State and much of it in proximity to their place of residence. Supermarkets, department stores, restaurants, gas stations, theaters, even the corner candy store and the seashore resorts can ill afford to lose this busineses. It is our considered opinion that railroad commuting service must be maintained. Beyond our daily needs, railroad arteries must be kept healthy for the indispensable service they perform in our defense during periods of national crisis.

COMMUTERS

Our commuter is facing a situation not of his own making. Every resident of the State is alongside him--the State itself, the municipalities, little and big businessmen, property owners, resort owners. Yes, all of us, public officials and private citizens, as parties in interest, have a share in the present situation and last but not least the railroads themselves. To correct this situation requires the cooperation of every citizen in all segments of our economy.

Interstate railroad cominuters today in the New York area far exceed those using buses and automobiles. Should railroad commuter service be discontinued or even curtailed to the point where it would be of little use as a means of transportation, it is not difficult to imagine what would happen. Suddenly the rush hour interstate commuters traveling the State highways would be more than doubled. Road conditions would be close to impossible and commuting time by passenger car and bus would be materially lengthened and this without counting the inconvenience to the thousands of intrastate commuters whose points of origin and destination we have not yet had time to determine. Strangulation would result. Such a condition would require the construction of new roads, bridges, and river crossings. For these there are neither adequate funds nor sufficient time available to enable us to cope with such a problem. Those who use motor transportation must take into consideration the value of the standby services of the railroads in inclement weather. An icy morning with no railroads and insufficient buses, or inadequate arteries of travel would present a chaotic condition, for on such days thousands of passenger car commuters turn to public transportation which they expect to be on tap for their service without advance notice.

With no commuter railroad service, the outlay by our State and our municipalities for highways over a period of years when traffic would be entrapped would amount to several billions of dollars with a continuing annual outlay for upkeep, repairs, and maintenance. Municipalities would be presented with serious traffic problems, increased policing costs, as well as the loss of ratables to find room for the new roadways.

ACTIVITIES TO DATE

Our highway department's concept of its responsibility is to move people rather than just vehicles.

And along with this philosophy our staff has not temporized with the transit problem, but has been focusing on a number of solutions which can contribute materially to relieving some of the tensions and threats, at the same time providing improved service for the commuters and economic salvation for the carriers.

Basically the first goal is to retain and improve essential commuter service and schedules. This will necessitate capital expenditures on the part of the railroads for equipment and general modernization; other phases will involve joint use of facilities by the railroads.

A plan to insure adequate service for the movement of commuters living in Bergen County to and from places of employment in the New York metropolitan area is vital to our overall program. Of primary importance to the whole commuter problem in northern New Jersey is the assurance of continued operation of the Hudson Tubes. Accordingly, efforts have been directed toward increasing their patronage and revenue by making their services available to commuters in the Central Railroad of New Jersey territory. At the request of the highway department's division of railroad transportation, the Pennsylvania Railroad is making a thorough study to determine how it may revise its operations to permit the Central Railroad to operate its passenger service through Newark over the Pennsylvania Railroad's facilities providing the Central Railroad passengers access to both the Hudson & Manhattan and the Pennsylvania Railroad which, when worked out, will speed up the service so routed.

As a result of our efforts so far, the Lackawanna has withdrawn its earlier expressed intent to suspend commuter service which, if carried out, would have jeopardized service to residents along its lines. We also anticipate sharing in the already well developed proposals for improving suburban transportation in the Camden area which promise substantial relief to commuters in that section of our State.

The department, both prior to and since the formation of its railroad division, has had innumerable meetings with railroad and municipal officials, commuter organizations and with some of the railroad labor groups, all of whom have a substantial stake in a working out of this transit situation. We have tackled the immediate problems with the hope of maintaining essential passenger service while avoiding really substantial fare increases.

The daily log of meetings and issues reviewed with the carriers and all parties at interest by our staff covers a wide field of activity. This has truly been a night and day job.

SUGGESTED SOLUTIONS

There have been too many so-called solutions in the past to detail here. Suffice it to say that none of the elixirs or curealls included any ideas as to source of revenue with which to carry out any of the grandiose plans.

One plan was for an elaborate railroad loop to tie all of the railroads together at an estimated cost of $500 million (despite the length of time required to build it, which would be a further drawback). The eventual final cost might come closer to $750 million. Considered judgment is that even when completed it would not be a self-sustaining operation. Such a plan would require borrowing by the State for construction (which the railroads cannot do as their credit is not in such shape to permit them to borrow that much money) or by a transit commission whose bonds would have little attraction to investors. The taxpayers would again be faced with the cost of interest on the debt and possibly the making up of a deficit in operation each year. Interest on the debt and the cost of upkeep would affect every taxpayer from Cape May to High Point Park.

