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called upon to find solutions. A primary restraint upon our search for solutions is the limited fiscal resources available to most cities. It is for this reason, among many others, that the National League of Cities and the U.S. Conference of Mayors strongly supports the President's General Revenue Sharing proposal. Because some press accounts have misunderstood our concern with what the President has chosen to call special revenue sharing with our commitment to general revenue sharing, we want to take this opportunity to again assure the Congress that our support for general revenue sharing remains firm.
Even before the President revealed his budget for Fiscal Year 1972, we began to realize that the Administration was refusing to obligate all of the funds that are available for a number of vital urban-oriented programs. Cities deeply appreciate the support which they have received from this Committee and from the Congress as a whole in the authorization and appropriation of needed funds for such programs as urban renewal, model cities, public housing, Sections 235 and 236 housing assistance, waste and sewer grants and mass transit. We hope this support will continue and will grow. Now, however, the Administration has told the Congress and the cities that the funds which we all worked so hard to get are not going to be utilized according to the schedule intended by Congress. Instead, the Administration tells us that only a portion of the funds made available by the Congress will in fact be obligated during this current fiscal year 1971. All unobligated funds will be carried over into fiscal year 1972 where most—but not all-of them will be finally utilized. Since this holdback situation became known, both the National League of Cities and the U.S. Conference of Mayors have earnestly called for the release of this money. We urge this Committee and the Congress as a whole to join with us in seeking the release of these vital funds.
What can the cities of this country do to get this money released? What can the Congress-and, in particular, this Committee do? Each year, the representatives of the cities come before the Congress, along with the Administration, to debate the needs of our urban areas. First, we debate the size of the authorization requets. Then, we return again to the Hill to argue for full appropriations. Each time, the Administration presents its arguments, usually for lower levels of funding in the programs we are discussing today. In past years, with only occasional exception, the Administration has accepted the ultimate decision of the Congress, a decision which resulted from this national debate. Now, however, this Administration has seen fit to carry that debate one step further. Now apparently, we must return to the Congress once again to argue whether the monies, which have already been authorized and appropriated, will in fact be spent.
Mr. Chairman, your Committee is meeting this morning to highlight concern about the Administration's decision to hold back certain already appropriated monies for a number of important programs. In particular, we direct the Committee's attention to the President's budget which shows that out of the Fiscal Year 1971 funds already made available by Congress, the following program amounts have been frozen: $192 million in public housing contract authority, $200 million in urban renewal funds, and $200 million for water and sewer grants-a total of nearly $600 million in funds which could be utilized today. In addition, the Administration's original budget showed a very low level for obligations under the Model Cities program with no new appropriation request for FY 72. As we will indicate in a moment, we are able to report to this Committee that HUD has now agreed to amend its level of estimated Model Cities obligations to provide for the full funding of all contracts. Finally, we are disappointed in the Administration's apparent unwillingness to request the full amounts authorized for the Section 235 and 236 housing assistance programs.
Far and away, the program with the most critical need for these withheld funds is public housing. In 1968, the Congress established a ten year national goal of the construction or rehabilitation of 26 million units, of which 6 mil. lion must be for low and moderate income families. That means we must build or rehabilitate an average of 600,000 units of low and moderate income housing each year. As this Committee knows only. too well, the Federal Government fell behind schedule in meeting that national goal almost as soon as it was set by the Congress.
The President's budget estimates that the Department of Housing and Urban Development will assist in the construction or rehabilitation of only 465,000 units during the current fiscal year. That is 135,000 less than our minimum annual goal. Nevertheless, the Administration has chosen for reasons of its own to freeze the $150 million in public housing contract authority which the Congress authorized in the Housing and Urban Development Act of 1970. Half or this amount-or $75 million-is available right now for new construction.
