The other 8 members either represented the Federal Government or the public at large. Yet, the clear conclusion of this committee is that a broad system of payments in lieu of taxes on Federal properties should be instituted at once. The committee has gone into great detail in its recommendations and has explained at length the philosophy governing it.

After this exhaustive work the committee and the Commission came to this conclusion: Congress should enact the bill now before you.

THE POSITION OF THE COUNTIES TODAY

In the weeks since the release, few though they have been, of the report of the Intergovernmental Relations Commission and its committee, county government has had opportunity to examine their reports and to consider their recommendations in the light of the needs of local government.

Senator HUMPHREY. May I ask you a question at this point? Have the county officials obtained copies of the Intergovernmental Relations Commission's report?

Mr. MACDOUGALL. Yes, everyone who came to Richmond was provided with one, ne, and key county officials throughout the country received them earlier by mail. There was excellent distribution.

Senator HUMPHREY. I just wanted to double check on that. May I say that we incorporated in the record this morning, at the request of the chairman, pertinent extracts from the Task Force Study on Payments in Lieu of Taxes and Shared Revenue because, as I understand it, we are running very short of those reports. The Government Printing Office has them for sale.

We wanted to make these extracts a part of this record because I think that practically everything that is said here will relate directly or indirectly to that portion of the task force report. When our hearings are printed, there will be additional copies of this particular task force report in the appendix to the hearings.

Mr. MACDOUGALL. That is the identical report that we regard as so significant and vital.

The result has been that it was possible less than 1 week ago to obtain the well-considered point of view of the counties. At the annual general conference of the National Association of County Officials at Richmond, Va., concluded only last Wednesday, representatives of county government from all States, after debate, adopted by a 97 percent affirmative vote the following expression of policy.

And that 97 percent affirmative vote, I will add, Mr. Chairman, was taken on the floor of the convention after debate, and the approximate vote was 200 "aye” to 5 "no."

Whereas the National Association of County Officials has for many years advocated some system of payments in lieu of taxes on federally owned real property which would insure the continued integrity of local government finance and at the same time achieve that equity as between the Federal taxpayer and the local taxpayer which the Congress has so zealously guarded and which is so essential to a sound and lasting solution to our mutual problem; and

Whereas, for many years, study after study has been launched by both the NACO and the Congress in efforts to establish benchmarks and guidelines for such a solution-studies which have elicited much information which has been and is most helpful in delineating the exact nature and extent of the problem; and

Whereas the recent completion of the two latest of such studies, the Inventory Report on Federal Real Property as of December 1953 (S. Doc. No. 32, 84th Cong., 1st sess.) and the Report of the Commission on Intergovernmental Relations, has finally brought forth the exact specifics of both the problem and its answers; and

Whereas the many years devoted to such studies, and the studies themselves, have provided more than ample time and information for both congressional and local appraisal of the problem and the solution as proposed by the Special Study Committee on Payments in Lieu of Taxes and Shared Revenues of the Commission on Intergovernmental Relations: Now, therefore, be it

Resolved by the National Association of County Officials in conference assembled at Richmond, Va., July 19, 1955, on motion of NACO's Federal Real Property Committee, That NACO does agree with the basic premise of the Commission that Federal real property holdings create inequities as between Federal and local taxpayers; NACO concurs with the Commission's developing logic that true equity in this situation can be achieved only by some system of taxation, payments in lieu of taxation, and a set of shared revenue plans; and NACO does formally accept and agree to the final conclusions of the study committee as endorsed by the Commission on Intergovernmental Relations with the following four exceptions:

Basically, what county government has done, and it is stated here in this language, "formally accept and agree to the final conclusions of the study committee as endorsed by the Commission," but with four exceptions, and it is those exceptions that I think are the meat of my statements here today.

1. No exemptions from payment in lieu of taxes should be permitted in behalf of military installations or Federal office buildings, either owned or leased, unless the use of such buildings is either of strictly local benefit or of completely universal nature and hence common to all or most communities in the Nation. 2. The use of any cutoff date.

Senator HUMPHREY. I respectfully receive the suggestion, and may I say that hope springs eternal in the human breast. However, after having discussed this matter over the past few years with a few of the Federal officials, I would imagine that there might be some cutoff date. In spirit I agree with you. I think on the basis of pure principle, a cutoff date violates the principle of equity, but I am sure that in the legislation that is reported, we will run into great difficulties if we do not include some cutoff date.

