It is obvious, I think, that the state of your State is intimately
related to, and sharply affected by, the state of the local governments
within it. Time does not permit a detailed philosophical discussion
here of the problems involved and the courses open for their reso-
lution. I believe, however, that the time has come for some funda-
mental decisions on the following:

How far should the State go in levying and collecting taxes which
are immediately returned to the subdivisions in the form of State
appropriations?

How far can the State go in granting the localities broader taxing
powers without jeopardizing its own revenue structure?

Should we permit them to levy and collect their own taxes, the
State withdrawing completely from the field of making appropriations
to the subdivisions?

Would the State, then, have to forego the establishment of minimal
standards for local government services, such as it now imposes for
such things as education, health and welfare?

What would be the effect of giving broad taxing powers to 25
separate and distinct units of government—that is to say, the State,
its 23 counties and Baltimore City?

While I am not prepared to offer immediate decisions on the ques-
tions raised, I can assure you that the Executive Department is aware
of them and is seriously concerned about finding solutions to these
complex problems of State and local government relationships.

The whole matter of State aid to the subdivisions is of grave con-
cern to me. While I am supporting the report of the Committee on
Taxation and Fiscal Matters at this time, I do firmly believe, however,
that the more the people are aware of the cost of the services their
government is providing, the better, and that therefore the division
of government appropriating the money should have the responsibility
to levy and collect the taxes to pay for its services.

Now, in as brief a manner as possible, I should like to review with
you some of the programs currently in operation in your State
Government and to offer you some suggestions I have for improving
them. But let me say, first of all, I have some satisfaction and some
pride in the accomplishments thus far of this Administration. With
your generous and competent assistance, we set up new agencies, re-
organized others and initiated new programs during the first part of
our term. I can say I am highly pleased with the results.

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