmington, N. C...... 92 1,067 17 2: Brunswick, New Hanover Worcester, Mass...... 329 473 53 Part of 1: Worcester York, Pa...... 290 1,437 214 2: Adams, York Youngstown-Warren, Ohio .... 509 1,039 109 2: Mahoning, Trumbull Appendix C

SUMMARY OF INFORMATION ON EXISTING STATE OFFICES OF LOCAL AFFAIRS, DECEMBER 1968 Alaska California Colorado Connecticut Name of agency Local Affairs Intergovernmental Division of Local Department of Com- Agency Council on Urban Government munity Affairs Growth2 Year established 1959 1963 1966 1967 Location Office of Governor Office of Governor Executive Depart- Independent Depart- ment ment Functions Advisory, coordinating & technical assistance Fiscal advice ...... X X Municipal management ...... X X Engineering & public works ...... X X Legislative aspects of intrastate government relations ...... X X Research, statistics & information

I-. collection ...... X X X h) w Personnel training ...... X X Assist Gov. in coordg. State activities affecting localities ...... X X X Recmd. programs & legislation ...... X X X Interlocal cooperation ...... X X Boundary and fringe problems ...... X Financial assistance ...... X3 Supervise local finances ...... Planning functions Statewide planning ...... X Local planning assistance ...... X Coord. with regional planning ...... X Coord. with Statewide plng...... X Program responsibility Urban renewal & redevelopment ..... X Poverty ...... X Housing ...... X Area redevelopment ...... X' Statutory citations A.S. 44.19 180 Ch. 1809,1963 S.B. 23, 1966 P.A. 522, 1967 et. seq. Stats.; 823, 1965 SUMMARY OF INFORMATION ON EXISTING STATE OFFICES OF LOCAL AFFAIRS, DECEMBER 1968 (Continued) Iliinois Massachusetts Minnesota Missouri Name of agency Office of Local Department of Corn- Office of Local and Department of Com- Government munity Affairs Urban Affairs munity Affairs4 Year established 1966 1968 1967 1967 hcation Office of Governor Independent de- In State planning Independent department Agency partment Functions Advisory, coordinating & technical assistance Fiscal advice ...... X Municipal management ...... X Engineering & public works ...... X Legislative aspects of intrastate government relations ...... X Research, statistics & information collection ...... X Personnel training ...... X Assist Gov. in coordg. State activities affecting localities ...... X Recmd. programs & legislation ...... X Interlocal cooperation ...... X Boundary and fringe problems ...... Financial assistance ...... Supervise local finances ...... Planning funciions Statewide planning ...... X Local planning assistance ...... X X Coord. with regional planning ...... X X Coord. with Statewide plng...... X Program responsibility Urban renewal &redevelopment ...... X X Poverty ...... X Housing ...... X Area redevelopment ...... X Statutory citations H.B. 2194, 1965 Ch. 76 1, Acts Minn. Statutes Secs. H.B. 129, 1967 (Approp. Act) of 1968 4.1 1, 4.12, 4.13, 4.16 SUMMARY OF INFORMATION ON EXISTING STATE OFFICES OF LOCAL AFFAIRS, DECEMBER 1968 (Continued) Montana Nebraska New Jersey New York Name of Agency Dept. of Planning Division of State Department of Corn- Office of Local and Economic and Urban Affairs munity Affairs Government Development Year established 1967 1967 1966 1959 Location Independent Dept .' of Economic Independent Within the executive department Development department department Functions Advisory, coordinating & technical assistance Fiscal advice ...... X X Municipal management ...... X X X Engineering & public works ...... X X Legislative aspects of intrastate government relations ...... X X Research, statistics & information collection ...... X X C h) Personnel training X X m ...... Assist Gov. in coordg. State activities affecting localities ...... X X Recmd. programs & legislation ...... X X Interlocal cooperation ...... X X Boundary and fringe problems ...... Financial assistance ...... X Supewise local finances ...... x XS Planning functions Statewide planning ...... X Local planning assistance ...... X X Coord. with regional planning ...... X X X Coord. with Statewide plng...... X Program responsibility Urban renewal & redevelopment ..... X Poverty ...... X X Housing ...... X Area redevelopment ...... X X Statutory citations S.B. 19, 1967 L.B. 34, 1967 1966 Laws, Ch. 293 N.Y. Consolidated Laws, Ch. 335 SUMMARY OF 1NFORMATION ON EXISTING STATE OFFICES OF LOCAL AFFAIRS, DECEMBER 1968 (Continued) Ohio Pennsylvania Rhode Island Tennessee Name of agency Department of Department of Com- Department of Com- Office for Office of Urban Urban Affairs munity Affairs munity Affairs Local Govern- Affairs ment Year established 1967 1966 1968 1963 1967 Location Independent Independent Within the exec- Office of Comp- Office of department department utive branch troller of Governor Treasury Functions Advisory, coordinating & technical assistance Fiscal advice ...... X Municipal management ..... X Engineering & public works ... X Legislative aspects of intrastate government relations .... Research, statistics & information collection ...... X X c. N Personneltraining ...... X X Q\ Assist Gov. in coordg. State activities affecting localities . . X X Recmd. programs & legislation . . X X Interlocal cooperation ..... X X Boundary and fringe problems .... Financial assistance ...... X X Supervise local finances ...... X X Planning functions Statewide planning ...... X Local planning assistance .... X6 X X Coord. with regional planning . . X X X Coord. with Statewide plng. ... X X Program responsibility Urban renewal & redevelopment . X X Poverty ...... X X X X Housing ...... X X Area redevelopment ...... X6 X X7 Statutory citations Substitute H.B. 495, Reorg. Plan 2, Act S.B. 300, 1968 Laws, 1963 Executive Au- 1967 582, 1965 Regular Ch. 205 thority, 1967 Session (Ap. 21 1/66) SUMMARY OF INFORMATION ON EXISTING STATE OFFICES OF LOCAL AFFAIRS, DECEMBER 1968 (Concluded)

