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FLOOD CONTROL BILL OF 1946

FRIDAY, MAY 3, 1946

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HOUSE OF REPRESENTATIVES,
COMMITTEE ON FLOOD CONTROL,

Washington, D. C. The committee met at 10 a. m., pursuant to notice, Hon. Will M. Whittington (chairman) presiding.

The CHAIRMAN. The committee will be in order.

We have before us today the consideration of the bills introduced by Representative Abernethy and Representative Whitten, of Mississippi, with respect to increasing the reimbursements from rentals to the roads and school districts and local interests on account of the condemnation of land for reservoirs and on account of the loss of taxes to the local interests.

General Wheeler, my recollection is that under the act of August 18, 1941, you are authorized to pay to the appropriate local agencies for the use and for the benefit of the local roads and schools 25 percent of the rentals that you receive from land acquired in reservoir sites.

General WHEELER. That is correct, Mr. Chairman.

The CHAIRMAN. General Wheeler, for the record, as I understand, you have pursued the policy since the construction of the Sardis Reservoir and since the construction of the Arkabulta Reservoir along the Yazoo, Tallahatchie, Yocona, Yalobusha, and Coldwater River system of leasing the lands not required for the actual pool since the authorization of those two projects in the act of 1938, and you have also turned over to the local interests the 25 percent therein included. General WHEELER. Yes, sir.

The CHAIRMAN. Now that act of 1938, applicable to the reservoirs authorized along the Yazoo River and the St. Francis River, has since been amended so that the law now is applicable to all reservoirs, and it is your policy to lease local interests, preferably former owners, the lands that have been acquired for reservoir sites not actually flooded in the dry seasons? General WHEELER. Yes, sir, that is correct, Mr. Chairman.

The CHAIRMAN. Representative Whitten introduced a bill which is now before the committee for consideration. That bill is H. R. 4259, and it contemplates amending the existing law so as to provide for payment to local interests of 100 percent instead of the 25 percent of rentals, and my colleagues, Mr. Abernethy and Mr. Whitten, have been very vigilant in that matter.

On March 30, 1945, the War Department submitted a report on this bill, which is before the committee, and a report on comparable bills by Representative Whitten and Representative Abernethy, and in

this report you have stated you submitted the matter to the Budget, and you have stated the matter of the amounts of rentals collected to be repaid to the local interests, as I recall, is a matter for congressional determination. Is that about the story?

General WHEELER. Yes, sir. Therefore, the War Department does not consider it appropriate to submit a specific recommendation because it is a matter for determination by Congress. The subject has also been reported upon by the Federal Real Estate Board and the House Committee on Public Lands with reference to the loss of tax revenues. Therefore, the matter would require study by them.

The CHAIRMAN. I have a report submitted on Representative Abernethy's bill and on a comparable bill by Mr. Whitten. The report will be inserted in the record at this point.

(The report referred to is as follows:) Hon. WILL M. WHITTINGTON, Chairman, Committee on Flood Control,

House of Representatives DEAR MR. WHITTINGTON : Reference is made to your letter, dated December 17, 1945, to this Department, requesting a report on the bill H. R. 4534, Seventy-ninth Congress, first session, to amend certain provisions of the Flood Control Act of August 18, 1941 (Public Law 228, 77th Cong.), so as to increase the amount paid to States from moneys received by the United States on account of certain leases.

This bill would amend section 7 of Public Law No. 228, Seventy-seventh Congress, approved August 18, 1941, to provide that, of the money's received and deposited in the Treasury of the United States during any fiscal year on account of the leasing of lands acquired by the United States for flood-control purposes, there shall be paid at the end of such year to the States in which such property is situated, 25 percent of the amount received or a sum equal to the annual tas loss as a result of taking such lands for flood control to the counties and to road and school districts in such counties, in which such lands are situated, as shown by the tax rolls of such counties for the year in which such lands were taken, whichever is the greater, to be expended as the State legislature may prescribe for the benefit of the public schools and public roads of the county or counties in which such property is situated; provided that when such property is situated in more than one State or county the distributive share to each from the proceeds of such property shall be proportional to its area therein.

