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The tax-exempt status of Federal property, of course, we have always had with us, and for a good many hundreds of years or more it did not impose much of a burden on the State and local governments. However, the increasing acquisitions of property by the Federal Government during the past score of years prim.arily has made this burden very substantial and increasingly acute until those of us in our association along with a good many other representatives of local government have been complaining bitterly about it for at least a decade.

Our principal objective has been to get payments in lieu of taxes on federally owned property. But an accompanying objective has been to get the Federal Government out of the ownership of property which we think is excess for Federal purposes.

I take it that is the matter before this committee this morning primarily, as far as we are concerned.

We do feel a lot of business property owned by the Federal Government, and a lot of personal property as well as real property should be subjected to taxation, since it demands the same protection from our county court houses by way of police protection, and fire protection, and school services for children of the people who work in the plants, as any other private property. We have a good many illustrations we can cite, but I will not be specific on that.

Just a typical one is that of a big plant in which there is both personal and real property which brings into the jurisdiction a few thousand extra people. It crowds the schools and crowds the highways and makes extra demands on our police and health services, and still pays no extra taxes.

We are careful to qualify our statements by saying that we have no interest at all in circumscribing the legitimate functions of the Federal Government. We know the Federal Government must own property, and we know it has important functions to perform. We would be the last in the county courthouses to suggest that the Federal Government cease property ownership in any way that would substantially curtail its legitimate and proper functions. But I believe we would like to be among the first to say that in many instances the Federal ownership has gone beyond that necessary for legitimate Federal functions, and in those instances we would like to see the Federal ownership removed and get the property back on the tax rolls.

With that much of a brief statement I would like to say that we endorse the objectives of these bills before the committee this morning. I have not examined them enough to endorse specifically any particular one, but the objectives we do endorse.

I would like to go on record with that much, if you please, Mr. Chairman. I have nothing further to say here.

The CHAIRMAN. Mr. Osmers.

Mr. OSMERS. Mr. Seegmiller, the Federal Government owns an amazingly high percentage of the land in the country, and I suppose it falls into 3 or 4 different categories, It falls into military installations, national parks and forests, Federal office buildings, and so on. Then it also gets into that quasi-private field where they have either built or leased buildings which are operated by private business for the manufacture of some item that is used by the Government.

For example, in my own congressional district the Navy Department came along on the Hudson River with an invaluable piece of waterfront

land and they took it and made it into a supply depot. They have built a $10 million plant which they have leased to a private concern to make aircraft tubing.

Of course, in small communities the impact of removing properties of that kind from the tax rolls and requiring additional local services is a serious one. You are familiar with the bill this committee processed concerning payments in lieu of taxes.

Mr. SEEGMILLER. I suppose you have reference to 5605?
Mr. OSMERS. Yes.
Mr. SEEGMILLER. Yes; I am quite familiar with it, Mr. Osmers.

Mr. Osmers. Do you feel that would be helpful in any of the circumstances you referred to?

Mr. SEEGMILLER. Very definitely so. It would be helpful in the most acute situations, Mr. Osmers, because as the law now stands our people have a prospective income from industrial property owned by some Government corporation. Payments in lieu of taxes have been made for the last several years, and for all we know will continue to be made. There is no outward change in the physical property.

If it is a plant it continues to be operated just as it was before. We make up our budgets and count on collecting the money we have collected last year. Sometimes we even disburse it in anticipation of the budget we have made up. Then we suddenly discover a paper transaction changed title from the corporation to the Navy Department, or somewhere else. So we do not get any money that year on that great piece of property. It not only deprives us of the money in the general way you suggested, but it comes as a surprise and makes the burden very acute in many cases.

H. R. 5605 would cure that in the most severe cases. It is quite limited in its application, but as far as it goes it is highly favored by our county people.

Mr. I IPSCOMB. Is 5605 the Hillelson bill?
Mr. SEEGMILLER. Yes.
Mr. LIPSCOMB. How many plants will that affect in your area?

Mr. SEEGMILLER. I represent the National Association of County Officials, and in all of the counties across the Nation I do not know how many plants it will be. Not a great many.

Mr. LIPSCOMB. 5605 is very limited in its application, is it not?

Mr. SEEGMILLER. It will be applicable nationally so far as its terms provide. It is not limited to any geographical area.

Mr. LIPSCOMB. Have you testified before the Interior and Insular Affairs Committee about any other bills before their committee?

Mr. SEEGMILLER: Yes.

Mr. LIPSCOMB. And the Inter-Governmental Relations Commission?

