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 49 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 49 of 49)
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nee<l and the fiscal capacity of the municipality, and on the other hand, public-
works projects which may be normal enough with respect to the two ordinary
factors but which become exceptional when timed with reference to a third
factor — general economic conditions.

For the most part, municipalities can finance the necessary construction of
public-works projects in their long-term programs of construction of needed im-
provements. But if in a period of severe unemployment these municipalities
are called upon by a higlier governmental authority to telescope a 10-year pro-
gram into a 1-year program, it must be realized by the higher authority that the
fiscal requirements cannot be met by the municipality without financial assist-
ance. The average municipality neither will have nor will be able to obtain the
funds to carry on that kind of an accelerated program.

Under normal conditions, if a municipality needs certain public works and can
develop a normal program over a comparatively long period, it is the business
of the municipality to do that job itself. Given time, in spite of limitations upon
tax rates and debt limits, these jobs have been accomplished. But there again,
the municipality cannot accomplish a long-term program in a .short period because
its tax base is simply not flexible enough. Municipalities cannot raise the money
to provide for large programs of public works for public employment purposes
in short periods of time.

Indeed, if every municipality in the Nation borrowed to the maximum of its
debt capacity to support wholly with local resources a program of work relief
through public-works construction on the scale which the Federal Government
followed in the lOSD's, it is very doubtful that the program could proceed for
more than a few weeks.

DISTINCTION BETWEEN TYPES OF PROGRAM

There frequently will be a distinction between the projects which for all purposes
can be considered normal and projects which should go on a shelf of plans of
projects to be constructed with financial assistance in periods of economic read-
.lustment. Often there may be no distinction in the physical nature of the
projects. But, generally speaking, there is a line of demarcation with respect
to the purposes.

For example, suppose that a municipality's first postwar year's construction
must be limited to an alternative between an urgently needed fire-alarm system
and a desirable but not imperative surfacing of residential streets. Assuming
an equal expenditure, the street project would provide by far the greater number
of jobs and would have the more salutary effect upon general economic con-
ditions in the community. Nevertheless, in this given situation, presumably
the citizens' choice will dictatp that the fire service be expanded. The labor-
consnming street project wou^d hold the second priority.

While the municipality would reqiiest Federal assistance for neither project,
since it intends and is able to finance and undertake the street project in the
second postwar year, it is obvious if both are taken up in the first year that
neither can be handled without assistance. As long as projects can be under-
taken in an oi-derly relation to the needs and the fiscal capacity of the com-
munity government, the expenditure can be met within the municipality's normal
resources. When the timing of the project is geared to an extraordinary economic
factor, a distinction must be recognized.

It may be said, then, that the timing — the primary purpose of the project being
its stabilizing effect upon the employment level of the community or of a larger



2078 POSTWAR ECONOMIC POLICY AND PLANNING

area at a certain time— is the first element in determining the justification for
financial assistance.

With reference to the type of projects which might be selected to receive finan-
cial assistance for their construction, it can only be concluded that projects on
the municipalities' program of public-works construction on a normal basis, and
projects which should be engineered with Federal assistance and shelved for
construction for unemployment relief purposes with Federal assistance at times
not predetermined, are differentiated primarily in the degree of the need of the
finished project.

The major condition in the selection of projects for the public-works shelf,
needless to say, should be the relative volume of employment with reference to
each dollar wliieh is proposed to be spent. On a public-works shelf of projects
designed to be initiated at times when the employment volume tends to be reduced,
the top temporal priority should go to those useful and desirable projects which
require the greatest number of man-hours per dollar of investment.

RECOMMENDATIONS

Enactment of the independent offices appropi-iation bill (H. R. 1984, 78th Con.)
has recently provided 171/. million dollars whicli the Federal Works Agency will
advance to State and local units of government to assist in the planning of" post-
war public-works projects, under authority of title V of the War Mobilization
and deconversion Act of 1944. According to the announced policy of the«Federal
Works Agency, the funds will be advanced for planning only of" projects which
the spon.sor intends, and is financially able, to put under construction within 3
years after the termination of the current national emergency. It is hoped that
the advances will be made for projects which offer large numbers of jobs.

Fundamental purpose of title V and the 17i/i. million dollars appropriation is
to assist in the planning of projects in municipalities and other units which are
prohibited by State constitutions or statutes to spend local revenues for planning
purposes prior to the beginning of actual construction but which, at the same
time, are authorized and able to finance the actual construction. The program
assumes that the planning advance may be repaid as part of the construction cost
from funds derived from bonds issued with reference to tie construction.

With no intention to disparage the program of public-works-planning advances,
it is pointed out that the program does little to dissipate the problem outlined
above. It is still true that the municipality cannot perform a long-term public-
works construction program in a short period without financial assistance.

It is recommended, therefore, that a postwar construction policy be established
and clearly defined by the Congress.

It is recommended that Congress authorize an appropriation to assist in the
construction of local public-works projects to be initiated by the local govern-
mental sponsor in periods of economic stress and to be deferred until such period
occurs, and that an appropriate Federal agency be authorized to commit the
Federal Government to assist in the construction of specific projects at such times
within the limit of the authorized appropriation.

CONCLUSION

State laws and constitutions and the natural laws of finance do not alford munic-
ipalities the fiscal ability to perform the important function of giving direction
to the national economy by means of the initiation of public-works projects,
although municipal public-woi-ks projects which employ large numbers of persons,
appropriately timed for initiation, can effect to some extent a stabilization of the
national level of employment volume. Since such an economic control, although
involving a traditional function of local government (1. e., initiating and financing
local public works), transcends tlie interest and the responsibility of the local
government, financial assistance from the units of tlie h'gher levels of government
is justifiable and necessary. Municipalities cannot do the job alone. With assist-
ance, municipalities will do the job when called upon.
Very truly yours,

Earl D. Mallery,
Executive Dii'cctor, American Municipal Association.

X



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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 49 of 49)