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The rehabilitation loan program provides subsidized loans to rehabilitate residential and small commercial structures in specified community development areas. A budget authority increase of $95 million is requested for 1979. It is expected that these funds will be augmented by anticipated loan repayments of $35 million. These total resources will support about 10,000 loans in 1979, compared to 7,700 in 1978. Outlays are estimated to rise from $43 million in 1978 to $85 million in 1979. The comprehensive planning program provides funds to State and local governments, and areawide organizations, for planning and management activities. The budget authority requested for this program is maintained at the 1978 level of $57 million. However, total funds available for these activities will be substantially greater, because the community development block grant program also provides funds to local governments for similar purposes. In 1979, block grant recipients are expected to use about $100 million for comprehensive planning and management activities. Outlays for the comprehensive planning program are estimated to decline from $64 million in 1978 to $60 million in 1979. The research program of the Department of Housing and Urban Development supports the search for solutions to community development and housing problems. Activities to be undertaken include: * major evaluations of the section 8 cash rental assistance program (discussed in the income security function) and community development block grant programs; * development of techniques to lower housing costs; and * evaluation of the performance funding system, which provides operating support to public housing projects. The research program also provides financial support for the interagency urban reinvestment task force, which encourages residential rehabilitation in urban neighborhoods. The 1979 budget also requests $20 million in budget authority for the urban homesteading program, a $5 million increase above the 1978 level, and $10 million in budget authority for a new urban extension service program. This program is intended to facilitate the interchange of approaches to handling urban problems among local governments and thus achieve more effective use of Federal funds.

Department of Agriculture.—The budget proposes $275 million of budget authority in 1979 for the Department of Agriculture's water and sewer and rural development grants, with emphasis on assisting in the development of water supply facilities. This is a $10 million increase over the 1978 level. These grants complement the $1 billion in loans discussed under area and regional development.

Pennsylvania Avenue development.—The budget requests $27 million in budget authority for 1979 to continue the revitalization of downtown Washington, D.C., as envisioned in the Pennsylvania Avenue development plan. Development will take place under the direction of the Pennsylvania Avenue Development Corporation in cooperation with private enterprise. Outlays for land acquisition and development activities are estimated to rise from $21 million in 1978 to $25 million in 1979.

Area and regional development.—Programs in this mission provide support for rural development, American Indian tribal governments, and Appalachian development.

Department of Agriculture.—The Department of Agriculture expects to make $1.0 billion in water and sewer and community facility insured loans during 1979, an increase of $50 million over the 1978 level, and to guarantee $1.1 billion in industrial development loans, an increase of $100 million over the 1978 level. Outlays for these programs are estimated to increase slightly from $318 million in 1978 to $344 million in 1979.

The water and sewer, and community facility loan and grant programs are intended to augment and complement the community development block grant program and the Environmental Protection Agency waste treatment grant program in rural areas. The Department of Agriculture community facility programs are limited to communities with a population of less than 10,000; industrial development loan guarantees are available in communities of less than 50,000 population.

In response to the President's request, the Department of Agriculture directed an interagency evaluation of rural problems and possible initiatives to facilitate a more effective Federal role in rural development. That study will be integrated with the findings developed by the White House Conference on Balanced Growth in February. The final study will also reflect the recommendations of the President's reorganization project regarding economic development. The study is scheduled for completion in the spring of 1978.

Department of Commerce.—The Economic Development Administration (EDA) provides assistance to economically depressed areas and assists States and communities in dealing with economic development and regional economic problems. The budget requests a supplemental of $117 million in budget authority for the regular EDA programs in 1978. Budget authority of $656 million is requested for 1979, an increase of $128 million over the 1978 total. The amount requested for cities increases from $127 million in 1978 to $205 million in 1979.

