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Drpnrtmentof thellaggyr ary ,
OFFICE OF REVENUE SHARING kf°f
WASHINGTON, O.C- 20220 TELEPHONE W04-8711 1789/
FOR RELEASE AT 12; 30 P.M. , MDT, OCT. 26, 1972
Federal regulations governing the first Revenue Sharing
for the nation' s 38,000 States, cities , counties and towns
were made public today.
Edward A. Fox, Interim Director of the new Office of
Revenue Sharing, told a conference of government officials
at Denver,Colo. , that the regulations will be printed in
the Federal Register Friday.
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Fox said the new regulations purposefully were kept to
a minimum, in keeping with the philosophy of fiscal account-
ability at the local level.
"The regulations not only describe the few requirements ,
but provide information on such things as when to expect
payments, data used for determining allocations , newspaper
publication of required reports , regulations on establishment
of trust funds , anti-discrimination facts , wage rates and other
pertinent points ," Fox said.
Copies of the regulations will be sent to all 38,000
governmental units involved .
The Interim Regulations are available by writing to
the Office of Revenue Sharing, Department of the Treasury,
Washington, D. C. 20220.
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720568
SOME ADDITIONAL QUESTIONS ON REVENUE SHARING
Oct. 25 , 1972
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QUESTION: May Revenue Sharing funds be used to reduce taxes?
ANSWER: Yes .
Whether or not local governments use the funds for
this purpose is a judgment which each government
must make, based on its evaluation of local needs .
QUESTION: Will reducing taxes affect the amount of Revenue
Sharing funds received by a local government?
ANSWER: To the extent that a reduction in taxes results in
changing the tax-effort relationship of a unit of t:
government with other governments in its locale,
it will reduce that government' s future share of
Revenue Sharing funds . However, Treasury Department
officials believe that the loss of funds will
probably not be a pivotal factor in the decision to
lower property taxes .
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QUESTION: Who receives the Revenue Sharing checks at the State
and local level?
ANSWER: At the State level --- the Governor. At the local
level , within a state , the person authorized to
receive such funds . This could be the Mayor or the
City Treasurer, etc .
The important thing to remember, though, is that
the more than 38 ,000 Revenue Sharing checks will be
sent directly to the State and local levels of
government from the Department of the Treasury.
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QUESTION: How long may a recipient government hold Revenue
Sharing funds in a trust account before the funds
must be expended?
ANSWER: A total of 24 months from the date of the check.
The recipient government must use or appropriate
such funds kincluding any interest earned while
the monies were held in the trust fund) in 24 months.
However, permission can be granted by the Secretary
of the Treasury for a longer period.
• QUESTION: Does the Treasury determine where a recipient
government should desposit its Revenue Sharing Check?
ANSWER: No. Determination of what bank to put the money in
is entirely within the discretion of the recipient
government. The Treasury does not designate a bank
for this purpose.
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EXECUT. .c OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
ADVANCE FOR RELEASE
Thursday, 1 :00 p.m. , MDT
October 26 , 1972
EXCERPTS FROM REMARKS OF CASPAR W. WEINBERGER
DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE REGIONAL COUNCIL CONFERENCE
DENVER, COLORADO
It is a particular pleasure for me to be with you in
Denver today for the first of a series of eight regional
conferences across the country with State and local government
leaders. These meetings are about a major reform, a revolu-
tion, in our federal system of Government - General Revenue
Sharing.
I want to thank Governor Love personally for his fore-
sight and national leadership in support of this important
legislation. It is particularly fitting and a measure of his
leadership that the first of these conferences , which will be
held all over the country, should be here in his Capital.
President Nixon has sponsored a wide range of governmental
reforms designed to enhance the role State and local governments
play in our federal system. This is not only sensible , but
essential to redress the balance among the various levels of
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government in the United States . He has created and used
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Federal Regional Councils in ten standard regions to ensure
that the Federal Government is responsive to the needs and
desires of Governors , mayors, and county executives . The
presence of the members of the Federal Regional Councils in
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Denver and Kansas City here today testifies to the importance
they have in enhancing the cooperative , not dominant, role the
Federal Government should play.
