Evening star., 1939-08-06
T.V. A. Tax Bill Raises in States
A Problem Long Felt in D. C..
Significance in Proposal Is Thot Prompt Study
Is Being Given to Its Effect on Revenues
BY J. A. O'LEARY.

Senate few days ago to estab-
llsh new formula for reimburs-
ing six States for revenue they will
lose as the Tennessee Valley Au-
thorlty takes over private, taxpay-
ing power properties, is the latest
evidence that other parts of the
country are beginning to recognize
the Importance of problem Wash
lngton has confronted for many
years.
When Senator Overto of Louisi-
ana put forward at this session his
formula to recompense the District
government for the increasing loss
of local tax revenue as the Federal
Government buys more property
here for National Capital purposes,
much of the opposition it incurred
was based on claim that it's adop-
ton would be precedent, prompt
ing other communities to seek cor
responding relief.
AS matter OF fact, the precedent
had long since been established for
other sections of the country in
series of special enactments, of
which the new T. V. A. bill is but
one example.
Survey Lists Special Laws.
A Government survey on Federal
ownership of real estate throughout
the country, submitted to Congress
last January, listed variety of laws
authorizing percentage payments to
certain States affected by public
lands, grazing, mineral leasing and
forest reserves.
Even in the case of T. V. A.. the
bill just introduced by Senator Nor
rlS OF Nebraska and Representative
Sparkman of Alabama would not be
a precedent. From its establishment
in 1888 the Tennessee Valley Au-
thority has been empowered by
Congress to make payments to two
of the States affected-Tennesse
and Alabama.
The significance in the new pro-
posal, as sidelight on Washing
tons fiscal relations problem, is
that, as the T. " A. prepares to
extend its holdings by acquiring
private power plants, prompt con-
sideration is being given to the
effect this will have on the States
and counties that heretofore OBJ
tanned local revenues from these
utilities.
In Washington's case, the Over
ton formula was an effort to bring
the attention of Congress to the
fact that the taxable area of the
District has been diminished stead
lily by Government acquisitions,
causing the local tax burden to fall
on a more limited area. Accord
ingly, Senator Overton proposed to
base the Federal payment here on
the percentage of land area required
for national purposes. which could
be adjusted automatically as the
situation changed.
Sequel to July rs Law.
In the case Of T. v. A., the new
formula is a sequel to the bill that
became law July 26, enabling the
Authority to go forward with it's
agreement to acquire private power
companies in the area of that de-
velopment. If enacted, the new
formula would enable Georgia, Ken
lucky, Mississippi and North Caro-
lima to share, along with Tennessee
and Alabama, in the payments in
lieu of taxes The basis of payment
also would be changed.
The Federal programs for slum
clearance, resettlement and low-cost
housing of the last few years furnish
other illustrations of instances in
which Congress has recognized the
equity of making payments to local
communities in lieu of taxes lost
thorugh Government activities.
While Congress is making a lump
sum payment to the National Capt.
tal-increased this year from $5,000.-
600 to $4,000, ,000-it is no longer
based on any definite formula, or
yardstick, by which it could be
measured in relation to the local loss
of revenue, despite the heavy per-
centage of Federal property hold
ings. The Overton formula would
have called for a Federal payment
of about $8,00o,O00.
Sets Specific Formula.
In contrast to the lum- sum meth
cd of payment Congress has been
making toward the expenses of
Washington for Is years, depending
only on the changing views of sue
ceeding Congresses, it is interesting
to note the exactness of the rule
beirg proposed for the States in the
Tennessee Valley program.
Explaining the bill, DR.. Harcourt
A. Morgan, chairman of the board
of T. v. A., wrote Senator Norris:
The draft of the recommended
bill provides that the payment by
the T. v. A. to the States as con-
tribution to the cost OF State and
local government be 10 per cent Of
gross proceeds from the sale Of