United States. Congress. Senate. Special Committee.

Post-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) online

. (page 34 of 49)
Online LibraryUnited States. Congress. Senate. Special CommitteePost-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) → online text (page 34 of 49)
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committee. Again we want to congratulate the people of Chicago on
having a ]Drogressive mayor.

Mayor Kelley. What about the two or three progressive Congress-
men we have here ?



1970 POSTWAR ECONOMIC POLICY AND PLANNING

Tlie Chairman, The four progressive Congressmen, as we have-
Congressman Kelly here with us.

Congressman Kelly. Mr. Chairman, and honorable members of
the committee, I know after hearing the testimony of our mayor,,
who is a very great progressive and constructive mayor in the building
up of Chicago and the welfare of the city of Chicago, I am going to ask
permission, not now in taking up the time of the people who you are
accomodating here, to appear before the committee when you get
back into Washington and make a statement myself as a former
member of the Chicago Planning Commission, who has sat in with
the members of the city of Chicago in formulating and laying some
of these plans for the postAvar planning to make Chicago one of the
greatest cities in the world. I say that in all due respects to the Bronx.

The Chairman. Yes. to the Bronx.

Congressman Kelly. I am' sorry at this time that I have another
appointment and I will have to see you later on. It is very nice to
be here and I am glad that you gave me this opportunity to say these
few words. I know the statement that the mayor made has been very
helpful and I know the committee has appreciated it very much.

The Chairman. I want to thank you gentlemen for listening to us
and, Mr. Mayor, we appreciate your coming here very much.

INIayor Kelly. Thank you very much.

The Chairman. The next witness to be heard will be Mr. Donald C.
Weeks, director of the Michigan Planning Commission. Mr. Weeks,
jT^ou may make your statement without interruption if you so desire
and at tlie end of your statement, the members of the committee will
probably have a number of questions to ask you.

STATEMENT OF DONALD C. WEEKS, DIRECTOR OE THE MICHIGAN
PLANNING COMMISSION

Mr. Weeks, This statement is intended to discuss local postwar
public- works programs in Michigan and the financial capacity of their
sponsors. Available information indicates that Michigan will be con-
fronted with a severe unemployment problem during the transition
from war to a peacetime economy. Plans and specifications for an
adequate public-works-construction program will be completed as a
result of the cooperative effort of the State and local units of Govern-
ment. However, if this construction program is to be financed entirely
by local government units it will be spread over at least a 10-year
period.

Only a few municipalities in the potentially critical areas have the
financial resources to provide employment through public works for
more tlian a small fraction of the need should a greatly expanded con-
struction program be required as an employment measure in the post-
war period.

Earh^ in 1943, Gov. Harry F. Kelly and the Michigan Legislature
began working actively on the State's prospective postwar problems.
It was rapidly becoming evident that with one-eighth of the Nation's
war production concentrated in Michigan, bringing an influx of more
than 300,000 people from other States and many population shifts
within the State, any postwar employment emergency in Michigan
would be especially severe. As a steo in preparing to meet this and



POSTWAR ECONOMIC POLICY AND PLANNING 1971

other postAvar problems, the legislature, by passing act 100, public
acts of 1943, amended the State Planning Commission Act to provide
for broader functions of the connnission and to strengthen its mem-
bership.

The commission, soon after its reorganization in June 1943, pro-
ceeded to canvass local units of Government to learn the extent of post-
war planning. The results were not encouraging. Little beyond an
inventory of public works needs prepared with the assistance of public-
works reserve engineers was available and practically no plans were in
process of preparation. This information indicated a need for some
means of stimulating both public-works planning and the preparation
of actual project plans. To stimulate local planning, seven planning
institutes were held during October and November 1943. The first
was held in Lansing, in cooperation with the American Society of
Planning Officials.

Largely as a result of these institutes and follow-up by the State
planning commission, 204 local planning commissions and committees
are organized by cities, villages, counties, and a few semiurban
townships.

