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

To the Congress of the United States:

I present the budget for the District of Columbia for the fiscal year beginning July 1, 1965.

I have spoken in recent weeks of our resolve to advance toward the Great Society-in our cities, in our countryside, and in our classrooms. What we do in our Capital City, I believe, will stand as a measure of our overall progress to that end.

I shall shortly send to the Congress a special message defining the specific goals and the steps for achieving them that will lead the District of Columbia toward the Great Society. The budget which I am transmitting will provide the means by which progress toward many of those goals can be made in fiscal year 1966.

Adequate financial support is necessary if the District is to have needed services and facilities. Improvements were made by the last Congress, but provisions for the Federal payment to the District and for District borrowing for capital improvements are still inadequate, and certain local tax rates should be increased.

1. The Federal payment.--The authorization for the Federal payment is a fixed amount. While this authorization was substantially increased by the last Congress, from $32 million to $50 million, it still does not reflect an equitable sharing by the Federal Government of the expense of government in the District. Of even more importance, a fixed amount necessarily fails to reflect adjustments which should be made in the authorization in order to maintain an equitable balance between Federal and local responsibility in the future. I urge the Congress to enact legislation authorizing an annual Federal payment based on a formula which provides a continuing and equitable measure of Federal financial responsibility.

The formula proposed by President Kennedy and approved by the Senate in 1963 will accomplish this purpose. Under it, the payment will be computed on the basis of the assessed value of real estate and personal property owned and used by the Federal Government in the District, and will represent the amount the District would receive if Federal Government activities were subject to local District taxes. Such a formula will relate the Federal payment directly both to District needs and to the contribution of its own citizens through local taxes. Under this formula, the Federal payment authorized in fiscal year 1966 would be approximately $57 million (see table), and is estimated to increase to approximately $75 million by fiscal year 1971.

It has been suggested that the proposed formula would create a precedent requiring the Federal Government to make similar payments for Federal property located in other jurisdictions. This is not a valid argument. The Congress has recognized for well over a century the special responsibility of the Federal Government for providing a share of the funds needed for the operation of the District government. The Congress has often changed the amount authorized for that purpose. The Federal payment authorization which I am now recommending is equitable and will provide a predictable basis for determining the amount which is authorized for the Federal payment. The issue has never been whether there should be a Federal payment but only as to the proper amount.

2. Borrowing authority.--While the limit of debt which may be incurred for purposes of the general fund of the District was increased by the last Congress to $175 million, it, too, is still a specified dollar limit, which must be renewed when exhausted. I recommend the enactment of legislation which will provide a flexible and at the same time prudent general fund debt limit based on ability to repay, namely, 6% of the 10-year average of the combined assessed value of taxable real and personal property (including property owned and used by the Federal Government as specified in the Federal payment formula). This would provide for the District a debt limit comparable in form with that in effect in most State and local jurisdictions. The adoption of this proposal would result in a general fund debt limit of approximately $233 million in fiscal year 1966, and of $293 million by fiscal year 1971. While borrowing will continue to require in each case the approval of the Congress, a debt limit of this kind will permit both the District and the Congress to make more soundly based long-range plans.

REQUIREMENTS AND FINANCING OF THE GENERAL FUND, 1965-71

NEW OBLIGATIONAL AUTHORITY, ALL FUNDS

It is quite appropriate for the District to incur long-term debt for capital improvements the useful life of which will extend over many years. It is equally appropriate to utilize more than might be considered a normal amount of such borrowing in order to catch up on capital improvement programs, such as for schools, in which the District has fallen far behind. It is neither appropriate nor prudent, however, to require the District to use borrowed money as a substitute for amounts which should be available on a current basis.

The District's budget is constructed in the belief that the Federal Government will provide its equitable share of District needs as indicated by the authorized Federal payment. The District is penalized unjustly when a portion of this proper Federal responsibility is transferred to the shoulders of future District taxpayers who must repay the loans.

EDUCATION Appropriations of $77.7 million are needed to provide for the operation of the District's school system in 1966, an increase of $5.8 million over 1965. The additional funds will provide for 517 new teaching positions needed to keep abreast of the requirements of a rapidly increasing school population, which will reach almost 150,000 by fiscal year 1966. The additional teachers will permit the achievement throughout the system of the pupil-teacher ratios approved by the Board of Education.

Funds are also provided to achieve the ratios recommended by the Board for school counselors and to provide librarians for about half of the elementary schools that now do not have them. Deficiencies will still remain but the budget reflects a major effort to remedy shortcomings and to make the District's educational system a model for the Nation.

The budget also includes $29.4 million for the vital program of improving the school plant. Construction of new schools and additions to existing school buildings will increase the capacity of the system by some 5,000 pupil spaces. Funds for sites and plans are provided to permit a similar enlargement in fiscal year 1967. Nothing less will suffice if the District is to have available modern, well equipped school buildings, eliminate part-time classes, and provide adequate space for its increasing school population, including students who are staying in school rather than dropping out. In no other area has the District's capital construction program lagged so far behind. In no other area is the need to catch up more urgent.