Vermont Virginia .. Washington Wisconsin Name of agency Office of Local Division of State Planning and Com- Department of Local ~ffairs~ Planning and Com- munity Affairs Affairs and Develop- munity Affairs Agency ment Year established 1967 1968 1967 1967 Location Office of Governor Office of Governor Office of Governor Independent department Functions Advisory, cqordinating & technical assistance Fiscal advice ...... X X Municipal management ...... X X Engineering & public works ...... X Legislative aspects of intrastate government relations ...... X Research, statistics & information - collection ...... X X t4 Personnel training 4 Assist Gov. in coordg. State activities affecting localities ...... X X Recmd. programs & legislation ...... X X Interlocal cooperation ...... X X Boundary and fringe problems ...... X X Financial assistance ...... X3 Supervise local finances ...... Planning functions Statewide planning ...... - X X Local planning assistance ...... X X X Coord. with regional planning ...... X X X Coord. with Statewide plng...... X X X Program responsibility Urban renewal & redevelopment ..... X9 Poverty ...... x9 X Housing ...... X X9 Area redevelopment ...... x9 Statutory citations Executive authority; H.B. 545, 1968 Laws 1967, Ch.74 Laws 1967, Ch. 75 1967 Approp. Act. APPENDIX C FOOTNOTES

Refers to administration of the Rural Redevelopment Fund.

Department and Commission of Housing and Community Development administers other programs, notably those of direct administration (poverty program, housing, etc.) rather than those of supervision and assistance. It renders advice on fiscal problems related to its progress, collects statistics and recommends legislation.

All State financial aid to localities for urban renewal, poverty programs, mass transit, etc., is chan- nelled at the discretion of the Director (or Commissioner) of the Agency (or Department).

Effective October 15, 1967.

5 In New York, the State Comptroller, an elective officer, supervises certain aspects of local fiscal affairs, audits and examines them on a continuing basis, maintains a State data bank on local governments, and advises and gives technical assistake on matters of law and finance. (N.Y. Consolidated Laws, Ch. 24.)

Refers solely to the functions of the Ohio Office of Appalachia within the Department of Urban Affairs.

' Includes administration of the Appalachian Re-Development and the Public Works and Economic Development Programs.

The Vermont Office was set up by executive authority only, and is awaiting statutory authority to undertake the functions proposed.

The Washington State Agency is given responsibility for "Administration or coordination of state programs and projects relating to community affairs for the planning and carrying out of the acquisition, preservation, use and development of land and provision of public facilities and services for fully carrying out the state's role in related federal grant or loan programs." Appendix D

TWO CASE STUDIES:

WATER AND SEWERAGE AND MASS TRANSPORTATION

Most of the reports of the Advisory Commission on recommendations contained in this report have since Intergovernmental Relations, as already noted, deal with been implemented, but most of the problems to which it broad types of problems that directly or indirectly was addressed have continued; some have become even involve a range of governmental activities. However, more serious. certain Commission reports have focused on particular public functions. Two of these are water and sewer Inherited Governmental Roles services and mass transportation. Each of them is important and relatively costly, and each involves Local Governments. Water supply and sewerage significant issues of intergovernmental felations which demand attention by local governments either because have merited study by the Commission. these services are publicly provided; or because the private firms providing those services are subject to WATER AND SEWERAGE various forms of regulative control by local governments. From very early days, urban local governments have Few governmental activities, if any, are more had to deal with the problem of sewage collection and essential to day-today life within the modern metropolis disposal, and this is everywhere recognized as a signifi- than the provision of water and the disposal of sewage. cant public responsibility for closely settled areas. Until At the height of the "Battle of Britain," according to recently, however, the installations and practices in- Winston Churchill, the only time that he feared for the volved often left much to be desired. In 1963, a Public survival of London was when bombing threatened to Health Service inventory identified about 21,000 water completely disrupt "the drainsy'-its sewage disposal systems, providing domestic water for 144 million system. people or about three-fourths of the total population Also, there are few if any other public services that and about one-sixth of the water used by manufacturing illustrate more vividly the complications that have industries. About three-fourths of these water supply resulted from the recent rapid development of a new operations involved only about 900 systems (including urban form-today's metropolitan "spread cityv- 154 privately owned), serving communities of 25,000 or without a corresponding major adjustment in inherited more.' governmental structural arrangements. These are services Water supply systems within the Nation's metropoli- that must and can be socially provided only where tan areas number several thousand, and relatively few of human settlemat is relatively concentrated; they are them include more than a few square miles of territory. unnecessary or unduly costly for sparsely settled areas. These localized municipal operations are not always Traditionally, they have been handled by "urban" local limited to the area of the parent government. Especially governments-municipalities, which in earlier days were for water supply, and less commonly for sewerage, geographically separate from one another. But in the service may be extended to adjacent territory through sprawling modern metropolis, many formerly separate contractual arrangements with individual customers, communities have grown together, new ones have been associations or developers, or other governments. Munic- created, and sizable "semi-urban" sections in various ipal operations also are supplemented by special dis- stages of development have made their appearance. In 1962 the Advisory Commission issued a report on Zntergovern#tental Responsibilities for Water Supply '~taiisticalAbstract of the United States, 1968, Table 254, and Sewage Disposal in Metropolitan Areas. Some of the p. 172. Figure 18 State Governments. Most States have an agency with power to classify surface water sources and to assign priorities to competing uses, for example as Community Water Systems, by Population of Areas Served: 1963 among agricultural, industrial, and municipal purposes. State health agencies also regulate community water and POPULATION SYSTEMS SIZE (000) POPULAT sewage facilities, usually with the responsibility for (in millio' testing water, reviewing plans for new water and sewer systems and extensions, and policing industrial waste disposal practices. In most States, the State health department also has a role in subdivision control, being authorized to require that adequate water and sewer facilities are provided in new developments. The inadequacies of individual well and septic tank systems increasingly have indicated the need for more stringent regulation. State regulation of industrial water pollution often has been handicapped by threats that the requirement of costly clean-up installations would damage local firms' competitive position, and cause them to move elsewhere. Recent Federal legislation is designed to lessen this problem by backstopping more vigorous State regulation and injecting Federal regulation in the absence of State action. Only in very recent years have any States provided grants to local governments to help finance their water or sewer facilities, and a considerable number still are not doing so. State technical assistance to local governments and agencies is more common. Perhaps the tricts, usually organized primarily to serve unincorpo- broadest approach thus far appears in the "State Pure rated territory. Waters Authority" created by New York in 1967. That In about half the States, some counties provide agency, with bond-issuing power, is authorized to make water supply or sewerage semces, but such county loans to municipalities for sewer system development operations are relatively few and scattered. and by contract with individual municipalities, to Local public water supply typically is handled on a construct, maintain, and operate sewage treatment financially self-sustaining basis, with charges set high plants on their behalf. enough to cover not only operating costs but also debt The Federal Government. The Federal role, like that service. Some municipalities, particularly in the South, of the States, extends considerably beyond urban or have water rates high enough to provide a considerable metropolitan area needs, and includes a broad concern net surplus to help finance other functions. This is the for conservation and natural resources. equivalent, of course, of a sizable sales tax upon water. Federal concern with water quality dates from the Special districts that provide sewerage service gener- Rivers and Harbors Act of 1899. Not until 1961, ally rely on service charges for their financing, and many however, was the national government's pollution con- municipalities also impose sewerage charges (usually trol jurisdiction extended to include all navigable water related to water use). Howe-ler, the rates often are too bodies, rather than only interstate waters. low to cover all related costs, and the difference must be In 1965 and 1966, new enactments considerably made up from tax revenues. strengthened the ability of the Federal Government to Local governments also have an important regulative attack water pollution problems more broadly and role with regard to water supply and waste disposal directly. All States now are required to develop stand- practices. Municipally imposed land-use controls and ards for water purity that are equal to or better than a building regulations prescribe standards for private in- specified Federal minimum. All have developed stand- stallations. Also, county health agencies often administer ards for review by the Secretary of the Interior and, as State-imposed requirements concerning suburban private of mid-1968, the standards of 32 States had been found wells and septic tanks, the testing of water, and acceptable. Furthermore, States must now maintain inspection of industrial waste disposal practices. interstate streams and their intrastate tributaries up to the Federal standard or an approved State standard of provided for public works programs in the 1930's. A quality. Thus a nationwide system for quality control 1948 Act authorized Federal loans for sewer system will not be limited by jurisdictional boundaries. construction, but no funds were provided. In 1956, a The 196566 enactments also established a Federal $50-million-a-year grant program was initiated, heavily Water Pollution Control Administration in the Depart- loaded in favor of small systems (with a maximum ment of the Interior, and an interagency Water Re- Federal contribution of $250,000 per project). By sources Council. Related provisions require the prepara- mid-1961, such Federal grants had totaled $225 million. tion of a detailed report, to be updated annually, The level of Federal aid since has been stepped up, but estimating national requirements and costs for additional as recently as fiscal 1967 all such grants were only about sewage treatment facilities for the five year period $100 million, or about 9 percent of total local outlays beginning July 1, 1968. The Water Resources Planning for sewerage purposes. Act of 1965 also called for the establishment of The Federal Water Pollution Control ~ctof 1966 Federal-State river basin commissions, and four now are authorized a sizable increase in Federal grants for waste in existence for the Pacific Northwest, the Great Lakes, treatment facilities, but actual appropriations have been the Souris-Red-Rainy, and the New England river basins. considerably below the authorized level. The total is The national government's direct dealing with prob- slightly over $300 million, or approximately one-tenth lems of water supply and quality also has been supple- of the current rate of local governments' capital outlay mented, to a limited but growing degree, by Federal for these purposes. grants-in-aid to local governments. Prospective Outlays. As required by law, the Federal Water Pollution Control Administration has estimated Financial Scale and Prospects the public outlays that would be needed to bring municipal sewerage practices into conformity with Fed- Local Government Expenditures. In recent years, eral water pollution control standards by 1973. To water supply and sewerage services have accounted for accomplish that, it rep~rted:~ about one-twelfth of all expenditures by local govern- . . . State and local governments need to spend ments in metropolitan areas, or about oneeighth of all $8.2 billion for municipal waste treatment their spending for non-school purposes. facilities during the period 1969-73. An addi- Public spending for water supply and sewerage has tional $6.7 billion will have to be invested in been rising. However, the growth in capital outlay for the construction of sanitary sewers during that these purposes has been less rapid than for other local period, bringing the grand total . . . to nearly government facilities. Between 1957 and 1967, when $1 5 billion-more than three times the amount total capital outlay of local governments was rising spent in 1962-66. about 5.7 percent annually, outlays for sewerage were If the authorized rate of Federal grants for treat- going up 5.4 percent a year and capital outlays for water ment facilities were fully funded by appropriations, the supply systems by only 3.7 percent a year.' Further- State-local share of financing during the next 5 years more, the bulk of this increase was attributable to rising would need to be 2% times the rate of 1962-66. If construction costs. Federal aid continues at only half the authorized rate, The bulk of all capital outlays for water supply and State-local financing would have to be multiplied three sewer systems has traditionally been financed by bor- times to carry out the stated objective by 1973.