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Revenue Sharing (3)
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James M. Cannon Files (Ford Administration)
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The original documents are located in Box 30, folder "Revenue Sharing (3)" of the James
M. Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 30 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
OF
REPARTMENT THE 1789 TREASURY
THE
THE UNDER SECRETARY OF THE TREASURY
WASHINGTON, D.C. 20220
April 7, 1975
MEMORANDUM FOR: /James M. Cannon
James H. Falk
James N. Purcell
GERALD
Walter D. Scott
Graham W. Watt
FROM:
Edward C. Schmults
SUBJECT:
Revenue Sharing Renewal
Attached are "final" drafts of the following revenue
sharing renewal items:
1.
Proposed renewal legislation.
2. "Comparative type" showing changes in
law.
3. Analysis of legislation.
4. Press or public information booklet
which includes the President's message,
a comparative fact sheet, Qs and As, a
summary of the legislation and a table
showing revenue sharing payments by
types of jurisdictions.
Also enclosed is a suggested White House press release. The
Presidential message is almost in final form and we are
transmitting our comments thereon to Jim Falk. We are now
preparing a "White House form" fact sheet and will circulate
this for review shortly.
The world "final" is in quotes in the preceding para-
graph to indicate that if we are to meet our time schedule
any more changes should be only to cure "disasters" and not
to edit. We hope to send the press booklet with the
Presidential message included to the printer for galley
proofs within the next day or SO.
I shall be giving Jim Cannon or Jim Falk a call to
discuss our timing for a press conference, etc.
Attachments
A BILL
Proposed Renewal Legis-
lation
A BILL
To extend and revise the State and Local Fiscal Assistance Act of
1972.
Be it enacted by the Senate and House of Pepresentatives of the
United States of America in Congress assembled, That section 102 of the
State and Local Fiscal Assistance Act of 1972 (31 U.S.C. Supp. 1221) is
amended by adding a final sentence to read as follows: "The Secre-
tary may reserve a percentage of the total entitlement payment for any
entitlement period as he deems necessary to ensure that there will be
sufficient funds available to pay adjustments due after the final
allocation of funds among the State governments and units of local
government."
SEC. 2. Section 105 of the State and Local Fiscal Assistance Act
of 1972 (31 U.S.C. Supp. 1224) is amended by--
(1) striking the word "and" at the end of subsection (b) (1) (F),
striking subparagraph (G) and adding to subsection (b) subparagraphs
(G) through (M) to read as follows:
"(G) for the period beginning July 1,
1976, and ending September 30, 1976,
$1,625,000,000;
(H) for the fiscal year beginning October 1,
1976, $6,500,000,000;
(I) for the fiscal year beginning October 1,
1977, $6,687,500,000;
-2-
(J) for the fiscal year beginning October 1,
1978, $6,837,500,000;
(K) for the fiscal year beginning October 1,
1979, $6,987,500,000;
(L) for the fiscal year beginning October 1,
1980, $7,137,500,000; and
(M) for the fiscal year beginning October 1,
1981, $7,287,500,000."
(2) striking the word "and" at the end of subsection (b)(2)(D)
and by striking subparagraph (E) and adding to subsection (b) (2)
subparagraphs (E) and (F) to read as follows:
(E) for the period beginning July 1, 1976 and ending
September 30, 1976, $1,195,000;
FORD i LIBRARY 9ERALD
(F) for each of the fiscal years beginning
October 1, 1976, October 1, 1977, October 1, 1978,
October 1, 1979, October 1, 1980, and
October 1, 1981, $4,780,000."; and
(3) adding subsections (d) and (e) to read as follows:
(d) NEW SPENDING AUTHORITY EXEMPTION.- --
Funds appropriated pursuant to subsection (b) (1) and (2) are exempt
from the provisions of sections 401 (a) and (b) of the Congressional
Budget Act of 1974."
3
"(e) SECRETARY'S REPORT ON EXTENSION.--
No later than September 30, 1980, the Secretary
shall submit a report with appropriate recom-
mendations concerning the extension of this
title to the committees of the House and the
Senate having legislative jurisdiction over
such extension.
SEC. 3. Section 107(b) of the State and Local Fiscal Assistance
Act of 1972 (31 U.S.C. Supp. 1226(b)) is amended by striking paragraph
(5) and redesignating paragraphs (6) and (7) as (5) and (6) respectively.
SEC. 4(a). Section 108(b)(4) of the State and Local Fiscal
Assistance Act of 1972 (31 U.S.C. Supp. 1227(b)(4)) is amended by revising
the last sentence thereof to read as follows: "If the entitlement of
any such tribe or village is waived for any entitlement period by the
governing body of that tribe or village, then the amount of such entitle-
ment shall (in lieu of being paid to such unit) be added to, and shall
become a part of, the entitlement of the county government of the county
area in which such unit is located."
(b) Section 108(b)(6)(B) of the Act (31 U.S.C. Supp. 1227(b)(6)(B)) is
amended by adding a new sentence to the end thereof to read as follows:
"Beginning with the entitlement period that begins July 1, 1976, the
maximum constraint shall increase at a rate of 6 percentage points per
entitlement period until it reaches 175 percent."
4
(c) Section 108(c)(1) of the Act (31 U.S.C. Supp. 1227(c)(1))
is amended by striking "December 31, 1976" from subparagraph (C) and
inserting in lieu thereof "September 30, 1982."
SEC. 5. Section 109(c)(2)(B) of the State and Local Fiscal Assistance
Act of 1972 (31 U.S.C. Supp. 1228(c)(2)(B)) is amended to read as follows:
"(B) MOST RECENT REPORTING YEAR. --
The most recent reporting year with respect to any
entitlement period consists of the years taken into
account by the Bureau of the Census in its most
recent general determination of State and local taxes
made before the beginning of such period."
SEC. 6(a). Section 121(a) of the State and Local Fiscal Assistance
Act of 1972 (31 U.S.C. Supp. 1241(a)) is amended by revising the first
sentence to read as follows: "Each State government and unit of local
government which receives funds under subtitle A shall, after the close
of each entitlement period, submit a report to the Secretary on the use
of the funds received during such period."
(b) Section 121 (b) of the Act (31 U.S.C. Supp. 1241(b)) is amended
by revising the first sentence to read as follows: "Each State govern-
ment and unit of local government which expects to receive funds under
subtitle A for any entitlement period beginning on or after January 1,
1973, shall submit a report to the Secretary on how it plans to use
the funds it expects to receive during such period."
5
(c) Section 121 (c) of the Act (31 U.S.C. Supp. 1241 (c)) is amended
by inserting a new sentence after the first sentence to.read as follows:
"Where the newspaper publication cost of such report is excessive in
relation to the amount of the entitlement of a unit of local government
or where other means of publicizing the reports are more appropriate,
then such reports shall be publicized pursuant to regulations prescribed
by the Secretary."
SEC. 7 Section 122(b) (2) of the State and Local Fiscal Assistance
Act of 1972 (31 U.S.C. Supp. 1242(b)(2)) is amended to read as follows:
"(2) to exercise the powers and functions provided by
title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d),
and to withhold all or a portion of the entitlement funds
due such State government or unit of local government, to
terminate the eligibility of such State government or unit
of local government to receive one or more payments under
FORD LIBRARY if GERALD
subtitle A, and to require repayment by such State govern-
ment or unit of local government of the entitlement funds
expended in a program or activity found to be in violation
of subsection (a)
SEC. 8. Section 123 of the State and Local Fiscal Assistance Act
of 1972 (31 U.S.C. Supp. 1243) is amended by --
(1) striking the word "and" at the end of subsection (a)(5)(B),
by striking the semicolon at the end of subsection (a)(5)(C), and inserting
in lieu of the latter a comma and the word "and", and by adding a new
subsection (a) (5) (D) to read as follows:
6
"(D) notwithstanding paragraph 4, provide.
notice and opportunity to the residents so that
they may give recommendations and views on the pro-
posed expenditures of all funds made available
under subtitle A in a public hearing or in such
other manner as the Secretary may prescribe by
regulation;";
(2) striking paragraph (8) of subsection (a).
SEC. 9. Section 141(b) of the State and Local Fiscal Assistance
Act of 1972 (31 U.S.C. Supp. 1261) is amended by striking paragraph (5)
and substituting in lieu thereof the following:
"(5) The period beginning July 1, 1976,
and ending September 30, 1977.
(6) The one-year periods beginning on
October 1 of 1977, 1978, 1979, 1980, and 1981."
COMPARATIVE
(Changes in Existing
Law)
COMPARATIVE TYPE SHOWING CHANGES IN
EXISTING LAW MADE BY PROPOSED BILL
Changes in existing law made by the proposed bill are shown as
follows (existing law proposed to be omitted is enclosed in brackets;
new matter is underscored):
Sections 102, 105, 107, 108, 109, 121, 122, 123 and 141 of the
State and Local Fiscal Assistance Act of 1972 (31 U.S.C. Supp.
1221, 1224, 1226, 1227, 1228, 1241, 1242, 1243, 1261)
SEC. 102. PAYMENTS TO STATE AND LOCAL GOVERNMENTS
*
*
*
Except as otherwise provided in this title, the
Secretary shall, for each entitlement period, pay out of the
Trust Fund to--
(1) each State government a total amount equal to
the entitlement of such State government determined under
section 107 for such period, and
(2) each unit of local government a total amount
equal to the entitlement of such unit determined under
section 108 for such period.
In the case of entitlement periods ending after the date of the
enactment of this Act, such payments shall be made in installments,
but not less often than once for each quarter, and, in the case
of quarters ending after September 30, 1972, shall be paid not
later than 5 days after the close of each quarter. Such payments
2
for any entitlement period may be initially made on the basis of
estimates. Proper adjustment shall be made in the amount of any
payment to a State government or a unit of local government to
the extent that the payments previously made to such government
under this subtitle were in excess of or less than the amounts
required to be paid. The Secretary may reserve a percentage of
the total entitlement payment for any entitlement period as he
deems necessary to ensure that there will be sufficient funds
available to pay adjustments due after the final allocation of
funds among State governments and units of local government.
SEC. 105. CREATION OF TRUST FUND: APPROPRIATIONS
*
*
*
(b) APPROPRIATIONS
(1) IN GENERAL. There is appropriated to the Trust Fund,
out of amounts in the general fund of the Treasury attributable
to the collections of the Federal individual income taxes not
otherwise appropriated--
(A) for the period beginning January 1, 1972,
and ending June 30, 1972, $2,650,000,000;
(B) for the period beginning July 1, 1972,
and ending December 31, 1972 $2,650,000,000;
(C) for the period beginning January 1, 1973,
and ending June 30, 1973, $2,987,500,000;
3
(D) for the fiscal year beginning July 1,
1973, $6,050,000,000;
(E) for the fiscal year beginning July 1,
1974, $6,200,000,000;
(F) for the fiscal year beginning July 1,
1975, $6,350,000,000; [and]
[(G) for the period beginning July 1, 1976,
and ending December 31, 1976, $3,325,000,000.]
"(G) for the period beginning July 1, 1976,
and ending September 30, 1976. $1,625,000,000;
(H) for the fiscal year beginning October 1, 1976,
$6,500,000,000;
(I) for the fiscal year beginning October 1, 1977,
$6,687,500,000;
(J) for the fiscal year beginning October 1, 1978,
$6,837,500,000;
(K) for the fiscal year beginning October 1, 1979,
$6,987,500,000;
(L) for the fiscal year beginning October 1, 1980,
$7,137,500,000; and
(M) for the fiscal year beginning October 1, 1981,
$7,287,500,000."
