Annual Message to the Congress, the District of Columbia Budget.

To the Congress of the United States:

I present the budget for the District of Columbia for the fiscal year beginning July 1, 1964.

The District of Columbia, as the Capital of our Nation, should symbolize our civic ideals. What the National Government does, or fails to do, for the District largely determines the city's c h a r a c t e r and attributes.

A year ago, in transmitting the District of Columbia budget to the Congress, President Kennedy said "... the problems of the District have become so critical as to challenge the National Government--both the Administration and the Congress--to redouble its understanding of and interest in its Capital City." The need to meet that challenge continues. The policies and programs which President Kennedy proposed for the development and progress of the Nation's Capital remain largely unfulfilled. The budget which I am presenting will measurably advance their accomplishment.

In certain respects the District has needs and problems which are common to many large cities today. It is the core of the fastest growing metropolitan area in the East. Like other central cities, its population characteristics have been changing rapidly. Between 1950 and 1970 the number of school age children in the District will have increased by 46%; the number of older persons by 55%. The number of persons in the productive period of their lives, however, will have decreased by 18%. Negroes, whose economic and social resources taken as a whole still lag far behind, continue to be an increasing proportion-now some 57%--of the District's citizens. Only recently have they been enabled to start breaking through the artificial barriers which by and large have kept them within the District.

In other fundamental respects, the District is unique. It discharges not only the full range of municipal responsibilities, but also responsibilities generally undertaken by State and county governments. These include health, welfare, and education--the very functions which expand most rapidly in areas undergoing changes in population characteristics. Furthermore, the District has more park land, lower building heights, and little industry--all factors which severely limit potential tax revenue. Another important consideration is that the National Government holds title to 43% of the land area of the city--none of it revenue producing; yet the National Government is the District's only major industry.

These facts, coupled with an inadequate response to the needs of the District in years past, make imperative the adoption of programs that will increase substantially the stability, income, and resources of the city's present and future productive citizens.

The Federal Government has explicit responsibility for legislative direction of District affairs. Its implicit responsibility is even broader, since it also must assume a fair share of the District's financial needs.

Nor is it only a question of fairness. The efficiency and productivity of the Federal establishment depend to a significant degree upon a capital city which is well planned and well run. From time to time, the Federal Government has increased its recognition of financial responsibility. Last year it enlarged the Federal payment authorization from $32 to $50 million a year. This still fails short of enabling the Congress and the District to plan and efficiently carry out long-term commitments within a framework of sound fiscal policy.

I recommend strongly that the Congress authorize a Federal payment based on a formula which reflects the relative responsibility of the National Government and of the local taxpayers in meeting the financial needs of the District. Title I of H.R. 4592 embodies such a formula, keyed to the assessed value of real estate and personal property owned and used by the Federal Government and the amount the District could expect to receive if Federal Government activity were taxable as a private business.

Although a $54.8 million Federal payment would be authorized by H.R. 4592 in fiscal 1965, compared to $50 million already authorized, the real benefit from its enactment would be the maintenance of an equitable balance between Federal and local responsibility as conditions change. For example, by fiscal 1968 the formula would authorize an estimated further increase of $6.6 million in the Federal payment compared with increased revenues from local sources estimated at $39.8 million. True concern for the District requires that the Federal Government thus recognize its equitable share of the costs. It also requires, of course, that normally the Congress appropriate no less.

The adoption of this formula basis for the Federal payment would not establish a precedent requiring the Federal Government to make payments in lieu of taxes in other jurisdictions. For more than 125 years the Congress has recognized the Federal Government's responsibility by appropriating a share of the funds needed for the operation of the District government. The Congress has fully accepted the fact that, because Washington is the Federal city and the seat of the National Government, its development and growth have been unusually affected by Federal Government operations. Unlike most other communities where post offices, courthouses, and the many other local and regional activities of the Federal Government serve the local citizens, Federal activities in Washington predominantly serve the whole Nation.