~ rowing, and this is particularly true for sewerage facilities. During the 8 year period 1958 through 1966, Some Metropolitan Area Problems sewer bond sales amounted to 90 percent of construction contract awards for public sewers and waste Impact of Metropolitan Development. With a grow- treatment fa~ilities.~ ing urban population, the amount of water supplied by Federal Aid. Local financing has been supplemented community water supply systems has been rising to a limited degree by Federal grants, initially with aid strongly-at an average annual rate of 3.9 percent between 1955 and 1967. Continuance of such a rate would mean a doubling of water system requirements 'u.s. Bureau of the Census, Compe~diurnof Governmental Finances 1957 Census of Governments Vol. 3, No. 5; and every 18 years. The water volume involved sounds very Governmental Finances in. 1966-6 7. 3~.~.Dept. of Interior, Federal Water Pollution Control Administration, The Cost of Clean Water: Economic Impact on Affected Units of Government (Washington, D.C.: January 10, '~e~artmentof Interior, Cost of Clean Water, op. cit., p. 1968) p. 62. 10. large-26 billion gallons a day in 1967, or some 170 small-scale approaches that all too soon are likely to gallons daily per resident in the areas served by produce unsatisfactory conditions and a multiplication community water systems. Nevertheless, such public of costs. In the scattered and initially "thin" pattern of utility demands make up only a very small fraction of all settlement around urban centers, families rely on indi- the Nation's water use, and are dwarfed by the require- vidual wells and septic tanks. This practice postpones the ments for agriculture, industry, and steam electric need for a public system, but the individual systems ~tilities.~ often cause trouble and expense to the homeowners, and While there are some notable exceptions, most maintenance costs often rise sharply over time. High fire major urban areas have access to surface or groundwater insurance costs reflect the inadequate protection sources that are sufficient in volume to meet their afforded by individual wells. With additional settlement, present and prospective water needs. However, the community facilities become increasingly necessary and question of adequate water quality for urban domestic economical. Yet, homeowners with their own septic use is another matter. There can be no question that tanks may be understandably reluctant to share in the "used water" must be relied upon for an even greater costs involved, or at least may seek the cheapest share of the Nation's total urban water needs in the shortrun solution-usually a small community network. future. Moreover, with continued metropolitan growth, The homeowner may thus pay twice or more for his most of the expansion in community water needs will water supply and sewage disposal facilities, as individual occur in areas where the relatively close settlement of a and then small-area community systems give way to large population multiplies the chances for contarnina- successively larger, more economical arrangements. tion and thereby increases the need for governmental Despite these statistics, however, many homeowners still action to assure not only an adequate volume but a safe find it financially attractive to build out ahead of water and palatable supply of water for domestic and other and sewer utilities, depending upon wells and septic urban uses. tanks in the meantime, since appreciation in land value The growing role of the States and the Federal usually more than compensates for the diseconomies Government with regard to water pollution reflects a detailed above. belated recognition that traditional localized approaches Financing Roblems. The usual procedure, bond are no longer adequate. Understandably, in earlier financing, tends to encourage relatively small-scale and decades, municipal efforts focused almost entirely on short-range development of suburban facilities. Unless a supply and largely ignored the condition of the water project involves a geographically large special district or discharged. A city might never develop without a good a county government, support for the bond issue is supply of water, but, once used, "our used water" likely to be limited to the present property tax base of a became "their pollution problem." small local area, and debt service requirements are It is mainly political and financial arrangements that typically met from revenues that at the outset will be prevent more effective handling of the water supply and modest, even if future urban development may promise sewerage requirements of metropolitan areas. A whole to increase them. Under such circumstan~es,obviously, range of factors often stand in the way of sensible and it is hard to finance extra capacity for probable future foresighted action. needs-and this practice further increases the total Decentralized Responsibility. In the first place, the long-range cost for water and sewerage facilities, since inherited multiplicity of local jurisdictions concerned the limited amount of bonds issued by small scale with water supply and sewerage in a particular metro- governments must usually carry a higher interest rate politan area seldom has any relationship to the water- than bonds issued by larger units having a broader fiscal shed that collects the water or the drainage area that base and a better credit standing. takes the sewage. Even entire counties or metropolitan areas rarely correspond closely to watersheds or drainage A piecemeal approach to the water and sewer basins. facility needs of suburbia results also from the strong This local diffusion of governmental responsibility competing pressures that urban fringe areas commonly also discourages the development of largescale installa: face at the same time .for other kinds of expanded tions which are likely to offer important economies. governmental physical plant, including especially public Settlement Patterns. Common characteristics of schools. Local government expenditure for additional urban fringe development also result in short-range and school plant-also usually financed by borrowing, and with burgeoning suburbs heavily involved-currently 6~tatisticalAbstract of the United States, 1968, Table 255, totals about twice as much as local spending for new p. 173. water and sewer facilities. Some Local Approaches Advisory Commission Proposals Contractual Arrangements. Various means have The Commission's 1962 report on water supply and been employed to overcome the damaging effect of sewage disposal in metropolitan areas offered a number these conditions in metropolitan areas. As previously of recommendations for local, State, and Federal action. mentioned, contractual arrangements between a sizable Most of the Federal proposals have since been imple- city and one or more suburbs are a common approach. mented, or have become less relevant in the light of the Sometimes the service is provided directly to outlying considerable broadening of the National Government's residents, and sometimes the city wholesales water or, role by the Water Pollution Control Act of 19.65 and less often, sewage disposal service, to suburban systems subsequent enactments. which then retail the service to their own residents. The Improved Contractual Relations. The Commission Federal Water Pollution Control Administration esti- noted many problems and limitations with intergovern- mates that more than 35 percent of all municipalities mental contracting for water supply and sewerage provide some sewerage service to customers outside their services. Nonetheless, it recognized that such arrange- boundaries.' Some sizable special districts also "whole- ments have, in some metropolitan areas, offered advan- sale" to smaller local distribution systems. tages of geographic and operating scale, as compared Special Districts. In some metropolitan areas, more with other politically feasible alternatives. Accordingly, fundamental approaches to larger area handling of water the Commission urged:' and sewer services have been attempted. These include, Where central cities, counties and other as already mentioned, county government operation or jurisdictions provide water or sewer service to the use of a special district or authority. other units of government on a contract basis, The special district, if it covers a large area, may they should assume the responsibility for com- offer important advantages over the separate municipal prehensive area-wide facility planning . . .the systems which serve only fragments of a metropolis. supplier-buyer relationship between municipal- However, in its usual form, the special district approach ity and suburb in specific instances might be also has certain disadvantages. In most instances, entirely eased through providing for suburban represen- separate districts have been set up, one to deal with tation on water and sewer policy agencies. water supply, another with sewerage. This single- The usual unrepresentative character of the contract function approach is understandable. The "natural" relationship can produce considerable intergovernmental areas for many large-area functions often do not antagonism. Many central contracting cities resist sharing coincide closely. The technicians and interest groups a voice in decisions. However, such sole control is not a concerned are likely to be different. Moreover, efforts necessary part of the contract structure: the semi- toward a large multi-function agency are likely to rouse autonomous system in Detroit, where only four out of a host of different opponents, sometimes fomenting seven Commissioners are Detroit residents, has an suburban fears of being politically overwhelmed by the excellent operating and financial record, and enjoys central city. harmonious relations with the suburbs it serves. But separate single-function districts add further to Improved Planning. The Commission emphasized the excessive complexity and layering of local govern- again, with particular reference to water supply and ment in the metropolitan area. And, especially in the sewerage, the crucial importance of comprehensive absence of specific arrangements to relate such units planning within metropolitan areas. Spe~ifically:~ closely to general purpose governments within the area, The Commission recommends that compre- such layering may add to the difficulty of relating plans hensive water utility planning on a metro- for water supply and sewerage-which have such an politan area as well as watershed and drainage important bearing on the form and direction of metro- basin basis, should be undertaken in each politan development-to health regulation, zoning and metropolitan area . . . Primary responsibility for building regulation, and the provision for roads and this function is best lodged in an area-wide public transportation. comprehensive planning agency . . . .