By Executive Order No. 8034, dated January 14, 1939, the President established the Federal Real Estate Board and directed the Board to study and make appropriate recommendations regarding the situation in different communities adversely affected by the loss of tax revenue on land purchased or acquired by the Federal Government. Pursuant thereto the Board submitted its conclusions and recommendations, which are embodied in House Document No. 216, Seventy-eighth Congress, first session. Subsequently, the Committee on the Public Lands, House of Representatives, made an interim report on the problem. Its conclusions and recommendations are contained in Report No. 1864, Seventy-eighth Congress, second session. The tentative conclusions and recommendations of the Board and of the committee recognize the complexities of the problem. The Board agreed on the principles which it suggested should govern Federal contributions. Stated briefly, these general principles are:

(1) Each class of real estate should be considered separately-no blanket formula could bring about the desired results; (2) the amount of Federal contribution should take into consideration the extent of actual tax loss, the local benefits from Federal ownership and its effect on requirements for services of State and local governments; (3) where determination of these factors is difficult or impracticable, contributions may be made on a receipts-sharing basis so determined as to approximate the desired results; (4) Federal contributions ought not to be made in such a way as to encourage perpetuation of uneconomic units of government or to impede reforms in the organization and functioning of local government.

Neither the present payment of 25 percent of leasing revenues nor the alternative provided in the bill will afford a wholly satisfactory solution of the problem

of compensating local communities for loss of tax revenues; nor do they take into consideration the very substantial benefits resulting from flood protection of other lands, or from recreational developments as authorized by section 4 of the Flood Control Act of December 22, 1944 (Public Law 534, 78th Cong.).

Since the reports of both the Federal Real Estate Board and the Committee on Public Lands indicate that further study of the general problem of compensation for loss of tax revenue on land acquired by the Federal Government is desirable before any remedial legislation is enacted, the War Department, while it has no objection to such legislation in general, deems it inappropriate to make any specific recommendation on H. R. 4534.

The Bureau of the Budget advises that it is not believed that the enactment of this proposal should be considered as being in accord with the program of the President. Sincerely yours, s

· ROBERT P. PATTERSON, Secretary of War. The CHAIRMAN. Mr. Whitten represents the district where the socalled Arkabutla Reservoir and the Sardis Reservoir have already been constructed. He represents a large area in the district where the reservoir known as the Enid Reservoir is to be constructed, and he is interested in the Enid Reservoir.

Mr. Whitten, we will be glad to have your statement now.

STATEMENT OF HON. JAMIE L. WHITTEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MISSISSIPPI

Mr. WHITTEN. Mr. Abernethy and I have cooperated our efforts. to relieve as far as possible the problems that are visited on our respective districts as a result of dams already constructed or those contemplated or in process of being built.

Of the four big reservoirs in Mississippi, three and one-half are in my district. It means, so far as my district is concerned, the richest, most fertile lands in the areas of Tallatchie, Yocona, Yalabusha, and Coldwater have been taken by the Federal Government as a result of action of Congress. Those lands were taken off the tax rolls, and it has resulted in a bigger percentage of the total land area of such school, certain road districts, and a big percentage of some counties are removed from the tax rolls, so far as supporting the remainder of those counties and so far as supporting the schools and road districts.

Whether this flood control program is beneficial to the State as a whole or to the Nation as a whole has been determined by Congress. Insofar as those areas are concerned where the water is placed on them, certainly, they have received no benefits. On the other hand, they have received a serious blow insofar as the local tax unit is concerned.

It might be argued that when you flood half of a road district that they have less roads to maintain, so, they do not suffer any loss, or you take off half the territory served by a given school you do not need as much money to operate the school for the remaining students. Of course, you realize you have to have the school plant, you have to have teachers and all the equipment. The same thing works for the roads. It does not cost a whole lot more to operate a school for 300 students than for a school of 150 students.

This is not a case of calling on the Federal Government to pay out of Federal Treasury money to those counties. Since they have been injured, maybe it would not be too much for the Government to do that. Actually, what we are requesting here is that the Federal Gov

ernment take the money which it collects for these county lands and turn all of it back, if necessary, to make that county whole for its tax loss.

It was called to my attention that in some areas of the United States recreational facilities had been built around the dams, that concessions had been sold, and that it was a real business proposition, and lots of money came from it. Recognizing that there possibly might be some draw-back in turning all the rentals of these lands back to the counties suffering these losses, we have introduced a bill which provides that the total rentals be paid to these counties suffering these losses or the total amount of the tax loss. In other words, if your 25 percent is much greater in a few sections of the country by reason of the concessions and recreational facilities, in that case, the county could not recover more than its tax loss, and the balance, of course, would stay in the Federal Treasury.