The President also has proposed a major reorganization
plan to simplify the structure of the Federal departments and
agencies. It would make our Federal bureaucracy more accessible
to those other levels of government that must deal with it, as
well as more responsive to the people.
He has consistently attempted to consolidate narrow
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categorical grant programs into block grants that give recipients
more flexibility in the use of the funds.
And most importantly, he has proposed, worked for, and now
signed, on October 20 , 1972 , fittingly, in Independence Hall in
Philadelphia, the State and Local Assistance Act, commonly
called Revenue Sharing.
The President considers this legislation to be truly a
landmark.
It is a giant step toward necessary decentralization of
our federal system of government. It puts the responsibility
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for decisionmaking and priority setting squarely on the shoulders
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of the elected officials of State and local government. It also
gives the people more control over their government. With this
money comes the local responsibility to see that it is spent
wisely; and in the final analysis the voters will review the
wisdom of the decisions of their elected State and local
representatives .
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Revenue sharing is not a new concept, and it should not be
the frightening bugbear that some of its detractors would have
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us believe it to be. The idea has been around for a long time.
As a matter of fact, it goes back to the days of President
Jefferson who urged that federal revenue be used for "a just
repartition. . . among the States. . .applied to rivers, canals,
roads, arts, manufacturers, education and other great objects
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within each State. . . . " (emphasis mine)
A form of revenue sharing was endorsed by Congress in 1836 ,
which voted to distribute surplus Federal funds to State
governments. Twenty-eight million dollars was distributed
in 1837 to capitalize State banks, local debt repayment and
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financing public works construction.
After this Jacksonian experiment, revenue sharing was
neglected and virtually forgotten for some 125 years, although
other countries such as Australia, Canada and India studied
or adopted it.
Revived interest in the concept of unconditional revenue
sharing of Federal tax monies occurred in the early 1950s,
when some far-sighted thinkers and political leaders called
attention to the growing gap between expenditures and the
limited tax base at the State level .
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A task force which studied intergovernment fiscal problems
in 1964 recommended that a portion of federal individual income
tax receipts be shared unconditionally with the States.
The Johnson Administration never seriously proposed this
proposal. However, interest in it persisted, and it received
new support when the Republican Governors published a policy
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paper calling for prompt enactment of the plan. By 1968 ,
both party platforms contained specific revenue sharing
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proposals.
For the first time in 1969 , President Nixon gave revenue
sharing the leadership it needed. The President called to the
White House a representative, bipartisan group of governors,
mayors and county officials to assist him in developing his
revenue sharing plan.
Originally proposed in 1969, Revenue Sharing languished
in the Congress without a hearing until President Nixon, in
his State of the Union Message on January 22 , 1971, once again
stressed the need for the program. He said:
"The time has come for a new partnership
between the Federal Government and the States and j
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the localities--a partnership in which we entrust
the States and localities with a larger share of
the Nation' s responsibilities and in which we share
our Federal revenues with them so that they can
meet these responsibilities. "
As you know there has been a stimulating public and
congressional debate about revenue sharing over the last two
or three years. The debate has finally been resolved in favor
of the confident view of the American Federal system, and last
Friday the President signed revenue sharing into law.
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However, the opponents of revenue sharing say that the
debate is not over. They say that government in America is
on trial, that all levels of government will be watched
closely by the people to see that their monies are wisely
spent, and they say they doubt that it can be done.
It is up to all of us here to prove that they are wrong.
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We must prove that Federal Government, State Government, and
local government can act responsibly and wisely, and I believe
we can.
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Let me be a little more specific about the philosophy
of revenue sharing.
President Nixon and the other supporters of this legislation
do not believe that the principal wisdom about what should be
done with the taxpayers' money resides in Washington, in the
Congress, or the Executive Branch. President Nixon believes
strongly that to be more responsive, government must be closer
to the people, close enough to hear them - and that means
greater dependence on State and local government.