It became evident from discussion periods held during each plan-
ning institute that many local units of government were not in posi-
tion to finance the preparation of plans and would postpone the
preparation of plans indefinitely unless some method of encouraging
them could be found. Largely as a result of this finding, the legisla-
ture, upon recommendation of Governor Kelly, established the
Michigan public improvement program, providing $5,000,'000 for
reimbursing local units of government for not to exceed one-half
the cost of preparing complete plans for postwar public works. The
act provided for the apportionment of the money to local units on a
population basis to pay grants-in-aid on applications of record Novem-
ber 1, 1944, and for reapportionment of funds not applied for by that
date among those requiring additional money to meet 50 percent of
their planning costs.

The piiblic wiprovem^ent needs of the cotmn/imities

In the Michigan public improvement program, the basic immediate
needs of the communities are well established by the applications filed
with the planing commission for planning aid grants.

That the projects listed with the commission represent basic needs
is indicated by each applicant's willingness to finance one-half the
cost of plans and prepare completed plans within the next few months.

A summary of the planning aid program on April 3, 1945, follows :

Number of projects 2,708

Total estimated construction cost $477, 9G7, 367

Total cost of planning documents $15, 249, 709

50 percent of cost of planning documents $7, 624, 854

Planning aid available tbrough act 57 $5,000,000

Excess of requests over appropriation $2, 624, 854

The applications received under this program represent an expan-
sion and improvement of all tjqoes of municipal facilities. In the
opinion of the planning commission and appropriate State depart-
ments assisting with the review of applications, these projects are
worth while and needed public works.



1972 POSTWAR ECONOMIC POLICY AND PLANNING

The following table presents the principal types and estimated
construction costs of the projects in the program:

Estimated
Type of project : construction cost

Sewers and sewage treatment $113, 571, 081

Schools 91, 816, 448

Street improvements 78, 533, 908

Buildings, other than schools 60, 722, 813

Water systems and purification 40, 942, 239

Parks and recreation facilities 15,163,140

Agricultural drains 10, 224, 114

On the basis of the estimates submitted by the applicants covering
the length of time necessary for the completion of plans and taking into
consideration those projects under the program for which plans are
already complete, it is indicated that $101,384,000 of public- works
construction will be in the completed plan stage by August 1, 1945.
It is judged that by early 11)40 plans will have been completed for
about $200,000,000 of potential construction.

There is no quick, accurate yardstick for measuring the fiscal ca-
pacity of local units of government insofar as the financing of public-
works programs is concerned. A complete financial analysis of each
local unit of government would be required. Such an analysis has
been completed for 17 of the larger cities in Michigan and a summary
of the findings for those 17 cities is included in the individual city
reports.

The Michigan Planning Commission intends in the near future to
make a detailed analysis of the ability of all local units of government
to finance the construction of projects submitted in the planning-aid
program. However, on the basis of- available figures to date and
studies of the financial history and condition of local government in
Michigan which are available, some general observations may be made
to outline the problem faced by the State. Most of the public works
need is concentrated in the 16 heavily populated counties of the State;
$358,460,000 of the total construction program of $413,116,000 or 87
percent has been submitted by units of government within these coun-
ties. This program consists"^ of 1,182 projects with a total planning
cost of $10,738,000. Within these counties are located the 20 largest
cities in Michigan with 52.01 percent of the State's population. The
16 industrial counties and the cities, villages, and townships within
their boundaries account for 73.7 percent of the population, 83.6
percent of the State's valuation, and 96 percent of the outstanding
municipal debt. It is estimated that approximately 85 percent of
the welfare burden of the 1930's was found in these industrial counties.

The city problem

Of the 171 cities of Michigan, 123 submitted a total construction
program of $237,927,000. Of this total, $202,000,000 was submitted
by the 20 largest cities.

An analysis of all material available indicates that of the 20 largest
cities, 14 will be unable to finance a construction program of sufficient
size to cope with anticipated unemployment with funds available or
expected to become available. Five cities, Lansing, Dearborn, Kala-
mazoo, Bay City, and Port Huron, have indicated that they are in
position to finance sufficient construction to take care of their expected
unemployment, should the period be of short duration. Should their



POSTWAR ECONOMIC POLICY AND PLANNING 1973

total unemployment load exceed their expectations or extend over a
period of several months they, too, will require additional finances.
Highland Park, one of the 20 largest cities, has very few public-work
needs; therefore, would be unable to provide any great amount of
employment.