Mr. SEEGMILLEK. I spent yesterday before them on this subject. We had about 10 witnesses down there yesterday. That is why I did not get my statement prepared to present here today. I did not have time to examine these bills.

Mr. LIPSCOMB. What did you mean by property in excess?

Mr. SEEGMILLER. I would hate to draw the line because I do not believe I am skilled enough to do it between that which is necessary for a legitimate Government function and that which is not. We had some witnesses yesterday before the Inter-Governmental Relations Commission who made the point of excess with respect to sur

rounding property around a plant, supposedly taken for future expansion, but where there was no future expansion. They had a good many hundreds of acres of property around the plant, or an installation that has never been used, and apparently will not be used.

That would be one illustration on the excess ownership by the Federal Government.

Mr. LIPSCOMB. Besides this piece of legislation which will eventually cut down the Government buying plants in many areas, you will still need those in-lieu-of-taxes bills on the proposals pending?

Mr. SEEGMILLER. Yes, Mr. Lipscomb.

Mr. LIPSCOMB. This bill will not solve the problem because we are just interested here in getting the Government out of business.

Mr. SEEGMILLER. You will solve the problem so far as you get the Government out of business, because then it would go out on the private tax rolls. There would still be a lot of property owned by the Federal Government, which I suppose we would all agree that the Federal Government ought to continue to own for legitimate Federal purposes, and we would still ask for payments in lieu of taxes on that. We have solved the problem partially by the bill before the committee.

Mr. LIPSCOMB. It helps cut it down.

Mr. SEEGMILLER. Yes. And these bills would deal with the problem where it is most acute. The large industrial installations are the most acute part of the problem. Public forests, and public domain, and some of the mineral rights, and reclamation projects, and even Army camps, are not as burdensome as a large industrial installation, which requires a high degree of service from a local community, such as water, and sewers, and police protection, and fire protection, and so on.

So the industrial types of plants these bills deal with illustrate our problems most pointedly and in the most acute area.

Mr. LJPSCOMB. Congress should not stop their work on that problem just because 5605 is on the way?

Mr. SEEGMILLER. We certainly hope they do not. We will ask
Mr. LIPSCOMB. I hope they do not. I have a bill on it also.
Mr. SEEGMILLER. We will be befcre the committees at every chance
asking you not to stop at that point.

The CHAIRMAN. Is that all?
Mr. LIPSCOMB. That is all.
The CHAIRMAN. Thank you.
Mr. SEEGMILLER. Thank you ever so much, Mr. Chairman.
The CHAIRMAN. Call the pext witness.

Mr. WARD. The next witness is Mr. Varrone of the Brushmakers Union.

The CHAIRMAN. Mr. Varrone, we thank you for the statement you have submitted to us, which seems to be rather comprehensive. It will be received and printed in the record, and if you wish to make additional statements or if the members wish to ask questions, we will proceed with that.

you pot.

STATEMENT OF ANTHONY VARRONE, BUSINESS MANAGER,

BRUSHMAKERS UNION, LOCAL 16303, AMERICAN FEDERATION OF LABOR

(The prepared statement of Mr. Varrone is as follows:) STATEMENT OF ANTHONY VARRONE, BUSINESS MANAGER, BRUSHMAKERS UNION,

LOCAL 16303, AMERICAN FEDERATION OF LABOR At the outset, please let me express the sincere appreciation of our entire membership for the opportunity afforded me at this time, to speak to this honorable committee, so that you may better understand out particular problem.

Prior to my having been privileged to represent the members of the Brushmakers Union, Local 16303, American Federation of Labor, I myself worked in a factory of the industry for a period of 18 consecutive years. This, of course was before prison-made brushes. On many an occasion, I remember working on Navy, Army, or other Government need for paint brushes. As a matter of fact, on many an occasion during slow periods we were not laid off because there was enough Government brushes to be made that the firm I worked for always got its share of the bids that were let out.

This, you must understand, was during normal times in the brush industry. As you and I know, normal times for the worker in the brush industry has been out the window for quite some time now. The opportunity that workers of the industry once had, to do Government work, is no longer available and at a time when it is needed most.

It is no longer available, because of a law on the statute books known as 18 U.S. C. A. 4124, which makes it obligatory on Government purchasing agencies to buy prison products. In practice the procurement agencies inform Federal Prison Industries of their requirements and Federal Prison Industries contracts to fulfill them insofar as they are able.

The classic example took place in March of 1942. At that time Wright Field let out a public bid for the Air Corps Circular No. 42–2064, in which just two items called for 70,800 pieces of wall brushes, amounting to approximately one-quarter of a million dollars.

