Plenary Session Transcripts

Governors Attending:

Guests:

Discussion Subjects:

Revenue sharing; education financing; welfare reform

Points of Interest:

Vice President Spiro Agnew castigated the Office of Economic Opportunity's legal services program, which he said had 'great potential for political mischief' via the use of federal funds to pursue political objectives rather than to uphold the legal rights of the poor. The Vice President talked to Governors about the probability that general revenue sharing would be enacted by Congress that year. He also encouraged them to support the concept of special revenue sharing, which would consolidate 130 out of 530 federal programs into six broad areas. (See 1971 Winter Meeting discussion.)

NGA's Executive Committee was on record as supporting the House Ways and Means Committee's revenue sharing legislation. However, because the revenue sharing formula would be linked to income taxes, Governors from states that did not have such taxes complained that the legislation would coerce them into establishing them.

Governors talked about recent court rulings to the effect that property tax expenditures on education resulted in unequal educational opportunity. President Nixon had asked the Advisory Commission on Intergovernmental Relations (ACIR) to study the issue and report back to him on it. In turn, ACIR had established two stages for its study: (1) examining whether a massive infusion of federal funds was necessary to equalize educational opportunity; and (2) investigating the possibility of imposing a national value-added tax or some other alternative to the use of property taxes to finance education. However, a Governors' association committee studying the issue opposed the idea of a value-added tax, which members felt would compete with state sales taxes and would be no less regressive than property taxes.

During a session of the meeting devoted to the need for welfare reform, Governors talked about welfare fraud, about oppressive federal rules and regulations that forced states to pay benefits before there was sufficient time to determine an applicant's eligibility, about variations in state demographics and the substantive and administrative differences among state social service programs that necessitated flexibility in the use of federal benefits, and about prospects for a work requirement. Demonstrators from the National Welfare Rights Organization interrupted the discussion several times, arguing that the poor were being scapegoated as welfare cheaters. When given an opportunity to speak, the demonstrators took over all of the microphones, at which point the mikes were turned off until order was restored.

Also discussed was land use planning and its relationship to environmental concerns. Governor Francis Sargent of Massachusetts argued that Governors should be guided by the recognition that one set of values (economic progress) needed to be balanced against another (environment), and that business and environmental interests should be brought together in a spirit of cooperation. Governor Patrick Lucey of Wisconsin referred to the comments of a British cabinet member in a recent issue of Saturday Review to the effect that the prospects for a national land use policy in the U.S. were dim, given that our nation was made up of 50 different entities that in turn delegated responsibility for zoning to local units of government. Lucey cautioned that growth and development could be expected to occur in already overcrowded urban areas, where the cost of protecting the environment would be borne by those least able to afford it: the poor. And he expressed the view that national leadership on the issue of land use planning should come not from a line agency but directly from the President, delineating responsibilities for the federal government as well as for state and local governments.

Memorable Quotes:

In his opening remarks, the association chairman, Governor Arch Moore of West Virginia, said: "To speak of federalism is to speak of balance…as its central concept—balance of power, balance of resources, and balance of responsibilities. In the past decade or so, we have lost our balance to the point of toppling. We have attempted to right ourselves with slogans. Small wonder that we have had a measurable lack of progress. To restore the balance of our fiscal affairs, we have urged the enactment of revenue sharing. To restore the balance of responsibility, we support the passage of legislation which relies upon the States for implementation. To restore the balance of decision-making authority, we encourage the strengthening of federal regional offices and the establishment of regional units within our States."

Vice President Agnew, in requesting support for special revenue sharing (i.e., consolidation of categorical grants), said: "…for many years prior to the Nixon Administration, the trend of power in government [had] all been in one way—toward Washington. And it has bred some monstrous results. You may be familiar with some of them, such as:

• A neighborhood health center in Louisville spent $50,000 a year just to apply to the various funding authorities which supported it.
• One State had 93 people on its payroll who did nothing but apply for Federal education grants.
• And remember the 2-1/2 foot high, 56-pound stack of paper that [Housing and Urban Development] Secretary Romney displayed as a single urban renewal application?

…Revenue sharing will help, but a grass-roots rejection of the idea that career elitists in Washington should make decisions for every Governor, every Mayor, and every County official is sorely needed."

Then-Governor Ronald Reagan of California said regarding congressional delays in the enactment of revenue sharing: "I think that one of the reasons for the great delay is that [the National Governors’ Conference]…has not made it plain until recently that we believe in this, that it is necessary to us, that we must have it. We simply sit in our respective fifty States and wait for someone in Washington to bring it about in the Congress—and I don’t think the Congress acts that way. And I would hope that this group would make it unmistakably clear before we leave here that…we believe in and want revenue sharing, and we want it on a block concept; we want as much as possible the power of veto for the Governors, and we want as much discretion as possible in the use of that money within our States."

With respect to welfare reform, Governor John Gilligan of Ohio said: "…I supported the passage of [Senate welfare reform legislation]…But I think that we should recognize that nothing in [that legislation]…and nothing in existing law…will get welfare recipients off of the welfare rolls and on the payrolls, because nothing…comes to grips with the central problem now facing the American economy—massive unemployment, unemployment that has affected even the most highly trained and experienced members of our work force. It is true that the national Administration has proposed a number of programs to increase employment, one of them being a space shuttle that would provide fifty thousand jobs. But fifty thousand jobs in a space shuttle program is hardly a drop in the bucket when we are talking about six percent unemployment in this country…Since 1947…the unemployment rate has been at or above five percent every year, except for the Korean and Vietnam War years. What these wars have masked…was a growing elimination of jobs—productive jobs—in the private sector…it is time for us to recognize that we are not living in [a] situation in which private industry can eventually pick up the slack in unemployment. The jobs to support full employment simply do not exist in private industry and never will again in all probability. For us to say…to welfare recipients today "Go out and get a job" is to make Marie Antoinette’s statement about eating cake…sound like the milk of human kindness."

Governor Francis Sargent of Massachusetts said: "I think that we have got to remember that "ecology" is not a synonym for "environment." Rather, "ecology" refers to…an organism’s relationship to its entire environment. That means its material as well as its financial environment, its relationship to progress as well as to preservation. Thus a proposal to build a highway or locate an industry, or even to develop a park, must be judged from all of its aspects. Roads not only move cars; they wreck neighborhoods and scar the landscape. Industries not only produce jobs and tax dollars; they pollute our water and foul our air. Society can no longer, in my view, afford the unilateral approach. The parks not only provide havens of green grass and trees, but also they reduce land available for taxation and increase the local taxpayer’s personal burden. So the ecology message cuts both ways, in my view. Just as environmental implications in a development decision require consideration, so must the economic consequences of a conservation decision be carefully assessed."

Policy Position Adopted:
Recommending that the national Pay Board establish a separate wage review category for state and local public employees, given that salaries of those employees were unlike salaries in the private sector.