TAX RELIEF

Railroads claim that taxes are too high and must be lowered to forestall the demise of passenger transportation. However, our municipalities cannot be expected to forgo taxes on ratables presently occupied by public carriers. They need revenue to service their communities. If they derive no income from such occupancy it will mean increased taxes on homes and local businesses which would add further burden to the taxpayers. Rail taxes are aproximately $18 million annually, of which about $15 million reflects taxation by municipalities. A pledge from the railroads to continue service while our railroad division delves into the facts, it is felt, would warrant a program of tax relief for the year 1960 and in subsequent years if justified by an improvement in service. This procedure would afford our railroad division time to review and investigate with the carriers a new program of changes, consolidations, etc.

Understand we are not accepting a continuation of the status quo, but expect the railroads to improve their service, air-condition their trains, and go out and do a selling job, get new business. More on this subject later.

FINANCING

Some time ago we added to our staff consultants to aid in providing a solution of our transportation problems. Among these were property, accounting, transportation and engineering consultants, as well as fiscal advisers and bond counsel. All of our studies have emphasized the need of money to effectuate our plans and alleviate the present situation. A plan developed whereby we may provide tax reductions for railroads that insure the maintenance and improvement of commuter service and at the same time enabling us to provide funds to reimburse the municipalities for the taxes so lost. This plan is based on the new conception of our responsibility that transportation by car and transportation by rail-in fact all means of transportation-are all parts of the single problem to be considered and dealt with by the State highway department.

It is proposed that the New Jersey Turnpike's surplus revenue which it is now earning over and above the cost of operation and required debt service, be made available to finance all phases of the transportation problem including the emergency presently facing the commuter. The attorney general has indicated that legislation can be drafted under which future railroad taxes can be properly

adjusted and revised. This emergency demands that the legislature exert its efforts toward framing and enacting effective legislation, bipartisan legislation, to accomplish this objective.

Opinions expressed by experienced financial and legal sources support this plan. The major steps would be for the legislature to pass an enabling act providing for this action and then ask the voters by referendum in the November election to place the State's credit behind the debt of the turnpike. There is ample precedent for this in the financing of the Garden State Parkway. Surplus income from the turnpike would replenish the State Treasury for any amount of possible loss to municipalities as before stated.

FAVORABLE RESULTS

Under present conditions the turnpike would be toll free, with all debt cleared by about 1974. Motorists have alternative toll free roads. It would seem inequitable to give these vehicles the opportunity of using this especially fine road as a wholly free project in any event earlier than 1988, when the turnpike bonds were designed to mature. The trip across our State is a comparatively short one and past history indicates that the millions of vehicles making this run rarely stop enroute to contribute toward our State's economy. After 1988 the then Governor and legislature may wish to do something about this toll free problem, but that is another story about which we are not now concerned.

Another collateral advantage from our plan would be that the State may recapture some substantial sums of money now in the reserve funds of the authority which would no longer be needed when the State places its credit behind the bonds. Our financial consultants have estimated the sum which would be so released as between $30 million and $40 million.

This plan, we feel sure, would be more effective and less costly than any overall plan to completely reform or remodel the commuting services of the railroads. A continuation of turnpike revenue trends based on the present level of operation would mean the State could recapture something in excess of $11 million in 1960; $12,500,000 in 1961; $13,750,000 in 1962; $15 million in 1963; and increasing yearly until it reaches about $43 million in 1988 by which time all of the turnpike debt will have been retired. These yearly surplus revenues will total about $630 million. Today all of these surplus revenues merely got to accelerate the retirement of turnpike debt more rapidly than is necessary to pay it off by 1988, the maturity date of the bonds as originally planned.

This plan requires the cooperation of the holders of the turnpike's outstanding bonds, who under their present contract have a right to all funds earned by the turnpike. They cannot be expected to give up this right without receiving an equivalent in exchange. Assuming the voters of the State approve the referendum at the November election, the bondholders will have even better security than at present. They will still have a first lien on the turnpike revenues and these revenues still will be ample to pay the debt. In exchange for this better security, it is planned to ask the bondholders to consent to give up only the surplus revenues as outlined above which they do not need. The par value of the bonds affected will amount to about $430 million by the end of 1959.

The application of these surplus funds to the solution of New Jersey's transportation problem is entirely proper for without doubt the turnpike has contributed materially to the decline in railroad passenger and freight traffic.

There is another aspect to this plan which should be of interest to our taxpayers. The cost of maintaining this turnpike as a free facility would have to come out of their taxes through the budget of the highway department (probably as much as $6 million to $8 million a year by 1974, when the road is then 15 years older than now).

By no means the least of our considerations is the safety of life and limb and the protection of our greatest resource, our human beings. It is imperative that modernization and elimination of railroad crossings at grade wherever possible be accomplished as part of the overall program.

With the financial resources that this plan will produce, we feel certain that the transportation problems facing the people of New Jersey can be progressively and effectively dealt with.

