[General revenue-sharing implemented in State and Local Fiscal Assistance Act of 1972 PL 92-512: Block grants contained in Manpower Special Revenue Sharing (PL 93-203; Housing Act PL 93-383 Elementary and Secondary Education Act of 1974 PL 93-380).] Congress should establish and follow a specific timetable for processing annual authorizations and appropriations for capital facility grants. For certain State-local programs involving longterm capital financing, Federal aid legislation should provide for multi-year advance budgeting, direct the President to include specific multi-year plans for these programs in his budget, and provide for advance obligational authority for each year in the advance budget plan. (Report A-37, 1970) [Implemented in part by Congressional Budget Reform Act, PL 93-344.] Coordination The President and Congress should improve coordination and management of grants-in-aid. The President should appoint a cabinet-level official to supervise the effort and provide liaison with States and local government. The Office of Management and Budget should sustain a vigorous program of interagency coordination. States and local governments should provide adequate staff and funds to improve coordination of Federal grants-in-aid but Federal grant funds should not be used for staff or facilities in the immediate office of governor, county executive or mayor. (Report A-31, 1967) [Partially implemented by Intergovernmental Cooperation Act of 1968, PL 90-577, through OMB Circular A-95 and Presidential directives.] Federal decision-making in the administration of grant programs should be decentralized to directors of regional offices. The regional boundaries and headquarters of Federal field offices. should be brought into conformity. The Office of Management and Budget should be given a field staff to increase coordination. This could be accomplished in part by strengthening Federal Executive Boards. (Report A-31, 1967) [Partially implemented by directive of President Nixon, March 27, 1969, and by Presidential Memorandum, August 13, 1969.] Congress should enact legislation to authorize single applications for interrelated projects and joint funding of projects with components from several sources. States should enact similar legislation for their grant programs. (Report A-31, 1967) [Included in proposed Intergovernmental Cooperation Act Amendments.] Federal grants for urban development should be channeled through the States if the State provides the appropriate administrative machinery and puts up a significant portion of the matching funds.36 (Report A-20, 1964) Congress should in "Weaver, Hummel, Tucker, Blaisdell, Naftalin dissent, Muskie makes further comment. crease Federal matching for community development projects which the States "buy into" and revise allocation formulas to this end. (Report A-37, 1970) All applications for grants-in-aid for specific functions in metropolitan areas should be reviewed first by a metropolitan planning agency.37 (Report A-5, 1961) [Partially implemented by Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754; further implemented by Intergovernmental Cooperation Act of 1968, PL 90-577.] Consolidation and Simplification Congress and the President should drastically reduce the number of separate grant-in-aid authorizations, beginning with vocational education and water and sewer construction. Congress should authorize the President to submit grant consolidation plans which would become effective unless rejected by either house within 90 days. (Report A-31, 1967) [Aspects of consolidation, Presidential authority included in proposed Joint Funding Simplification Act and Intergovernmental Cooperation Act Amendments. Demonstration in joint funding through Integrated Grant Administration.] Congress should enact a general statute providing for periodical Congressional review of Federal grants-in-aid to assure that all programs meet current needs.38 Executive agencies should periodically assess grant-in-aid programs to determine whether they are accomplishing their objectives or whether alternate methods are advisable. (Report A-8, 1961) [Implemented by Intergovernmental Cooperation Act of 1968, PL 90-577.] The Office of Management and Budget should initiate an aggressive program to simplify and systemize the matching and apportionment formulas for existing Federal grant-in-aid programs. (Report A-31, 1967) Congress should consolidate as far as possible into a single enactment a set of planning requirements to be applicable to Federal grant programs especially those affecting urban development. (Report A-31, 1967) Congress should authorize States-with the approval of the head of the Federal department or agency-to modify single State agency requirements. (Report A-31, 1967) [Implemented by Intergovernmental Cooperation Act of 1968, PL 90-577.] Congress should enact general legislation providing for the Comptroller General to study State accounting and auditing systems and-if they meet standards of adequacy and integrity-certify those systems to audit their Federal grants and for the ad 37 Ribicoff no position. 38 Cutler dissent. ministering agency to accept the State audits. This authorization might be extended to local governments receiving direct Federal grants. (Report A-31, 1967) [Included in proposed Intergovernmental Cooperation Act Amendments; interagency-intergovernmental task force developing audit standards for States.] Equalization Distribution of Federal grants, with certain exceptions, should take into account relative inequalities in the fiscal capacities of State and local government. However, the equalizing aim of grant distributions should be limited to the functions and services specifically related to national objectives and only to the minimum service levels. It should aim for a relatively uniform level of minimum program performance in every State. Equalization is inappropriate in several categories of grantsplanning and demonstration, stimulation, funds for localized emergencies, and those which cover all program costs. Excluding these categories, if any part of a grant program is “equalized", all should be. Departments and agencies that administer such programs should periodically reassess the adequacy of their equalization provisions. And grant programs distributing