'~etter from Secretary of the Interior to Speaker, U.S. '~dvisor~Commission on Intergovernmental Relations, House of Representatives and Chairman, U.S. Senate Committee Intergovernmental Responsibilities for Water Supply and Sewae on Public Works, updating The Cost of Clean Water, (Jan. 16, Disposal in Metropolitan Areas (A-13; October, 1962), p. 105. 1969). The Commission further recommends that urgent consideration to the requirements and local units of government coordinate utility problems of urban areas. Each State should also policy making on a regional basis, regardless of insure that the interests of its urban areas are the number of operating agencies in the metro- provided for in the State's representation on politan area. inter-state water agencies. Even in the minority of metropolitan areas where No Substitute for Strict Enforcement. The States attention has been given to regional considerations in have ample authority, through the exercise of the police water and sewerage planning, such efforts typically have power, to abate water pollution. The Commission found been "utilityv-oriented, with too little concern for the in 1962, however, that State performance was critically potential of water and waste disposal facilities as a tool deficient; less the result of inadequate laws than of for shaping urban settlements. Thus, even in such areas, substandard effort. In turn, inadequate financing and extension of water and sewer services has tended to staffing of State water pollution agencies was partly follow rather than guide development. responsible. But even greater was the political difficulty Even the existence or creation of an operating of requiring municipal and industrial water-polluters to metropolitan utility does not of itself guarantee broad- undertake costly treatment measures, especially when gauge planning, and is no substitute for a metropolitan the benefits of such action might not accrue primarily to planning agency with primary responsibility for develop- them, but to the entire area. Moreover, such benefits are mental planning. extremely difficult to measure, even though they extend to health, recreation, conservation, property values, and Coordinated Policy Development general development. Instead of Piecemeal Decisions As a result, the Commission found, State regulatory agencies typically had relied unduly upon "voluntary The Commission urged the States act to equip cooperation," which in many instances permitted anti- themselves to develop and carry out a coordinated water pollution action to be unduly postponed or entirely resources policy, step up their anti-pollution efforts and avoided. stimulate related local activities. Accordingly, the Commission urged: ' ' Until recently, few if any State governments have . . . that the States enforce water pollution exercised a sufficiently vigorous role concerning water legislation and regulations affecting public resources. Traditionally, water pollution control, water health and recreation, municipal, industrial and allocation, water resource development, and other other uses with greater vigor and thoroughness. phases of the overall water resources problem have been Specifically . . . that (a) strengthened legislation dealt with independently by separate State agencies and be enacted to permit States, singly or jointly, to boards. With rapidly growing water use and increased control and abate pollution of rivers and pollution, the need for effective coordination of these streams, (b) States undertake more vigorous several kinds of effort has become more pressing. In administration of their water pollution control 1957, the Council of State Governments called for the programs, including adequate financial support, establishment of a comprehensive water resources pro- and (c) legislation be enacted endowing the gram in each State. Similarly, commending steps under appropriate State and local agencies with regu- way in this direction in some States at the time of its latory authority over individual wells and septic 1962 report, the Advisory Commission recom- tank installations, with a view to minimizing mended: ' O and limiting their use to exceptional situations . . . . that States enact legislation vesting respon- consistent with comprehensive land use goals sibility for overall State water resource plan- . . . The State legislatures should provide time ning, policy making and program coordination limits for each step in the pollution abatement in a single agency . . . . . State water resource enforcement procedures. planning and policy development should give State Stimulation of Local Action. Traditionally, the burden for financing of public water supply and