The inclusion of the District in the program of Federal aid to school districts impacted by children of Federal employees does not lessen the need for these appropriations. The Federal aid provided under Public Law 88-665 is properly being allocated to those schools in the District most in need of enrichment of programs and services above the level provided in the regular budget. Use of these funds as a substitute for regular educational appropriations not only would deprive District children of these additional educational resources, but also would conflict with the intention of the Congress.

Special programs for the schools in the Cardozo area which have been funded through the Economic Opportunity Act and the program to prevent juvenile delinquency should also be regarded as additional to those provided in the regular budget.

WELFARE AND HEALTH The budget includes appropriations of $81.3 million for operating expenses of the welfare and health departments, an increase of $5.1 million over 1965.

The welfare programs for which funds are provided are directed so far as possible to the rehabilitation of persons and families by positive action which will advance them toward self-sufficiency. Consistent with this, although not a part of the welfare budget, matching funds are provided to enable the District to participate in a number of training projects under the Manpower Development and Training Act.

The budget reflects my belief that the District should be in a position of leadership in putting into effect the welfare and health programs which the Congress has authorized in recent years. I remain particularly concerned with the plight of dependent children, and the continuing upward trend in the population of Junior Village. For that reason the budget contains funds which will permit the District to participate in the national program of aid to dependent children of unemployed parents. In the massive effort now being undertaken on many fronts to improve the conditions of the District's poverty-stricken families, we can ill afford not to utilize every available program which will help to maintain families intact. I strongly urge the Congress to reconsider its previous position on District participation in this program.

The budget continues the health programs already established and provides funds for more intensive efforts in the fields of maternal and child health, in the control of venereal disease, and in the food pesticide residue program.

Proposed capital outlays total $7.8 million. The substantial increase over last year is occasioned by the need to construct a facility for the detention and rehabilitation of District youths now being accommodated at the National Training School for Boys, which will be moved to Morgantown, W. Va., in 1967. A badly needed school activities building at Junior Village is also included in the Welfare Department budget.

The Health Department budget includes funds urgently needed to plan for community health centers. The establishment of such centers in several parts of the city is important to the District's general health program and is basic to the implementation in the District of new concepts in the prevention, treatment, and care of mental illness and mental retardation.

PUBLIC SAFETY The budget provides operating expenses of $77.6 million for public safety, an increase of $3.4 million over 1965.

The District is engaged on many fronts in an attack on the prevention and punishment of criminal acts, and the elimination of the causes of crime. It is apparent that more must be done. I shall shortly make further recommendations on the subject to the Congress. The budget provides funds for the enlargement of the police force by 100 men, and continues the program to release officers for active police work by increased use of civilian personnel for administrative activities.

PARKS AND RECREATION The funds provided in the budget for the Recreation Department will continue the improvements which were instituted last year, as well as accelerate the program of enlargement and improvement of playground and recreation facilities. The John F. Kennedy Playground in the near Northwest section of the District--an area seriously deficient in playground resources--is a welcome addition to the city's recreation facilities. Funds have been provided for a new site for Shaw Junior High School, thereby making it possible to preserve the needed playground.

HIGHWAYS AND TRAFFIC The highway program has been coordinated with the proposed rapid transit program in order to achieve a balanced transportation system for the District and the Washington metropolitan area. I shall shortly send to the Congress my recommendations with respect to the rapid transit program. Funds to meet the District's share of initial costs are included in the budget.

The highway program, which is also urgently needed, will be delayed for lack of funds in fiscal year 1966 unless the resources of the highway fund are increased. I am, therefore, again recommending an increase of $35 million in the loan authorization for in the gasoline tax. The new District gasoline tax rate of 7 cents will correspond with the rates in Maryland and Virginia, and will yield an additional $2 million annually, a sum sufficient to retire the $35 million loan in 30 years. This tax and borrowing program continues the sound policy of financing the street and highway system by taxes based upon use. Additional taxes of this kind may be necessary as the District faces increased expenses in maintaining its portion of the Interstate System and in constructing, maintaining and improving other highways and streets. I am therefore instructing the Commissioners to consider proposals for financing the highway fund for the next decade.

CONCLUSION The needs of the District, as of other great cities, continue to grow. As our Nation's capital, the District of Columbia should exemplify the best in programs for the health, education, and welfare of its citizens. This budget, together with the proposals in this message for additional funds, will in my judgment significantly advance the District toward that goal. At the same time, it is designed, like the Federal budget, to avoid waste and inefficiency. The District is continuing to strengthen its management improvement programs. In the District, as elsewhere in our government, staff must be used effectively, unnecessary work and positions must be eliminated, and additional personnel added only when absolutely essential.

LYNDON B. JOHNSON

January 21, 1965