Information regarding federally owned property in the State of Arizona located in or near school districts that are applicants under Public Law 874 and 815 during the 1954 fiscal year

Name of property

All American Canal, Gila project

Apache National Forest

Avondale Circle No. 2038, No. 2355, PHA.
Border patrol station

Camp Verde Indian Reservation..
Casa Grande National Monument_

Catalina Federal Prison Camp.

Coconino National Forest...

Colorado River Indian Reservation

Consolidated Dwellings, No. 2027, PHA....
Coronado National Forest....

Courthouse.

Customhouse...

Davis Dam project.

Davis-Monthan Air Force Base.

Davis-Monthan Air Force Base Wherry_do_.

Housing, No. 123-80000-80007.

Davis-Monthan Dwellings, No. 2025.

Fort Apache Indian Reservation___

Fort Huachuca.

Gila project (Wellton-Mohawk division)..
Gila River Indian Reservation..
Grand Canyon National Park
Grand Central Electronics Bldg.
Hopi Indian Reservation_
Hualapai Indian Reservation..

Hughes Aircraft Co. plant_

Indian Hospital.

Indian irrigation service.

Indian school and hospital.

Ingalls Victory Homes, No. 2338.

Katherine Wash Ranger Station..

Mesa Vista Homes, No. 2063, No. 2337, Yuma.

Bullhead City.

21

1,664, 872

Fort Huachuca.

33,713

115,000

372, 022

Grand Canyon..

604, 809

1

100,000

PHA.

Senator GOLDWATER. Mr. Chairman, while I know it is impossible to show diagrams and photographs in testimony, I should like to take just a few seconds of this committee's time to outline what I think to be the most drastic example of this Federal impact that we have in the United States. Certainly it is far and away the worst one we have in Arizona.

South of Tucson and the Senator is familiar with that very fine city

Senator HUMPHREY. Yes, indeed.

Senator GOLDWATER. We have a school district called the Sunnyside School District. Now before the war came, along with the enlargement of the Tucson Municipal Airport, they were doing pretty well down there. It is a school district that has a very small population, but a large amount of undeveloped desert land.

Well, the airport was enlarged, but it became an airport authority. So it became nontaxable. And then Grand Central Aircraft Co. from Glendale, Calif., came in at the outbreak of the Korean war to modify the B-29's that were in cocoons over at Davis Dam, a short distance away. This project amounted to some $16 million and employed at one time 5,000 people.

Now the Senator can imagine what would happen to a school district that was very peacefully getting along with the small number of people, with a very poor but large area to tax, when 5,000 people are brought into it along with the attendant children.

The school then applied for Federal aid and got Federal aid, but not in a sufficient amount. They were, however, doing pretty well under that even with the impact of Grand Central. And then came Howard Hughes Co. from California.

Howard Hughes located adjacent to the airport and acquired five sections of land. Most of this land was immediately given or taken over, I can't find out which, by the Air Force, so that was removed from the tax rolls of this school district.

So at the present time we have a school district south of Tucson with a heavily impacted population due to the coming in of not only Grand Central but later Douglas Aircraft and Howard Hughes, and there is no more available land to tax. In fact, there is less available land to tax than there was before the war.

Much of the Hughes property goes tax free. They do pay some taxes, but certainly nothing that contributes substantially to the problems of this school district.

I want to leave with the chairman a map of this school district just for his own perusal, because I realize these cannot be printed in the record, but I can see, and my assistant will point out, the school. You will see how few homes and houses and properties there are to tax, and yet the Federal Government keeps coming in, coming in, coming in, and they will expand their operaions and the school district has already exhausted available Federal funds for assistance. And we, if we base it on this one school alone, urge the favorable action by this committee on some legislation that will correct this.

I could recount at great length the problems that we run into in the national parks and monuments in my State, and we have more of them than any other State in the Union. I could recite at great length

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the problems involved in Indian reservations, and we have more of them than any other State in the Union.

But I don't want to detain the committee. I want to thank the committee through its chairman for affording me the opportunity of appearing here this morning and explaining, in very short essence, the problems that my State of Arizona finds wrapped up in the general problem the legislation being considered is designed to correct.

Senator HUMPHREY. We want to thank you, Senator. I am somewhat familiar with some of these problems through Public Law 815 in the 81st Congress. I sponsored that legislation, and through the cooperation of the late Senator Taft, we were able to obtain favorable action by the Congress. It provided some token and I repeat the word "token"-assistance to these impacted areas; an area like yours would have been inundated with impossible problems without that kind of help. Public Law 874, 81st Congress, was enacted as a complementing measure.

One of these statutes provided for school construction money and the other for school operation. But we found out after, I think, the Department of Health, Education, and Welfare made a survey, that the amount of assistance provided was totally inadequate, even under the formula we had provided, to meet the requirements of the areas that were heavily populated for school purposes.

Senator Cotton, do you have any questions you would like to ask? Senator COTTON. I should like to ask the Senator a couple of questions, and please do not interpret these questions as indicating any hostility to your bill. The interests of justice require it. Does the State of Arizona have a State income tax? Senator GOLDWATER. Yes, we do. Four percent.

Senator COTTON. Would you in your own mind, Senator, draw any line of distinction between the type of Federal installations, Federal lands that tie up areas of land without much productivity, without much employment, such as your Indian reservations and other western situations, and the type of a Federal installation that, while it increases greatly the problems and expenses of cities and school districts, does bring in a lot of business, a large amount of personnel who buy shirts and milk and food and pay income taxes, and is an element of benefit?