Mr. MACDOUGALL. I am not discussing here today, Mr. Chairman, the inevitability of a cutoff date. I am merely noting, as you know, that the cutoff date is based upon the principle that the man without a leg sooner or later learns to navigate, and therefore his unfortunate condition should not receive any notice that would be given to other persons who later lose their legs.

It is the principle that the sore heals over and therefore no compensation is due. Equity is done violence by a cutoff date. And we will submit, and I think your committee studies may show, that the cutoff date will be unnecessary when the final classification of properties is obtained which will exempt such large areas. This cheese is sliced both ways. We slice it up and down when we categorize properties, and then we slice it again across here when we put in a cutoff date. Senator HUMPHREY. Yes, that is true.

Mr. MACDOUGALL. If we slice sufficiently in the up-and-down classification, we may find that the cutoff date will cut off very little indeed in the way of payments, and that among those which we cut off will be some examples of great inequity.

Senator HUMPHREY. You are very persuasive, Mr. MacDougall.

Mr. MACDOUGALL. Thank you, Mr. Chairman.

3. Any arbitrary provisions designed to prevent so-called windfall payments, since many apparent windfalls only represent a repayment to local taxpayers of those sums they have expended for many years in support of their local governmental institutions and services which rightfully should have been paid by all Federal taxpayers.

One of the favorite arguments of those who operate the bureaus of the Federal Government is the windfall argument, and they can envision a small mosquito abatement district suddenly becoming wealthy and indulging in chromium-plated jeeps to spray the mosquitos, because of the great windfall which came from the Federal Government when its tax base was increased.

Senator HUMPHREY. We want just some plain old jeeps in Minnesota to spray the mosquitoes.

Mr. MACDOUGALL. That is precisely what we feel, and I know the Commission and the committee both had a great deal of difficulty with this windfall theory and the modified approach of the study committee is certainly a great step in the direction against arbitrary action with respect to windfalls.

Senator HUMPHREY. As you know, the Department of Defense was gravely concerned about this very point.

Mr. MACDOUGALL. I think No. 4, which I will get to now, may take care of the Department of Defense and its worrying about windfalls, and this is a very significant recommendation. It is in favor of the Federal Government and its "old" attitude or traditional attitude and against that of local government.

Counties do not wish to include in recommendations for payments in lieu of taxes any federally owned personalty. That runs all the way from giant bombers down to paper clips and includes such items as trucks, office furniture, and that sort of thing.

You run into terrific assessing problems when you get into personalty, and we must recognize and realize that our problem is that of real property. This whole problem came from real property, not from personal property acquired by the Federal Government.

Senator HUMPHREY. So the position of the county officials and their association is that insofar as personal property is concerned, defense installations

Mr. MACDOUGALL. Any personal property should all be exempt, and at this time we will not ask for its inclusion. We, of course, thank the Commission and its study committee for thinking of including it.

4. The inclusion of recommendations for payments in behalf of any federally owned personalty.

And be it further resolved, That the National Association of County Officials does tender its most real and heartfelt thanks to the members of the Commission on Intergovernmental Relations and its Study Committee on Payments in Lieu of Taxes and Shared Revenues and in particular to Mr. Meyer Kestnbaum, chairman of the Commission and Mr. Arthur E. B. Tanner, chairman of the study committee, for their many hours of devoted effort; for their publicspirited willingness to serve; their sympathetic understanding and careful treatment of the basic problem; and for the sound solutions offered as a result of their deliberations. We believe these men deserve the thanks, not only of all county officials and the Congress but of the Nation as a whole for the care with which the Commission's proposed solution was achieved.

IMPLEMENTATION OF COMMISSION'S RECOMMENDATIONS

It thus becomes clear that we are on the threshold of achieving a system of payments in lieu of taxes on Federal real property having the following salutary features:

1. The system is so devised that payments will definitely be on the basis of taking care of the greatest need first.

2. All the glaring inequities and hardship situations and I emphasize "glaring inequities and hardship situations" on local governments throughout the country will be cured.