The next 20 largest cities, those with a population of 9,000 to 17,000,
have submitted a construction program totaling $18,245,000. Infor-
mation available indicates that about half of these cities can finance
their total program over a 3- to 5-year period. The balance will
require a longer period. The majority have indicated their inability
to finance sufficient construction quickly, should an unemployment sit-
uation develop.

The majority of the cities having less than 9,000 population appear
to be able to finance the major portion of their construction program;
over a 3- to 5-year period.

At the request of the Michigan Planning Commission, officials of
several cities have submitted information regarding their financial
situation and the problem of financing their proposed public improve-
ment program. The following section includes excerpts from tha^
statements received from 19 cities.

Glenn C, Richards, commissioner of public works, Detroit, was con -
tacted. Detroit population, 1,623,452, has applied for State planning
aid for postwar public works estimated to cost $130,259,730. INlr.
Richards made the following observation to be included in this state-
ment :

Detroit has a good postwar public-works program. Tlie plan preparation was
started 2 years ago and a large shelf of plans are now completed and ready
for construction. Over 100 designers and draftsmen have been employed by the
city engineer's office for 2 years and funds are set up to keep this group on the
preparation of postwar plans for at least another year.

City departments, such as street, board of education, water department, and
several small departments, are also preparing plans for their particular depart-
ment. Detroit has a planned program approved by the common council for ap-
proximately $250,000,000. These do not include our transportation system for
which plans are in the preliminary stage.

Wayne County, of which Detroit is a big part, has also completed plans for a
great deal of work and has many plans now on tlie drafting board wliich are to be
ready for the postwar period. Tliese plans for the city and county are very di-
versified, consisting of roads, bridges, sewers and water mains, pumping stations,
schools, libraries, recreational facilities, fire stations, police stations, parks, and
numerous other similar projects.

Financial arrangements can be made by the city and county to build many of
these projects. However, it is anticipated that many more will not be built for
20 years if local government is to finance them out of local taxes. Detroit
would prefer a more equitable distribution of taxes which would permit us to
finance our own program. However, until the redistribution takes place, we will'
no doubt need Federal aid.

It is anticipated that the Detroit industrial area will be one of the hardest
hit in the country in the change-over from war to peace. Local government wilh
not be able to finance any program that would do much to relieve an unemploy-
ment situation such as might exist. Hundreds of thousands of people have beera
brought in by the Federal Government to build war equipment. We cannot
take care of this increase in the immediate postwar era. None of us want made-
work programs. It seems only fair that the Federal Government should assume
its responsibility for the employment of these people that were brought to
Detroit.

By July 1, 1945, Detroit will have $20,000,000' accumulated reserves earmarked
for postwar construction. In addition, a small amount of construction can be
financed by revenue bonds to be issued by the water board or the Detroit street



1974 POSTWAR ECONOMIC POLICY AND PLANNING

railway. A program which can be financed by these funds will not provide suflB-
cient construction to take care of our anticipated unemployment.

Floyd Jennings, director of the city planning commission, Grand
Rapids, was contacted. Grand Rapids, population 164,292, has ap-
plied for State planning aid for postwar public works estimated to
cost $6,274,107. Mr. Jennings made the following observation to be
included in this statement :

We have a "must" public-works program of $6,000,000 for which plans are
being prepared by the city engineering department with the assistance of State
funds. Of the total program, the city of Grand Rapids can finance in the im-
mediate postwar period approximately $700,000 worth of construction. The
balance must be financed by either general obligations bonds or special assess-
ments which means that they must be constructed over a period of years, if at
all. We will require some type of assistance if any unemployment situation
develops.

In addition to the $6,000,000 program filed with the Michigan Planning Com-
mission, we have approximately $10,000,000 of public-works needs for which
we have not even considered preparing plans due to lack of finances.