I have in mind an instance in my own locality where a city, through its chamber of commerce, just came down to Washington and moved heaven and earth to get a Federal installation. After they got it, then they started moving heaven and earth because we had imposed upon them the necessity to contribute to the school facilities. Would you care to comment on that?

Senator GOLDWATER. Yes, I think you have raised a very good point on that, Senator.

I think as the committee studies this, they are going to find out they cannot include the entire Federal structure. I certainly do not see any possible way we can tax the Federal Government or expect lieu payments on Indian lands.

Under Public Law 874, 81st Congress, we can now get money to help schools that border where the Indian reservation causes impaction in white schools; we can get money for that. I do not think that we can, in every instance in a national park, justify either taxing or lieu payments.

Now, they do it in Yellowstone National Park, which is a very isolated park. The Department of Interior includes each year in its budget moneys to help pay for the school up there.

In the Grand Canyon, which is a very isolated park, although it is a part of the school district, the high school is 65 miles away. We are now beginning to get enough children to form a high school. We had 4 students 2 years ago, then 12, and this year 18. We foresee a high school of 100 students there in the next 10 years.

However, we only have the Santa Fe Railroad, one photographer, and one Indian store to tax. They produce about $19,000 a year in

taxes.

Now, we should in that case, I think, expect some help from the Department of the Interior.

Down by some of the national monuments where there are no schools within literally hundreds of miles, there is no problem. I think you will probably find that you can't tax those.

But to get to the meat of what you were talking about, the main cause of the problem that I was just discussing is the fact that we have two commercially operated institutions operating on Federal land that is tax free.

Now, you say that they are taxable. Well, under our laws they are not taxable.

For instance, if we could have collected a 2-percent sales tax on the $16 million the Grand Central performed there, we would have a little different picture. And we can't tax a California corporation doing business in Arizona for sales that are accomplished in Arizona, especially when they are operating under a Federal contract.

So while it is true that these corporations do bring great amounts of money into the State of Arizona, and that our State out of its income taxes pays an average daily attendance amount to school districts, it is not sufficient.

Another thing that happens in this particular case, and I imagine you will find it happening in many cases, when a city entices a business to come there, the business is placed in an industrial area, and that industrial area usually is, to begin with, a very poor school district. They don't have much to tax, because people have not built homes there and they have not gone into business there.

The money is spent in the commercial part of the town where the stores are, and the profits and income from that go to the employees and the employers who live in a different part of the town than in the area where the business, causing the impaction, is located.

Now, I think in that case that there certainly should be included sums for either a payment of direct taxes to this district or, better yet, I would require the company to pay those taxes.

Now, I am not harping on Howard Hughes, because we are very proud of him and we are very happy, too, that he is in Arizona. But suppose that he had to pay school district taxes and other taxes in Tucson. I think it would be perfectly fair for the price that the Federal Government pays Howard Hughes for his equipment, to include those taxes, so that his ability to make a profit and pay the type of wages that he pays would not be impaired.

Senator COTTON. That answers my question.

Would you draw any distinction between the situation where you have a private industry operating on Government land and an installation which is strictly a Federal Government operation, like a shipyard, where the Government itself is furnishing employment, is engaged in the activity?

Senator GOLDWATER. In that case if there was any distinction, it would be a mighty fine one.

No. 1, I don't happen to believe that the Federal Government should be in private business. But there are cases where the Federal Government has to be, such as, I feel, the Ropewalk in Boston. Some shipyard activities and some Air Force activities are located where private industry could do the same thing, and I think, in that case the Federal Government should pay in-lieu taxes. I don't know how you can directly tax the United States Government.

Senator HUMPHREY. Senator Ervin.

Senator ERVIN. No questions.

Senator HUMPHREY. Senator Goldwater, we are very grateful to you. I believe everyone realizes this is a very complicated problem. It is going to take a lot of cooperation from every group that is interested.

I think everybody wants a solution to it, and I believe we have arrived at that point now where we have broken the ice, so to speak, and are trying to navigate a course that will result in an equitable settlement of what is presently a great inequity in the economy. In your State it is critical.

We have very few installations in my part of the country, but even there we have some very serious problems where there is a heavy Federal impact, and where large areas of taxable property have been purchased.

We have, for example, an ordnance plant that was established during World War II, which never really got into production. The Government bought up some of the finest land that we have south of Minneapolis. All of that has been held out of taxable resources.

And yet it surrounds a community where the land is privately held, and the impact on that area, because of the taking away of taxable property, has been an exceedingly heavy one.

It has caused the tax rate upon the private business establishments in that small city, and the homes, in the community that I am thinking about, to go up considerably and disporportionately. They have had to pay disproportionately, compared to their neighboring town, because of the fact that they lost some of their tax base.

You have that problem in Arizona, and they have it all over the United States.

Senator GOLDWATER. Just before I leave, and in keeping with what you have just said, while I reported only the 29 million acres that is claimed under Public Law 815, I would like to call the attention of this committee to this fact: that the Federal Government owns nearly 75 percent of my State. That means that 25 percent of the land has to produce taxes.

Now, we were in good shape when we were a small State. When I was born in that State, there were less than 250,000 people living there. We have over a million people living in that State today.

We could take care of a population density of 2 to a mile or 1.5 to a mile, but we are now up to nearly 10 to a mile, and we can still only tax 25 percent of our lands. Mr. Chairman, that is a tough job. We shall be grateful to you for anything you can do.