Moreover, the Federal Government plays a larger 'part in the planning and development of the District than it does anywhere else in the Nation. The location and types of buildings in certain areas are dependent upon its approval. It imposes other restrictions, such as that which limits the height of all buildings within the District. Serious limitations are thus placed on the development of private industry and businesses in a city essentially geared to functioning as headquarters of the Federal Government. Such restrictions caused by the presence of Federal activities are not nearly so far-reaching in any other city in the Nation. In other words, there is already a well-established precedent--that the Federal Government should and does contribute to the expense of government in the District. The issue is only what measure can best be used to determine the fair share which the Federal Government should provide. The proposed formula will establish that measure.

I also recommend that the authority of the District to borrow from the Treasury should be related to local needs and resources. Title II of H.R. 4592 embodies the form of an appropriate debt limit, namely, 6% of the 10-year average of the combined assessed value of taxable real and personal property (including property owned and used by the Federal Government as specified in the Federal payment formula). This is a flexible but prudent debt limit related directly to ability to repay, and in keeping with the restrictions on borrowing common to most State and local jurisdictions. The adoption of this proposal would, for example, result in a general fund limit of outstanding indebtedness of approximately $235 million as of fiscal 1965, and of $295 million as of fiscal 1970, compared with the present limit of $175 million, which must be renewed when it is exhausted.

The District will continue, of course, as it has in the past, to finance much of its general fund capital outlays from current revenues. Nonetheless, a flexible, predictable, and continuing debt limit which is related to ability to repay, taken together with the formula basis for the Federal payment authorization and the tax increases proposed herein, will permit the Congress and the District to plan and meet its critical needs on an orderly basis.

District taxpayers continue to bear the lion's share of financing the District government. This is as it should be. In keeping with this view, and inasmuch as the financial needs of the District, if it is to take and maintain its proper place among America's great cities, will continue to increase in the years ahead, I urge the Congress to enact H.R. 4598. This bill, which was recommended last year as a part of the overall general fund financing program, would increase certain District taxes which are low in comparison with neighboring jurisdictions. Together with a real estate tax increase to be set by the Commissioners concurrently, it will produce about $10 million of required additional revenue in fiscal 1965, and an estimated $12 million when fully effective in fiscal 1966. These local tax increases will expand the tax base and will represent a substantial further local contribution toward mounting District expenditure needs.

These tax changes, coupled with my recommended changes in the method of determining the Federal payment authorization and District borrowing, should assure adequate revenue to finance general fund budgetary needs for the next several years.

The financing of the general fund portion of this budget includes, therefore, new revenues from local taxes of $9.9 million, and a Federal payment of $54.8 million which would be authorized by the formula proposed.

These additional funds permit limited but necessary expansion of services and the acceleration of capital improvements, particularly school buildings, without excessive inroads into the District's borrowing authority.

The Congress may be assured that this budget, no less than the budget of the Federal Government, is designed to avoid waste, inefficiency, and unnecessary expenditures. At the same time, it is designed to meet urgent needs in education, health, welfare, recreation, and related fields. These are the requirements which are traditionally met by State and local governments, and which are largely responsible for an increase of 128% in the general expenditures of State and local governments between 1952 and 1962, in contrast to an increase of only 43% in general Federal expenditures during the same decade. Adequate funds for these purposes are essential to the needs of District citizens and to their hopes for improvement in employment, income and family stability.

REQUIREMENTS AND FINANCING OF THE GENERAL FUND, 1964-70
[ In millions of dollars ]

Estimates Projections
Funds required: 1964 1965 1966 1967 1968 1969 1970
Operating expenses 237.9 253.8 267. 4 280. 9 295.1 310.0 325.6
Capital outlay 31.9 41.9 42.0 42.2 41.1 40.4 36.0
Repayment of loans
and interest 1.9 1.7 3.8 5.0 5.4 5.9 6.6
Reserves for contingencies 2.4 4.6 4.8 5.0 5.0 5.0 5.0

Total funds required 274. 1 302.0 318.0 333.1 346.6 361.3 373.2

Revenues and balances:
From present sources:
Taxes, fees, etc 219.1 227.0 237.6 248.4 259.4 270.4 281.7
Balances 7.9 1.7
Federal payment 37.5 50.0 50.0 50.0 50.0 50.0 50.0
Loan authorization 11.3 8.6 11.4 11.9 8.5 4.3 .2

Total from present
sources 275.8 287.3 299.0 310.3 317.9 324.7 331.9

From proposed sources:
Taxes 9.9 11.9 13.5 17.3 21.5 22.4
Federal payment 4.8 7.1 9.3 11.4 15.1 18.9

Total from
proposed sources 14.7 19.0 22.8 28.7 36.6 41.3

Total revenues
and balances 275.8 302.0 318.0 333.1 346.6 361.3 373.2

EDUCATION

For education programs, appropriations of $93.3 million are needed in 1965. The increase of $4.7 million for operating expenses will permit additional school staff necessary to provide teachers needed for a school population which will increase 5,000 over 1964. The system will achieve, for the first time, the pupil-teacher ratios set by the Board of Education several years ago as their standard.

