Mr. THOMPSON. Perhaps Mr. Janzen would be in a position to give us an indication.

Mr. JANZEN. I am afraid my position would have to be as just announced by Mr. McBroom. The Department did not take a position on this, and our answer would simply have to be that I could furnish you the information on how much more it would cost the Federal Government to have this option plan and I think we have already furnished those figures to you. But the Department at this point does not endorse the option plan.

Mr. THOMPSON. Prior to any action by this subcommittee the Chair would suggest that we would ask counsel to request of the Department their opinion of this bill which we will consider under the optional plan as against other bills that have been up. We would like a report on H.R. 11008 as to the attitude of the Department, whether you take a position or not, including whatever costs as you have indicated here for the record this morning might be involved.

Mr. McBROOM. Yes, sir; I believe that is the proper way to do it. Mr. DINGELL. Very briefly, how long will that take?

Mr. McBROOM. Mr. Finnegan is the man working on these matters. Mr. FINNEGAN. As soon as we can get advice from the Bureau of the Budget on it.

Mr. DINGELL. Since you are simply furnishing information to the committee, is it necessary for you to get the clearance from the Bureau of the Budget?

Mr. FINNEGAN. Yes, sir; this is a new bill. We would have to have advice of the Budget Bureau.

Mr. THOMPSON. You would need clearance as to whether they objected to your report?

Mr. FINNEGAN. That is right.

Mr. THOMPSON. Would you attempt to expedite this report to where it is a matter of days instead of weeks? We would appreciate it. Mr. FINNEGAN. Yes, sir. We will try to get it to you before the end of next week, if we can.

Mr. McBROOM. Mr. Chairman, if I may, this is more than information, as Mr. Dingell indicated. It is a policy position of the Department.

Mr. THOMPSON. What we need is a policy position because any other report would not be that.

Mr. CARLIN. Mr. Chairman, your time has gone beyond the time originally allocated to us. We would like to submit the statements of Mr. Keyes and Mr. Tollenaar for the record, and since the points they had wished to make have been covered in your oral discussion, we can just file their statements.

Mr. THOMPSON. Without objection, it is so ordered. I thank you gentlemen for appearing.

(The statements referred to follow :)

STATEMENT BY RALPH T. KEYES, EXECUTIVE SECRETARY, ASSOCIATION OF MINNESOTA COUNTIES, ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES My name is Ralph T. Keyes, of St. Paul, Minn. I am the executive secretary and counsel for the Association of Minnesota Counties. I appear here today before the subcommittee as a representative of the National Association of Counties.

My testimony will attempt to put before the subcommittee one segment of the opinions and concern of counties in the manner of payments from national wildlife refuges to county governments.

The members of the subcommittee, I am sure, are aware that in almost all of the States the principle source of local tax revenues is a property tax. Nationally, the property tax provided 86.7 percent of local government's tax revenue during 1961. In many States, these taxes can be levied only within a maximum limitation that has been spelled out in either the State constitution or the statutes of the State or both. This tax revenue is realized by applying a millage rate to the value of the land.

The counties' concern regarding the Federal Government's wildlife acquisition program is that with the acquisition of these areas there is less taxable land in the local constituency. The result is a lessened tax base to which millage rates can be applied.

The amount of land which the Federal Government will acquire under the new program is substantial. As the subcommittee is aware, the Department of the Interior estimated in 1962 that it needs to acquire 2,970,000 acres by 1970. In my home State of Minnesota, we are informed that when the program is complete, the Federal Government will have purchased 124,000 acres. In addition, they will have acquired the use of considerable additional acreage resulting from easements. All of the acreage acquired by any means for use by the Federal Government will be in addition to the State wildlife area acquisition programs in effect, such as is the case in Minnesota.

Our concern on a nationwide basis is that the existing formula under the 1935 law is at present inadequate. It is undisputed that the principal use of the lands acquired and to acquired, is for wildlife breeding grounds or refuge areas. It has not been acquired for a profitable use in the commercial sense. Any income realized is merely incidental to the primary use of the land in the wildlife programs.

Consequently, especially when we look at the program in prospect, the Federal Government will be acquiring land which will be returning small amounts of revenue. The continuation of only a shared revenue program will produce for many, many counties a return that is inadequate. Using again an example in my home State, the Tamarac Refuge in Becker County consisting of 32,439 acres currently provides a shared-revenue payment to that county, in the amount of only $102.

Counties throughout the Nation are encouraged by the attention the Congress is giving to this problem when it considers a percent-of-value payment to the counties. A payment of a percent of cost, whether three-fourths of 1 percent or a straght 1 percent will substantially increase receipts in almost all counties. Some counties would not gain by an across-the-board percent of cost forumula. Counties in the upper midwest would be among the many counties which would be benefited by a formula based on percent of cost.