4
(2) NONCONTIGUOUS STATES ADJUSTMENT AMOUNTS. There is appropriated
to the Trust Fund, out of amounts in the general funds of the Treasury
attributable to the collections of the Federal individual income taxes
not otherwise appropriated--
(A) for the period beginning January 1, 1972, and
ending June 30, 1972, $2,390,000;
(B) for the period beginning July 1, 1972, and ending
December 31, 1972, $2,390,000;
(C) for the period beginning January 1,
1973, and ending June 30, 1973, $2,390,000;
(D) for each of the fiscal years beginning
July 1, 1973, July 1, 1974, and July 1, 1975,
$4,780,000; [and]
[(E) for the period beginning July 1, 1976,
and ending December 31, 1976, $2,390,000;]
(E) for the period beginning July 1, 1976,
and ending September 30, 1976, $1,195,000;
(F) for each of the fiscal years beginning October 1,
1976, October 1, 1977, October 1, 1978, October 1, 1979,
October 1, 1980, and October 1, 1981, $4,780,000.
(3) DEPOSITS. Amounts appropriated by paragraph (1) or (2)
for any fiscal year or other period shall be deposited in the
Trust Fund on the later of (A) the first day of such year or period, or
5
(B) the day after the date of enactment of this
Act.
(c) TRANSFERS FROM TRUST FUND TO GENERAL FUND. The Secretary
shall from time to time transfer from the Trust Fund to the general fund
of the Treasury any moneys in the Trust Fund which he determines will
not be needed to make payments to State governments and units of local
government under this subtitle.
(d) NEW SPENDING AUTHORITY EXEMPTION. Funds appropriated
pursuant to subsection (b) (1) and (2) are exempt from the previsions
of sections 401 (a) and (b) of the Congressional Budget Act of 1974.
(e) SECRETARY'S REPORT ON EXTENSION. --No later than September 30,
1980, the Secretary shall submit a report with appropriate recom-
mendations concerning the extension of this title to the committees
of the House and the Senate having legislative jurisdiction over such
extension.
SEC. 107. ENTITLEMENTS OF STATE GOVERNMENTS
*
*
*
(b) STATE MUST MAINTAIN TRANSFERS TO LOCAL
GOVERNMENTS.
*
*
*
[(5) SPECIAL RULE FOR PERIOD BEGINNING JULY 1, 1976.-- --
In the case of the entitlement period beginning July 1, 1976,
and ending December 31, 1976, the aggregate amount taken into
account under paragraph (1) (A) for the preceding entitlement
period and the aggregate amount taken into account under paragraph
6
(1) (B) shall be one-half of the amounts which (but for this
paragraph) would be taken into account.]
[6] (5) REDUCTION IN ENTITLEMENT. If the Secretary has
reason to believe that paragraph (1) requires a reduction in the
entitlement of any State government for any entitlement period,
he shall give reasonable notice and opportunity for hearing to
the State. If, thereafter, he determines that paragraph (1)
requires the reduction of such entitlement, he shall also determine
the amount of such reduction and shall notify the Governor of
such State of such determinations and shall withhold from subsequent
payments to such State government under this subtitle an amount
equal to such reduction.
[7](6) TRANSFER TO GENERAL FUND. An amount equal to the
reduction in the entitlement of any State government which
results from the application of this subsection (after any judicial
review under section 143) shall be transferred from the Trust Fund
to the general fund of the Treasury on the day on which such
reduction becomes final.
SEC. 108. ENTITLEMENTS OF LOCAL GOVERNMENTS.
*
*
*
(b) ALLOCATION TO COUNTY GOVERNMENTS,
MUNICIPALITIES, TOWNSHIPS, ETC.-- --
*
*
*
7
(4) INDIAN TRIBES AND ALASKAN NATIVE VILLAGES. --
If within a county area there is an Indian tribe or Alaskan
native village which has a recognized governing body which per-
forms substantial governmental functions, then before applying
paragraph (1) there shall be allocated to such tribe or village
a portion of the amount allocated to the county area for the
entitlement period which bears the same ratio to such amount as
the population of that tribe or village within that county area
bears to the population of that county area. If this paragraph
applies with respect to any county area for any entitlement period,
the amount to be allocated under paragraph (1) shall be appropriately
reduced to reflect the amount allocated under the preceding
sentence. If the entitlement of any such tribe or village is
waived for any entitlement period by the governing body of that
tribe or village, then the [provisions of this paragraph shall not
apply with respect to the amount of such entitlement for such
period] amount of such entitlement shall (in lieu of being paid
to such unit) be added to, and shall become a part of, the entitle-
ment of the county government of the county area in which such
unit is located.
*
*
*
8
(6) ENTITLEMENT. --
(A) IN GENERAL Except as otherwise provided in
this paragraph, the entitlement of any unit of local
government for any entitlement period shall be the
amount allocated to such unit under this subsection (after
taking into account any applicable modification under sub-
section (c)).
(B) MAXIMUM AND MINIMUM PER CAPITA ENTITLEMENT. --
Subject to the provisions of subparagraphs (C) and (D),
the per capita amount allocated to any county area or any
unit of local government (other than a county government)
within a State under this section for any entitlement
period shall not be less than 20 percent, nor more than
145 percent, of two-thirds of the amount allocated to the
State under section 106, divided by the population of
that State. Beginning with the entitlement period that
begins July 1, 1976, the maximum constraint shall increase
at a rate of 6 percentage points per entitlement period
until it reaches 175 percent.
(c) SPECIAL ALLOCATION RULES. --
*
*
*
(1) OPTIONAL FORMULA
*
*
*
9
(C) apply during the period beginning on
the first day of the first entitlement period
to which it applies and ending on [December 31,
1976.] September 30, 1982.
SEC. 109. DEFINITIONS AND SPECIAL RULES FOR APPLICATION
OF ALLOCATION FORMULAS.
*
*
*
(c) GENERAL TAX EFFORT OF STATES
*
*
*
(2) STATE AND LOCAL TAXES. --
(B) MOST RECENT REPORTING YEAR. The most recent
reporting year with respect to any entitlement period consists
of the years taken into account by the Bureau of the Census
in its most recent general determination of State and local
taxes made before the [close] beginning of such period.
SEC. 121. REPORTS ON USE OF FUNDS; PUBLICATION.
(a) REPORTS ON USE OF FUNDS. Each State government and unit of
local government which receives funds under subtitle A shall, after
the close of each entitlement period, submit a report to the Secre-
tary [setting forth the amounts and purposes for which funds received
during such period have been spent or obligated] on the use of the
funds received during such period. Such reports shall be in such form
and detail and shall be submitted at such time as the Secretary may
prescribe.
10
(b) REPORTS ON PLANNED USE OF FUNDS Each State government and
unit of local government which expects to receive funds under subtitle
A for any entitlement period beginning on or after January 1, 1973,
shall submit a report to the Secretary setting forth the amounts and
purposes for which it plans to spend or obligate the funds which it
expects to receive during such period on how it plans to use the funds
it expects to receive during such period. Such reports shall be in such
form and detail as the Secretary may prescribe and shall be submitted
at such time before the beginning of the entitlement period as the
Secretary may prescribe.
(c) PUBLICATION AND PUBLICITY OF REPORTS. Each State government
and unit of local government shall have a copy of each report submitted
by it under subsection (a) or (b) published in a newspaper which is
FORD LIBRARY
published within the State and has general circulation within the geo-
graphic area of that government. Where the newspaper publication cost
of such report is excessive in relation to the amount of the entitlement
of a unit of local government or where other means of publicizing the
reports are more appropriate, then such reports shall be publicized
pursuant to regulations prescribed by the Secretary. Each State govern-
ment and unit of local government shall advise the news media of the
publication of its reports pursuant to this subsection.
SEC. 122. NONDISCRIMINATION PROVISION.
*
*
*
(b) AUTHORITY OF SECRETARY. Whenever the Secretary determines
that a State government or unit of local government has failed to
comply with subsection (a) or an applicable regulation, he shall notify
11
the Governor of the State (or, in the case of a unit of local government,
the Governor of the State in which such unit is located) of the noncom-
pliance and shall request the Governor to secure compliance. If within
a reasonable period of time the Governor fails or refuses to secure
compliance, the Secretary is authorized (1) to refer the matter to the
Attorney General with a recommendation that an appropriate civil action
be instituted; (2) to exercise the powers and functions provided by
title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d) [;], and to
withhold all or a portion of the entitlement funds due such State government
or unit of local government, to terminate the eligibility of such State government
or unit of local government to receive one or more payments under subtitle A,
and to require repayment by such State government or unit of local government
of the entitlement funds expended in a program or activity found to be in
violation of subsection (a);
(3) to take such other action as may be provided by law.
SEC. 123. MISCELLANEOUS PROVISIONS.
(a) ASSURANCES TO THE SECRETARY
*
*
*
(5) it will --
(A) use fiscal, accounting, and audit
procedures which conform to guidelines established
therefor by the Secretary (after consultation
with the Comptroller General of the United States),
(B) provide to the Secretary (and to the
Comptroller General of the United States),
12
on reasonable notice, access to, and the
right to examine, such books, documents,
papers, or records as the Secretary may
reasonably require for purposes of reviewing
compliance with this title (or, in the case of
the Comptroller General, as the Comptroller
General may reasonably require for purposes of
reviewing compliance and operations under
subsection (c)(2)), [and]
(C) make such annual and interim reports
(other than reports required by section 121)
to the Secretary as he may reasonably require[;],
and
(D) notwithstanding paragraph (4), provide
notice and opportunity to the residents so that
they may give recommendations and views on the
FORD LIBRARY & GERALD
proposed expenditures of all funds made available
under subtitle A in a public hearing or in such
other manner as the Secretary may prescribe by
regulations;
*
*
*
[(8) in the case of a unit of local government as defined in the second
sentence of section 108(d)(1) (relating to governments of Indian tribes
and Alaskan native villages), it will expend funds received by it under
subtitle A for the benefit of members of the tribe or village residing
in the county area from the allocation of which funds are allocated to
it under section 108 (b)(4).]
*
*
*
13
SEC. 141. DEFINITIONS AND SPECIAL RULES.
*
*
*
(b) ENTITLEMENT PERIOD. For purposes of this title, the term
"entitlement period" means --
(1) The period beginning January 1, 1972, and
ending June 30, 1972.
(2) The period beginning July 1, 1972, and
ending December 31, 1972.
(3) The period beginning January 1, 1973, and
ending June 30, 1973.
(4) The one-year periods beginning on July 1,
of 1973, 1974, and 1975.
[(5) The period beginning July 1, 1976, and
ending December 31, 1976.]
(5) The period beginning July 1, 1976, and
ending September 30, 1977.
(6) The one-year periods beginning on October 1
of 1977, 1978, 1979, 1980, and 1981.
ANALYSIS OF LEGISLA-
LATION
ANALYSIS.
Section 1
The amount of a recipient government's general revenue sharing en-
titlement is determined to a great extent by the use of data obtained
from the Bureau of the Census. The Secretary of the Treasury is cur-
rently empowered to use data other than that provided by Census when its
data is determined to be insufficient to provide for proper allocations.