We believe this is something that this committee and the Congress would want to be fair about. We have tried to be fair in the preparation of these bills, which have been referred to your committee.

I know in my own area it has seriously crippled a number of schools. It has seriously crippled several counties in the operation of its finance. I think certainly, so long as the Federal Government has taken the lands from those counties, without their consent and against their wishes in most instances, the Federal Government should want to turn back to said counties any money that the Federal Government should receive from lands taken away from the counties, to replace the amount of tax loss which those counties have had. I grant you further that, since the situation differs in this section of the country, it would be well to put in there that in no case should they recover more than the, tax loss.

The CHAIRMAN. We are glad to have had your statement.

Mr. Abernethy is present, and we will be glad to have your statement.

STATEMENT OF HON. THOMAS G. ABERNATHY, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MISSISSIPPI Mr. ABERNETHY. Mr. Chairman, I am interested in this matter because, as you and the members of the committee know, there is now in the course of construction in my district, and in that of Mr. Whitten, two reservoirs known as the Enid and Grenada Reservoirs.

County revenues in the State of Mississippi are almost wholly acquired from taxes against our lands. Other than ad valorem taxes, there are few other sources of revenue for the retirement of bonds, maintenance of schools, roads, and general operating expenses. As our lands are removed from the tax rolls, the major sources of the revenue of our counties are proportionally removed.

While these figures may not be exactly correct, I have been previously informed that the surcharge pool in the Enid Reservoir will embody approximately 41,000 acres, and the surcharge pool in the Grenada Reservoir will embody approximately 72,000 acres. At this time I understand it is doubtful as to whether or not that quantity of acreage will be acquired. It is quite probable, according to a report I had a few weeks ago from the district engineer's office at Vicksburg, that a lesser quantity of land will be acquired; but, whether or not, it is

evident that a very large portion of the lands in Grenada, Calhoun, and Yalobusha Counties will be removed from the tax rolls. I made an estimate this morning. I do not know how correct it is. I am assuming that 36,000 acres of the Grenada County lands will be embodied in the surcharge of the pool of the Grenada Reservoir. This is a very large portion of the lands of the county. We all know that water is not backed up on the hills, but over the valley lands, which are our best lands, and which naturally carry the highest assessment and produce the most revenue for the county. Thus the county stands to lose a tremendous amount of revenue from this construction.

Previous experiences in my district, where the Government has acquired large tracts of lands in so-called submarginal areas, had a disastrous effect on the operation of the schools, particularly in Winston County, Miss., and in my home county of Chickasaw.

With these experiences I have concerned myself about this subject and so have the boards of supervisors of the counties who are charged with the governing responsibilities and the raising of revenues..

I have also made an estimate this moning—which I think is approximately correct—that we collect annually in taxes about 80 cents per acre from these lowlands which are to be embodied in the surcharge pool. As against that, under the present law, which is section 7 of Public Law 228, of the Seventy-seventh Congress, from the leased lands we would receive, as our share, 25 cents per acre, and therefore incur a loss of 55 cents per acre in revenue. We will incur a total loss as to that acreage within the water line.

The Water Department, apparently in programming these projects has not made a real study of the tax loss to be incurred. This is reflected in the report which it has made on the pending bills.

We have pending before this committee two types of bills. One would increase the returns from 25 to 50 percent, and the other would either pay 25 percent or a sum equal to the tax loss incurred by the county, as determined by the assessments in the last year that the lands were on the tax rolls whichever is the greater. The latter means would no doubt return to the counties, to the exact penny, the amount of losses that they had incurred. I confess that there is this objection: the Government, through the engineers, would be required first to determine the assessments and year after year determine the tax levies so as to calculate each year's remittance.

Personally, I have no preference as to the two bills, although H. R. 4438, Mr. Whitten's bill, which increases the return from 25 to 50 percent, I think is the most preferable means of settling the issue.

These lands are not ordinarily flooded. They are good valley lands. They are fertile lands. They are profitable lands. They are about to be removed not only from the sovereign powers of the State, but from the tax rolls of the county, and the people who are living on other soils in the county are going to have to assume the proportionate cost of operating the county that these particular lands would have borne. The government owes them the moral duty to see that this does not happen.

The War Department in its report has referred to the Federal Real Estate Board, which was set up for the purpose of making a general study of this subject. It also refers to the fact that the Public Lands Committee of the House of Representatives has been authorized to

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