The President has directed that the regulations governing
the use of these funds be as simple and free of red tape and other
restrictions as is humanly possible within, of course, the terms
of the law itself. The regulation will not tell you how to
spend this money. State and local laws and procedures will
govern, and accounting, reporting and auditing will be governed
as much as possible by State and local governments themselves .
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The options about what this money should be used for
are truly broad, and the choices among them are to be made by
the elected representatives of the people at State and local
government levels.
I am sure that you are all thinking about your options . !
I have heard and read a lot about the debates that are going
on around the country. I do not want to urge on you, indeed
I cannot, that you increase your spending for education or
roads or law enforcement or for a new city hall. You may
well choose some form of tax relief for the burdened taxpayers
to whom you are answerable. This is entirely consistent with
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the President' s original conception of revenue sharing. The
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genius of this landmark law is that each decision as to the
use of these monies can and should be unique to the problems
and demands of each State or local government and its people.
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° And now about the administration of revenue sharing:
To administer the State and Local Fiscal Assistance Act
of 1972 , the Office of Revenue Sharing has been established
under the Secretary of the Treasury.
The Office will be headed by a Director who will be
assisted by a Deputy Director and a small staff. Edward E.
Fox, Director of Finance, Federal Home Loan Banks in
Washington, D.C. , has been named interim director of this new
office. His job is to get the money out to the States and
local governments as quickly and simply and economically as
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he can. As 2 see it, his main task will be the verification
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of data used for applying revenue sharing formulas. There
are more than 38 ,000 State and local government units eligible
to share these federal funds , and we must of course apply the
formulas in the law to determine the amounts due each govern-
mental unit. His is the office that will try to answer your
questions about the technicalities of this law. Regretfully
the law has a few more of those technicalities than we could
' have wished.
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° What is the basic provision of the law?
The amount for calendar year 1972 is $5 . 3 billion. This
amount will be increased each succeeding year. We estimate the
take will amount to $30.2 billion for the five years of the
statute 's existence. Congress provided that the life of the Act
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run five years, beginning January 1, 1972.
All revenue sharing funds are to be divided between the
States and local governments in the ratio of one-third to State
governments , two-thirds to local. Thus, of the $5 .3 billion
in 1972, a total of about $1.8 billion is made available to
State governments, and about $3 .5 billion is made available to
counties , cities and other local governments.
This amount will be increased by small annual increments
for each of the four -succeeding years. Formulas based on
population, income, and tax effort determine individual
state entitlements.
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The seven States represented at this conference will
receive in calendar 1972 the following amounts :
1. Colorado - $54 .6 million
2 . Kansas - $52 . 8 million
3. Missouri - $98 . 8 million �
4 . Nebraska - $42. 9 million
5. North Dakota - $19 . 7 million
6 . South Dakota - $25 . 1 million
7. Wyoming - $9. 7 million
The first checks, to be mailed as soon as practicable
(we hope by December) , will represent approximately one-half
of the Calendar Year 1972 payment of $5. 3 billion. The second
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checks , in early January, will distribute the remainder of the l
1972 payment.
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It should be emphasized that figures published by the ,
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Conference Committee as the Act cleared the Congress were j
based on estimates from older data, and do not represent the
final amount each unit of government will receive.
A special study is now being completed by the Census
Bureau to update the data required under the law for determining
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allocations.
State governments and units of local government are required
by Congress to establish a trust fund and deposit all payments
received under the Act intthat fund. In the case of local
governments, Congress has ordered that they must use the amounts
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for priority expenditures as defined in the Act. Most current
expenditures of local governments are in categories that meet
this requirement already. So that this requirement, which was
of Congress ' making, not the Administration' s , should not be
too burdensome.
Revenue Sharing is a program that does indeed return power
to the States and local governments of America. I am confident
that the money made available under revenue sharing will be
wisely spent by those people who are here today who are closer
to the public and better able than the Federal Government to
decide local needs and resources . The Act is but part of the
overall solution. It is a good start. Whether it is the
beginning of a new trend is largely up to all of us here . j
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