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Budget authority for rural districts and counties increases from $171 million in 1978 to $213 million in 1979. Outlays for the temporary local public works program are estimated to be $2.3 billion in 1978, $2.0 billion in 1979 and $1.1 billion in 1980. Except for necessary administrative expenses, no budget authority is requested for this program. In 1977 an additional $4.0 billion of budget authority was requested as part of the President's economic stimulus program. Therefore, further economic stimulus from this source is not necessary at this time. Proposed budget authority for technical assistance, supplemental grants, and administrative costs of the regional action planning commissions in 1979 is at the 1978 level of $65 million. The coastal energy impact program provides limited planning and environmental grants, and major loans and loan guarantees to States and local governments to assist them in planning and financing public facilities and services required as a result of energy development activities in or near coastal areas, such as Outer Continental Shelf (OCS) oil development. No 1979 funding for the loan program is requested because an estimated $200 million is available for loans and guarantees from current and prior-year appropriations. Additional funding will be requested when loan applications exceed existing funds. For 1978 and 1979 a total of $210 million is proposed to be made available in Federal grants, loans, and loan guarantees. Outlays are estimated to rise from $4 million in 1978 to $15 million in 1979.

Indian programs.-The major objectives of Federal Indian policy are to meet the trusteeship responsibilities of the U.S. Government, to increase self-determination for American Indian tribal governments, and to encourage economic development on Indian reservations. To further these objectives, the Indian Self-Determination and Education Assistance Act of 1975 enables Indian communities to administer Federal programs serving them, pursuant to contracts with the Bureau of Indian Affairs (BIA). Currently, $140 million of BIA programs are covered by such contracts.

The Federal Government provides grants, training, and technical assistance to strengthen tribal management and planning abilities. It also encourages economic development through business development assistance, direct Federal loans, and interest subsidies. It funds community development activities, such as construction of roads, schools, and irrigation systems. Outlays for the Indian programs whose primary mission is regional development are estimated to rise from $686 million in 1978 to $743 million in 1979. Additional assistance to Indian tribes is classified in the health, education, training, employment, and social services; income security; natural resources and environment; and general government functions.

Appalachian programs.--Through the Appalachian Regional Commission (ARC), 13 States—from Mississippi to New York—and the Federal Government cooperate to encourage economic development of the region. The 1979 budget requests a $10 million increase in appropriations for each of ARC's major programs: the Appalachian development highway system; and area development projects aimed at providing facilities essential to the region's growth, particularly in the areas of health, education, and community development. A total appropriation of $346 million is requested for Appalachian programs in 1979, an increase of 6% over 1978. Outlays are estimated to increase from $315 million in 1978 to $323 million in 1979. In addition, estimated outlays of $135 million in 1979 from the Tennessee Valley Authority will be used for development in the region.

Disaster relief and insurance.--Insurance against losses from such natural disasters as floods, hurricanes, and tornadoes is the responsibility of individuals and businesses, with State and local governments primarily responsible for aiding recovery. Federal insurance and disaster relief are available to supplement these resources when they are insufficient. Outlays for disaster relief and insurance are estimated to decline from $1.7 billion in 1978 to $1.0 billion in 1979.

Disaster loans.-Under current law, both the Farmers Home Administration in the Department of Agriculture and the Small Business Administration have the authority to make emergency farm disaster loans. To remedy the difficulties caused by this overlap in responsibility, legislation is proposed to limit such authority to the Farmers Home Administration. The Department of Agriculture administers three major disaster assistance programs: (1) emergency loans; (2) Commodity Credit Corporation disaster payments; and (3) Federal crop insurance. The Farmers Home Administration is better equipped, through its long experience in dealing with farmers, to handle this program more effectively, and will assure that loan assistance is extended only to those who can demonstrate a real need and who are unable to obtain loans from private lenders. Farmers Home Administration programs are discussed more fully in the agriculture and commerce and housing credit functions.

Disaster relief.Under the Disaster Relief Act of 1974, disaster relief in the form of grants to individual victims and block grants for the restoration of public facilities is provided. Outlays depend upon the incidence and severity of uninsured losses from natural disasters and are estimated to be $284 million in 1979.

National flood insurance.—This program is designed to reduce the economic hardship resulting from floods. Flood insurance is available at federally subsidized rates for structures located in flood hazard areas in communities that are willing to adopt flood plain management plans. An important aspect of an effective flood insurance program is the participation of all communities in the flood plain management process so that development in one community does not adversely affect another community. By the end of 1979, it is estimated that there will be 16,500 communities participating. Most of the estimated $150 million in outlays in 1979 will result from the payment of claims.


[In millions of dollars]

[blocks in formation]

Guaranteed loans:

New loans.--
Net credit guaranteed.



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