Evening star., 1932-01-07
History of Fiscal Relations
No. 4
Existence of District Surplus Recognized by Inquiry.
HOY House, Under Its OHn Rules, Overt1rew
Fixed Ratio Without Repeating Statute
Requiring It-Ldter Developments.

! permitted its accumulation. Applica-
| ton of surplus under any other ratio
| is inequitable."
How Surplus Was Spent.
Not only was the surplus not ex-
| pended with a corresponding contribu-
! ton from the United States under the
! haIf-and-hal law but the United States
made no contribution whatever to it, of
| 40 per cent tunder the 60-40 ratio)
or Of any percentage contribution. In
| deed. though the law indicated that the
| surplus was to be applied to the Dis
/ trict's share of the cost of maintaining
the CAPITAL, q considerable part of 1t
was expended to meet the Nations
| share Of national or semi-national prof.
/ ects as. for example, to complete acqui-
/ sition of the parkway connecting Poto-
mac and Rock Creek Parks.
One of the changes in District
financing Congress had made when
! it created the Senate and House
| Committee to study the surplus was
! the enactment Of a provision requiring
the District to build up within five
wears a reserve fund sufficient to en-
able the municipality to begin in 1927
operating on a cash basis at the outset
of each fiscal year. The fact that that
requirement placed future burdens on
the taxpayers of that day also was de-
veloped by the Citizens Joint Commit
tee in its brief at that time. Summing
up the situation as it then existed, the
Citizens Committee, in a brief filed
early in 1923, declared:
THE taxpayers OF today-that is, of
the period 1916 to l926-are weighed
down with the tax burdens of the past.
present and future: Cd They are bur-
dened with alleged Indebtedness of the
remote past, especially those arising
from the blunders or neglects Of agents
of the Federal Government between
1874 and 1878. Many thousand dollars
of such alleged Indebtedness have been
thus inequitably collected from them.
and they are now menaced (in violation
of the spirit of the statute of limita-
tions) with the revivification, to their
injury, of debts apparently settled or
forgiven more than 40 years ago and
with demand for payment of interest
on these alleged ancient debts. (2)
They have been burdened with the
heavy war taxes of this decade. of
which they have paid their full share.
more in 19l8-19 than any one of IS
States, more than 5 States combined.
They have met all their obligations in
municipal expenditure. They have been
taxed municipality so as to raise, in
addition to what thev were permitted
to spend. several millions of surplus
taxes under the half-and-half law, and
now the question is raised whether they
shall be permitted to spend for their
own benefit the surplus which they have
thus accumulated, through violation by
Congress, their exclusive Legislature, of
the literal terms Of the act of 1878,
(3) They are not only thus burdened
with the resurrected alleged indebted
ness long ago dead, buried and de-
cayed. of the remote past, and are not
only thus held from >the use of mil
lions of taxes, collected from them in
the last three years, constituting their
tax revenue of the present, but they
are menaced with imposition of the bur-
dens of the taxpayers of the futlKe by
the requirement that in addition to
current taxes for current maintenance
they shall be taxed to raise millions to
meet the first half-year expenditure of
1929 under the new so-called pay-aS
you-go policy. recently proclaimed by
Congress This pay-as-you-go policy
obviously exposes itself as really pay
before-you-go policy"
Surplus Computed
After weighing the miscellaneous as
sortment of matters that had been sug-
gested as possible offsets against the
money of the District taxpayers in the
Treasury the Joint Senate and House
Committee found that the District had,
as its people contended. a surplus of
local tax money in the Treasury The
committee found the surplus to be
s4,67l 1857, but it approved three ad-
,,rfv aofe IN ha &c uyt,;
duced the stotal to a net surplus of
S4,438,15492. These adjustments con-
sisted of a portion of the cost of addi-
tional land the Government had bought
for the National Geological Park, por-
ton of the S240 wartime bonus paid to
local employees and half of the amount
of special relief bill Congress had
passed.
Before the bill recognizing the surplus
became a law, in 1925, the District gov
ernnent called attention of Congress to
a further sum of 9,373.83, which it
regarded as belonging to the city. Con-
gress left this claim up to the controller
general, who later that year ruled in
favor Of the District, which made the
surplus fund S5,257,528. AS enacted,
the law recognizing the surplus required
it to be used for school buildings, parks
and Fairgrounds.
AS the total Of District appropriation
bills began to mount under the $9,000,-
900 lump-Sum arrangement, which
meant, Of course, that the District was
bearing the whole burden Of annual
increases, the Senate Continued its ef-
fortS.to obtain more equitable settle
ment Of the question. The Senate had
yielded reluctantly to the House in that
first departure from the definite pro-
portion system In 1924. When House
members first decided in that year to
throw aside the substantive 60-40 law
for an arbitrary lump-sum contribution,
they proposed $8,000,000. The Senate
wanted either TO adhere to the 60-40
ratio or a s14000,000 lump sum. The
S9000,000 figure finally emerged as a
compromise
During the ensuing six years the
Senate, recognizing that the gap be-
tween 100000 and the total required
annually to maintain the Capital was
growing constantly wider, made repeat
ed efforts to have the Federal partner
pay a more equitable share either by
an increase in the lump sum or by re-
turning to some percentage ratio.
On each occasion, however, the House
succeeded in having its way by holding
TO the 100000 figure, until 1880,
when the Senate, by standing firmly
by its contention for some increase in
the Federal share, secured an agreement
IN the closing hours of the session, in
creasing the lump sum to s9,5O0,O0O.
At the same time that the House
| agreed to this increase in the lump sum
u adopted the resolution creating the
Special House Committee, the Mapes
Committee, which has recently de-
Ivered its report.
Next Article-House Efforts 10 Re-
/ peal Fixed Ratio LaW)
Leisenring Reappointed.