Provision for these teachers is vital, yet a first-rate school system requires more than just an adequate number of teachers. The 1965 budget is also aimed at meeting critical deficiencies by providing: (I) the beginning of a library program for elementary schools--a program of special importance for children whose homes provide few if any opportunities to learn the joys of reading; (2) improved counseling and other guidance services to direct children into curricula most suited to their individual needs; (3) an expansion of special education programs for mentally retarded children which can rescue many of them from the prospect of permanent dependency; (4) supporting administrative services which are needed to bring the District up to the level of school systems of comparable size; and (5) a continuation of the special effort to remedy the inability of culturally deprived students to speak, read, and write the English language--a serious and obvious social, academic, and economic disadvantage.

NEW OBLIGATIONAL AUTHORITY, ALL FUNDS
[ In thousands of dollars ]

1963 1964 1965
actual estimate recom-
mended

Current authorizations:
Education:
Operating expenses 59, 505 63, 861 68, 607
Capital outlay 7,693 15,626 24, 684
Welfare and health:
Operating expenses 65, 913 70,526 75,496
Capital outlay 13, 701 1,310 1,147
Highways and traffic:
Operating expenses 11, 454 12, 408 13,663
Capital outlay 10, 039 11, 280 15,080
Public safety:
Operating expenses 60, 491 65, 972 69,358
Capital outlay 1, 446 539 886
Parks and recreation:
Operating expenses 8,564 9,067 9,967
Capital outlay 327 378 1,130
General operating expenses:
Operating expenses 16,388 17, 883 19,369
Capital outlay 1,542 1,088 4,102
Sanitary engineering:
Operating expenses 21, 051 21,851 21, 790
Capital outlay 12,235 15,400 23,066
Potomac interceptor sewerline 2,800
Repayment of loans and interest 1, 496 4, 990 5,364
Payment of D.C. share of Federal capital outlays 972 916 1,860
Additional municipal expenses, inaugural ceremonies 283
Judgments, claims, and refunds 546

Subtotal 296,163 313,094 355,852
General fund:
Obligations (262,808) (263,913) (299,574)
Change from obligations to new
obligational authority (-6,798)
Other funds (40,153) (49,181) (56,278)
Permanent authorizations 1,645 1,608 1,598
Operations of D.C. trust funds 37,375 43,703 61,099
Repayment (--) of advances from Federal funds 7,000 -10,000
Investments 3,648

Total authorizations 345,830 348,405 418,549

Funds required, general fund:
Current authorizations 262,808 263,913 299,574
Adjusted deferred financing -7,675 7,800 -2,200
Reserves for contingencies 2,350 4,572

Total, general fund 255,133 274,063 301,946

Of particular importance, the budget includes $24.7 million for an accelerated school construction program. These funds will provide classroom space for some 7,000 pupils by the construction of four new schools and the enlargement of five others, a considerable step toward the elimination of double sessions. The funds will also provide the preliminary steps in the replacement of seven of the District's overage and obsolete schools.

Much more needs to be done, however, if many of the young people now marching toward responsible adulthood are not to become instead a frustrated and embittered army of unemployed, swelling the welfare rolls and crowding the prisons.

The 1963 amendments to the Manpower Development and Training Act will enable the District to participate in an accelerated program of training in both basic literacy and specific employment skills for the hard core of unemployed youth and older workers. I am directing that programs be developed to make maximum use of this opportunity in the District. The Vocational Education Act of 1963 not only will permit a substantial expansion and improvement in the vocational education programs of the District schools, but also will make possible in the National Capital Region a demonstration residential vocational school which will be established as a means of emphasizing the relationship between training and employment opportunities.