In some instances, the fact that incorrect data has been used to compute
revenue sharing allocations is not discoverable until after the revenue
sharing funds have been distributed pursuant to the relevant sections of
the State and Local Fiscal Assistance Act of 1972, hereinafter designated
"the Act".
To mitigate the inequity arising from this unfortunate but inevitable
circumstance, 31 CFR 51.25(a) has been promulgated. It establishes an
Obligated Adjustment Reserve that is funded by administratively holding in
reserve a small percentage (.005) of the revenue sharing funds appropriated
for each entitlement period from which adjustments can be made to alleviate
hardships caused by prior misallocations. The amount of revenue sharing
funds held in reserve and the decision to make adjustment payments is de-
termined in the discretion of the Secretary, as the equity of the situation
requires.
The creation of the Reserve Fund has proved necessary for the orderly
administration of the general revenue sharing program due to the complexity
of the allocation process. The proposed amendment to section 102 of the
Act is recommended in the first section of the bill to clarify the authority
of the Secretary to make adjustments in this manner.
2
Section 2
Section 105(b)(1) of the present Act provides for the periodic
appropriation of funds from the general fund of the Treasury to the State
and Local Government Fiscal Assistance Trust Fund. Funding under this
section is provided through December 31, 1976, with an increase of 150
million dollars each full year with the exception of the last period of
six months which also provides for a step increase of one hundred and fifty
million dollars.
Clause (1) of section 2 of the bill provides for a continuation of
the general revenue sharing program for five and three-quarters additional
years, concluding with the fiscal year beginning October 1, 1981. This
recommendation strikes a reasonable balance between the need of recipient
governments for fiscal stability and the legitimate desire of the Federal
Executive and the Congress to maintain control over the budget. The appro-
priations set forth in this amendment continue the step increase at the
rate of one hundred and fifty million dollars per year.
Although the appropriation periods now coincide with the entitlement
periods defined in section (b), this amendment would add a three-month
appropriation period beginning July 1, 1976 and ending September 30,
1976. The combination of amendments to section 105(b)(1) and
section 141 (b) will provide for the transition to the new Federal fiscal
year while at the same time make clear the amount of funds which would
be added to the existing appropriation.
3
When the revenue sharing allocation of Alaska or Hawaii is determined
by the three-factor allocation formula, it becomes eligible for the noncon-
tiguous State adjustment. Pursuant to section 106(c) of the Act, an ad-
justment may be made to the basic allocation for these States in which ci-
vilian employees of the U.S. Government receive an allowance under 5 U.S.C.
section 5941. Section 105(b)(2) appropriates the funds used to make this
adjustment.
Clause (2) of section 2 of the bill would amend section 105(b) (2) by
extending this appropriation at the existing rate of $4,780,000 per year.
Further, this amendment, like that of clause (1) of section 2 above, would
result in two appropriation periods being combined under the new fifteen-
month entitlement period proposed for section 141(b). This will allow for
the transition to the new Federal fiscal year and at the same time identify
the new appropriations being proposed for this section.
FORD it LIBRARY 938839
Clause (3) of section 2 of the bill would amend section 105 of the Act
to add subsections (d) and (e). The new subsection (d) provides that the
funds appropriated for the extension of the general revenue sharing program
are exempt from the appropriation procedures of section 401 (a) and (b) of the
Congressional Budget Act of 1974 (P.L. 93-344). This Act specifically
provides that any extension of the general revenue sharing program is
eligible for this exemption. The appropriation. of funds at the outset for the
extension of the general revenue sharing program is vitally important to
recipient governments to assist them in planning for their service programs,
capital improvement programs, and financial policies without being subject to
the inherent delays and uncertainties of the annual appropriation process.
4
The new subsection (e) provides that the Secretary of the Treasury
shall submit a report, with recommendations concerning the extension of the
Act, to the appropriate Congressional committees two years before the ex-
piration of funding under this bill. While many favor making general reve-
nue sharing a permanent program, this approach is not recommended at this
time. A requirement to review the renewal of the general revenue sharing
program two years in advance of its expiration would remove much of the un-
certainty for State and local governments regarding availability of the funds.
Section 3
Section 107(b) (5) of the Act provides a special rule to measure State
assistance to local governments during the six-month long entitlement period
(July 1, 1976 - December 31, 1976). In situations in which either the recip-
ient government's fiscal year does not coincide with an entitlement period or
where an entitlement period is greater than or less than a full year, the
Office of Revenue Sharing has provided by regulation (31 CFR 51.26) that the
point of reference for measuring a State's assistance to local governments will
be that State's fiscal year. Accordingly, it is proposed that section 107(b)
be amended to delete paragraph (5).
Section 4
Section 108(b)(4) of the present Act provides that if the governing body
of an Indian tribe or Alaskan native village waives its entitlement, then
the amount of the entitlement shall be distributed according to the rules re-
lating to distribution within county areas. The waiver by an Indian tribe or
Alaskan native village is therefore handled differently than a waiver by a unit
5
of local government pursuant to section 108(b)(6)(D). In the case of a
waiver by a unit of local government, the entitlement waived becomes a part
of the entitlement of the county government of the county area in which the
waiving unit is located. In the case of Indian tribes and Alaskan native vil-
lages, section 108(b)(4) requires the amount of the entitlement waived by those
units to pass to all of the other local units of government in the applicable
county area.
The required treatment of waived entitlements by Indian tribes causes
FORD LIBRARY
significant burden of recomputation, the net effect of which is to increase
the entitlement of numerous units of local government by relatively insignifi-
cant amounts. In many instances, the cost to the Office of Revenue Sharing of
making the required adjustment to entitlements initiated by waiver by an Indian
tribe exceeds the amount of the entitlement waived. We believe that entitle-
ments waived by an Indian tribe or Alaskan native village should be treated the
same as a waiver by any other unit of local government, and the amount waived
should be added to the county government entitlement. Section 4(a) of the bill
would accomplish that purpose.
In order to insure that some communities would not receive extremely high
or low allocations, the maximum and minimum limitations on the revenue sharing
allocations to county areas and units of local government were imposed upon
the revenue sharing formula. Under the current law, the maximum limitation for
any county area or local government in a State is 145 percent of the per capita
allocation to all local governments in the State.
The effect of this 145 percent maximum is as follows: after the en-
titlements of local governments within a State are computed according to the
6
formula, any jurisdiction which is entitled to receive more than 145
percent of the average per capita allocation to all local governments
in that state has its allocation reduced to the 145 percent level. The
funds taken from these jurisdictions, which are generally characterized
by low income population and high levels of tax effort, are then
redistributed according to the formula to the remaining jurisdictions
within the State which are not so constrained and which would otherwise
receive smaller amounts.
Section 4(b) of the bill provides that beginning with the entitlement
period that begins on July 1, 1976, the present maximum limitation on the
amount of revenue sharing entitlements be raised. To reduce the impact on
local governments which have been receiving additional funds that are
redistributed because of the operation of the 145% constraint upon other
jurisdictions within their State, the maximum allocation constraint would
be raised gradually, in five steps, by an increase of 6 percentage points
per entitlement period until a new maximum constraint level of 175 percent
is reached. The purpose of raising the maximum per capita allocation
constraint to 175 percent is to allow low personal income and high tax
tax
effort to be more fully reflected in the operation of the basic formula.
Due to the responsiveness of the revenue sharing formulas to changes
in data--the allocation of revenue sharing funds is based on annually
changing data elements such as adjusted taxes, and on periodically updated
data elements such as per capita income and population--the effect of
this proposed change will vary in any entitlement period and from State to
7
State. Generally, more jurisdictions will experience a potential funding
reduction than will gain. As a result of the gradual phase-in, and as a
result of the stair-step increases in the total amount being distributed
each entitlement period, however, the potential losses to almost all juris-
dictions in any given year should be fully offset so that they will not
suffer an actual decrease in their revenue sharing payments as a consequence
of this change.
Increasing the maximum constraint as proposed will, as a general rule,
cause increased revenue sharing funds to be received by the 4,000 places
that have been constrained in the past. These places include both major
cities and smaller jurisdictions with relatively low per capita income and
relatively high tax effort, or both. Approximately 23,000 places would no
longer receive additional redistributed funds from the constrained places.
For example, had the 175 percent constraint limitation been fully implemented
in FY 1974, these 23,000 places would have received an average of $3,000
less than they were actually paid in FY 1974, which is an average 2.2 percent
less than they actually received.
Section 108(c) of the Act enables State governments, by enactment of
a State law, to adopt an alternative formula for the distribution of revenue
sharing allocations among the county areas and among the municipalities
located therein. Section 4(c) of the bill amends section 108(c)(1)(C)
for the sole purpose of reflecting the extension of the general revenue
sharing appropriations until September 30, 1982.
8
Section 5
Section 109(a)(5) of the present Act states that, except as provided
in the regulations, the determination of allocations and entitlements for
any entitlement period shall be made as of the first day of the third month
immediately preceding the beginning of each period. Further, section 109(a)(7)
provides for uniformity of data and states the general rule that the data
shall be the most recently available data. These provisions are effective
and permit the orderly computation of entitlements before the beginning
of each period so that States and local governments may be advised, for
planning purposes and for purposes of informing their citizens, well before
payments are made. In section 109(c)(2)(B) the definition of the general
tax effort for States defines the most recent reporting year as the one
taken into account by the Bureau of the Census prior to the close of that
entitlement period. This definition appears to conflict with the definition
for all other data items and appears to conflict with the earlier sec-
tion providing for uniformity of data and for computation of entitlements
three months before the beginning of an entitlement period.
Were this non-conforming definition to be given precedence, it would
necessitate substitution of this data during an entitlement period while
payments were being made, and would result in changing the entitlements for
all 38,000 recipient governments during the middle of the payment year.
Section 5 of the bill would eliminate this non-conforming language by
amending section 109(c)(2)(B) by deleting the word "close" in the phrase
"made before the close of each period", and inserting in lieu thereof the
word "beginning". Thus, the phrase would read "made before the beginning
9
of such period.' In this way, the tax effort factor which is published by
the Bureau of the Census in October would be used for the computation of the
entitlement period beginning in the following year, and no tax effort adjust-
ments to the general universe of recipients would be necessary.
Section 6
Section 121 (a) of the Act requires States and units of local government
to submit a report to the Secretary of the Treasury at the close of each en-
titlement period setting forth the amounts and purposes for which funds re-
ceived during such period have been spent or obligated. The purpose of this
section is to keep the Secretary and the public abreast of how recipient
governments are spending their general revenue sharing funds.
Attempts to measure the various effects general revenue sharing funds
have had on recipient governments from the Actual Use Reports submitted to
date have met with only limited success. Section 6(a) of the bill is
intended to give the Secretary more discretion to determine the form and
content of the reports submitted under section 121 (a) of the Act. This
additional authority to regulate the substantive content of the Actual
Use Reports will be used to require recipient governments to report finan-
cial and use information in a fashion that is more meaningful to the general
public, to the Congress and to the Executive Branch.
Section 121 (b) of the Act requires States and units of local govern-
ment expecting to receive revenue sharing funds for any entitlement period
to submit a report to the Secretary of the Treasury setting forth the amounts
and purposes for which they plan to spend or obligate the funds during such
period. The so-called Planned Use Report is intended to be used to inform
10
the Secretary and the public as to how recipient governments plan to expend
their general revenue sharing funds.
Section 6(b) of the bill is intended to serve the same function for
the Planned Use Reports as section 6(a) serves for the Actual Use Reports.