In fact, if we look at the figures for the total contract authority available and at the estimated obligations for FY 71, we find that approximately $83 million in funds for new development will go unused this year. These funds would account for an additional 50,000 units which added to the current estimate, would still place this country some 85,000 units short of its annual housing goal for federally-assisted housing. This trend in underfunding would apparently continue into the FY 72 budget where some $75 million more for new starts, accounting for about 47,000 units, would go unused. That is nearly 100,000 units in two years.
Mr. Chairman, the President eloquently expresses his concern for the dangerous economic situation facing this country today, Yet, he decides to withhold spending for these necessary urban programs, spending which would mean immediate jobs and stimulation to the lagging economy. Unemploy. ment is now, not on July 1, 1971. We appeal to the President to release these funds now.
Also in the HUD Act of 1970, Congress increased from $75 million to $150 million the amount of contract authority to be available annually under the public housing program for operating deficits and maintenance expenses. It is imperative, Mr. Chairman, that the entire amount_$150 million-be obligated each year for this purpose. Throughout the country, many public housing authorities, both large and small, are facing massive deficits. Soaring operating and maintenance costs, coupled with reduced rental receipts, have created an intollerable fiscal situation. Each year, there is discussion about problems with the public housing program, and as mayors, we are quick to admit that the program could stand considerable improvement. However, the Federal Government cannot allow the existing inventory of units to disintegrate while we are having a national debate about the reform of our housing assistance programs.
One of the explanations which the mayors have received when they have inquired about this low level of obligations for the public housing program is that this Administration feels that the housing assistance programsSection 235 and 236-are better mechanisms. These programs provide homeownership and rental units to families of low and moderate incomes.
At least two points need to be made about this preference of the Administration's. First, the President's most welcome statements to the effect that local priorities, locally determined should be favored wherever possible, would lead one to logically conclude, for example, that the choice between public housing and Section 236 should be made by each applicant-community. Yet, by essentially selecting one program over another at the national level, the Administration renders meaningless its expressed commitment to abide by local priorities. It should be pointed out, for example, that to a significant extent, public housing serves a lower income clientel than either Section 235 or 236. In some communities, public housing is currently the only appropriate program designed to meet the needs of their low income citizens.
Secondly, even if we were to accept for the moment that Sections 235 and 236 were to be favored, how then are we to understand the Administration's request for Fiscal Year 72 for these programs. Where Congress has authorized $200 million each for Sections 235 and 236, the President intends to ask for only $175 million. Moreover, there has been no supplemental request for funds to utilize the additional $25 million in FY 71 authority approved by the Congress in December for these two programs. To say that a level of 465,000 units of federally-assisted low and moderate income housing in enough during FY 71 or that just over 500,000 units for FY 72 is satisfactory is to ignore the Congressionally set national goal of at least 600,000 such units annually. We call upon the Administration to make full use of the funds that are available for these important housing programs and to seek a supplemental appropriations for Section 235 and 236 for the balance of this fiscal year.
The Administration's budget also short-changes the all important urban renewal program. You will recall, Mr. Chairman, that the Second Session of the 91st Congress originally appropriated $1.35 billion for the urban renewal program during Fiscal Year 71. This bill, which also included $500 million for the vital water and sewer grant program upon which so many of our counties and smaller communities rely, was vetoed by the President in August of 1970. The Congress then passed a new appropriation bill which called for a $1.2 billion for renewal and $350 million for water and sewer, amounts which constituted a compromise between the Administration's original request and the vetoed bill. The President signed that bill.
Now we find that the Administration intends to obligate only $1 billion for urban renewal, carrying over the balance of $200 million for use in Fiscal Year 1972. For water and sewer grants, the budget shows estimated obligations of only $150 million, with a balance of $200 million carried over.
We need not, I am sure, go deeply into the discussion of the demand for these urban renewal funds with this Committee. Well over a 1,000 communities in all 50 states have participated in the program since it began in 1949. Over half of these communities have populations below 25,000. The rate of return on this investment to these communities and to the Federal Government has been impressive. Over 2 million jobs will have been created and over 5,000 structures will have been built when present development has been completed. Over five dollars of local private and public investment has been generated for each federal urban renewal dollar spent. The assessed tax valuation of land and improvements has been increased an average of 240% in completed projects, thereby expanding the local tax base.
