proval. I think their advice and assistance should be sought but I do not think we should subject the Federal program to local veto. Senator PERCY. Senator Arrington, you have indicated that States should be consulted during the process of Federal grant consolidation. What form do you visualize this consultation best take place what is the best mechanism for insuring adequate consultation will be taken for the plan implemented? Mr. ARRINGTON. Well, increasing numbers of States are providing for State planning agencies. It would seem to me it would be through those units that consultation should take place. It seems obvious to me that there is a need to consult with States with respect to problems with which we feel that we and the localities are much more familiar than the people in Washington can be. The great problem with our poverty programs is that the program is, as operated now, does not permit of a recognition of the diversity of problems between particular areas. I think it has been demonstrated time after time and that this probably accounts for the failure of many of the Federal programs-the inability of the people at the Federal level to have speaking acquaintanceships with the details of the problem at the local levels. Therefore, if you are going to have meaningful consolidation or anything, I think it just would provide all kinds of pitfalls if the representatives of the local areas were not consulted. It does not mean you have to go to every mayor and Governor or anything like that, but you have associations with which the dialog can take place. I think in the case of the Governors' Conference, you have provided staff by Council of State Governments. There are a variety of State and local organization—the National Municipal League. I just think it provides for more workable arrangements if you have the point of view of local people. Senator PERCY. Senator James, do you want to comment? Senator PERCY. My last question: If I could just take one agency and try to put myself in your shoes to see how you are dealing with that agency, I would choose HEW. HEW has today 209 separate programs, 17 types of welfare grants, 79 for education, 80 for public health programs, resulting in a maze of plans, regulations, and rules. Seventeen welfare grants alone lead to 5,000 pages of Federal operating requirements. Governor Rockefeller in testimony has called for greater flexibility in allowing States to take comprehensive approaches to their programs in making application for grant funds. Do you see S. 2479 and S. 2035 providing that kind of needed flexibility? Mr. JAMES. I am afraid Senator Muskie might run into problems with Congress if you tried to consolidate two important areas and I am really not knowledgeable enough about the Federal operation to say exactly what the line is between congressional jealousy of a particular program and what they would permit the department to do. Certainly there should be a joint effort on the part of the executive branch and the Congress to achieve consolidation. I can say this, as far as the welfare program goes, not even our Director of Public Welfare in Maryland knows what the formulas are. Every formula for each category is a very complex formula. I used to try to memorize them; I may remember them for a week or so, but after that they slip away from me. There must be some more simplified method of distributing welfare funds to the State. And until you do get a more simplified method, nobody is really going to understand the welfare program. Senator PERCY. Senator Arrington, I would appreciate your comments on that question, also. I wonder if you could give us the benefit of your views on the Federal revenue sharing (a) is it necessary and desirable, and needed; (b) do you have an opinion as to how it can be best done? Proposals before Congress today essentially say Federal revenue to the States should be granted back on some agreed percentage on unrestricted no-strings-attached basis. There are other bodies of thought that say it should best be done by an income tax credit for State and local taxes, so that in the first instance the State would not hesitate to raise revenue and immediately the taxpayer would know that would be a credit, not a deduction against his tax return. Do you have any opinion on how we could best do this? Mr. ARRINGTON. Yes. First of all, I think that the States do need help, financially. Essentially the Federal Government has dominated the area of potential revenue production. The States utilize two of the three which are available, utilize them fully; namely, the consumer tax, best represented by the sales tax. You pay tax on what you buy. In the other area you pay tax on what you own, which in our State is primarily the real estate. But in the third potential source of revenue production, income tax, there is just no question that the Federal Government has appropriated and preempted that field. It has so preempted it that when the State, our State imposed on itself an income tax of a most modest type, we had a universal complaint on the part of the public, because they felt that the Government was taking all of their income that they could afford to pay. I do not think there is any question but the States have reached their capacity to raise income locally and keep the ranges of tax within some sensible limit. Now, as to the manner in which it should be done: There have been a variety of plans but I do not think it is too important. I find myself in perhaps a somewhat difficult position, I served with the Senator, with the chairman on the ACIR, who has a point of view with respect to the subject, which I think is going to be wholly different from the point of view of my Governor. This is going to put me in a somewhat difficult spot. We recognize that the local governments in Illinois had reached their capacity to provide for their citizens by the methods of taxation available to them. I think we are the first State that faced the problem, and we provide for our sharing by the State by direct apportioning of the revenues we will raise through the income tax. In our case we apportion it without strings. We had confidence in the integrity of the local governments that they would use wisely the money that had been provided them. Our State would be a good laboratory to determine whether or not that reliance is justified. I know how Congress feels about making a portion of tax revenue available without strings thus reflecting what perhaps is to a large extent deserved, a lack of confidence in the State legislatures. I do not think Congress has quite made itself acquainted with the fact that the improvement of the legislative process at the State level has been enormous in the last 4 or 5 years. There is a recognition on the part of the responsible legislator, I think, that being a member of the legislature is not easy-it is a working job and carries heavy responsibilities. There is recognition that by having that responsibility, then it requires responsible people. I am confident that if there were a sharing with Illinois of Federal tax money, it would be treated and utilized judiciously. But in answer to your fundamental question, do the States need it, yes. Do they want it? Yes. How they get it, to me, is not too important. And in all of this, I do not think the tax credit would be a substitute. I think it has to be done at