In each case, we believe the effectiveness of the reports could be signifi-
cantly enhanced if the Secretary were allowed more administrative discretion
to determine their content. The present requirement that the Planned Use
Report set forth the amounts and purposes for which the recipient government
plans to spend or obligate the funds does provide beneficial information.
However, section 6(b) would make it possible for the reports to provide
GEBALOR FORD LIBRARY
data that is more useful to local citizens and the Federal government.
Section 121 (c) of the Act requires each recipient government to
publish a copy of each report which it submits to the Office of Revenue
Sharing in a newspaper which is published within the State and has general
circulation within the geographical area of that government. Section 121 (c),
based on our administrative experience, should be modified.
In administering section 121 (c), the Office of Revenue Sharing has
received a large number of complaints, particularly from small units of
government, regarding the relatively high cost of publication. Some small
governments receiving less than $1,000 have had to spend $100 or more for
publication due to a variety of local circumstances. In other instances,
the unavailability of a newspaper circulating. generally within the geographical
area of a county has been called to our attention. In still other cases, we
have been advised that there are more effective ways to get the information
contained in the report to the citizens of the community.
11
Accordingly, we believe there are alternative procedures to accomplish
the desired intent of the Congress that these reports be publicized. Section
6(c) of the bill would amend section 121 (c) to authorize the Secretary to
establish alternative procedures where it is determined that the require-
ment of publication in a newspaper is unreasonably expensive in relation to
the amount of revenue sharing funds involved, or where the Secretary finds
that in terms of public understanding, there are better methods to get the
information before the residents of the community.
Section 7
Section 122(a) of the Act provides that no person in the United
States shall on the ground of race, color, national origin, or sex be
excluded from participation in, be denied the benefits of, or be subjected
to discrimination under any program or activity funded in whole or in
part with revenue sharing funds. The statutory authority of the Secretary
of the Treasury to enforce the above nondiscrimination provision is set
forth in section 122(b) of the Act. It presently states that upon
a determination by the Secretary that a recipient has failed to comply with
subsection 122(a), and after notification to the Governor of the State
(or, in the case of a unit of local government, the Governor of the State
in which such unit is located) and after failure to secure voluntary compliance
within a reasonable period of time, the Secretary may either: refer the
matter to the Attorney General with a recommendation that an appropriate
civil action be instituted; exercise the powers and functions provided by
Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d); or take such
other action as may be provided by law.
12
Title VI of the Civil Rights Act of 1964 prohibits discrimination in
the use of Federal financial assistance by way of grant, loan or contract,
42 U.S.C. 2000d-1. In order to receive such assistance, the State or local
government must file an application satisfying the requirements of the par-
ticular program. Revenue sharing payments are based on a statutory entitle-
ment for which States and units of local government are automatically eligible
pursuant to Section 102 of the Act. The Secretary has no discretion to
approve or disapprove in advance payments to any participating recipient
government.
Recognizing the unique aspects of revenue sharing entitlements, section
7 of the bill is intended to express clearly in the Act certain authority of
the Secretary in applying the nondiscrimination provisions of Section 122.
This is accomplished by stating explicitly that the Secretary has authority
to withhold all or a portion of entitlement funds due a State or unit of
local government, to terminate one or more payments of entitlement funds,
and to require repayment of entitlement funds previously expended in a pro-
gram or activity found to have been in violation of subsection (a). The
changes in section 122 will further enhance the Secretary's ability to
ensure that entitlement funds are not utilized in a discriminatory manner.
Section 8
Broad public participation in State and local decision making as to
how revenue sharing funds are to be expended is an essential ingredient
of general revenue sharing. For this reason, section 121 (c) requires that
the news media be notified when the Planned Use and Actual Use Reports are
published in a local newspaper. By regulation, recipient governments must
also make these reports available to the general public. Additionally,
to encourage citizen involvement, section 123(a)(4) of the Act requires
13
recipient governments to provide for the expenditure of revenue sharing
funds only in accordance with the laws and appropriation procedures which
are applicable to the expenditure of their own revenues.
Clause (1) of section 8 of the bill would further strengthen the
general public's role in the general revenue sharing process. It amends
section 123(a)(5) of the Act to the extent that in order to qualify for
revenue sharing funds, a State or unit of local government must establish
to the satisfaction of the Secretary of the Treasury that it will provide
the residents under its jurisdiction with an opportunity to give their
recommendations and views on how the revenue sharing funds should be spent.
For most recipient governments the public's opportunity to comment on
the proposed expenditures of revenue sharing funds would occur in a public
hearing. However, in some cases it would be necessary for the Secretary to
regulate the manner in which the views of the public are presented to State
and local officials in order to avoid State or local public hearing proce-
dures which are either unnecessary or which conflict with the purpose of
this provision. This amendment would serve to ensure that all recipient
governments, regardless of whether they have State or local public participa-
tion requirements, will include the public in the decision-making process on
the expenditure of revenue sharing funds.
Section 123(a)(8) of the Act provides that Indian tribes and Alaskan
native villages must spend their revenue sharing funds for the benefit of
members of the tribe or village residing in the county area from which its
revenue sharing entitlement originates. This provision affects Indian
reservations which are located in more than one county, thus resulting
in the tribe receiving separate revenue sharing allocations from each
county area.
14
Clause (2) of section 8 proposes to eliminate this provision for two
reasons. First, it is very difficult for the Indian government to adminis-
ter since it demands that an analysis be made of each proposed revenue
sharing expenditure to ensure that the proper percentage of residents in
the applicable counties will benefit in proportion to the percentage of
revenue sharing funds generated from each county. Second, this requirement
frustrates reservation-wide planning by limiting the capacity of the tribal
government to concentrate its revenue sharing expenditures in areas which
have the highest priority.
Section 9
Section 141 of the Act defines the entitlement periods which govern
the distribution of funds to recipient governments. Section 9 of the bill
would revise the last entitlement period (July 1, 1976 to December 31, 1976)
by extending it to September 30, 1977. This fifteen-month entitlement
period would provide for the transition to the new Federal fiscal year and
would combine the appropriations of subparagraph (G) and proposed subpara-
graph (H) of section 105(b)(1). Also, section 141 would be amended to ex-
tend the general revenue sharing program until September 30, 1982.
PRESS BOOKLET
Renewal of
General Revenue Sharing
"there could be no more practical
reaffirmation of the Federal compact
which launched this country than to
renew the program which has done
so much more to preserve and
strengthen that compact .
General Revenue Sharing."
President Gerald R. Ford
Message to Congress
6 FORD LIBRERY
April , 1975
Department of the Treasury
Washington, D.C. 20220
Table of Contents
President Ford's Message to the
Congress, April
, 1975
An Outline of Key Provisions of the Present
General Revenue Sharing Law and the
Proposed Legislation
Questions and Answers about How General
Revenue Sharing Works and What
Changes are Proposed
Length of Program and Funding Levels
Eligible Participants
Allocation Procedure
Expenditure Decisions
Reporting Requirement
Citizen Participation
Revenue Sharing and Civil Rights
Administration
A Summary of the Proposed Amendments to
the State and Local Fiscal Assistance Act
A Table of General Revenue Sharing Payments
to Date
President Ford's Message to Congress
[To be inserted]
KEY PROVISIONS OF
GENERAL REVENUE SHARING LAW
CURRENT AUTHORIZATION
RENEWAL PROPOSAL
$30.2 billion to be distributed
Additional $39.7 billion to be
January 1972 - December 1976.
distributed July 1976 - September 1982.
Non-contiguous states (Alaska &
Non-contiguous states (Alaska &
Hawaii) appropriation of $23.9
Hawaii) appropriation of $27.5
million, January 1972 - December
million, through September 1982.
1976,
Funds authorized and appropriated
Funds authorized and appropriated for
for entire 5-year period.
entire 5-3/4 year period.
All units of general government to
No change.
be eligible participants (states,
counties, cities, towns, townships,
Indian tribes and Alaskan native
villages).
No general review of program
Secretary of the Treasury to report
required.
to Congress two years before expira-
tion date.
Money allocated by formula set forth
No change, except as noted below with
in the law, using data supplied
regard to 145% maximum constraint.
primarily by U.S. Bureau of the
Census.
States receive 1/3 of the funds
No change.
distribed; local governments
receive 2/3.
Allocation to local governments
145% limit to be raised to 175% by
limited to 145% of average state-
6 percentage points per entitlement
wide per capita allocation within
period in five steps,
their states.
- 2 -
CURRENT AUTHORIZATION
RENEWAL PROPOSAL
Allocations to local governments are
No change.
not to be below 20% of average state-
wide per capita allocation witin
their states.
To keep citizens informed, recipient
Secretary of the Treasury may
governments must publish use reports
authorize other methods to publicize
in newspapers of general circulation.
use information locally.
All media must be notified.
No provision to require assurance
Recipient governments must assure
that there will be a public hearing
the Secretary of the Treasury that
or other method by which public may
public has access to a public hear-
participate in deciding how shared
ing or other appropriate means of
revenues are to be spent.
participation in decision-making
for uses of shared revenues.
Law prescribes reports on amounts
Secretary of Treasury would have
and purposes of planned and actual
full discretion to determine form
expenditures.
and content of recipients' use
reports.
Law contains strong anti-discrimina-
Strong anti-discrimination require-
tion requirement. Secretary's en-
ment and general powers retained.
forcement powers are stated in
Secretary expressly authorized to
general terms: to refer matter to
withhold all or part of funds used
Attorney General for civil action,
in discriminatory program or
to exercise powers and functions
activity, to require repayment,
provided by Title VI of Civil Rights
and to terminate eligibility for one
Act of 1964, or to take such other
or more payments.
action as may be provided by law.
- 3 -
CURRENT AUTHORIZATION
RENEWAL PROPOSAL
Revenue Sharing funds may not be
Restrictions retained in their
utilized to meet Federal matching
present form.
grants and the Davis-Bacon Federal
minimum wage rate law applies to
certain construction projects funded
through revenue sharing. Local
governments may use funds for any
capital projects but only for
operating and maintenance of programs
in eight priority expenduture
categories.
QUESTIONS AND ANSWERS ABOUT HOW GENERAL REVENUE SHARING
WORKS AND WHAT CHANGES ARE PROPOSED
Length of Program and Funding Levels
Q: When did the General Revenue Sharing program begin and for
how long does it last?
A: The State and Local Fiscal Assistance Act (P.L. 92-512)
was signed into law on October 20, 1972. Title I of the
Act authorized General Revenue Sharing and made it re-
troactive to January 1, 1972. The first checks went out
on December 7, 1972. The program is due to expire on
December 31, 1976.
Q: How much money is being distributed under the present
program?
A: $30.2 billion over the five year period. An additional
$23.9 million is provided for non-contiguous states:
Alaska and Hawaii.
Q: What steps is the Administration taking to extend the
program?
A: After careful review, the Administration is proposing a
5-3/4 year renewal along the general lines of the present
program.
Q: Will the funding level of the new program be similar to
that currently in effect?
A: Yes. The funding level is to continue to increase at the
rate of $150 million per year. $39.7 billion would be
provided for 5-3/4 years. The non-contiguous states of
Alaska and Hawaii would receive an additional $27.5
million.
- 2 -
Eligible Participants
Q: Who are the recipients of the money that is distributed
through General Revenue Sharing?
