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wise to use these successful job-generating programs as pawns in a discussion over a broad concept like revenue sharing. I think it should be possible for me, as Governor of Minnesota, to favor general revenue sharing as a principle but still give my wholehearted endorsement to H.R. 5376 which I know can produce new jobs for our state.
STATEMENT OF HON. WENDELL ANDERSON, GOVERNOR OF THE
STATE OF MINNESOTA; ACCOMPANIED BY THOMAS FEENEY, COMMISSIONER OF ECONOMIC DEVELOPMENT, STATE OF MINNESOTA
Governor ANDERSON. Mr. Chairman, members of the committee: I have issued a statement which is before you. I would like to highlight a couple of points.
I have been Governor for 212 months, although it seems longer, and I do not pretend to be an expert in all Federal programs. But I do feel after spending some 12 years in the Minnesota Legislature that I can discuss some of the unique problems that we have there and how these Federal programs helped us solve unique and chronic problems of unemployment in a couple of dozen of our northernmost counties.
Everybody knows that throughout the country we have serious unemployment today, but in Minnesota, for years, we have had many of our counties suffering from very serious unemployment. Today in Minnesota we have counties within unemployment rates of 10 percent, 12 percent, and as high as 15 percent.
I am not here to complain about a Federal program. I am here to support the Federal programs which are incorporated and strengthened in your bill, Mr. Congressman. In Minnesota we feel we are doing more than our fair share on the local level. We have a $2.3 billion budget today on the State level. I have recommended increased taxes of over $700 million.
Our little State ranks 14th nationally when you compare income taxes, sales taxes and real estate taxes—and we ve all three. I do not think you can expect the taxpayers to do more than we are doing in Minnesota. We need your help.
We feel that what you have done in the past has been of tremendous help to us. We do not feel we should be asked to make a choice between the special programs and general revenue sharing. We need both, and we need them now.
I would like to call on Tom Feeney from our Business Development Department to highlight a couple of the programs in terms of specifics in northern Minnesota.
The CHAIRMAN. Mr. Feeney, for the purpose of the record, would you give your full name and title?
Mr. FEENEY. My name is Thomas Feeney. I am acting commissioner of department of economic development, State of Minnesota.
The CHAIRMAN. How long have you been in the department? Mr. FEENEY. Since 1967, Mr. Chairman. During that period of time I have paid special interest to northern Minnesota, so the counties we are discussing in terms of economic development administration aid and possible upper Great Lakes help are counties with which I am familiar.
I would like to select a few examples from the prepared statement to give you an idea of the kind of impact that these programs have had in our State.
The Governor visited the town of Alexandria last week. For years this community was a typical Minnesota tourist community. They prospered in the summertime, and for 9 or 10 months there was a little economic growth. A few years ago EDA made two public works grants to Alexandria, and they predicted these grants on the availability of some new job creating industries. And when the community actually had some prospects ready to sign a lease, the grants were made. The sewer and waterlines were extended and access road was sent to an industrial park near the airport. Six companies moved in, and that industrial park is now full.
A second industrial park has been created. There are 600 new bs in Alexandria, 12-month jobs, not summertime jobs, this in a town of only 6,000 people. This is of significant impact.
We in Minnesota, in many cases, were unable to take advantage of some of the Federal programs because the counties were so poor they could not make up the entire amount of their matching grant. One of the things which the Upper Great Lakes program has done for our State is to allow us to have some supplemental grants which have made possible some significant improvements in our State. It has been used to build bridges, to construct industrial parks.
For example, $300,000 grant was made in the county of Aitkin, which made it possible for a bridge to be built, opening up a whole new area of lumber to wood production industries in the county.
We examined the 5-year plan which the Upper Great Lakes Commission recommended to the Congress, and we feel its recommendations are sound. It covers basic areas of importance to our State. We have analyzed the various programs, and they are listed in the statement.
One of the things which I think I should also mention is the accelerated public works program which operated in Minnesota from 1962 to 1964, and had an important impact in creating immediate jobs. But since 1962, our State has a State planning office, and this planning office has been in contact with all the communities and counties in our State.
We feel in Minnesota, that if this extended public works program is renewed, that we have plans available so that we have a priority listing of communities on projects which we would recommend would be useful, and we think well founded. I think the last thing I would like to say is that we in Minnesota-I agree with what the Governor saidwe feel that we should be able to enjoy both the specific program like this bill discusses, and also be available for possible general revenue sharing
Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Feeney, the question was asked yesterday, and I think it is valid, whether this accelerated public works program could get underway in time to do enough good. It was asked, I believe, by the chairman of the County Board of Wichita, Kans. : Why not just wait until we renew, revise, and upgrade EDA, and let this more comprehensive program help those communities in distress?
Would you have any comment to make?
Mr. FEENEY. We are in favor of EDA programs, but we see them as carefully planned, long-range programs looking for full-time employment. In many cases they take months of careful planning and long waiting lists and priorities.
The accelerated public works program would give immediate jobs in the next year and help some of our unemployment programs right now, this summer.
The CHAIRMAN. That was his response too—that they need help right now. What happens too often, especially in smaller communities, is that a man has to wait at least a year to 18 months for a job to open up. The average family man, especially a young man, is literally forced to leave that town and move elsewhere, to seek employment, therefore, perpetuating exactly what we are trying to slow down, the immigration or the outmigration of far too many people from these very attractive places, such as Alexandria, which you described very properly, and which I know well.
We hope this program will be an immediate help to people who would rather be on the payroll than the welfare roll. We hope it will be, along with EDA, the Appalachian and regional commissions, and other long-term programs, a part of national policy-a deliberate and consciously spelled out attempt to substantially slow down this outmigration from the rural and semirural areas into the overcrowded metropolitan area.
