Page images
PDF
EPUB

ABSORPTION OF COSTS OF DEFENSE ACTIVITIES

I will not take the time of the committee to repeat the detail of the budget estimates, since that is set forth in the written justification which has been furnished. Instead I will address the remainder of my remarks to the question which I suppose may well be uppermost in the minds of the committee: Why cannot these new activities, at least for the balance of the current fiscal year, be absorbed by present personnel within existing budget limitations?

I can assure you that we in the Housing and Home Finance Agency are fully aware of the firm purpose of the committees and the Members of Congress to meet as much of the cost of the defense program as possible by curtailment, reorientation and absorption within existing personnel and funds. We not only understand that purpose, but share it and share the responsibility. Quite frankly, our question is not whether we can go still further along that line, but whether we have not gone too far already.

Last fiscal year, after Korea, we began to curtail regular programs, and at the same time to take on new defense responsibilities. I will not take time here to detail the various actions taken, since they are public knowledge. As the year progressed, our defense workload steadily increased, with the passage of the Defense Production Act of 1950, the issuance of regulation X, and the increasing problems of coordinating the housing programs of the Government with the developing materials and manpower problems of coordinating the housing programs of the Government with the developing materials and manpower problems generated by defense production and military activities.

By the end of the year, we estimate that our expenses in the Office of the Administrator alone for new defense functions-not covered in the original budget-amounted to some $650,000. This figure relates to added functions only, and not to costs of regular programs adjusted to serve defense requirements. To meet these costs, we used only $226,500 from the special defense appropriations made last year. The balance we succeeded in absorbing within our regular budget; and, in fact, practically all of the $226,500 was used to finance services obtained from other agencies-only a very minor portion went to supplement the staff of the Office of the Administrator.

REDUCTIONS IN REGULAR 1952 APPROPRIATIONS

For the fiscal year 1952, our budget problems are far more difficult. I am sure this committee will recall that the Housing Agency budget was cut as sharply in the regular Independent Offices Act for 1952 as any agency in the bill. In accordance with budget instructions, no funds for defense activities were included in the regular estimates. For the direct appropriation for salaries and expenses for the Office of the Administrator, we requested $4,330,000. The Congress approved $3,010,000-a cut of more than one-third. In connection with the advance planning programs, we requested $1,100,000. This committee and the Congress approved $550,000-a cut of one-half. In connection with prefabricated housing loans, we requested $185,000; the Congress approved $157,000.

When the Federal National Mortgage Association was transferred to HHFA after almost a quarter of fiscal 1951 had passed, its going rate of expense on an annual basis was about $5.6 million. During the balance of the year we reduced that rate by more than a million. For fiscal 1952, taking account of what then seemed reasonable assumptions, we requested $3.6 million-$2 million below the rate at the time of the transfer. The Congress approved $3,060,000.

In connection with the Public Housing Administration, the appropriation cut foreshadowed by the action of the Appropriations Com.mittees and the House was so severe that a reduction in force was made eliminating some 300 employees as of June 29, even though an employment "freeze" had then been in effect on last year's funds since early in March. In the Federal Housing Administration, reduction in force notices have been given to about 1,000 employees since congressional action on 1952 funds became known.

We are not pointing out these cuts in any spirit of complaining or objecting to the decisions the Congress has made. Mr. THOMAS. What is the purpose then?

Mr. FITZPATRICK. The purpose, Mr. Chairman, is to get these facts before you, because I think they are important facts in relation to our current request and where we stand today. The purpose is to show, as I will develop a little later in my statement, that we do stand in a fairly serious position personnelwise and budgetwise at this point.

Those decisions are settled and accepted. But it is important in connection with these present estimates to establish the plain, practical facts with which we have to work: and the cuts made in the annual budget make up a very important part of the facts.

CURRENT EMPLOYMENT OFFICE OF THE ADMINISTRATOR

At the end of the fiscal year, there were about 860 employees on the payroll of the Office of the Administrator, exclusive of the Federal National Mortgage Association. Funds available under the regular 1952 appropriation would support about 700. At the present time we have about 840 people in all. In other words, we have around 120-130 more people actually employed than we can carry for the balance of the year if the supplemental appropriations for defense activities are not made available.

What has happened is simply this: We have kept on about 120 people who normally would have been let go after June 30, because of lack of funds. Of course, some of those engaged in these defense activities have been newly employed, while others have been reassigned to defense functions. But the net effect is that there are about 120 people engaged in defense production and defense housing and community-facilities activities which cannot be supported without these appropriations.

Mr. THOMAS. Suppose you do not get these funds; how are you going to pay those people, the 120 people that have been kept on?

Mr. FITZPATRICK. Mr. Thomas, this agency has never come to this committee with a deficiency, and we won't this time. If the funds are not made available to us, we have no choice for the balance of this year, but to slash much deeper than otherwise we would have had to.

Our choice has really been either to cut them now-in which case we would either have had to drop our defense activities or almost completely abandon some of our regular functions, for which we had a one-third cut. Now, we had requested a supplemental appropriation to carry those added defense activities. Funds were requested in June in connection with the supplemental appropriation under the Defense Production Act, and that is still pending on the Senate side.

Frankly, we just didn't see how we could just drop activities which are obviously fairly essential to the defense program. We felt we had to postpone it until later in the year, and that means per se that if adequate funds are not available, the cuts which we will have to make will be much deeper-but that is what we would have to do.

Mr. YATES. Is that not an incongruous statement when you say that you only have funds for so many people, yet you have 120 more people employed than funds are available for?

Mr. FITZPATRICK. Those 120 people are on the defense activities. Mr. YATES. How are they being paid?