The Committee on Public Higher Education in the District of Columbia will shortly present to me its recommendations for meeting the needs for publicly supported post high school education in the District. These recommendations will receive my careful attention. The Higher Education Facilities Act of 1963 will provide some assistance toward meeting the District's requirements.

We must demonstrate that we lack neither the will nor the resources to resolve the current crisis in education. We cannot afford a less than first-rate educational system in the Nation's Capital.

A comment is appropriate here on the Public Library. While its branch operations have largely kept pace with community needs, the central library at Mount Vernon Square has long been woefully inadequate. The examination of the central library problem authorized by the Congress in 1961 resulted in a recommendation for a larger and more accessible building on a new site. I am renewing last year's budget request embodying this recommendation, for the need is urgent.

WELFARE AND HEALTH

The budget recommends appropriations totaling $76.6 million for welfare and health, an increase of $4.8 million over 1964.

The attention devoted by the Congress to the District's welfare program has resulted in major gains by way of reorganization and improved administration of the Department. Some of the programs, unfortunately, still fall far short of the minimum necessary to realize the primary objective of public assistance-the rehabilitation of persons and families by positive actions which will enable them to achieve and maintain self-sufficiency. The organization, administration, and financing of welfare programs should each be geared to this objective.

The plight of dependent children remains particularly distressing. I strongly urge that funds be provided which will permit the District to participate in the national program of aid to children of unemployed parents authorized by the Congress in 1961. I am equally concerned that other measures also be undertaken to effect a major reduction in the population of Junior Village. The budget accordingly includes funds with which to increase the rates paid for foster home care, to provide extra personnel to find and to approve foster homes, to provide assistance to families in danger of disintegration, and to increase the availability of day care.

In other areas as well, the budget reflects my belief that the District should be a leader in effecting the improvements which the Congress made possible in the 1961 and 1962 amendments to the Social Security Act. Effective rehabilitation work is virtually impossible, for example, unless the caseload of social workers is reduced. Only 44% of the welfare recipients who might be rehabilitated are now served by social workers with caseloads acceptable under Federal standards. The 1965 budget will increase this figure to 50%. Here, and in other areas, failure to take forward steps only insures that welfare aid will remain essentially a dole, and that its recipients will perpetuate their dependency.

The Department of Public Health has also been reorganized, with advantages in improved service at minimal cost which will become apparent in the future. Medical care programs for the aged now provide for greater services to this group, ranging from home care and accident prevention to rehabilitation. The budget provides funds for a continuation of these programs, as well as for more intensive efforts in areas in which District rates are alarmingly high-infant mortality and venereal disease.

The District should also play a leadership role in adopting and demonstrating the new concepts in the prevention, treatment, and care of mental illness and mental retardation. The major effort by the District in these directions, as well as a significant part of its entire health program, is the plan for community health centers. This budget provides funds to plan for two such centers, which should be brought into being as soon as possible. In addition to their other services, these centers can provide help for mentally disturbed 'persons who do not require long-term hospitalization, and thus reduce materially the patient load at Saint Elizabeth's Hospital.

PUBLIC SAFETY

The Congress has responded promptly to past needs for more policemen. The 1965 budget seeks primarily to increase the efficiency of the present force, rather than to increase its size. Police cadet programs, financed in part by Federal funds, will take boys from 17 to 20 through a training-work program, and at age 21 move those who qualify into the patrol ranks.

A substantial proportion of serious crimes, in the District as elsewhere, is committed by juveniles. The District will soon have from Washington Action for Youth, a community effort developed by the President's Committee on Juvenile Delinquency and Youth Crime, a plan for a comprehensive attack on juvenile delinquency. That battle will not be easy, nor will success come quickly, for there are no panaceas. Law enforcement has its necessary role, but the significant efforts must come in the fields of education, recreation, health, employment, and welfare. In the District--as in the Nation-we face no more important social challenge. I fully support the effort that is being made to mount a comprehensive demonstration in the Cardozo area which will develop programs to seek out and eliminate the basic causes of poverty which contribute to the patterns of delinquency and dependency. I shall continue to encourage the most comprehensive attack on these evils that can be devised.