Last summer when we mayors came in large numbers to the Capitol to stress our needs for increased urban renewal appropriations, we pointed out that where there were pending with HUD over $3 billion in project applications, only about $1 billion would be funded during fiscal year 71 under the Administration's request.
We have no reason to believe that this disparity between requests and available funds has lessened. If anything, the demand has continued to steadily increase. The urban renewal program continues to be the primary, physical development tool available to our cities. It must receive adequate funding from the Congress and those funds that must all be utilized by the Administration in order for the Cities to be able to make any headway in the seemingly endless struggle for urban rejuvenation. We ask this Committee and the Congress itself to assist the cities in having this vital money released.
We are happy to report that the crisis facing the Model Cities program under the Administration's budget as published has now eased. When the President announced his general plans for the consolidation of four HUD programs-urban renewal, model cities, water and sewer grants, and rehabilitation loans-into a community development grant program, he indicated that December 31, 1971 was the target date for the beginning of the new program. This, of course, assumed favorable Congressional approval prior to that date. In anticipation of this planned transition, HUD planned to notify the mayors of all cities involved in the Model Cities program that their program would be terminated on December 31, 1971 and that all future funds for these purposes were to be gotten out of the new consolidated grant program or from elsewhere in the Federal Government. In particular, this meant that the bulk of Model Cities activity-over 80% of the totalwhich has been non-physical development would have to be financed out of some other department's budget.
As soon as these plans became known to the mayors, they appealed the matter with the White House and the Office of Management and Budget through their Washington representatives, the National League of Cities and the U.S. Conference of Mayors. After several weeks of discussions, at various levels of the Government, and with the important help of the Vice President's office, we are now satisfied that we have a commitment from HUD to institute a different approach to the proposed transition of Model Cities. We have assurances from HUD that the Department will fully fund on an annual basis all Model Cities contracts which come up for renewal (or for initial funding) between now and the end of this calendar year. In order to be able to do this, HUD must-and we are told it has request an amended budget from OMB which would raise the estimated
obligation levels for this fiscal year from $375 million to $524 million. For the six months of FY 72, the new level of obligations would be $288 million rather than $70 million. Working just with the money which has already been appropriated by Congress for this program, we understand that HUD could fully fund all contracts that come up for renewal until mid-March of 1972, at which point a new appropriation would be necessary. HUD has assured us that the Department will request this supplemental appropriation sometime later this calendar year if it becomes clear as we think it will that Congress will not be able to approve the Administration's grant consolidation proposal prior to December 31, 1971,
As a minimum approach, we can work with this. We may very well have some serious questions about the advisability of including Model Cities in with several basic, hardware programs. However, we will hold those concerns until we have been able to study the Administration's grant consolidation proposal. We would only comment in summing up this recent change of heart on the part of the Administration by saying that the kind of consultation-though with greater quality and frequency- that has occurred these past two weeks is the kind of regular communication that should precede, rather than follow, the presentation of all major legislative issues to the Congress. Prior consultation in this case with both the mayors and the Congress would have eliminated the threat of disasterous consequences posed by the Administration's original plans.
To summarize the funding freeze now being applied to these several, important HUD programs, we deplore the Administration's actions of refusing to utilize $200 million in urban renewal funds, $200 million in water and sewer grants, and $192 million in available public housing contract authority. This amount, nearly $600 million, could be obligated for pending project requests almost immediately if the Administration so desired. We appeal to the Administration to demonstrate its commitment to assist the communities who participate in these programs and who are thereby seeking to solve some of their most critical problems by releasing these funds for use during the current fiscal year. We also urge the Administration to submit a request for a supplemental appropriation for the two vital, housing assistance programs Sections 235 and 236.