A: All units of general government in the United States are
eligible to receive General Revenue Sharing funds. Nearly
39,000 States, counties, cities, towns, townships, Indian
tribes and Alaskan native villages are receiving the money
on a regular basis.
Q: Must all units of general government participate in the
program?
A: No. Local governments may elect to waive participation.
When a government waives its revenue sharing money for
an entitlement period, those funds are paid to the next
higher level of government. Currently, one-third
of one percent of all eligible governments have chosen
not to participate directly in General Revenue Sharing.
FOND
Allocation Procedure
Q: How is the money allocated to recipient units of govern-
ment?
A: The funds are distributed quarterly according to formulas
contained in the law. Data relating to population, per
capita income, tax effort and other factors are supplied,
principally by the U.S. Bureau of the Census, for each
unit of general government. Using sophisticated computer
techniques, these data are applied to the formulas to
compute amounts to be paid each recipient government dur-
ing each entitlement period.
Q: Do governments apply for the money?
A: No. Unlike grants, shared revenues are "entitlement"
funds which are distributed automatically, on a regular
basis, in October, January, April and July.
- 3 -
Q: Does the legislation propose any change in the way revenue
sharing funds are allocated?
A: Only one change is proposed. After careful evaluation
of existing and alternative formulas, it was decided to
propose a gradual rise in the 145% maximum constraint to
175% in five steps.
This provision presently limits
the entitlements of local governments to 145% of the
average per capita allocation for localities in the
States in which the jurisdiction is located.
Q: Why is the Administration proposing to raise the maximum
constraint?
A: The increase would permit the basic formulas to function
in a less constrained manner. Thus many governments with
high tax effort or low per capita income, or both, in-
cluding some large urban governments which have been con-
strained, will receive more money. Due to the gradual
rise of six percentage points per entitlement period in
the maximum constraint and continuation of the $150 million
annual funding increases, virtually all other local govern-
ments will not suffer a decrease in funding.
Expenditure Decisions
Q: Who decides how revenue sharing money should be spent?
A: The basic purpose of the General Revenue Sharing program
continues to be that of providing funds to be used to
meet needs identified by the recipient State and local
general purpose governments.
Q: Can revenue sharing funds be spent for any purpose?
A: Under both the present program and the Administration's
proposed renewal program, all States and local govern-
ments must spend their "shared revenues" in accordance
with the laws and procedures that apply to the expenditure
of their own revenues. State governments are not restricted
in the areas of activity for which they may use the money.
Local governments (i.e., cities, counties, etc.) may use
the funds for any capital project (capital, as defined
by local law) or for operating and maintenance of programs
and projects in the following categories: public safety,
public transportation, recreation, environmental protection,
financial administration, health, libraries, and social
services for the poor or aged.
- 4 -
Q: What general restrictions are imposed on uses of the money?
A: The President's proposal retains restrictions that now
apply to all expenditures of shared revenues. The money
may not be used to match other Federal funds. Use of
the money in any program or activity in which there is
discrimination because of race, color, national origin
or sex is prohibited. In addition, if shared revenues
are to be used to pay 25% or more of the cost of a
construction } roject, and if $2,000 or more in revenue
sharing funds is involved, then Federally-established
minimum wage rates must be paid (i.e., the Davis-Bacon
Act applies).
Q: When must recipient governments spend their shared revenues?
A: Governments must use, obligate or appropriate their shared
revenues (including any interest they earn on the money)
within 24 months from the end of the entitlement period
to which the check is applicable, unless approval is
obtained from the Office of Revenue Sharing for an exten-
sion of this time.
Q: How have governments been spending their shared revenues?
A: States and local governments together have spent approxi-
mately 60 percent of their shared revenues in the fields
of public safety, education, and public transportation.
During fiscal year 1974, State governments used 52 per-
cent of their revenue sharing money in support of public
education. The latest figures indicate that more money
was spent during fiscal year 1974 to operate and maintain
programs than for capital expenditures.
- 5 -
Reporting Requirement
Q: Does the Administration proposal seek to make any changes
in the reports which recipient governments must file with
the Office of Revenue Sharing?
A: Yes. The current law requires each recipient government
to file two one-page reports with the Office of Revenue
Sharing for each entitlement period. Prior to the begin-
ning of each period, the recipient government must submit
a report on its plans for use of the money it expects to
receive for the coming period. After June 30 of each
year, the recipient government must report for what pur-
poses funds have been spent. The Administration proposal
widens the discretion of the Secretary of the Treasury to
determine the form and content of these reports so that
the data obtained will be more useful to interested citi-
zens and to the Federal Government.
Citizen Participation
Q: Can citizens influence the use to which shared revenues
are put?
A: Recipient units of governments establish their own proce-
dures to set priorities for using their shared revenues.
The present law requires that each Planned and Actual Use
Report be published in one or more newspapers which are
published within the State and have general circulation
within the geographic area of the recipient government
involved. The proposed legislation seeks to improve this
process by permitting the Secretary of the Treasury to
prescribe alternate procedures for publicizing reports.
These would be utilized where it is determined that the
requirement of publication in a newspaper is unreasonably
expensive in relation to the amount of funds involved or
where the Secretary finds that there are better methods
for bringing information to the attention of residents of
a community.
- 6 -
Q: Does the Administration's proposal further the goal of
increasing public participation in the expenditure of
revenue sharing funds?
A: Yes. The proposed legislation would add a new provision
to the current law to require that a recipient government
give written assurance to the Secretary that it provides
its residents the opportunity of a public hearing or the
like to give recommendations and views on how revenue
sharing funds should be spent.
Revenue Sharing and Civil Rights
Q: Is there a provision in the proposed legislation to assure
that revenue sharing funds are not used in a discriminatory
manner?
A: Yes. Section 51.32 of Title I of the State and Local
Fiscal Assistance Act of 1972 provides that "No person in
the United States shall, on the ground of race, color,
national origin, or sex, be excluded from participation in,
be denied the benefits of, or be subjected to discrimina-
tion under, any program or activity funded in whole or in
part with entitlement funds
This provision is retained
in the proposed legislation.
Q: Has the Administration proposed any changes in the section
of the current law which empowers the Secretary of the
Treasury to secure compliance with the non-discrimination
requirement?
A: Yes. The proposed legislation makes it clear that the
Secretary has the flexibility to invoke one or more of
several remedies where a recipient government is found to
have used revenue sharing funds in a discriminatory activity.
The legislation expressly states that the Secretary may
withhold all or a portion of entitlement funds due that
government, may require the repayment of funds expended in
a discriminatory manner, and may terminate the eligibility
of a State or local government to receive one or more pay-
ments.
- 7
Administration
Q: What does it cost to administer the General Revenue Sharing
program?
A: The Fiscal Year 1975 appropriation for operating the Office
of Revenue Sharing is $2,133,000. Administration of the
General Revenue Sharing program currently costs 12/100ths
of one percent of the amount being distributed.
Q: What is the size of the Office of Revenue Sharing staff?
A: The Office of Revenue Sharing is authorized a maximum of
85 positions, all of whom are located in Washington, D.C.
A total request of 116 positions has been made to Congress
in the Fiscal Year 1976 budget.
A SUMMARY OF THE
STATE AND LOCAL FISCAL ASSISTANCE ACT AMENDMENTS OF 1975
The State and Local Fiscal Assistance Act Amendments
of 1975 will extend and improve the general revenue sharing
program to provide essential fiscal assistance to general
purpose governments through September of 1982. The bill
amends the State and Local Fiscal Assistanct Act of 1972
(Public Law 92-512). The bill has nine sections, which
are summarized below.
1. Reserve for Adjustments
This section provides the means for making adjustment
payments to governments where data corrections are necessary
after the time when final allocations of funds have been
made for eligible state and local governments. The amount
of payments to each of approximately 39,000 governments
is a share of a national total, and each share is determined
according to data factors for each government relative to
data factors for all governments. A change in the data
for one government may change the shares for a large number
of governments. The current Act gives the Secretary
authority to make necessary adjustments after payments have
been made, but does not mention the means of funding such
adjustments.
The bill authorizes the Secretary of the Treasury to
reserve a percentage of the total funds available for any
- 2 -
entitlement period to be used to make any necessary
adjustment payments after the final payment amounts have
been determined for all the governments. This method
previously has been prescribed by regulation and express
inclusion in the statute is now proposed. The method
allows adjustment payments to be made to one or more
governments without adjusting the payments of all
governments.
2. Funding of Payments
The second section of the bill provides continuing
funding of payments to recipient governments, including
Indian tribes and Alaskan native villages, through
September of 1982. The funding level is an extension of
the funding established in the original Act, and continues
to provide annual step increases of $150 million each
federal Fiscal Year beginning after June 30, 1976. Fixed
appropriations are provided for each federal Fiscal Year,
through and including Fiscal Year 1981, so that all levels
of government may undertake with confidence their financial,
program, and project plans for future years. Total
appropriations for the 5 3/4 years amount to $39.7 billion.
Funds for adjustments to allocations to Alaska and
Hawaii are continued at the present annual rate of $4.78
million, totalling $27.5 million for the 5 3/4 year
extension period.
A three-month appropriation provides for transition
to the new federal Fiscal Year which begins October 1, 1976.
- 3 -
As permitted in the Congressional Budget Act of 1974,
this section specifically provides that funds appropriated
for the extension of the general revenue sharing program
are exempted from certain annual appropriation procedures
otherwise required by the Congressional Budget Act.
The bill also requires the Secretary of the Treasury
to submit a report, with recommendations concerning the
extension of general revenue sharing program, to the
appropriate Congressional committees a full two years
before the proposed expiration date. Review of the general
revenue sharing program at such time will minimize future
uncertainty for state and local governments regarding
availability of shared revenues.
3. State Maintenance of Transfers to Local Governments
The third section of the bill deletes a special rule
to measure state assistance to local governments during
the final six-month entitlement period included in the
original Act. The special rule is no longer needed as
that six-month entitlement period is modified in the
bill to become a 15-month entitlement period ending
September 30, 1977. The current regulations of the
Office of Revenue Sharing provide that the point of
reference for measuring a state's assistance to local
governments will be that state's fiscal year, making a
special statutory rule unnecessary for the 15-month
entitlement period.
- 4 -
4. Increasing Equity Under the Formula
Section four of the bill increases the amount of funds
that may be received by local governments characterized by
unusually high tax effort or low per capita income or both.
The original Act limits a local government to an amount
which may not exceed on a per capita basis 145% of the
average per capita amount for all local governments in a
state.
By raising the 145% constraint to an upper limit of
175%, the bill will allow governments now constrained to
receive all or a greater part of the shared revenues other-
wise allocated to them by the formula. By increasing the
upper limit gradually, by 6 percentage points each entitlement
period until the 175% limit is reached after four and one-
quarter years, the potential negative impact on other govern-
ments will be minimized by the annual $150 million increase
in the total appropriations. The 175% upper limit will
continue to serve, as Congress originally intended, to
prevent excessive amounts being allocated to jurisdictions
with unusual characteristics whose needs are distorted by the
prescribed data, such as certain resort communities and
industrial enclaves.
Should an Indian tribe or Alaskan native village
waive receipt of its shared revenue payment, the bill
provides that the funds will be paid to the county
government as is the case with funds waived by any unit
- 5 -
of municipal government.
The present Act gives state governments the option
of adoption of an alternate formula for distributing
sharing revenues to its county areas and municipalities.