Private manufacturers bid and one of our union shops was the successful bidder. However, because this bid was not processed through Federal Prison Industries, all bids were canceled and the order recalled. This at a time when our members were suffering from severe unemployment.

President William Green, together with our office, protested to the Commission of Federal Prisons, in which he said in part: “My information leads me to believe that the Wright Field contract is far from modest in size, and in terms of manhours of unemployment and consequent loss of wages represents a serious blow to free labor in the brush-manufacturing field. Free labor in America is willing and eager to do everything in its power to speed the war effort. We do not expect work to be given us on a charity basis, at the expense of production results or at unreasonable costs. We do maintain, however, that other things being equal, a just bid on Government orders, particularly in those fields where unemployment is already acute due to curtailment of civilian production, should be given to free labor in preference to prison labor. The morale of a worker is at times an intangible thing. But, it is very real nevertheless, and very necessary to the maximum effort necessary to fight and win the war. It is not improved by causing the worker to feel that he is being unjustly discriminated against and denied a fair chance to earn a living as well as to do his share in the Government's production program.

Another case I can cite is when one of our union shops bid on Federal specification EHE-731, and emergency alternate Federal specification EHE-731, dated May 8, 1942. These were on invitation No. 28–021-44 NEG 41, and requisition No. JCG 44 of September 27, 1943. The quantity of brushes needed was 43,863. The company learned unofficially that their bid was to be accepted. A short time later the company was advised that the office who issued the bid had to first contact Fort Leavenworth in order to get a release to purchase these brushes other than from Prison Industries. It turned out that Fort Leavenworth could manufacture these brushes, and so an American concern, taxpayers and members of our union, were denied the right to make these brushes for the Government. Prison labor was given preference over free labor, who was suffering from layoffs. During May of 1952, my information was that Prison Industries had sent out

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inquiries for the purchase of bristle in the amount of $509,539. This would make approximately $1 million worth of brushes. My further information was that Prison Industries had a projected work schedule well into December 1952. This, mind you, when our membership was suffering grave unemployment.

I brought this to the attention of President Meany of the American Federation of Labor, who then arranged for me to meet with Commissioner Bennet in Washington, Þ. C. This I did on June 30, 1952. I found Mr. Bennet sympathetic to our problem. He offered, and did cooperate to the best of his ability within the law, to give us some relief. But this was not, nor will it be, the solution to the problem faced by the members of our union. It is perhaps a strange and yet a true paradox that when the Government becomes, as has happened on numerous occasions, the largest purchaser of brushes, the civilian market becomes demoralized. During such periods, the members of our union who are law-abiding citizens suffer unemployment, and convicts who have broken the law become increasingly busy in order to furnish our Government's brush needs.

I am sure that our public representatives, or any responsible group, never intended that the law-abiding citizen and responsible family man and woman should become demoralized through unemployment caused by convicts who have broken the law. And yet our membership knows, and the fact is, that under the present situation, any time a Federal or Government agency has the need for any type of brush, the lawbreaker is given preference and allowed to do the work while the law-abiding citizen is faced with unemployment.

We know that during March and April of 1952, Federal Prisons were awarded at least three contracts for paint brushes only, from one department of the Government General Stores Supply Office, Robbins Avenue, Philadelphia, as follows:

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If 9,042 dozen were awarded on the 3 published awards we happened to catch for 1 particular branch, there are 2 natural questions that follow:

1. What is the total of business being awarded to Federal Prison Industries?

2. In the face of an industry that has suffered severe volume losses and has had to contract its operations to a minimal point (for reasons well known to you) how much has the Federal Prison Industries expanded its brush manufacturing facilities?

I sincerely hope that the information I have given herein, will be of some value to you when you make your final determination in this matter that is so vitally important to the members of our union, their families and the brush industry itself.

Mr. VARRONE. I want to thank you for making my prepared statement a part of the record. There are one or two further comments I would like to make, so that you might better understand the problem.

To begin with, you must understand that the industry is a very small one, and during the past few years it has been shrinking. It is shrinking for many reasons. One of the reasons is because of the fact that bristle, which is the most important item that goes into a paint brush, is no longer available to the industry because of the purposes of security.

We get our bristle from China. We are not doing business with China these days, but England is buying the bristle that is available. They are buying that bristle and making it into brushes and bringing those brushes into this country and selling them in competition with ours. We cannot make a pure bristle brush.

The CHAIRMAN. You mean the Government itself is?

Mr. VARRONE. No, not the Government. But I am just trying to show how the industry is suffering in addition to the competition

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