The percent-of-cost formula most often used is that of three-fourths of 1 percent of the cost, as adjusted periodically. Information that I have been able to gather in correspondence and conversations with county officials, not only in my own local area but throughout the Nation, would indicate that a threefourths of 1 percent of adjusted cost payment is going to be substantially less than the revenue this land would produce in the form of an ad valorem tax. When the counties accept a proposal which would result in a payment based upon three-fourths of 1 percent of cost they are indeed making a sacrifice.

Just what the comparison of return by taxation against the return under the proposed formula is on a nationwide basis, I am unable to determine or even estimate for the committee. In Minnesota, the average return of our porperty taxes, taking into account both urban and so-called rural property is slightly more than 2 percent of market value. It is admitted that there is some reduction in governmental services, once the land is acquired by the Federal Government. The extent of the reduction is probably more imagined than real, simply because the necessary services of Governnment such as providing roads, schools, and maintaining a welfare program have to be continued in the general area, even though some of the land is taken.

Another concern of the counties in a percent-of-value formula, is that the counties would be giving up the benefit of any future increases in revenue that may be realized from the land. The acquisition program as we know it will involve the taking of some land which is good, tillable farmland. The records of the Department show that National Wildlife Refuge System revenues have increased. Comparing 1961 and 1962 total revenues, the revenues increased in excess of $300,000. Consequently, on the shared-revenue basis, the counties received an equal percentage increase in their payments. The Department of the Interior figures indicate that payments under the proposed formula would have

resulted in payments to the counties in 1961, of $620,086. In 1962, this would have increased to $657,759. This results in a 6-percent increase in payments as compared with a 17-percent increase in payments under the shared-revenue formula.

The reason the counties are producing these figures and comparisons to the committee is to show that a three-fourths of 1 percent of value payment is not a mere trading of dollars. Even though a three-fourths of 1 percent of value payment would be beneficial to most counties, the agreement of counties to accept a three-fourths of 1 percent of cost formula does, in fact, represent a sacrifice on the part of county governments. The acceptance of this formula by county governments, on a nationwide basis, has been agreed to in the spirit of compromise in seeking a reasonable settlement to this extremely knotty problem.

STATEMENT BY KENNETH C. TOLLENAAR, EXECUTIVE SECRETARY, ASSOCIATION OF OREGON COUNTIES, SALEM, OREG., ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES

My name is Kenneth C. Tollenaar. I am executive secretary of the Association of Oregon Counties.

H.R. 2393, H.R. 1004, H.R. 1127, the draft bill transmitted by the Department to Chairman Bonner, and related legislation share a common feature which is of concern to county governments. All these bills would pool on a nationwide basis the revenues which are now shared with the particular localities containing the lands which produce them. They would then be redistributed in accordance with a flat percent of valuation back to the various communities.

The difficulty with this approach is that it forces an artificial redistribution of the wealth of the various communities affected. The economy, and tax structure, of each community is geared to its peculiar forms of wealth, whether this be in the form of grasslands, timber, minerals, agriculture, manufacturing, reereation, or whatever. County officials believe that each community has the right to the economic benefit of the resources which it contains.

Equity in this sense would be preserved by amending these bills as suggested by the National Association of Counties, so that a county would receive either 25 percent of net revenues, or three-fourths of 1 percent of value, whichever is greater.

At the present time, no county in my State would gain anything by this amendment. They would, in fact, all gain a few thousand dollars annually under the legislation in its present form. However, my association believes strongly that a matter of principle is involved, and we would rather forgo any increase whatsoever than accept the objectionable principle of redistribution embodied in these bills as they stand.

As indicated in our national policy statement, the counties have several other reservations about this proposal. In the interest of removing an obstacle to a worthy governmental program, however, we will have no further present objections if the proposed amendment is adopted.

Mr. CARLIN. May I express our sincere appreciation to the subcommittee for your thorough consideration of these knotty problems which are now confronting county governments.

Mr. THOMPSON. We will do our best to see that you are accommodated.

Mr. BONNER. I want to ask the Interior witness one other question. Mr. THOMPSON. Mr. Bonner.

Mr. BONNER. The problem of getting clear title to lands the Department of Interior may acquire that were under an organized drainage district was raised here yesterday and there are certain laws that set up the manner in which drainage districts are organized, and the per acre tax is assessed.

Now, where you make this return to the county, is that fixed tax included in your return to the county so as to clear that land in fee simple?

Mr. McBROOM. Mr. Bonner, when we acquire land that is in one of these districts, it is necessary for the seller to pay all current amounts on that indebtedness due.

Mr. BONNER. But the amounts after the current payments.

Mr. McBROOM. After that the payments which we would make under this proposed legislation would go in part to retire that indebted

ness.

Mr. BONNER. In part?

Mr. McBROOM. The payments will go into the general county treasury, so they could use it to retire the indebtedness for schools and roads.

Mr. BONNER. I am thinking about title to that land if you acquire it under a chattel.