'Olntergovernrnental. . . Water Supply & Sewage Dispos- al. . . , p. 111. A draft measure to implement this proposal has ' '~nter~overnrnental. . . Water Supply & Sewage Dis- been prepared. It provides for the designation of a single agency posal. . . , p. 114. Three model statutes have been developed in to formulate and implement a coordinated State water policy. consultation with the U.S. Public Health Service and other See 1970 Cumulative ACIR State Legislative Program: Code organizations to implement the Commission's recommendations. 87-20-00. See 1970 Cumulative . . . , Code 87-51-00. sewerage facilities has falleil nearly entirely upon individ- again to a peak of over 23 billion passenger-trips ual local communities. Only relatively minor amounts of annually during World War 11, and has since fallen to its aid have been available @articularly for sewage treat- recent low of a little more than 8 billion trips per ment installations) from the Federal Government, and year.' until very recently no more than a handful of States Rubber-tired vehicles using public streets (mainly have made any grants-in-aid for these purposes. Predomi- buses but including some "trackless trolleys") account nantly, the role of the States has been limited to for nearly three-fourths of all transit rides; streetcars regulation, supplemented in some instances by technical handle only 3 percent, and subway and elevated rail advice and assistance to local communities. systems the other 24 percent. In contrast, during the In view of the serious lag in needed investment in mid-30's streetcars carried 60 percent, buses about 22 public water supply and sewerage facilities, especially to percent, and subways and elevated systems the other 18 abate water pollution, the Commission found an urgent percent. Thus, public roadbeds are now used for a far need for a broadening of the States' traditional role, and larger proportion of all mass transit than was the case in recommended: ' earlier periods. But the actual volume of such street use . . . . that the States enact legislation to (a) has fallen off because of the decline in mass transporta- provide grants for capital development and tion generally; rubber-tired transit vehicles carried about assistance improvements designed to supple- one-fourth fewer passengers in 1967 than they had 10 ment Federal aid under the Water Pollution years earlier.' ' Control Act.. . . , (b) provide incentives for Figure 19 comprehensive development and appropriate organization on watershed, drainage basin, 01 Passengers Carried by Local Transit Liner metropolitan area bases, . . . [and] expand their Selected Years, 1940 to 1967 technical assistance programs for waste disposal Billions planning and construction . . . .