The bill extends to September 30, 1982, the time period
during which any such law must remain in effect.
5. Date for Determining State and Local Taxes
The fifth section of the bill makes the definition
of the "most recent reporting year" for the state and
local taxes component of the data factor, called the
"General Tax Effort of States", consistent with the
definition for all other data elements used in the
general revenue sharing formulas. For all data elements,
the data used for allocations will be the most recent
data available before the beginning of each entitlement
period.
6. More Effective Reports on Use of Funds
The sixth section of the bill gives the Secretary
of the Treasury increased discretion to prescribe the
form and content of recipient government reports made
before and after use of shared revenues.
The bill also allows the Secretary of the Treasury
to authorize new ways to publicize the use reports where
newspaper publication costs would be excessive in relation
to the amount of shared revenues received by the local
government, or where better methods for informing the
public are available.
- 6 -
7. Non-Discrimination
Section seven of the bill clarifies the authority
of the Secretary of the Treasury to enforce the broad
non-discrimination requirements of the existing law.
The bill states explicitly that when a jurisdiction
is found to have discriminated in the use of revenue
sharing money, the Secretary may withhold all or part
of the jurisdiction's entitlement funds. The Secretary
also is specifically authorized to terminate the eligibility
of the jurisdiction to receive one or more future payments,
and to require repayment by the jurisdiction of revenue
sharing funds expended in a discriminatory program or
activity.
8. Increased Public Involvement in Expenditure Decisions
Section eight expands the opportunity for the public to
participate in decisions by state and local governments on
the use of shared revenues. In addition to the requirement
for publicity of the report on the planned uses of shared
revenues, each government is required to assure the Secretary
of the Treasury that it will provide the residents with an
opportunity to give their recommendations and views on the
proposed expenditures of shared revenues. This opportunity
for public involvement may be provided either in a public
hearing or by other appropriate means prescribed in
regulations to be issued by the Secretary of the Treasury.
- 7 -
The bill also removes a burdensome restriction on those
Indian tribes and Alaskan native villages whose members
reside in more than one county. The original Act required
them to apportion the benefits of expenditures among county
areas in the same ratios as those used in the revenue sharing
allocation of funds. This bill will allow all Indian tribes
and Alaskan native villages to concentrate their revenue
sharing expenditures in areas of greatest need.
9. Entitlement Periods
The ninth and last section of the bill defines the
entitlement periods which govern the distribution of funds
to recipient governments. A fifteen month entitlement
period beginning July 1, 1976 and ending September 30, 1977
permits transition to the new federal fiscal year. Funds
distributed during this fifteen month entitlement period
are provided from both the transition quarter appropriation
and the appropriation for FY 1977. Five equal quarterly
payments will be made to all recipient governments during
this period. Each entitlement period after September 30, 1977
has the same beginning and ending dates as the applicable
federal fiscal year.
CENERAL REVENUE SHARING FUNDS
Payments Through April 7, 1975
(with numbers of recipients by category)
INDIAN TRIBES &
ALASKAN NATIVE
STATE NAME
STATE
COUNTIES
MUNICIPALITIES
TOWNSHIPS
VILLAGES
TOTALS
ALABAMA
$106,595,657 (1)
$ 79,811,942 ( 67)
$133,713,837 ( 399)
$ 320,121,436 ( 467)
ALASKA
8,151,177 (1)
15,610,757 ( 126)
$ 502,614 (92)
24,264,548 ( 219)
ARIZONA
62,746,495 (1)
50,361,909 ( 14)
69,635,925 ( 66)
5,473,525 (18)
188,217,854 ( 99)
ARKANSAS
69,510,107 (1)
70,833,435 ( 75)
55,238,944 ( 458)
195,582,486 ( 534)
CALIFORNIA
670,854,042 (1)
809,818,743 ( 57)
531,332,619 ( 411)
439,280 (54)
2,012,444,684 ( 523)
COLORADO
65,926,982 (1)
46,565,115 ( 62)
85,251,972 ( 247)
125,967 ( 2)
197,870,036 ( 312)
CONNECTICUT
79,662,535 (1)
85,046,335 ( 33)
$ 74,404,145 ( 149)
239,113,015 ( 183)
DELAWARE
21,513,093 (1)
20,746,117 ( 3)
14,328,555 ( 54)
56,587,765 ( 58)
DIST OF COLUMBIA
84,346,800 (1)
84,346,800 ( 1)
FLORIDA
182,940,956 (1)
162,485,967 ( 66)
204,068,115 ( 386)
67,526 ( 2)
549,562,564 ( 455)
GEORGIA
131,235,067 (1)
151,975,678 ( 158)
110,326,599 ( 510)
393,537,344 ( 669)
HAWAII
27,769,366 (1)
13,785,221 ( 3)
41,753,506 ( 1)
83,308,093 ( 5)
IDAHO
25,409,184 (1)
29,286,689 ( 44)
21,250,024 ( 191)
281,613 ( 5)
76,227,510 ( 241)
ILLINOIS
321,490,473 (1)
145,128,416 ( 102)
375,071,021 (1266)
84,200,590 (1435)
925,890,500 (2804)
INDIANA
133,429,274 (1)
91,027,087 ( 91)
144,268,402 ( 556)
31,538,816 (1000)
400,263,579 (1648)
IOWA
88,919,482 (1)
103,446,064 ( 99)
74,369,178 ( 942)
39,024 ( 1)
266,773,748 (1043)
KANSAS
60,543,743 (1)
61,612,162 ( 105)
52,727,466 ( 610)
6,677,819 (1150)
24,620 ( 4)
181,585,810 (1870)
KENTUCKY
119,366,078 (1)
87,677,671 ( 120)
101,332,824 ( 394)
308,376,573 ( 515)
LOUISIANA
146,682,050 (1)
117,231,843 ( 62)
169,081,739 ( 295)
19,977 ( 1)
433,015,609 ( 359)
MAINE
38,310,773 (1)
5,082,942 ( 16)
31,631,228 ( 22)
39,760,365 ( 474)
147,619 ( 3)
114,932,927 ( 516)
MARYLAND
124,631,230 (1)
145,159,546 ( 23)
104,154,181 ( 150)
373,944,957 ( 174)
MASSACHUSETTS
198,483,338 (1)
22,853,112 ( 12)
223,428,876 ( 39)
151,235,999 ( 312)
596,001,325 ( 364)
MICHIGAN
266,937,865 (1)
155,459,927 ( 83)
329,785,203 ( 533)
48,891,318 (1246)
87,832 ( 5)
801,162,145 (1868)
MINNESOTA
124,450,206 (1)
132,688,249 ( 87)
100,936,211 ( 851)
15,347,576 (1786)
722,432 (12)
374,144,674 (2737)
MISSISSIPPI
107,730,187 (1)
129,712,527 ( 82)
72,631,500 ( 277)
139,963 ( 1)
310,214,177 ( 361)
MISSOURI
117,788,182 (1)
77,955,694 ( 114)
152,024,347 ( 871)
5,375,451 ( 340)
353,143,674 (1326)
MONTANA
24,795,577 (1)
32,917,719 ( 56)
14,867,791 ( 125)
1,799,394 ( 7)
74,380,481 ( 189)
NEBRASKA
45,242,176 (1)
44,942,342 ( 93)
42,449,611 ( 520)
2,888,578 ( 467)
188,852 ( 3)
135,711,559 (1084)
NEVADA
13,808,081 (1)
17,260,681 ( 16)
10,133,099 ( 17)
214,000 (17)
41,415,861 ( 51)
NEW HAMPSHIRE
20,065,455 (1)
5,241,933 ( 10)
19,023,527 ( 13)
15,994,890 ( 222)
60,325,805 ( 246)
NEW JERSEY
197,304,585 (1)
139,546,268 ( 21)
175,520,213 ( 333)
79,616,848 ( 232)
591,987,914 ( 587)
NEW MEXICO
40,936,304 (1)
32,313,628 ( 32)
40,412,093 ( 90)
5,262,231 (22)
118,924,256 ( 145)
NEW YORK
701,017,982 (1)
300,426,090 ( 57)
952,937,060 ( 619)
148,175,049 ( 930)
376,761 ( 6)
2,102,932,942 (1613)
NORTH CAROLINA
161,145,301 (1)
173,513,583 ( 100)
149,191,324 ( 458)
351,242 ( 1)
484,201,450 ( 560)
NORTH DAKOTA
25,086,436 (1)
25,784,127 ( 53)
16,806,213 ( 347)
6,565,389 (1360)
1,030,470 ( 5)
75,272,635 (1766)
OHIO
250,822,997 (1)
159,058,849 ( 88)
293,615,356 ( 934)
48,927,549 (1320)
752,424,751 (2343)
OKLAHOMA
70,365,929 (1)
51,984,173 ( 77)
87,464,599 ( 531)
1,258,880 (25)
211,073,581 ( 634)
OREGON
62,368,422 (1)
47,356,878 ( 36)
77,147,921 ( 232)
203,642 ( 4)
PENNSYLVANIA
330,060,562 (1)
187,076,863 ( 273)
186,699,849 ( 66)
369,484,186 (1013)
104,552,547 (1548)
400 ( 1)
RHODE ISLAND
28,324,916 (1)
990,797,544 (2629)
40,294,723 ( 8)
16,346,341 ( 31)
SOUTH CAROLINA
88,306,116 (1)
84,965,980 ( 40)
90,005,513 ( 46)
80,005,022 ( 256)
SOUTH DAKOTA
27,940,838 (1)
258,316,651 ( 303)
32,593,747 ( 67)
17,320,150 ( 301)
4,024,127 ( 957)
TENNESSEE
1,920,825 ( 9)
118,634,753 (1)
83,799,687 (1335)
103,267,923 ( 94)
136,445,761 ( 321)
TEXAS
298,229,926 (1)
358,348,437 ( 416)
220,569,873 ( 254)
374,361,656 ( 993)
UTAH
61,583 ( 2)
37,112,350 (1)
893,223,038 (1250)
36,921,263 ( 29)
36,672,985 ( 216)
VERMONT
572,734 ( 5)
17,661,991 (1)
111,279,332 ( 251)
434,430 ( 14)
12,186,527 ( 55)
22,765,017 ( 237)
VIRGINIA
124,558,263 (1)
53,047,965 ( 307)
92,153,679 ( 96)
157,419,760 ( 228)
WASHINGTON
5,649 ( 2)
90,873,182 (1)
374,137,351 ( 327)
81,461,633 ( 39)
99,535,101 ( 266)
3,401 ( 3)
WEST VIRGINIA
773,299 (22)
81,122,395 (1)
272,646,616 ( 331)
48,335,893 ( 55)
56,008,362 ( 227)
WISCONSIN
158,038,834 (1)
185,466,650 ( 283)
156,134,786 ( 72)
134,753,494 ( 574)
25,195,870 (1268)
WYOMING
483,197 (10)
11,669,645 (1)
474,606,181 (1925)
16,985,238 ( 23)
6,011,605 ( 86)
258,757 ( 2)
34,925,245 ( 112)
NATIONAL TOTALS
FUNDS
$6,410,917,358
$4,806,616,154
$6,699,067,503
$932,487,685
$22,833,908
RECIPIENTS
$18,871,922,608
(51)
(3,039)
(18,451)
(16,467)
(343)
(38,351)
GERALD
R.