the Federal level. Senator PERCY. I certainly agree with you. I cosponsored for two and a half years now revenue sharing. It was not a very popular idea two and a half years ago, but I do believe now there is a very strong body of favorable opinion. I am encouraged by now hearing more discussion as to how it should be done rather than whether it should be done. There is a great body of agreement that it is needed, that it will strengthen the federal system in such a way as to minimize the cost and give maximum flexibility to government operation. I think in order to do this we have to have strong State government. We have to have career legislators and strong Governors. We cannot have a weak Governor and poor legislators, underpaid, understaffed, without office. We have to draft people to take jobs in State government or we will get a poor quality of people in the State legislature. I know both of you are trying to upgrade the quality of State legislators to make the jobs top quality people will seek and staff them properly. Then that combination will effect a strong government. I think the Federal Government would have much more confidence in largescale grants back to the States, I think, steps in this direction are now being followed. Mr. ARRINGTON. I am very hopeful that the attitude of Congress to consider and actually appropriate for the first time block grants represents an illustration in estimation on the part of Congress with respect to the States. I think, too, it provides the States as laboratories within which to demonstrate that they can treat with responsibility these moneys that are given to them without any significant strings. Senator PERCY. Thank you, Mr. Chairman. Senator MUSKIE. Thank you, Senator Percy, and thank you very much, gentlemen. (Thereupon, at 12:20 p.m., the hearing was adjourned.) INTERGOVERNMENTAL COOPERATION ACT OF 1969 AND RELATED LEGISLATION WEDNESDAY, SEPTEMBER 17, 1969 U.S. SENATE, SUBCOMMITTEE ON INTERGOVERNMENTAL RELATIONS, Washington, D.C. The subcommittee met, pursuant to recess, at 10:30 a.m., in room 6626, New Senate Office Building, Senator Edmund S. Muskie (chairman) presiding. Present: Senators Muskie and Stevens. Staff members present: Edwin W. Webber, staff director; E. Winslow Turner, general counsel; Robert E. Berry, minority counsel; and Lucinda T. Dennis, administrative secretary. Senator MUSKIE. Our scheduled first witness is Senator Boggs, who has not yet arrived. So we will take a few minutes to hear an unscheduled witness who is here, the distinguished mayor of one of our American cities, Frank N. Zullo, of Norwalk, Conn., representing the National League of Cities and the U.S. Conference of Mayors. Mr. Zullo, it is nice to have you here. And we welcome your testimony. STATEMENT OF FRANK N. ZULLO, MAYOR, NORWALK, CONN., ON BEHALF OF THE NATIONAL LEAGUE OF CITIES AND THE U.S. CONFERENCE OF MAYORS Mr. ZULLO. Thank you, Senator. We are pleased to be given this opportunity to testify before this distinguished committee. I appear today on behalf of the National League of Cities and the U.S. Conference of Mayors, speaking for more than 14,600 municipal governments. In addition, we are joined in our statement by the International City Management Association. I am grateful for the opportunity to testify before your subcommittee in support of Senate bills 2035, 2479, and 60. We commend the chairman and members of this subcommittee for your initiative and your interest in this legislation. It was the Intergovernmental Cooperation Act of 1968 which laid some very significant groundwork for overhauling the Federal Government's grant-in-aid machinery. We are particularly pleased to see that this important act is finally being implemented by the executive branch. The legislation now under consideration is a logical and very urgently needed next step to shape this machinery into a sensitive tool for responding to the unprecedented urban problems which now face our country. (169) Our people may not learn of these bills in bold black headlines and most of them probably will not hear about them at all. But I assure you that those of us who are engaged day in and day out at a local level in trying to make government responsive to these needs of these very people will welcome these bills to a man. They will be welcomed because they promise to conserve two of our most precious resources, time and energy, and because they would commit the Congress and the Federal Government to an attempt to bring order out of what is, in some areas, a very complicated situation. At this very moment, there are hundreds and perhaps thousands of local governmental technicians, competent people some of them quite gifted, who are literally wasting time and energy coping with administrative procedures which really serve no one's interest, certainly not the public's. They are filing program reports to one Federal department which I am sure for the most part duplicate, though in a different form, reports on closely related projects that they have already filed with other Federal departments. They are trying to puzzle out one department's new set of administrative guidelines and to relate the information which is needed to information which they have already provided in other ways to other departments. They are laboring to keep separate financial records for a combination of programs which all deal with the same problem and have to be coordinated at the local level to be meaningful. And these are programs which are funded through different Federal agencies that cannot or will not coordinate at the Federal level in receiving and reviewing these records. In short, a lot of time is being wasted and a lot of energy is being expended which could be used more profitably in program execution. It is time lost in the job we are committed to doing; trying our best to do what we can to make the lives of our people better and more productive. Let me be a little more specific for the moment. My city, Norwalk, Conn., is a small city with a population of about 85,000. Being a smaller city doesn't help us in avoiding city problems. We have all of them. Being a smaller city does mean though that we have extremely limited resources to draw on when we do our work. Norwalk has only a few individuals without line and staff responsibilities who would be available to develop, process, and pursue grant programs. When wasteful Federal administrative procedures whittle away part of their time, little time is left for productive and worthwhile work. In Stamford, a somewhat larger city than Norwalk, with perhaps a population of 110,000, a concentrated effort is being made to upgrade employment skills and expand opportunities. It involves a number of different agencies at different levels of government. Three of these agencies are Federal; the Department of Labor, Department of Commerce, and the Office of Economic Opportunity. The programs involved are coordinated at the local level. If they were, they would be duplicating one another at best and competing with one another at worst. However, these programs are not coordinated at the Federal level. A lot of the good that could be done at the local level is therefore undone because of the way the Federal Government operates. Another situation which troubles me concerns the relatively new Federal program objectives in career opportunities. We feel that this |