MASS TRANSPORTATION Urbanization emerged as a means of civilized life because it reduced "the space that separates man, without freezing the relationships, so that contact and communication may be easy and varied at will."'

The Where and How of Urban Traffic Motor vehicles in the United States have multiplied tenfold since 1920. In 1963, 82 percent of American workers living at least a quarter-mile from their jobs reached their work in private automobiles, and nearly 70 percent of these work commuters were driving alone.' In mid-1967, nearly 79 percent of all U.S. households owned at least one car and 25 percent owned two.' The use of all forms of urban public transportation initially declined with the arrival of the automobile, rose

'21ntergovernmenral. . . Water Supply & Sewage Dis- posal... , p. 118. Intra-Metropolitan Travel. One key characteristic of 13~utherGulick, "Observations on Urban Transportation," urban circulation is that much of it involves the CongressionaIRecord (January 17, 1961). Vol. 107, p. 860. recurring daily movement of people between their l4uS. Bureau of the Census, 1963 Census of Transpor- tation. and ' I968 Transit Fact Book, American Transit Association, 151968 Automobile Facts Figures, Automobile Table 4. Manufacturers Association, p. 64; source, U.S. Dept. of Com- merce, Home-to-Work Travel Time. ' 'lbid. homes and jobs, schools, and other locations of habitual at least half a mile from public transportation, so that group activity. nearly 40 percent of all metropolitan work commuters In spite of the changing spread and density of found public transit inconvenient or impossible in 1963. metropolitan areas, traffic tying the central city to its Developments since then (including the faster growth of suburbs and the suburbs to each other is vitally jobs in suburbia than in metropolitan central cities) have important. It is, of course, the major factor in the undoubtedly increased this proportion, and it is likely definition of any group of jurisdictions as a Standard that about half of all the metropolitan workers who use Metropolitan Statistical Area. Major streets cannot stop a car to get to work do not have any alternative. at the city line, mass transit cannot terminate there; But many regular commuters and others still need provision must be made for people to travel circumferen- and use public transportation, even in the suburbs. Most tially from suburb to suburb as well as radially. The of the aged, the handicapped, and the young cannot needs of those who do not or cannot drive must be met. drive, and even in 1967 only 25 percent of U.S. In short, the area should be treated as a whole in households owned a second car. There is some evidence, transportation planning. in fact, that the long decline in public transit ridership is The 1960 Census showed that of the 22 million leveling off. For example new rail transit systems are employed residents of the central cities of SMSA's of being built in the San Francisco area and in Camden 100,000 or more, over 2.5 million worked in the (N.J.). outlying suburbs. Of the 19.6 million employed resi- Transit System Ownership. A widespread switch is dents of the suburban rings, 6.5 million worked in the under way from private to public ownership of local central city. That is a massive cross-over of people every transit systems, especially in the largest urban areas. day.' The trend toward public provision of urban mass The relative numbers have changed since then-the transportation takes various forms. In some instances, suburbs now contain an even larger part of the metro- publicly owned systems are operated by private firms on politan population and their share is growing. Lateral a contract basis, but public operation is more usual. movement was important in 1960, when over two-thirds There are also two main patterns of public ownership: of suburban working residents held suburban jobs, and it city-owned systems predominate, but a major and is even more important now. The evidence is plain that growing proportion of public systems that serve the most of these suburbanites work outside their own largest metropolitan centers belong to separate transit towns: the 1963 Census of Transportation showed that districts or authorities. only 42 percent of suburban work-commuters (those Typically, the assigned legal responsibility of these gainfully employed people with jobs at least a quarter districts involves only the provision and operation of mile from their homes) lived within 5 miles of their transit facilities. In most instances they are governed by jobs,' but the overwhelming majority of suburban a board appointed by county or municipal officials or municipalities are far too small geographically to accom- both. Most of them comprise at least a county, several modate such a journey. are multi-county, and one (the Massachusetts Bay The reliance on sutomobiles in the suburbs is Transportation Authority) has certain statewide respon- especially heavy; 96 percent of the families in suburban sibilities. Transit districts are empowered to issue debt, areas own a car. In metropolitan central cities, the but few have any direct taxing power. Their revenue proportion is generally far less, ranging down to an needs must be met mainly from operating income, average of less than 50 percent in 5 "old" major supplemented in some instances by aid from other metropolitan cities.' governments. The domination of the automobile is also enforced Several major factors help to account for the urban by necessity, especially in the modern spread city of the transportation problem. metropolitan area. Nearly one-third of the metropolitan Travel "Parking". The pattern of job concentration commuters in 1963 lacked means of public transporta- and hours puts a heavy handicap on economical urban tion to get to work. Another four million persons lived transportation. The day-time working population con- centrates at the heart of the city-or, rather, in several 18u.s. Census of Population, 1961, U.S. Summary, De- hearts-and workday travel peaks sharply at the begin- tailed Characteristics, PC (1) ID, Table 216. ning and end of the working day. ' 1963 Census of Transportation; Vol. 1, Passenger This means that transportation facilities of any kind Transportation Survey. that are designed to meet peak-load conditions ade- 20~urvey Research Center; Automobile Ownership and quately will be under-used at other periods. For public Residential Density (Ann Arbor: University of Michigan, June 1967), p. 14. carriers, this means that operating equipment is idle a good part of the day, and in some instances it also means The costs to the community for private or public employees who are paid for time when they are not rubber-borne transportation include not only street actually working. construction and upkeep, but the lost tax revenue from Rush-hour jams also limit capability of the private land taken for streets and-where they exist-municipal automobile for employee transport. The car is a rela- parking lots. Public parking fees from meters and lots tively bulky piece of equipment considering the number contribute relatively little to offset these costs: less than of people it carries, and one that must be parked all day 3 cents per dollar of local government spending on at or near the job. Because the number of vehicles streets and highways. Other costs involved in inefficient carrying only one occupant is so high, the number of urban circulation, very large though difficult to measure, independent decision-makers is multiplied in comparison arise from delay in the movement of people and goods with public transit and this maximizes the opportunities within cities, and losses of business patronage because of for driving error without decreasing the potential for congestion. The community incurs excessive costs from damage. The demonstration of this truth takes place congestion, too, in providing such services as refuse every rush hour; and bad weather multiplies the prob- collection, street cleaning, and fire protection, aside lem. from the large sums directly devoted to traffic control Affluence. Ki'gher living standards have complicated and to street and highway facilities. the problem in many ways; most of all, perhaps, by The operating costs of public transportation have making automobile ownership possible for the over- risen to the point where the industry as a whole has whelming majority of urban and suburban families, but operated at a loss in recent years. Several hundred local also by making suburban. home ownership more widely transit companies have ceased operation since 1954, and possible, and thus requiring extended home-to-work while in some cases service has bew taken over by travel. another company or public system, a growing number of Sprawl. The thinner, wider pattern of settlement towns that formerly had public transportation are now brought about by the automobile means that a smaller without it. For the transit industry as a whole, operating fraction of the population is close to major arteries of expense (including depreciation), has climbed from 78.5 daily travel, for which common carrier service is most percent of revenue in 1935 to 98.4 percent in 1967- logical and economical. The automobile has cut severely before taxes, debt service and other non-operating into non-rush hour use of mass transit, further confining cosk2 its business to the rush hours. The automobile has Many remedies are proposed for the diseases attack- helped make it feasible for large industrial and commer- ing urban transportation. For cars and buses, wider cial establishments to locate out on the fringe, while still streets, more downtown parking lots, one-way traffic, drawing on the whole metropolitan area for their work and multi-lane expressways are constantly being built; forces. This increases the variety of travel linkages, and for rail transit, higher fares, tax relief and public lessens the number of people that can be "collected" acquisition take place. But as fast as steps are taken, new efficiently by mass transit carriers. problems and needs develop from sharp changes in land Decentralized Responsibility. In most metropolitan use, expansion of the urban community in new direc- areas, separate and often uncoordinated governmental tions, and increased traffic, so that it is extremely units administer highway planning, construction and difficult to forecast and meet future conditions and traffic registration; operation of public transit facilities; future needs. Long-range proposals to "solve" the crisis and related matters. of urban transportation commonly call for action so Cost Factors. The demand for transport services and broad and so varied as often to appear politically and facilities (including roads) does not yet connect accu- economically unrealistic. rately in the public mind with the resulting costs. The automobile owner tends to think only of out-of-pocket Local Government Responsibilities expense of using his car, ignoring not only the social costs, such as air pollution, but also part of his own Clearly, governments at all levels have a stake in direct costs of driving, such as depreciation. For the smoothly moving transport of people and goods in average motorist driving 10,000 miles a year these costs, metropolitan areas. The major burden naturally falls including gas, oil, maintenance, tires, insurance, license upon city governments, for they build and maintain and registration, and depreciation, added up in 1967 to most of the roads in the central city, and the major part $1,362.' ' of the network that links suburbia together. 