CONCLUSION

All will have to do their part. By this I mean your office, sir, the State legislature, the highway commissioner, the railroad division and its consultants under his direction, the attorney general, and last but by far the most impor

tant, the voters. It will also require the wholehearted cooperation of the public carriers, the labor groups, the various commuter organizations, the press, the chamber of commerce, the League of Women Voters, the State Taxpayers Association, public officials, and civic organizations. We know the railroad problem can be corrected and intend at your direction to do all that we can legally do and do that now. At the same time we expect the railroads, in their own interest, to help themselves back to profitable operation of their commuter services.

None of the aforementioned interests, in the opinion of the transportation division, can escape their share in the responsibility for clearing up this transportation situation. It must not, it cannot, fail.

To sum up, the plan will:

1. Keep the railroads running for essential passenger service.

2. Prevent shifting of business and homeowners within or out of our State, which would tend to ruin our economy.

3. Will enable small homeowners to retain their equity in property which is part of their old-age "nest egg."

4. Prevent municipalities from losing taxes and enhance their opportunities for income.

5. Assure railroad labor of jobs.

6. Enable both small and big business to maintain their activities and encourage full employment.

7. Save paying interest on debt created to build new highways that would be required in attempting to cope with any major disruption of passenger rail service; also annual maintenance of such facilities.

8. Save taxpayers the cost of maintenance of the turnpike were it allowed to become toll free ahead of time.

9. Avoid loss of life due to extreme highway congestion if rail commuters were forced to change to automotive transportation.

10. Provide hope for improvement in rail service and thereby drain traffic away from our highways.

11. Avoid new taxes to finance our transportation operations.

12. Will not cost the taxpayers 1 cent.

This is the proposal of your division of railroad transportation of the highway department.

Respectfully submitted.

JUNE 15, 1919.

DWIGHT R. G. PALMER, Commissioner.

Senator WILLIAMS. The many Federal programs giving relative subsidy advantages to certain transportation media have therefore magnified the problem for the States and localities and made a solution a great deal more difficult. This is but one of the many reasons the Federal Government has a responsibility. I do not know what can appropriately be done to assist our metropolitan areas toward a solution but I think it is one task the proposed commission should look into.

A second problem is that of our expanding educational needs. The shortage of physical plant in our educational structure is particularly acute in large urban areas. Here, we have many buildings which are old in terms of time and almost totally inflexible in terms of physical construction. Many of these buildings were built in the last century. The rooms are designed in accordance with the needs and desires of a time long since supplanted with major advances and changes. Not only from a functional point of view but from a point of view of safety, many of these buildings are terribly outdated. Wooden floors soaked with oil, narrow fire escapes and staircases; many without libraries, or such minimal requirements as electrical outlets in classrooms, concrete playgrounds, and a host of similar problems. All of us who have traveled through the larger cities, particularly in the East, are familiar with the total inadequacy of many

of these facilities despite their relative physical soundness. These outmoded facilities hamper modern educational methods.

Of course, our educational needs must be viewed not only in terms of growing school populations, but in terms of higher quality. Our local governments have been doing everything they can to meet the problem but it just hasn't been enough. After all, the largest part of local government funds comes from property taxes, and while our property taxes have been rising and rising in the past decade, the Federal income tax rate has remained stable. Under the existing division of tax sources, clearly the Federal Government is in a stronger position to be of more assistance than it has been.

We have, in addition, a problem in the field of physical decay of core cities. This development is, as this committee well knows, the result of the many rapid changes in our social and economic patterns, brought about by the expansion of the metropolis. Since this problem is being fully debated in the repeated attempts of the Congress to move forward with a minimal program of housing and urban renewal, I shall not take the time of the committee to go over this wellworn ground.

I would, however, like to point out that, in my opinion, too few Americans have a clear understanding of the problems facing us during what has been called the greatest migration of all time-the shift in population from great cities to the areas around them. A notable planner, Carl Feiss, has used a new term to describe one of the biggest problems now facing our Nation. He calls it "land pollution," which is new, and, I think a better description than "urban sprawl." In other words, we swallow up valuable agricultural land, or natural recreation areas, or beautiful forests with each spurt of growth outward from our city and suburban centers. According to one estimate, we use up more than a million acres each year for urban development.

The sad truth is, we don't know the full implications of this metropolitan growth phenomenon. Are our Federal programs helping to solve problems caused by this growth, or are they balking attempts at solution? What are we doing to save the sections of our cities which should be saved? Is Lewis Mumford right when he says there is a kind of degraded urban tissue growing up around our great metropolitan areas?

Shouldn't we pay heed when a distinguished student of metropolitan problems, Wilfred Owen, consultant for the Twentieth Century Fund and senior staff member of the Brookings Institution, warns that great and unprecedented land use problems can result from the expenditure of approximately $100 billion within the next 15 years for the road programs at Federal, State, and local levels?

I ask these questions only to point out that we do not yet know enough to attempt to give an answer to them. We need this Federal commission to help give us these answers, and we should have it as soon as possible.

Air and water pollution do not recognize political boundaries. The distinguished chairman of this committee, of course, is fully aware of this problem and is the sponsor of an urgently needed expansion of our water pollution program.