RECREATION

The recreation program of the District has not kept pace with the increase in the number of younger people. The budget will permit two major advances. First, it will provide funds for the District to begin a program to bring the city's swimming pool facilities into reasonable relation to its needs, and to assume complete operation of the pools currently operated by a concessionaire under the National Park Service. Second, it will provide funds to extend the hours of supervised operation of many present recreational facilities, which now are often unavailable when they would be most useful.

The budget also will continue the roving leader program, under which men and women work in the streets and neighborhoods directly with delinquent and potentially delinquent youths on both individual and group bases. This program has proved that it is possible to reach and help the hard-to-reach youngsters. It strongly merits the modest expansion proposed in the budget.

TRANSPORTATION

The Administration and the Congress have been wrestling with the transportation problems of the District for many years. While some progress has been made, I hope for further progress during the coming year.

A major barrier to the development of plans for the Interstate Highway System in the District was surmounted in November 1963, when the District Commissioners accepted the recommendations of an advisory committee drawn from all interested Federal agencies with respect to an additional central city Potomac River crossing and an interstate connection making maximum use of tunneling across the north central 'part of the District. President Kennedy accepted the recommendations, and they likewise have my approval. Although problems of specific location and of design remain to be worked out with the help of the advisory committee, the progress which has been made permits inclusion in the budget of funds for major additional segments of the urgently needed Interstate System in the District.

The financing of the construction of this Interstate System requires immediate attention. The System must be completed by 1972. The District also faces increasing requirements for funds to maintain the System and to construct, improve and maintain other highways and streets. The resources of the highway fund are entirely earmarked revenues. The most equitable method of financing a street and highway network is taxation based upon use. There is warrant, also, for meeting a part of the cost of highways by borrowing which will be repaid by taxes on later users, since highways have a long useful life. I am proposing, therefore, a loan authorization for the highway fund of $35 million in addition to the $50.2 million already authorized. The Commissioners will propose an increase of one cent in the present six cents per gallon gasoline tax, which will provide $2 million annually, a sum sufficient to retire the $35 million loan in 30 years. These measures will meet the needs of the highway fund for several years, although other tax sources contributing to that fund may thereafter also have to be increased.

The resolution of the problems of providing a rapid rail transit system for the National Capital Region is not yet in hand. Ten years and more of study, however, have made it abundantly clear that such a system is a critical necessity if intolerable traffic congestion is to be avoided. The recent recommital of H.R. 8929 to the House District Committee demands a redoubling of efforts to find an acceptable program which will permit a transit development plan to proceed. I have instructed the National Capital Transportation Agency, together with other Federal agencies, to work with affected local jurisdictions to that end. I am confident that the Congress agrees on the need, and I trust that an acceptable program can be formulated at this session of the Congress.

A comprehensive transportation system must, of course, be the result of joint efforts between the District and its neighboring jurisdictions. Indeed, the Congress has conditioned continuing Federal assistance to highway development in urban areas after mid-1965 on the existence of such cooperation. Many other local problems, too, extend beyond the District's boundaries, just as many problems in the suburbs cannot be efficiently and economically solved without the full cooperation of the District. I intend to give my full support to the development of cooperative efforts to meet these regional problems and to provide for the orderly development of the National Capital Region.

CONCLUSION

The Congress will be required to consider many other matters of concern to the District during this year. Some pending bills are of particular urgency. S. 628, passed by the Senate, would permit the District to act, as other cities have done, to revitalize the downtown area. S. 1024, also passed by the Senate, would authorize relocation assistance to those displaced by District government action, and would provide a central relocation service which would greatly increase the success of relocation efforts. I urge the Congress to enact these measures.

A bill (H.R. 5794 and S. 1650), which would both provide home rule for District citizens and protect Federal interests, was transmitted to the Congress by President Kennedy. As long as District citizens are denied the basic rights to vote and to govern themselves, they will remain less than full citizens, and will be less effective in assuming their proper share of responsibility for District problems. I urge strongly that the Congress enact Home Rule legislation at this session.

This budget, the programs which it funds, and the legislation which is recommended, will promote, in my opinion, the District's best interests. They will also serve the Nation's best interests by providing the means by which our Nation's Capital can become a living symbol of the political, social, and economic vitality of the United States in the last half of the 20th century.

LYNDON B. JOHNSON