21 ~merican Automobile Association, "Your Driving 22~mericanTransit Association, 1968 Transit Fact Book, Costs," (1967). Table I. In fiscal 1967, local governments spent $4.5 billion The benefit of these roads to urban mass transporta- on streets and highways. The major portion was financed tion is mixed. The private automobile owner enjoys from local revenue and borrowings.23 Metropolitan driving on them, but local transit buses find their areas, with less than one-ninth of the Nation's land area, usefulness limited because of the need to turn on and off account for nearly two-thirds of all local governments' to make intermediate stops. Sometimes the construction highway expenditure. And the State governments make of the suburban expressway has blocked off smaller even greater highway expenditures within these areas streets, and forced transit buses to take more circuitous, (some $3.6 billion in 1966), although dealing with far timeconsuming routes. less mileage than that of the streets and highways that On the average, the States finance 44 percent of are under local governments' jurisdiction. local government highway spending, most of it from Aside from the provision of streets and highways, highway-user taxes and fees. A few States have provided local governments also perform a wide range of other some financial aid to urban transit through tax relief, services that directly affect urban travel and transporta- purchase-lease arrangements for equipment, or contracts tion: control of traffic and parking, regulation of private with private railroads for guaranteed commuter service. transportation activities (including taxis and trucking At the State level, there are commonly two or three operations as well as privat\ely operated mass transit distinct agencies with a direct impact on urban transpor- systems), and public provision of parking facilities. tation-above all, usually, the State highway department, Here, as so often in the functions of metropolitan but also agencies concerned with vehicle licensing, areas, the fragmentation of governmental authority puts regulation of intrastate transportation, highway policing, a roadblock in the way of effective performance. and often, at least to some degree, State development Regulations and requirements that vary from suburb to and planning activities. Here again, needs for consistency suburb, differences in fiscal capacity between central and coordination exist. Some States have created a city and suburb, differences in emphasis and treat- transportation agency to bring together the relevant ment-all are complicating elements. activities of existing agencies. Public ownership and operation of transit facilities typically involve a considerable financial subsidy-as a The Federal Role minimum, the surrender of taxes that would apply to a private system, and commonly also the underwriting of Grants to States for highway construction origi- some transit requirements not covered by farebox nated before World War I, and have been ever since an revenues. Thus, the operating revenue of governmentally essential tool for the development of the Nation's major operated local transit systems in 1966-1967 was $906 road system. In 1956, this program was considerably million, and their current operating expenditure (exclu- expanded with increased Federal highway-user taxes, to sive of depreciation), amounted to $910 million; they provide for development of a modem "national system also paid out $94 million in interest on transit debt, and of interstate and defense highways" with "90-10" $347 million in capital outlay. Of the 27 cities of 50,000 financing-i.e., nine dollars of Federal money for every or more that operated transit systems in 196667, only one supplied by the States. Such interstate system 10 showed an excess of operating revenue over operating payments now make up nearly three-fourths of all expenditure (exclusive of depre~iation).'~ Federal-State highway aid, with most of the remainder distributed on a 50-50 matching basis. State Responsibilities Although intended mainly to facilitate intercity travel, the costly new interstate system of course has to The States, with considerable Federal assistance, deal with the particularly difficult problem of efficient build and maintain the Nation's primary road system. highway access into and around major urban centers, While the vast majority of this express system is outside and a considerable share of all the expenditures involved metropolitan areas, the portion located within is typi- (though only a minor fraction of the system mileage) is cally the most expensive and heavily traveled, and within metropolitan areas. These greatly improved road accounts for about 40 percent of all State spending on facilities have also found very heavy use for daily work highway construction and maintenance. commuters and other motorized traffic within and around metropolitan areas, and have facilitated the geographic outthrust of many major urban centers. 23~.~.Bureau of the Census, Governmental Finances in As many observers have pointed out, these financing 1966-67, and State Government Finances in 196% arrangements gave highway development a great advan- 24~.~.Bureau of the Census, Governmental Finances in 1966-67 and City Government Finances in 1966-67. tage, at the State and local level, over other possible forms of public expenditure to deal with urban and Because no one confines his travels to his own metropolitan transportation needs: a State-source dollar jurisdiction, transportation planners must take into will buy from two to ten dollars worth of major-highway consideration entire urbanized areas. Major highways construction, while for most alternatives the entire cost cannot stop short at the city line; bus and subway lines (at least until very recently) has had to be financed must provide extensions into suburbia. Because of the locally or by the State. growing and changing pattern of settlement, moreover, Explicit Federal concern for urban mass transporta- any transportation solution must have flexibility and tion is only very recent. A 1961 enactment authorized capacity for growth. $25 million of Federal expenditure for "demonstration Governmental action at all three levels with respect grants," and also provided for low-interest loans for to urban transportation should serve urgent needs for: transit facilities. This was broadened and enlarged by the (1) effective coordination of the various transportation Urban Mass Transportation Act of 1964 and subsequent functions of government-regulation, taxation, provision amendments, under which research and training pro- of lughway facilities, traffic control, and public transit grams are carried out and grants are made not only for operations; (2) areawide consistency of planning and research and demonstration purposes but also to help action by numerous governmental jurisdictions; (3) finance the provision of capital facilities for urban equitable and consistent policies for financing the transit systems. Total Federal obligations under this various forms of urban transportation-highways, rail program in the fiscal year 1969 are about $150 million, and surface transit; and (4) a vigorous research effort. including $130 million for capital facilities grants. Recommended Federal Actions. The ACIR's 1961 These grants (and also authorized loans, little used report included only two explicit recommendations for thus far) can go only to governmental bodies, to aid Federal action: (1) Congressional consent in advance to their acquisition of capital facilities (including equip- interstate compacts creating agencies for planning (in- ment) in accordance with a specific urban transport cluding transportation planning) for interstate metro- plan. However, governmental operation of the transit politan areas-a proposal that was later implemented by system is not essential; public ownership with private the Housing Act of 1961;25 and (2) Federal grants for operation under lease or contract is acceptable. Subject metropolitan area planning and demonstration grants to certain other conditions, grants may be made up to involving for innovative "demonstration" projects, and two-thirds of the net cost of an urban transportation low-interest loans to help finance the improvement of project-defined as the part of the expenditure which mass transportation fa~ilities.~ Subsequent Federal cannot be readily financed from transit revenues. legislation has included such provisions but has gone beyond them to authorize grants also to help finance the Several Commission Conclusions and Recommendations development and improvement of capital facilities for local transit systems. In spite of the strong preference of the American Recommended State Action. The Commission's public for automobile travel, a need for mass public 1961 report included two specific recommendations for transportation in sizeable urban areas will remain as long State action. In one of these the Commission urged:27 as the present pattern of concentrated settlement and . . . . enactment of legislation by the States to simultaneous working hours persists. Private cars cannot authorize local units of government within meet all the internal circulation needs of the modern metropolitan areas to establish, . . . service cor- metropolis. porations or authorities for the management of Some form of mass transit must continue even for areawide transportation facilities and services, parts of the metropolis where its cost is out of such entities to have authority to borrow and proportion to its revenue. Even in the suburbs, the aged, to impose user charges, but with the initial the handicapped, and the young cannot drive, and not establishment of any such entity being subject every family owns a second car. The alternative to public to voter approval on the basis of an areawide transportation is to isolate these parts of the population. majority. Part of the cost of providing this transportation must be borne by government. The farebox alone cannot Advisory Commission on Intergovernmental Relations, Intergovernmental Responsibilities for Moss Transportation support the uneven operating schedules and the capital Facilities and Services in Metropolitan Areas (A-4; April, 1961), investments that are needed. Especially is this true for p. 50. operations serving the poorer segments of the popula- 26~bid.,pp. 51-2. Senator Muekie and Congressman Foun- tion, whose alternatives to mass transit are particularly tain reserved judgment, and Mr. Burton dissented in part. limited. 2'Ibid., p. 48. Since in a majority of States a large share of State Government. One of these calls for the elimination of revenue comes from the metropolitan areas and since, in "anti-diversion" provisions which in many States now many instances, the State represents the only single make it impossible for local governments to use any part force which can be brought to bear upon metropolitan of their allocations of State highway-user revenues for areas in their entirety, it is reasonable and necessary that mass transportation purposes rather than solely for the State governments direct an increased share of their street and hlghway purposes. Beyond this:2 technical and financial resources to the problems of the The Commission recommends that urban metropolitan areas. The policies and activities of State States develop a mass transportation plan and highway departments, planning agencies, tax and regula- that, in addition to providing technical and tory authorities, and special agencies having responsibil- financial assistance to metropolitan areas with ity for local government and/or urban affairs all need to regard to the planning of mass transportation be marshalled and coordinated for sustained attack on facilities and services, the States furnish finan- the problem of urban transportation. Accordingly, the cial assistance toward the improvement, acquisi- Commission recommended: tion and operation of such facilities. . . . that the States take legislative and adrninis- This contemplates the development of a partnership trative action to extend technical and financial financing role by those States which have sizable assistance to their metropolitan areas with metropolitan areas, in a broad-based tackling of mass regard to the planning of mass transportation transportation problems. Thus far, there has been facilities and services. relatively little State expenditure for this purpose (in The continuing and increasing urgency of mass fiscal 1967, a total of $48 million expended by three transportation problems in many metropolitan areas led States), but recent enactments promise more widespread the Commission to make two additional proposals on activity. this subject in its April 1969 report, State Aid to Local 29~dvisoryCommission on Intergovernmental Relations, 28~bid.,p. 50. State Aid to Local Government (A-34; April, 1969), p. 23.

* U.S. GOVERNMENT.PRINTINGOFFICE: 1971-424-212/1177