George Gundry, city manager of Flint, was contacted. Flint,
population 151,543, has applied for State planning aid for postwar
public works estimated to cost $17,056,261. Mr. Gundry ' made
the following observation to be included in this statement :

We have over $17,000,000 worth of needed projects listed with the Michigan
Planning Commission of -which we hope to prepare plans for $4,962,000. We
have available for postwar construction in the neighborhood of $240,000 and
have no other sources to which to turn tor additional money other than a very
small amount of waterworks construction which can ba financed with revenue
bonds. Tliat is the sum and substance of our postwar program. We expended
more money for current operations than we received from all sources of revenue
last year and the same is true this year.

The people of Flint have refused on one occasion to vote additional millage
for operating the schools and twice have refused to vote additional millage to
meet increased city operating costs and to create a reserve for postwar con-
struction. The referendums were defeated 4 to 1.

Carl H. Peterson, city manager of Saginaw, was contacted. Sagi-
naw, population 83,794, has applied for State planning aid for post-
war public works estimated to cost $8,526,470. Mr. Peterson made the
following observation to be included in this statement :

We are preparing plans for an $8,500,000 program in addition to $300,000 of
construction for which plans were completed prior to the inception of the Michi-
gan public improvement program. We have no funds available for postwar con-
st rui-tion and with expenditures running as they are now, we will have to oper-
ate with an approximate deficit of $150,000 per year beginning June 30, 1946,
unless additional sources of revenue are somehow made available.

The committee for economic research of the board of commerce, city of Sagi-
naw, has asked us to prepare a public-improvement program which would em-
ploy 500 men for 1 year, the approximate cost of which would be $2,000,000.
These 500 men will be in addition to our regular employees and would include
some 60 former city employees returning from the service. The city's share in
such a public-improvement program would amount to over $500,000. With our
present income, the city will not be in position to finance this program. Money
must come from some other source if we are to put men to work during the re-
conversion period.

Ralph W. Crego, mayor of Lansing, was contacted. Lansing, pop-
ulation 78,753, has applied for State planning aid for postwar public
works estimated to cost $6,866,400. Mr. Crego made the following
observation to be included in this statement :

The problem of postwar employment is one with which our community is very
much concerned. The present employment in our city is nearly double the normal



POSTWAR ECONOMIC POLICY AND PLANNING 1975

■peacetime capacity ; therefore, it would be possible for Lansing to be the home of
many thonsand unemployed during the change-over. We are j>reparing plans for
a rather large public-improvement program and have about $1,000,000 in i-eserves
available for inunediate postwar construction and expect to construct the balance
over a period of years. However, our reserve would be but a drop in the bucket
should we be forced to employ even a thousand more people on our public pay roll.

George Bean, city manager of Pontiac, was contacted. Pontiac,
population 66,626, has applied for State planning aid for postwar
public works estimated to cost $3,197,615. Mr. Bean made the fol-
lowing observation to be included in this statement:

The city of Pontiac believes that there is insufficient tax base at the local level
to support a major public works program and that, therefore, the Federal Gov-
ernment will have to provide some means of carrying out this program either on
a matching basis or a grant basis or a combination of the two.

We are going along pretty well on financing plans. We have already let con-
tracts on quite a bit. With the planning help that we are getting from the State,
we can set up a pretty healthy program, but we will have to have some method of
•quick financing.

Fred Storrer, city engineer, Dearborn, was contacted. Dearborn,
population 63,584, has applied for State planning aid for postwar
public works estimated to cost $4,280,000. Mr. Storrer made the fol-
lowing observation to be included in this statement :

We could probably finance about 60 percent of our work without any financial
assistance although if it became necessary to telescope our program in order to
provide employment we would need assistance. We have approximately $700,000
on hand now and will have about $1,000,000 available by 1946. Whether or not
we will need assistance depends on the amount and duration of unemployment.
"We will want our share if funds are available, but would prefer a division of
taxes based on percentage paid in order that we could finance our own public-
works program.