FORD
FOR IMMEDIATE RELEASE
APRIL
, 1975
Office of the White House Pres Secretar
THE WHITE HOUSE
STATEMENT BY THE PRESIDENT
President Ford asked Congress today to renew General
Revenue Sharing for 5-3/4 years past its present expiration
on December 31, 1976.
To renew General Revenue Sharing, the President request-
ed Congress to amend the State and Local Fiscal Assistance
Act of 1972 (P.L. 92-512), Title I of which authorizes and
appropriates funds for the first five years of the program.
As it now stands, the law authorizes the Treasury Department's
Office of Revenue Sharing to distribute $30.2 billion to
State and local governments over a five year period -- from
January 1972 through December 1976. An additional $23.9
million is provided to be allocated to non-contiguous
states: Alaska and Hawaii. To date a total of $18.9 billion
has been paid to State and local governments.
Today's proposal would provide $39.7 billion in General
Revenue Sharing funds, to be distributed from July 1976
through September 1982. Another $27.5 million would be
allowed for Alaska and Hawaii. The funds would be authorized
and appropriated at the outset, for the entire renewal period,
- 2 -
as was done for the first five years of the program. The
present $150 million annual stairstep increase in funding
level would be retained. The renewal measure also provides
for review of General Revenue Sharing two years before the
1982 expiration date.
With one change, the present basic formula used to
allocate funds to States and local governments would be re-
tained in the next 5-3/4 years of the program. Whereas the
present formula limits a local government's maximum alloca-
tion of funds to 145% of the average per capita local alloca-
tion in its state, the President's proposal would increase
that level to 175% at a rate of 6 percentage points per
entitlement period in five steps.
This would permit more
money to be allocated to certain communities now constrained
by the 145% maximum, including some large urban areas.
The increase from 145% to 175% will be made gradually,
in order to minimize the potential negative impact on govern-
ments that otherwise would lose funds with the change in
constraint level. Few, if any, jurisdictions will experience
a net dollar decrease in funding since reductions stemming
from the constraint change should be offset by additional
funds available to be distributed for each period.
States would continue to receive one-third of the money
distributed; and local governments would receive two-thirds.
- 3 -
It has always been a goal of the program that the public
be able to participate in local decision-making on uses of
revenue sharing dollars. President Ford is recommending that
the existing legislation be strengthened to require recipient
jurisdictions to assure the Secretary of the Treasury that the
public has access through a public hearing process or that
other satisfactory methods of public participation are avail-
able.
The President's proposal would give the Secretary of the
Treasury discretion to determine the form and content of
reports that must be made by recipient governments on their
plans for and uses of shared revenues. The Secretary would
also be allowed to authorize new ways to publicize the use
information locally.
The existing revenue sharing law carries a broad anti-
discrimination requirement. The President is recommending
that the civil rights-related enforcement powers of the
Treasury Department be clarified in the statute. The renewal
proposal makes clear the Secretary of the Treasury's authority
to withhold payments to recipient governments that are found
to have discriminated in the use of revenue sharing money.
The Secretary would be explicitly authorized to withhold a
jurisdiction's entire amount or that portion found to be used
in a discriminatory program or activity. He also could terminate
- 4 -
the eligibility of a State or local government to receive funds
under the program and require repayment of revenue sharing
money spent in a discriminatory activity.
President Ford urged Congress to give revenue sharing
renewal prompt attention, since States and local governments
already need to be able to plan their budgets past the
program's present expiration date.
April 9, 1975
MEMORANDUM FOR THE PRESIDENT
FROM :
JIM CANNON
Attached is a draft letter to Governors, Mayors, State
Legislators, and County Officials when your message and
legislation for General Revenue Sharing is sent to the
Hill. The recipients would be:
1. All 50 State Governors
2 200 State Legislative leaders (Presidents
and Minority Leaders of the Senates and
Speakers and Minority Leaders of the Houses
FORD & LIBRARY 938470
of Representatives)
3. Mayors of 150 largest cities.
4. List of approximately 50 County Officials.
In order to expedite your letters to these leaders,
we propose that the message and Bill be sent separately.
Attachment
April 9, 1975
MEMORANDUM FOR THE PRESIDENT
FROM 1
JIM CANNON
Attached is a draft letter to Governors, Mayors, State
Legislators, and County Officials when your message and
legislation for General Revenue Sharing is sent to the
Hill. The recipients would be:
1. All 50 State Governors
2 200 State Legislative leaders (Presidents
and Minority Leaders of the Senates and
Speakers and Minority Leaders of the Houses
of Representatives)
FORD i LIBRARY 9ERVLD
3. Mayors of 150 largest cities.
4. List of approximately 50 County Officials.
In order to expedite your letters to these leaders,
we propose that the message and Bill be sent separately.
Attachment
DRAFT
Dear
:
I am a strong believer in the system of
shared sovereignty which protects freedom of action
and promotes creativity at all three Constitutional
levels of government simultaneously. This federal
system was designed in part to enable all Americans
to be served by the government closest to them and
best able to act in the public interest.
We made a historic advance for this federal
system when Congress passed the General Revenue
Sharing in 1972.
It was my pleasure at that time to work with a
broadly based bi-partisan group of leaders and Members
in the House toward passage of Revenue Sharing.
Since that time, I have had numerous meetings with
state and local officials, and many have told me that
their number one priority in Federal programs was the
continuation of General Revenue Sharing. In these discussions,
I emphasized that I would be a strong advocate for reenact-
ment of this essential program.
Today I sent to the Congress an official message
and a bill which would continue in substantially its present
form, General Revenue Sharing for 5 1/4 years.
2
In addition, I am proposing that Congress increase the
amount by $150 million each year, so that the total
program over the full extended period will be $39,625
billion dollars.
I am asking my staff to send a copy of the
message and the bill to you separately.
I am confident that you and the citizens you
represent know that you have a vital stake in the
continuation of this program, and I sincerely hope
that you will lend your support to the passage of the
extension of General Revenue Sharing at this Session
of the 94th Congress.
DOMESTIC COUNCIL CLEARANCE SHEET
PASTA Imc /
DATE: April 9. 1975
JMC action required by: A.S.A.P.
TO:
JIM CANNON
VIA:
DICK DUNHAM
JIM CAVANAUGH
FROM:
JIM FALK 7
SUBJECT: Draft letter for President's signature to State and local leaders
on General Revenue Sharing.
COMMENTS: Jim lannon specifically asked
for this today. The rest of the
total package will follow.
DATE:
RETURN TO:
Material has been:
GERALD'S daryell FORD
Signed and forwarded
Changed and signed (copy attached)
Returned per our conversation
Noted
Jim Cannon
THE WHITE HOUSE
WASHInGTON
April 9, 1975
MEMORANDUM FOR:
JIM CANNON
FROM:
JIM FALK 7
Attached is a draft letter for the President to sign to Governors, Mayors,
State Legislators, and County Officials when General Revenue Sharing is
sent up. The mailing of the documents will be handled separately to the
same list of recipients. The recipients will be the following:
1. All 54 State and Territorial Governors.
2. 200 State Legislative leaders (Presidents and Minority Leaders of the Senates
and Speakers and Minority Leaders of the Houses of Representatives)
3. Mayors of 150 largest cities.
4. List of approximately 50 County Officials.
These lists are available any time you would like to look at them, although
LOR FORD LIGHTER
I have not attached them because of their bulk. The White House Corres-
pondence unit prefers not to transmit documents with Presidential letters
and suggests the separate follow-up mailing which we are prepared to do.
April 9, 1975
Dear
:
In recent months I have had numerous meetings with State and Local officials
and I have repeatedly been assured that the top Federal legislative priority
of State and Local government is the re-enactment of General Revenue Sharing.
In these meetings, I have stated the position that I will be an advocate for the
re-enactment of this program.
It is, therefore, with a great deal of pleasure that I can inform you that today
I have transmitted a Special Message to Congress along with draft legislation
which keeps that pledge. My proposal would renew the program for 5 3/4
years in substantially its present form. In addition, the provision for annual
stair-step increases in appropriations of $150 million will be continued. I
have asked my staff to forward copies of this proposal to you at an early date.
I am sure that you and your citizens feel a vital stake in this program and I
sincerely hope that you will lend your personal support to its continuation in
this session of the 94th Congress.
Sincerely,
Gerald R. Ford
FORD i LIBRARY 07V839
*The Blank will be filled in with names of appropriate Governors, State
Legislators, Mayors and County Executives.
EXECUTIVE OFFICE OF THE PRESIDENT
Can
OFFICE OF MANAGEMENT AND BUDGET
STATE
WASHINGTON, D.C. 20503
APR 9 1975
7 le
MEMORANDUM FOR THE DIRECTOR
Subject: General Revenue Sharing (GRS) renewal funding
One of the key decisions resulting from the Administration's
review of General Revenue Sharing renewal was a Presidential
determination to maintain $150 million annual stair-step
increases through 1982. Furthermore, the Administration
decided to revise the current GRS legislation (which runs
through December 31, 1976) to bridge immediately into the
transition quarter (July 1-September 30, 1976) and there-
after to reflect the Government's new fiscal year (October
1-September 30) throughout the renewal period.
Below are two alternative funding approaches based on these
decisions - but reflecting different treatment of the
fifteen month entitlement period between July 1, 1976,
and September 30, 1977.
FORD & LIBRARY 076839
($ in millions)
Option A
Option
B
Current legislation - (through
December 31, 1976)
FY 1976
6,350.0
6,350.0
Transition quarter (1/4
of FY 1977 rate of
$6,500)
1,625.0
1,625.0
1st quarter, FY 1977 (1/4
of 1977 rate of $6,500)
1,625.0
1,625.0
Renewal legislation - (January 1,
1977 to September 30, 1982)
3 quarters, FY 1977
4,875.0
4,912.5
Total, FY 1977
(6,500.0)
(6,537.5)
FY 1978
6,650.0
6,687.5
FY 1979
6,800.0
6,837.5
FY 1980
6,950.0
6,987.5
FY 1981
7,100.0
7,137.5
FY 1982
7,250.0
7,287.5
Total, renewal legisla-
tion
39,625.0*
39,850.0*
*Estimates reflect moving forward $75 million from the last
six months of the present program to provide even stair-step
increases during the renewal period.
9-65
2
Option A provides for $150 million increments between
each fiscal year. The three month transition quarter
is calculated as one-fourth of the 1977 amount of $6,500
million. The incremental increase in the transition
quarter does not affect the base for determining 1977
and subsequent year levels.
Option B calculates the transition quarter in the same
method as Option A (one-fourth of the 1977 amount of
$6,500 million) but considers the transition quarter
as establishing a new base for 1977 and subsequent
years.
Option B assumes a literal interpretation of the President's
decision to increase GRS by $150 million annually (every
four quarters). Since the period July 1, 1976, to
September 30, 1977, has five quarters, this alternative
adds an increase of $150 million for four of those quarters
but provides a further increased increment for the fifth
quarter.
The difference between these options is best illustrated
in the following table:
($ in millions)
Option A
Option B
1976
6,350.0
6,350.0
FORD LIBRARY.
Incremental increase for the
transition quarter
+37.5
+37.5
Subtotal
6,387.5
6,387.5
Incremental increase for 1977,
above the transition quarter
+112.5
+150.0
1977
6,500.0
6,537.5
Subsequent years increase $150
million from these bases.