The final program that we wish to bring to your attention this morning is the mass transit program. The much acclaimed Urban Mass Transportation Assistance Act of 1970 which authorized $3.1 billion for the cities was a measure that received the strong backing of this Administration. The House-Senate conferees on that bill agreed to set a $600 million limit on obligations under this bill during Fiscal Year 1971.
It is thus with considerable disappointment that we learn from the Administration's budget that only $270 million is scheduled for capital facility grant reservations during FY 71. After subtracting the funds recently awarded the District of Columbia, the total amount to be made available to the cities for their pressing mass transit needs is a far cry from the level envisioned by Congress last year.
This Committee knows well the extent to which many of our largest metropolitan areas are choking with their own uncontrollable transportation snarl. As in the area of the community development programs which we just discussed, the name of the game in mass transit development is money. Without massive amounts of it, no city in this country will be able to take meaningful steps to solve its transit problems. We urge this Committee and the Congress to join with the mayors in seeking to increase the Administration's actual level of FY 71 obligations under the mass transit program.
Senator ERVIN. If I may interject, I do not know whether or not vou saw the program put on by ABC-TV last night, in which Commentator Howard K. Smith called the attention of the President to the fact that this subcommittee was beginning these hearings today. The President stated in substance that when he was in the Congress, he used to play games with the White House.
Do you think this could be likened to just some games that are played for recreation
Mayor ALIOTO. Let me just say, Senator, on that, that those 300 community leaders that I, Mayors Lindsay, Daley, White, and D'Alesandro brought to Washington to tell them what was going to happen in those ghettoes unless the renewal programs which the Government had generated would continue, that those community leaders gave Congress the impression that they were doing something other than playing games.
Senator ERVIN. Do you not consider the power of the purse perhaps the greatest power that the Constitution gives to Congress?
Mayor ALIOTO. There is not any doubt. Those of us who are budget makers in our own cities and those of us who have some control over hudgets in our cities know clearly that the power to govern ultimately can be defeated if somebody else controls the money. .
Senator ERVIN. Do you not consider that when the Congress makes an appropriation which is in excess of the amount that the President has requested Congress to make, and the President then impounds the excess funds, that the President, to all intents and purposes, is usurping Congress' power of the purse?
Mayor ALIOTO. I think it is very clear in the case of the urban renewal funds we are talking about. Congress made a deliberate decision based upon a documented case. Then the President said, “We are not going to spend this money.” If there are games being played, Senator, there ought to be some kind of signal worked out between the President and the Congress on that. But when the matters are as serious as some of the matters I have discussed with you, certainly some signal ought to be worked out for the Executive usurping the Congress of its power by executive fiat.
Senator ERVIN. In the case you are speaking of, the impoundment of appropriated funds which were designated by the Congress to be of assistance in carrying out such programs at the local level as the urban renewal program can bring chaos into the local administration of such programs.
Mayor ALIOTO. There is no question about the chaos it can bring to the local administration of programs.
Let me just give you an example from my own city. There was a time when I had to take on Eldridge Cleaver directly because I believed he was not only espousing violence but also actually training young people for violence. The black leadership in my city stood behind me. In fact, I was able to step aside for awhile and they completed the job in San Francisco. He acknowledged this in a national magazine.
These same black leaders have been working with us now because we have given them the hope that through rejuvenating their communities, we could wipe out the existing problems. The hope that has arisen in 5 years under the urban renewal program has been dashed by freezing these funds. Those leaders who fought once to knock out somebody who trained young people for violence may not feel the same way if these expectations that have been generated by the Federal Government are somehow dashed.
Senator ERVIN. Mr. Secretary, if you want to comment anytime on what the mayor says, it will be entirely satisfactory.
Mr. UDALL. No, as a former administrator, I am very sympathetic to the argument that the mayor makes, and I think the real issue
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