Mr. FITZPATRICK. They are being paid out of our current appropriation, but for that reason we are currently running at a rate we could not run at for the balance of the fiscal year.

Mr. YATES. I see.

Mr. FITZPATRICK. If funds are not made available, we will make our adjustments in the balance of the year by simply cutting much deeper.

At this point, let me make it perfectly clear that we are not contemplating a violation of the law against deficiencies. The Housing and Home Finance Agency has never come to this committee with a deficiency and will not do so in this case. I said earlier that we have some 120 people on the rolls who normally would have been let go. They are people who have been hired or kept on for essential defense work which was there to be done.

Supplemental appropriation requests for defense funds have been pending before the Congress since last June, and we did not believe. the Congress would want us to dismiss the employees and disrupt the functions during the very period when appropriations were being considered. But I want the record to be perfectly clear that if the Congress does not provide funds at this session, we will take appropriate and sufficient action to finish the fiscal year within funds already available to us. As I said before, we have no thought of coming back at the next session to say that we will run out of money before the end of the year. However, it should be equally clear that such drastic action-if we should have to take it would make it impossible for us to move ahead under the Defense Housing and Community Facilities and Services Act of 1951; would sharply restrict our already limited resources for carrying out defense production activities; and would impose further very heavy cuts on regular activities already reduced to a minimum basis-in order to avoid discontinuing special defense activities completely.

I shall be glad to answer any questions your committee may have, Mr. Chairman.

SUMMARY OF BUDGET ESTIMATES

Mr. THOMAS. Gentlemen, we have read your justifications rather carefully and without any lost motion on the part of the committee and to conserve your time as well as ours, we will go into your budget here.

You are seeking $79,451,000 for all of the interrelated activities of the Housing and Home Finance Agency in the form of a supplemental appropriation to augment and help you carry into effect the provisions of Public Law 139, the Defense Housing and Community Facilities and Services Act of 1951, which was passed and signed by the President on what date?

Mr. FITZPATRICK. September 1, 1951.

Mr. THOMAS. Is that statement accurate?

Mr. FITZPATRICK. Yes, sir.

Mr. THOMAS. The justifications are just about as complete as you can make them under the circumstances, and the meat is in here.

Mr. Reporter, at this point of the record will you insert page 5, which is a summary of the budget estimates. (The page referred to is as follows:)

Provision of defense housing and community facilities and services-Summary of budget estimates

[blocks in formation]

1 Items in parentheses show estimated fiscal 1952 usage of program funds for administrative expenses.

Mr. THOMAS. The summary of the budget estimates listed on page 5 is made up of some eight items.

The first is the determination of locality needs for defense housing and community facilities, which is directly under Mr. Foley's office. For that purpose the amount of $1,340,000 is sought for administrative expenses.

Under the Federal Housing Administration, there is a request for $51,000 for administrative expenses, and $2,500,000 for nonadministrative expenses.

For the Federal National Mortgage Association, $450,000 is requested for administrative expenses.

Item No. 4 is the provision of public defense housing with administrative expenses of $500,000, which amount is included in the total request of $50,000,000.

The next item is the provision of community facilities, with administrative expense of $140,000, which amount is included in the total of $15 million.

Next is the development of isolated defense sites, where you have not been able to arrive at the administrative costs, but the authorization is $10 million, and the full sum of $10 million is requested.

For loans for prefabricated housing $110,000 is requested for administrative expenses.

Referring now to item No. 1, namely, the determination of locality needs for defense housing and community facilities, an item of $1,340,000 in the Administrator's office, I think it would be well, Mr. Reporter, at this point to insert the summary of the estimates which begin on page 2 and continues on to page 3.

(The summary of the estimates is as follows:)

SUMMARY OF THE ESTIMATES

As related to the new functions and powers enumerated above, the budget estimates submitted by the President in House Document 242 and justified herein, may be briefly summarized as follows:

1. An appropriation of $1,340,000 for the Office of the Administrator to cover the cost of making analyses and surveys necessary for the identification and designation of critical defense housing areas; for the measurement of defense related housing and community facilities needs in such localities; and for the preparation of specific locality plans or programs designed to bring to bear the resources provided by the act to meet the needs identified.

2. An increase of $51,000 in the administrative expense authorization and of $2.5 million in the nonadministrative authorization of the Federal Housing Administration, to provide for increased workload resulting primarily from applications for mortgage insurance under the new title IX of the National Housing Act, and from the changes made by the act in credit regulations affecting housing.

3. An increase of $450,000 in the administrative expense authorization of the Federal National Mortgage Association, to permit the association to put into effect the advance commitment authority provided in Public Law 139 and in general to use its powers to encourage the freer flow of mortgage funds into the production of needed defense housing.

4. An appropriation of $50 million for the provision of housing by public construction in critical areas where private enterprise is unable to meet the entire defense related need, including $500,000 for the expenses of the Public Housing Administration during the current year in connection with the development and construction of such housing.

5. An appropriation of $15 million for the provision of certain community facilities primarily water and sewer systems-essential to meet local defense needs.

6. An appropriation of $10 million-practically none of which will be spent until an active program is initiated-to make title IV of Public Law 139 operative by establishing the revolving fund in the Treasury authorized by the title.

7. An authorization of $110,000 to cover added administrative expenses related to the expanded program of prefabricated housing loans under title V of the new act.

DETERMINATION OF LOCALITY NEEDS

Mr. THOMAS. And I will ask that there be inserted at this point the table appearing on page 15, which is a breakdown of the item of $1,340,000.

(Table referred to is as follows:)

« PreviousContinue »