Edward Clarke, city manager of Kalamazoo, was contacted. Kala-
anazoo, population 54,097, has applied for State planning aid for
postwar public works estimated to cost $2,369,700. Mr. Clarke made
the following observation to be included in this statement :

While the city of Kalamazoo is in as good a financial condition or better than
the average city of our population and would be able to carry on a construction
■program for a short period of time during an unemployment period, we could not
continue to do so because our city is financed on the policy of annual taxation for
carrying on current pro.1ects. In my opinion, we could carry on an expanded
program of revenue-production projects and a normal program of non-revenue-
producing projects, but we could not cope with any gi*eatly expanded program
which would normall.v be constructed over a period of years without outside
assistance. It is also my opinion that any greatly expanded program designed
to provide employment may cost more money because labor is used in excess.
UMany times suflicient equipment is not available or is not used in order to keep
the unemployed occupied. However, again in my opinion, the unemployed man
is better off by being employed and busy even if it costs more to accomplish it.

A. J. Koenig, city manager of Jackson, was contacted. Jackson,
population 49,556, has applied for State planning aid for postwar
public vv'orks estimated to cost $2,987,500. Mr. Koenig made the
following observation to be included in this statement :

The city of Jackson operates under the 15-mill tax limitation and is therefore
drastically limited in the amount of financial support for municipal operations
that may be derived from tax sources. From a total of 1,5 mills assessed, Jack-
son in 1944 received the highest allotment ever, 5.92 mills, of which under charter
provisions 1 mill is earmarked for the city hospital.

Upon the basis of a true assessed valuation of $73,152,820 on real and personal
properties in 1944, the 4.92 residue of millage has provided only $360,400.57
'toward the financing of a limited operating budget of $791,407.01. For the first



1976 POSTWAR ECONOMIC POLICY AND PLANNING

time in recent yeai's the city will have a deficit of approximately $80,000 at the
close of its fiscal year on June 30.

The city of Jackson is in a very desperate financial situation and there is no
prospect of any substantial improvement in its finances in the foreseeable future.
It has no money on hand or in reserve for the financing of a postwar public-
improvement program.

Harry Nelson, city manager of Bay City, was contacted. Bay City,
population 47,956, has applied for State planning aid for postwar
public works estimated to cost $1,170,065. Mr. Nelson made the
following observation to be included in this statement :

It is my personal opinion that Bay City will be able to provide its share of the
funds necessary to give employment during the immediate postwar period. We
have several sinking funds set up for postwar projects, those for general city use
being transferred from the earnings of our electric distribution system. We
have enough street-improvement work alone to take care of the expected unem-
ployment situation.

Roy Winters, city manager of Muskegon, was contacted.. JNIiiskegon,
population 47,697, has applied for State planning aid for postwar
public works estimated to cost $2,414,000. Mr. Winters made the
following observation to be included in this statement :

There are 31,000 persons employed in the Muskegon area today as compared
to 14,000 in 1939. A survey conducted by the Committee for Economic Develop-
ment indicated that 6 months following the end of the war, industry and the
services can employ but 27,501) and that there will be a minimum of 8,000 persons
in the area without employment. To provide employment for 8,000 people means
a potential $9,000,000 pay roll alone on the basis of $100 a month per person.
To meet the situation, we have a water and sewer program of $1,000,000 of
which only $300,000 is within the bonding ability of those departments. We
hope by rate revisions to increase the bonding ability of the water and sev/er
departments to $750,000. The balance of our public-works program must be
financed either by general obligation bonds or by special assessments which at
present cannot be financed except by pledging the full faith and credit of the
city, neither of which would be approved by the voters. If a severe unemployment
situation should develop, the city of Muskegon could not begin to finance a
public-works program of sufficient size to furnish the employment necessary.



Online LibraryUnited States. Congress. Senate. Special CommitteePost-war economic policy and planning. Joint hearings before the special committees on post-war economic policy and planning, Congress of the United States, Seventy-eighth Congress, second session, pursuant to S. Res. 102 and H. Res. 408, resolutions creating special committees on post-war economic (unit 6) → online text (page 34 of 49)