Mr. McBROOм. The answer is there is no lien on the land at all if the current taxes are paid. As we understand it, Mr. Bonner, the existence of county indebtedness does not constitute a lien on the private lands.

Mr. BONNER. This is not county indebtedness. This is an organized drainage district.

Mr. McBROOM. Yes, sir.

Mr. BONNER. That is organized under law and is operated by a board of commissioners that assess so much on each acre of land in that drainage district and it is paid in as a receipt to that drainage district from the owner of the land to retire the bonds.

Mr. McBROOM. May I ask Mr. Finnegan, the attorney, to comment further on that point?

Mr. FINNEGAN. Mr. Bonner, the Department in acquiring lands within a drainage district or a school district or any of these types where there is a bonded indebtedness

Mr. BONNER. Just a minute. These school districts in many instances are entirely different from the law in general; for instance, in North Carolina the statute provides the manner in which a drainage district can be set up. A map is arranged of the district showing the area, then there is a referendum. A favorable majority vote of those within that district authorizes the project to be carried out, not withstanding the fact that some people in there do not want to pay the tax, but they are all assessed.

Now, that tax goes into a fund to retire bonds in that drainage district. Now, how do you get around that?

Mr. FINNEGAN. Well, I am not totally familiar with the North Carolina law, but in my general knowledge, there is no assessment on the land as such, no lien on the land until an annual assessment is made, so that when the United States acquires land the taxes are only paid on liens that are then existing on the land.

Now, if the United States get a benefit from the drainage district, from use of the drainage district, we would also have to pay for the assessment yearly.

Mr. BONNER. I do not think that will clear you whether you get a benefit or do not get a benefit; that land has been included in that drainage district.

Mr. FINNEGAN. We get clear title, sir.

Mr. BONNER. Who pays the tax then to the drainage district?

Mr. FINNEGAN. The seller of the land. He gets a number of dollars for buying the land from the United States.

t

Mr. BONNER. That is included in the cost of acquisition from you to him?

Mr. FINNEGAN. Not in the appraised value. I do not think it includes taxes.

Mr. THOMPSON. I think Mr. Finnegan means, Mr. Bonner, that the taxes then currently due are provided for.

Mr. BONNER. I am talking about who is going to take care of the balance.

Mr. FINNEGAN. They are usually uncertain, sir. They are not certain and determined. It is just a general amount.

Mr. BONNER. I am aware of the fact that many drainage districts have gone broke.

Mr. THOMPSON. I suggest that counsel give us full and considered answers to your question, Mr. Bonner. We are going to have to go into this later. If you could give us a full and considered answer to Mr. Bonner's question, copies to Mr. Bonner and this committee, I think it would cover it.

(The information mentioned follows:)

Hon. HERBERT C. BONNER,

DEPARTMENT OF THE INTERIOR,

OFFICE OF THE SECRETARY, Washington, D.C., May 27, 1964.

Chairman, Committee on Merchant Marine and Fisheries,
House of Representatives, Washington, D.C.

DEAR MR. BONNER: During the recent hearings on H.R. 2393, a bill to increase the participation by counties in revenues from the national wildlife refuge system by amending the act of June 15, 1935, relating to such participation, and for other purposes, and related bills, you asked whether the payments to the counties under these bills include or cover the taxes assessed by drainage districts.

The legislation, in the form recommended by this Department, revises the present refuge receipt sharing formula to provide a more equitable distribution of revenues to the counties. Under the revised formula of H.R. 11008, the counties should receive an increased share of the receipts from the operation and management of the National Wildlife Refuge System. These revenues are made available to the counties for the benefit of their public schools and roads. These funds are not available to cover the assessments of local drainage districts.

Where this Department acquires land as part of the National Wildlife Refuge System, we and the Department of Justice require, in order to get "safe" title (as required in sec. 6 of the Migratory Bird Conservation Act), that the seller pay off all existing liens on the property to be acquired. This includes any assessments made by a drainage district that are a lien on the land to be acquired. Future assessments to pay off the district's bonded indebtedness are not chargeable against Federal lands. Existing law does not provide for the payment of these latter charges. H.R. 11008 does not change existing law in this regard, although H.R. 5565, a bill to provide for the payment of debt service construction charges, and increased operation and maintenance charges with irrigable lands are taken for nonagriculture uses under Federal programs, is an attempt to provide an equitable solution to financial problems which often arise when lands in an irrigation district or of a water agency are acquired for nonirrigation uses by a Federal agency. This latter bill would not benefit drainage districts.

Insofar as our acquisition program for wildlife is concerned, we do not anticipate any problems relating to obtaining "safe" title in drainage districts.

Where the United States actually participates in the benefits of a drainage district, provision is made by contract for paying annual operation and maintenance charges subject to the availability of funds.

Sincerely yours,

MAX N. EDWARDS,

Assistant to the Secretary and Legislative Counsel.