fund sdirectly to localities should examine the feasibility and necessity of equalization. (Report A-19, 1964) State Aid Each State should codify all State aid plans, review aid programs periodically to determine their capacity to meet objectives, develop an information system with respect to local fiscal needs and resources, and evaluate Federal aid programs in terms of their compatibility with State programs. (Report A-34, 1969) Each State should eliminate from its aid programs all features that aggravate differences in local fiscal capacity to meet service requirements in metropolitan areas and that encourage proliferation of local governments in those areas. (Report A–25, 1965) State grant-in-aid legislation should establish performance standards in addition to accounting, auditing and financial reporting standards. State programs should require aided. facilities and activities to conform to local, regional and areawide plans. (Report A-34, 1969) General FISCAL-MANAGEMENT As a necessary first step, policymakers at all levels should support effective anti-inflationary action in order to reduce the cost of borrowed money and increase its availability to State and local governments. (Report A-37, 1970) The President, in cooperation with the governors, should establish procedures for voluntary State action to cut back or accelerate State and local capital expenditures as a countercyclical move, rather than relying exclusively on Federal aid fund cutbacks for this purpose. (Report A-37, 1970) Congress should favor the lump sum payment approach over the debt service grant to finance future Federal aid commitments, to ease the pressure on an overburdened State and local bond market. However, where there are multi-year Federal aid commitments, Congress should authorize Federal administrators to enter into prefinancing contracts which pledge the Federal Government to reimburse State and local government for payments made in advance to cover the Federal share. Such contracts should provide restrictions to limit the prefinancing entitlement of any one State. (Report A-37, 1970) States should provide greater flexibility in their constitutions for long-range State financing programs. (Report A-31, 1967) States should remove prohibitions against investment of State and local funds-at least idle operating funds-in interest bearing deposits with insured institutions and in obligations of the State or the United States.39 Further, States and localities should facilitate temporary transfers among separate funds for investment purposes and for effective cash management, taking care that the credit of the governmental unit is not impaired. (Report A-3, 1961) To test the ability of a federally subsidized lending operation to broaden State and local access to the capital market, Congress should establish a pilot operation of lending funds to appropriate jurisdictions to cover their share of financing waste treatment construction. This environmental financing program should be designed to supplement, not supplant, tax exempt bonds. (Report A-37, 1970) State Restrictions on Local Debt States should change restrictions on local government borrowing to relate any State regulation of local debt more realistically to the ability of local governments to service debt. State proprovisions on local government indebtedness should recognize all forms of local borrowing and debt, and should facilitate rather than hamper intelligent choice among suitable alternative forms of borrowing. Local governing bodies should be legally authorized to issue bonds, with participation available to all eligible voters and results determined by a simple majority vote on the question. (Report A-10, 1961) States should repeal limits on local government debt or debt service by reference to the local base for property taxation.10 They should consider regulating long-term borrowing by reference to the net interest cost of prospective bond issues in relation to the currently prevailing interest rate on high quality municipal securities. (Report A-10, 1961) 30 Celebrezze dissent. 40 Michaelian, Burton dissent. 41 "Cutler, Clinton, Burton dissent, Dillon reservation. State Technical Assistance States should make available to local governments technical assistance on long-term debt. The State agency responsible for for this function should be empowered to prescribe minimum content of official statements in connection with local issuances. (Report A-10, 1961) States should have a technical assistance program for local governments with respect to the investment of idle funds. The U.S. Treasury, in cooperation with State and local officials and the investment community, should develop an information program regarding U.S. obligations as investment possibilities for State and local funds. (Report A-3, 1961) [Information program implemented by administrative action of U.S. Treasury in brochure, "Interest Bearing U.S. Government Securities Available for Investment of Short-Term Cash Balances of State and Local Government", September 1963] Industrial Bonds The Commission neither endorses nor recommends the use of industrial development bonds as they tend to impair tax equities, competitive business relationships and conventional financing institutions. But, if States are going to use them, they should enact some safeguards, including: 42 (a) legislative definition of precise conditions and requirements for undertaking these activities; (b) requirement that all such bonds issued by political subdivisions be approved by an appropriate State agency; (c) authority be restricted to general units of government; (d) priority be given to governmental units with a surplus of labor and which are outside regular conventional credit and property leasing facilities; (e) the total volume of such bonds be limited according to meaningful criteria, such as personal income of population; (f) approval of bonds be conditioned on a contract with a (g) the public be given an opportunity to understand pro- Congress should amend the Internal Revenue Code of 1954 to terminate the financing of industrial facilities with tax exempt securities if the bonds are directly or indirectly held by the lessee. (Report A-18, 1963) [Implemented by Revenue and Expendi ure Control Act of 1968, PL 90-364.] "Muskie, Lowman dissent. |