For the fifteen month period, between July 1, 1976 and
September 30, 1977, Options A and B provide for the follow-
ing increases above 1976:
($ in millions)
Option A
Option B
Transition quarter
+37.5
+37.5
FY 1977
+150.0
+187.5
187.5
225.0
3
Since Option A does not consider the transition quarter
in establishing 1977 levels, it is more consistent with
the treatment other Federal programs received in the 1976
budget than Option B. Option A differs slightly from
normal budget treatment in that it calculates the tran-
sition quarter from 1977 rather than 1976. Since the
President agreed to progressively increase GRS program
levels throughout the renewal period, it was determined
inappropriate to hold the transition quarter static at
the 1976 level. However, Option A does not consider the
transition quarter as establishing a new base for deter-
mining 1977 GRS levels.
In other programs comparable to General Revenue Sharing--
Community Development grants, Comprehensive Employment
and Training Act, Airport Development Aid Program and
Law Enforcement Assistance Administration--decisions
concerning the transition quarter level and the 1977
projected level were made in accordance with guidance
published by OMB in Bulletin No. 75-8 and Transmittal
Memorandum No. 42 revising Circular A-11. Under that
guidance, budget authority for the transition quarter
FORD LIBRARY & GERALD
and future years was calculated from the 1976 level.
In other programs, such as the Federal-aid Highway
program, decisions were made relative to the individual
issues involved. In the Highway program, contract
authority, authorized in prior years, is being used
for the 1976 and transition quarter program with
additional "make well" authority provided for certain
states. The 1977 Highway program levels are higher
than those in 1976. Even in the Highway program, the
transition quarter, however, was treated throughout as
related to 1976 or as part of a 15-month period including
1976. We have identified no instance in which the transi-
tion quarter was used in establishing the base for 1977
program levels.
Treasury is concerned that Option A will be misinterpreted
by state and local recipients as an attempt to deprive
them of funds they believe they are entitled to by virtue
of the President's decision. State and local governments
are well aware of the President's decisions. Since there
will be significant renewal issues raised by the critics of
GRS, Treasury does not want to raise issues about the calcula-
tion of funding levels with GRS supporters. You might recall
that Bill Simon asked Ed Schmults to call you about the
political issues involved in this decision.
4
In fact, either Option A or B is defensible as far as
carrying out the President's decision is concerned.
Option A has the advantage of being somewhat more con-
sistent with the treatment of other similar programs.
Furthermore, the Administration could point out that in
Option A it opted to calculate the transition quarter
from a higher 1977 level (as. opposed to 1976 in most
other programs) in accordance with the President's
decision to consistently increase program levels
throughout the renewal period.
From the attachment you can see Highways is the principal
precedent problem. Let's discuss this as soon as you
have a chance to review this memo.
halls Walter D. Scott
Associate Director for
Economics & Government
Attachment
)
Attachment
Treatment in the 1976 Budget of Programs Similar to General Revenue Sharing
(dollars in millions)
Transition
1976
quarter
1977
1978
1979
1980
Program
BA
O
BA
O
BA
O
BA
O
BA
O
BA
O
Community Development
grants
2,550
1,300
--------
600
2,550
2,250
2,500
2,650
2,500
2,600
2,500
2,500
Comprehensive Employment
and Training Act
2,394
2,684
599
673
2,394
2,540
2,394
2,394
2,394
2,394
2,394
2,394
Airport Development Aid
program*
350
360
88
100
350
360
350
350
300
340
300
330
Law Enforcement Assistance
Administration
770
888
195
237
770
925
770
809
770
780
770
773
Federal-aid and Highway
programs*
5,200
5,817
1,300
1,365
5,500
5,600
5,650
5,600
5,800
5,600
5,950
5,600
*Currrent estimate, obligations are used in lieu of BA.
DOMESTIC COUNCIL CLEARANCE SHEET
DATE: April 9, 1975
JMC action required by: A.S.A.P.
TO:
JIM CANNON
VIA:
DICK DUNHAM
JIM CAVANAUGH
FORD LIBRARY & CERALD
ORD
FROM:
JIM FALK 7
SUBJECT: Draft letter for President's signature to State and local leaders
on General Revenue Sharing.
COMMENTS: Jim lannon specifically asked
for this today. The rest of the
total package will follow.
DATE:
RETURN TO:
Material has been:
Signed and forwarded
Changed and signed (copy attached)
Returned per our conversation
Noted
Jim Cannon
THE WHITE HOUSE
WASHINGTON
April 9, 1975
The Resident
MEMORANDUM FOR.
IIM CANNON
FROM:
FIM
FALL 7 this Can
your vegistation nessaga and for
Attached is a draft letter for the President to Sign to Governors, Mayors,
State Legislators, and County Officials when General Revenue Sharing is
to
sent
The mailing of the documents will be handled separately to the
same list of recipients. The recipients will be the following:
The
jo
would be:
Hill.
1. All State and Territorial Governors.
2. 200 State Legislative leaders (Presidents and Minority Leaders of the Senates
and Speakers and Minority Leaders of the Houses of Representatives)
3. Mayors of 150 largest cities.
4. List of approximately 50 County Officials.
These and pondence have suggests lists not unit attached are the prefers available separate them not because any to follow transmit time of up you their mailing documents would bulk which like The with to we look White Presidential are at prepared House them, Corres- although letters to do.
In order to expedito you
letters to These leader, we
propose that The Wassage and
bir be sent upa ataly.
April 9, 1975
Dear
recent menths I have had numerous meetings with State and Local officials
and I have repeatedly been assured that the top Federal legislative priority
of State and Local government is the re-enactment of General Revenue Sharing.
In these meetings, I have stated the position that I will be an advocate for the
re-enactment of this program.
It is, therefore, with a great deal of pleasure that I can inform you that today
I have transmitted a Special Message to Congress along with draft legislation
which keeps that pledge. My proposal would renew the program for 5 3/4
years in substantially its present form. In addition, the provision for annual
stair-step increases in appropriations of $150 million will be continued. I
have asked my staff to forward copies of this proposal to you at an early date.
I am sure that you and your citizens feel a vital stake in this program and I
sincerely hope that you will lend your personal support to its continuation in
this session of the 94th Congress.
Sincerely,
Gerald R. Ford
*The Blank will be filled in with names of appropriate Governors, State
Legislators, Mayors and County Executives.
THE WHITE HOUSE
WASHINGTON
April 11, 1975
MEMORANDUM FOR THE PRESIDENT
FROM :
JIM CANNON
SUBJECT :
General Revenue Sharing
One decision remains concerning General Revenue Sharing.
BACKGROUND
In January you decided that your proposal for the
extension of General Revenue Sharing should include
an annual increase of $150 million through FY 1982.
This works out to an increase of $37.5 million per
quarter, which is Treasury's payment period for
Revenue Sharing.
Because the Fiscal Year will change in 1977, there
will actually be 15 months (five quarters) in FY 1977.
QUESTION
Should the $37.5 million increase per quarter apply
through the five quarters of FY 1977, which would
make the total increase come to $187.5 million (vs.
$150 million) for that one fiscal year?
The cumulative difference for the full extended period
for 5 3/4 years is $225 million, or slightly more than
1/2 of 1% of your proposed total cost of extending
Revenue Sharing.
RECOMMENDATION
Bill Simon, Jim Lynn and Max Friedersdorf recommend
the increase of $37.5 million for each quarter including
the extra 1/4 in FY 1977 over the life of the bill through
1987. This change would provide an additional $225 million.
I concur.
DECISION
The issue is whether you want to propose this additional
1/4 payment of $37.5 million due to the fiscal year change.
Agree
Disagree
Discuss
THE WHITE HOUSE
WASHINGTON
April 11, 1975
MEMORANDUM FOR THE PRESIDENT
FROM :
JIM CANNON
SUBJECT :
General Revenue Sharing
One decision remains concerning General Revenue Sharing.
BACKGROUND
In January you decided that your proposal for the
extension of General Revenue Sharing should include
an annual increase of $150 million through FY 1982.
This works out to an increase of $37.5 million per
quarter, which is Treasury's payment period for
Revenue Sharing.
SALE FORD
Because the Fiscal Year will change in 1977, there
will actually be 15 months (five quarters) in FY 1977.
QUESTION
Should the $37.5 million increase per quarter apply
through the five quarters of FY 1977, which would
make the total increase come to $187.5 million (vs.
$150 million) for that one fiscal year?
The cumulative difference for the full extended period
for 5 3/4 years is $225 million, or slightly more than
1/2 of 1% of your proposed total cost of extending
Revenue Sharing.
RECOMMENDATION
Bill Simon, Jim Lynn and Max Friedersdorf recommend
the increase of $37.5 million for each quarter including
the extra 1/4 in FY 1977 over the life of the bill through
1987. This change would provide an additional $225 million.
I concur.
DECISION
The issue is whether you want to propose this additional
1/4 payment of $37.5 million due to the fiscal year change.
Agree
Disagree
Discuss
THE WHITE HOUSE
WASHINGTON
April 11, 1975
MEMORANDUM FOR THE PRESIDENT
FROM :
JIM CANNON
SUBJECT :
General Revenue Sharing
One decision remains concerning General Revenue Sharing.
BACKGROUND
In January you decided that your proposal for the:
extension of General Revenue Sharing should include
an annual increase of $150 million through FY 1982.
This works out to an increase of $37.5 million per
quarter, which is Treasury's payment period for
Revenue Sharing.
Because the Fiscal Year will change in 1977, there
will actually be 15 months (five quarters) in FY 1977.
QUESTION
Should the $37.5 million increase per quarter apply
through the five quarters of FY 1977, which would
make the total increase come to $187.5 million (vs.
$150 million) for that one fiscal year?
The cumulative difference for the full extended period
for 5 3/4 years is $225 million, or slightly more than
1/2 of 1% of your proposed total cost of extending
Revenue Sharing.
RECOMMENDATION
Bill Simon, Jim Lynn and Max Friedersdorf recommend
the increase of $37.5 million for each quarter including
the extra 1/4 in FY 1977 over the life of the bill through
1987. This change would provide an additional $225 million.
I concur.
DECISION
The issue is whether you want to propose this additional
1/4 payment of $37.5 million due to the fiscal year change.
Agree
Disagree
Discuss
THE WHITE HOUSE
WASHINGTON
April 11, 1975
MEMORANDUM FOR THE PRESIDENT
FROM :
JIM CANNON
SUBJECT :
General Revenue Sharing
One decision remains concerning General Revenue Sharing.
BACKGROUND
In January you decided that your proposal for the
extension of General Revenue Sharing should include
an annual increase of $150 million through FY 1982.
This works out to an increase of $37.5 million per
quarter, which is Treasury's payment period for
Revenue Sharing.
Because the Fiscal Year will change in 1977, there
will actually be 15 months (five quarters) in FY 1977.
QUESTION
Should the $37.5 million increase per quarter apply
through the five quarters of FY 1977, which would
make the total increase come to $187.5 million (vs.
$150 million) for that one fiscal year?
The cumulative difference for the full extended period
for 5 3/4 years is $225 million, or slightly more than
1/2 of 1% of your proposed total cost of extending
Revenue Sharing.
RECOMMENDATION
Bill Simon, Jim Lynn and Max Friedersdorf recommend
the increase of $37.5 million for each quarter including
the extra 1/4 in FY 1977 over the life of the bill through
1987. This change would provide an additional $225 million.
I concur.
DECISION
The issue is whether you want to propose this additional
1/4 payment of $37.5 million due to the fiscal year change.
Agree
Disagree
Discuss