3. The existing satisfactory and operating system of shared revenues from Federal lands will not be disturbed.

4. Local governments at this time will not ask for payments on Federal properties of purely local benefit or of universal occurrence. 5. Payments will be made on the sound basis of the taxable value of the property as determined by application of valid local tax standards in actual use.

6. Local governments at this time will not ask for payments on the vast amounts of Federal personal property since the acuteness of our present problem stems from real property holdings.

It is obvious that many finishing touches must be given the bill which is to be the final vehicle. It is our present belief that the bill before you should probably be that bill. Procedural and other amendments to it will be necessary to obtain maximum operating efficiency and the maximum possible conformity to the recommendations of the Commission on Intergovernmental Relations. Amendments will be necessary to give effect to the revised views of county government as expressed in the resolution hereinbefore contained.

It is our urgent request, and our sole request for 1955, that the committee staff be assigned the task of deep study of these problems so that when the Congress reconvenes in January 1956 it will be possible to make rapid progress.

Senator HUMPHREY. Do you want to stop and take a good look here at the beleaguered professional staff members of the committee who will be assigned to these multitudinous duties?

Mr. Reynolds is the chief of staff of the full committee, and I am sure he has listened quite attentively to your comments. Knowing his long interest in this matter, I am sure that he will make the necessary assignments so that the staff here will have their work cut out for them. Mr. Nobleman is the professional staff member assigned to this work. He is doing the research and analysis and preparing the necessary staff studies.

Mr. REYNOLDS. I might say, Mr. Chairman, we welcome all the help we can get.

Mr. MACDOUGALL. We sympathize with them for their task, but we will pledge them our daily cooperation, and I want to say that now. It is in the statement.

To this end all the staff resources of county government, its State associations, and its national association, are pledged to you. It will be a pleasure for all of us in county government to work with your able staff in the interim months just ahead.

The need for the final enactment of this legislation in 1956 must be apparent to all of us.

Those who work and live in local government and those who believe in the contribution independent local government makes to our democratic system of government are all convinced from their own observations that some system of payments in lieu of taxes has become a necessity.

Now the correctness of these observations has been certified by two top-level outside study groups the Commission on Intergovernmental Relations and its study committee on the subject. We have always enjoyed awareness of the problem from Members of the Congress and have known that the achievement of the ultimate solution was mainly a matter of methods and mechanics. Those have now been worked out.

The true opposition-whether it be conscious or unconscious, to the creation of an in-lieu payments system comes from those who feel that the extinction of many of our units of local government would be a good thing. Such persons believe that this gradual grinding down by no tax attrition would result in a sort of "survival of the fittest" situation.

Thus, it becomes clear that the stake of our counties and our cities in this matter of in-lieu payments is not a financial stake. The stake is far greater and far more important. It is that of the very survival of responsible and responsive local government in our land.

We commend to you the principle of the bill before you, not only as a means of achieving equity in governmental finances, but as a means of insuring the future life of those priceless local governments which in our system are older than the Republic itself.

The axiomatic phrase that "the power to tax involves the power to destroy" is now joined by another: "The right to tax exemption also involves the power to destroy."

Senator HUMPHREY. Mr. MacDougall, I want to compliment you particularly upon the moderation of your testimony, as well as its comprehensive nature. We are very much indebted to the county officials association for their long endeavors in this area, and your willingness to cooperate and assist us in every possible way.

This is a difficult assignment. Some of us have been at this for a long time.

I introduced a bill in the 81st Congress on this matter. We have held hearings and made staff studies from time to time. Furthermore, Mr. Reynolds told me only a moment ago that there was some very comprehensive information available in our files. Mr. Reynolds, will you indicate just what that is?

Mr. REYNOLDS. Mr. MacDougall referred to it in his resolution where he mentioned the fact that the recent compilation was made by the General Services Administration in connection with Senate Document No. 32.

We have the complete compilations of all Federal property by States and by agencies in our office. Some of it is classified, but the rest of it will be available.

Senator HUMPHREY. It is available with the exception of that which is classified, for the study of interested parties, is it not?

Mr. REYNOLDS. Any group that would like to examine the material will be afforded access to that part which is not classified.

Mr. MACDOUGALL. Without that information there could be no bill. It is that vital, I am sure.