1942: Municipal Government

In spite of the overshadowing importance of the war and the prodigious activities of the national government, rising citizen-interest in local affairs has characterized 1942. This is to be accounted for, in part at least, by the fact that the war has put local government on the spot.

Financial Problems.

In only very rare instances has the war made local government problems easier. Many communities have enjoyed boom-like prosperity, reflected in greater municipal revenues. Philadelphia, which has for years been struggling with budget deficits, has had a surplus in 1942 from which she has been paying off accumulated obligations. Her earned-income tax has become the envy of other cities. Most cities, however, which have experienced war booms have got with them a complex of rising prices and wages, new service requirements, and demands for costly public works, which have more than made up for enlarged income. Federal aid for war-necessitated works has fallen far short of meeting the situation. Other cities, of which New York is a striking example, by-passed by war industry, have lost population and suffered from declining revenues.

It is safe to say that for one reason or another the finances of most cities have been in a near-critical condition in 1942. Most cities have found their local tax revenues increasingly inadequate. Before the war they had come to depend on state and national grants for 25 per cent of their income. As the year progressed, the cutting off of WPA on which many cities — the letter of the law to the contrary — had relied for help to meet ordinary running expenses such as the operation of playgrounds and street repairs, caused new financial troubles. At the same time, the shrinking of state gas-tax revenues threatened a shortage of road funds.

The result has been endless studies and debates on the poignant subject of Federal-state-local fiscal relations by the Federal treasury, the Municipal Finance Officers Association, and many state and local agencies. It is apparent that local self-government cannot exist without a satisfactory self-controlled revenue basis. The fact that this subject has been brought out into the open by the war is a sign of hope. Of even more significance are the multiplied indications of citizen activity in local affairs. More revenue is not the only solution for the financial perplexities of local government. Better organized and more efficient government can help, and there has never been a time when citizen groups have been more active than this first year of war. This has gone along pari passu with extraordinary citizen participation in the various aspects of civilian defense and rationing, the enumeration of which is unnecessary here.

Municipal Elections.

The year 1942 has not been, generally speaking, a municipal election year. Very significant elections, however, were held, in Seattle and Kansas City in March. Seattle politics had for some time been dominated by the powerful teamsters' union headed by Dave Beck. The incumbent mayor, Earl Millikin, and a teamsters' union colleague on the city commission, however, were overwhelmingly defeated, after a bitter fight, by a ticket headed by Judge William F. Devin. In Kansas City the reform administration which came into power in 1940 was handsomely endorsed in the reelection of Mayor Gage and a council ticket pledged to carry on the work of reform. This seems to indicate the permanent conversion of Kansas City from the one conspicuous blot on the reputation of manager-plan cities. Already charter amendments to stabilize and remove from politics the civil service and to improve financial procedure are on the way to adoption.

Changes in City Charters.

Charter changes have been under discussion in many places throughout the country. The manager plan made conspicuous progress during 1942. It was adopted in 21 cities, including not only Bennington (7,628) and Brattleboro (9,622), Vermont, and several small New England towns, but such widely separated places as Lowell (101,389), Massachusetts, Lower Merion Township (39,566), Pennsylvania, Laramie (10,627), Wyoming, Houston (384,514), Texas, and Mill Valley (4,834), California. There were at the end of the year 561 cities and 7 counties under the manager plan.

Lowell, embarked on a campaign of economic recovery, adopted the so-called 'Plan E' manager plan with proportional representation which was adopted by Cambridge in 1941 and is now being agitated in several other Bay State cities. Houston's turn to the manager plan has peculiar significance as she had been the second city in the country to adopt the commission plan of government in 1905. Newark, New Jersey, the country's second largest commission-governed city rejected the manager plan in May, not so much on its merits as because of political involvements.

Municipal Bonds and Tax Exemptions.

A battle of giants was waged during the year over the exemption from federal taxation of income derived from interest on municipal bonds. The removal of the exemption was advocated by the United States Treasury as a means of preventing tax avoidance by wealthy investors and as a means of increasing revenue. It was opposed by state and local governments on the grounds that it would increase the cost of their operation by raising interest rates, and that it was a further invasion of the rights of local self government supposedly protected under our constitutional system. The battle before the House and Senate Committees evoked more heat and caused the expenditure of more oratory and printer's ink than its mere fiscal importance warranted. In the end the well-organized opposition succeeded in keeping the proposal out of the 1942 tax bill. The Treasury, however, apparently has not yet given up hope of completing its victory begun when the Supreme Court sanctioned Federal taxation of municipal salaries.

Wage Ceilings and City Employees.

Another issue as to the extent of Federal jurisdiction over local government arose in connection with the wage-ceiling order of the President. For some time its application to municipalities was left in doubt, to the manifest confusion of many local authorities. The national administration, however, finally decided against its own power to enforce ceilings on the wages paid to city employees, and the War Labor Board declined jurisdiction of labor disputes between municipalities and their employees. As local government payrolls aggregate between four and five billion dollars annually this left a considerable gap in the structure of wage control. On the other hand, it is clear as a pikestaff that if Federal authorities could fix the wages to be paid by local government there would be a great hole in the fabric of local self-government.