That is the purpose of the program.
One other point, it is not additional expenditure. If you look at the chart to your right and on your left, we pointed out yesterday that that is the charting of the unemployment compensation which has been paid out since 1967. And notice for this year it is expected to almost double from $3 billion to almost $6 billion. That matches the chart to your left, with unemployment going up at about the same time to over 6 percent.
Our idea was, if we are going to spend $6 billion in 1971 for unemployment compensation, just to pay men and women for not working, when they would rather be working, we would rather use some of that money, about $2 billion, to give them jobs and upgrade needed facilities in the community.
We appreciate your contributions, Governor Anderson, and especially your effort in being here. We know what you intend to do when you get back home. We do have the Great Lakes Regional Commission's 5-year plan, and we will work with your representative and your office to implement that soon, perhaps even in this legislation, to provide adequate appropriations to get that program underway.
Any questions on my right?
Mr. EDMONDSON. I would like initially to say that I think the Governor has given us a fine statement, and I appreciate the contribution which Mr. Feeney has made to it. Your statement speaks of remarkable results at the town of Alexandria and city of Detroit Lakes, with public works grants under the economic development program, $700,000 in the town of Alexandria and $450,000 at Detroit Lakes, and a payout in terms of jobs of 600 new jobs at Alexandria and 400 new jobs at Detroit Lakes.
I realize that you probably cannot contribute these industries entirely to the plans that were made, but is it a fair statement to say that the public works improvements, the water, sewer, and roads at Detroit Lakes and extension of the water and sewerlines and access road at Alexandria were indispensable to those developments of those two towns?
Could you say that?
Mr. EDMONDSON. We have been talking about what kind of public investment was a measurement of a job or how much Federal investment or public investment you would justify to making just one industrial job, and we have talked about a figure of anywhere from $10,000 to $50,000 of investment, to create an industrial job.
In these two instances, you have a public investment of a little over $1,000 a job, in each of those communities, and I am talking strictly about the Federal investment involved in this. I think that is a remarkable return. I assume that in both of these instances that were matching local funds which would have brought that figure up, I guess, to over $2,000 a job in both instances; is that right, Mr. Feeney?
Mr. FEENEY. Yes, sir; that is true. And to comment on the Gov. ernor's remarks, in the case of Detroit Lakes, for example, here was a
community that I grew up in every summer, I spent my vacations there, and I remember the railroad tracks that were insurmountable barriers. On one side of the railroad tracks it was near the lake and there was part of the summertime tourist business. But this grant made it possible for the community to cross the railroad tracks with public facilities like sewer and water and road and open up a whole new area and whole new business. This community did not even know what industry was. They did not have one basic industry in Detroit Lakes.
Mr. EDMONDSON. We had some discussion yesterday by witnesses on the requirement in some communities of an addition to this legislation that would take care of the situation in which a community was unable to match Federal funds to any extent whatsoever.
Now this APW section calls for 20 percent local matching. And of course EDA has a range in there of anywhere from 50 to 30 percent local, depending upon whether you get economic development district and regional commission money.
Do you feel that there is in the State of Minnesota any community that by reason of its present taxing level and present bonded indebtedness would be unable to match any part of the accelerated public works grant under this APW program?
Mr. FEENEY. If you are talking about any parts, 20 percent, I think our community could perhaps meet 20 percent, but there have been many examples where they could not match 40 or 50 percent. In the Upper Great Lakes Regional Commission, there was supplemental grant to make up part of community share in the Upper Great Lakes.
Mr. EDMONDSON. Are you aware of any community that would find 20 percent matching grant beyond their capacity!
Governor ANDERSON. I think there are such communities. We have tried to take that into consideration in our State budget. I mentioned earlier that we recommended new taxes in Minnesota in the amount of $762 million. Really what we are talking about is shifting away from the State real estate taxes to income taxes, so that the communities would have more resources. There would be some counties like Mahnomen and others that even 20 percent would have a tough time coming up with resources that are necessary. On the State level we have recognized that problem, and we think with the help of our legislature we will be able to meet it.
Mr. EDMONDSON. Do you have, if you secure the funds, do you have the constitutional or statutory authority in your State whereby the State can go into a community like Alexandria or Detroit Lakes and supply their share of an accelerated public works grant, project grant, if local communities cannot raise the funds?
Governor ANDERSON. We do it indirectly by furnishing substantial amounts of money for education and other sorts of aid. We feel we can indirectly reduce the real estate tax burden which gives them more leverage and flexibility.
In the area of sewage disposal plants, we are hoping to do this directly by providing specific State funds to local units that cannot qualify for Federal funds because they do not have the matching dollars.
Mr. EDMONDSON. I thank the gentlemen for your answers.
Mr. HAMMERSCHMIDT. Governor Anderson, I want to commend you for a very helpful and fine statement to our committee, as well as the helpful remarks of Mr. Feeney who is with you.
I notice in your statement that one of the problems in your State is that several counties have a below average annual income. As a result, even within the State, you are suffering migration problems from the rural areas to the more urban areas of Minnesota.
Are these rural areas that are below the average income of the State and the Nation suffering unemployment at a rate that would qualify them under the proposed APW section of this bill, roughly 6 percent over a period of time?
Governor ANDERSON. Very definitely. Just to give you a couple of examples. In Aitkin County, the unemployment rate is 10.8. In Clearwater County it is 10 percent; in Kittson County it is 10 percent; in Mahnomen County it is 15.6 percent; in Marshall County it is 12.7 percent; and in Redlake County it is 9.4 percent.
Mr. HAMMERSCHMIDT. Are those recent statistics?