Evening star., 1951-06-21
By WoIter l. Fowler
Budget Officer. District Government


By WoIter |. Fowler
Budget Officer. District Government
BECAUSE of the very vital Importance
- of this Federal payment it being
the largest single item we have in this
budget, I would like to tell you some
thing about it.
We are asking on page 2, line 3, that
you strike out $98 million and insert
$i1 million.
You see the total appropriations for
the District of Columbia government.
You will observe the terrific impact Of
imitation. In 1949 the budget here in
the general fund was 500 million. Now
we are speaking in terms of $116 mil
lion. The only item that has not been
affected by imitation is the item of the
Federal payment. Today the percentage
is 8.43, the lowest in history.
From the laying out of the Capital in
1890 to 1885 the Federal Government
contributed about SIS million, while the
residents of the District of Columbia
paid over SAL million. accommodating a
large indebtedness. In 1885 values COL
lapsed and a state of bankruptcy re-
suited.
AS usual, an investigation was made
but nothing was done, although Senator
Southland of New Jersey made an ex-
cellent report recommending that the
fair portion the Government should con-
tribute was more than one-half.
For the next 40 years the finances Of
the District continued in the same
"catch as catch can" manner. Sometimes
the Federal Government gave money and
at other times it was entirely up to the
District.
From 1885 to 1870, total of $50 mil
lion was expended in the District-$124
million Federal and $17.7 million District
or less than an average of 81 million
each year. The only outstanding expend-
iture in this period was the Federal
3 Governments construction Of the Wash
ington aqueduct from 1850 to 1870 at
a cost of $3,385,000.
In 1871 the real beginning Of the mod
ern District of Columbia began. In that
year the corporations of Georgetown and
Washington-the Alexandria units had
been lost by the 1846 retrocession-were
abolished, and a territorial government
for the District of Columbia was estab-
lished and a debt of over $4,350,000
inherited An effort was made to lift
Washington out of the mud. The city
was not only lifted out of the mud. but
the debt was lifted to the then astro-
nomical amount of $23. 1860, 700. The re-
suit of that was excessive taxes and an
other appeal to Congress.
This appeal eliminated in the Act Of
June II, 1878, which is the present
Organic Act of the District of Columbia.
Here, for the first time, Congress as
sumed the prerogative granted under
Clause II Of Section 8, Article I, of the
Constitution. The organic act provided
that all estimates should be approved
by the Secretary Of the Treasury and
submitted to Congress. It established q
$3.50 ratio continued until 1921.
From 1878 until around 1910 the A.
nancial scene was comparatively peace
full in the District of Columbia. The So
so distribution was approximately COM
piled with. Between 1902 and 1910,
when the District had insufficient funds
to meet its obligations, the Secretary Of
the Treasury was authorized to advance
funds. Relations between the District
Of Columbia and the Federal Govern
ment were amicable.
Shortly after 1910 the District began
to accumulate a revenue surplus and
the efforts to reduce the Federal pay
ment began. A joint select committee of
three Senator's and three Congressman
was appointed in 1915. which delivered
q majority and minority report. But
no reduction was made until 1921,
when the ratio was reduced to so per
cent payment by the District of Columbia
and 40 per cent by Federal. This did
not repeal the $3.50 provision of the
organic act, but provided for 6040
for one year. This division continued
until 1925 when the lump-sum payment
was substituted for 1t, and made perma-
nent in 1899.
I can remember when Senator Over
ton was chairman of this same subcom-
mittee. He became interested in the
fiscal relationship between the District
and the Federal Government. During
his term he created formula, fixing
the amount to be paid each year by
the Federal Government. He was unable
to get that through the Senate.
After Senator OMahoney became
chairman of this committee, a COM
mittee of four eminent Investigators
WOO OkkOAAVSO Wy VAlC
Committee to make an investigation.
Senate Document No. 203 resulted
from that inveStigation-an illuminat-
ing report. It found:
Cd That the District is the seat of the
Federal Government set aside for Fed
eral purposes with full legislative powers
retained by Congress.
Cd The area of the District is fixed
1t cannot expand. Therefore, when the
Federal Government purchases property
the tax revenue previously received on
su"h property is lost to the District and
cannot be replaced. The residents of
the District in fairness should not be
expected to make up such loss in reve-
nues by increased taxes.
80 Expenses Of the District of CO.
lumbia during the past 10 years (the
report was made in 1946) were occa-
stoned by the tremendous expansion Of
the Federal Government, with no COM
mensurate increase in the payment by
the Federal Government.
Under the O'Mahoney formula the
Federal payments would have been in
excess of $12 million.
In 1947 the Joint Committee on
Fiscal Affairs had hearing over
here in the Senate. For Is days we
appeared before that committee and
gave them every table everv hit of in