Every engineering firm and survey firm in the State of New Mexico says USGS could give a blanket clearance in that part of New Mexico in terms of soil feasibility for construction. But I assume that HUD had a failure some place or perhaps one of their multihousing units sank into a marsh, or the like, and now it just doesn't matter where you are. In order to get that grant you must spend that kind of money, $6,400, an inordinate amount for this kind of unit which is not even multiple story. They are single level, just like residences being built in that community. They need not run this kind of a test for that. Now, that adds a little different dimension to your bill.

I would suggest that if OMB is going to be your focal point, that they also ought to review the regulations on programs to see if regionally they make sense. I believe that many of them have national kinds of regulations that really don't make any sense at all from one part of the country to another.

I could go on almost ad nauseum giving you examples of the problems that small communities are having, and I just want to leave with this notion, Mr. Chairman. If there is some way that this could be done in a manner that the central focal point could also be an official complaint bureau and be required to report to Congress on how our grant programs are running-how they are failing, and why they are failing—I think that would be helpful.

The point I am making is that I am sure that our small communities' complaints go unnoticed in most cases.

I don't think the agencies exchange information until way down the line in a grant process. By that point, the money is spent, the frustration exists, and some of the symptoms that you have so aptly described in your introductory remarks are already there.

I want to also sav that I don't think you should. in this bill that you have, that all of the problems that are forthcoming are the result of bureaucrats being arbitrary.

I think you should assume that part of it is because Congress has passed laws and mandated arbitrariness in these grant programs.

I think we ought to try to get to that. also, somehow or other. We all think they are great when they pass, but then we don't know that they are the same as 20 other grant programs that are in the field with a slight dissimilarity. We put conditions in that the bureaucrats must follow, and I would just hope that this approach would also tell us about that.

I want to address one of your questions, Mr. Chairman, and then I will quit.

How significant is the fact that these programs are not reliable? I would say this: I believe that the major shortcoming of the categorical grant program in the United States, governmentally speaking, is the lack of reliability. I have heard State legislators that I truly respect sav one of the reasons that they don't have confidence in these programs is because they are not reliable. The State governments are verv reluctant to encourage or participate or help small communities because they feel they get that community's neck stuck out and then the State will have to take over later if the small community cannot continue with the kind of program or project in the out years.

If there is some way to build in more reliability where reliability and continuity are necessary, then I think that that should be done.

It's not necessarily the case in all grant programs, but I think with many of them, the absence of reliability is a very significant shortcoming.

I would be pleased to answer any questions, but I just want to commend you and the committee for this undertaking, I hope that the National Association of Counties and those representing our cities, in the process of developing this theme and approach, would let their small communities spread on the record of this committee the horror stories of the failure in the grants and aid programs as they see it. I believe you would have a shocking testimonial if they would just go out and sample a half of 1 percent of the small cities and let them deliver to this committee the problems they have and the almost lunacy of the application in the field.

Thank you, Mr. Chairman.

Senator DANFORTH. I appreciate very much your comments, and your full statement will, of course, be part of the record.

I think everybody has horror stories. As a matter of fact the immediate genesis of this particular bill was a meeting that I happened to have in the city of Maryville, Mo., which is way up in the northwest corner of our State, and the people in attendance at that meeting were local officials mainly from very small communities.

I asked them, "Well, how are you getting along with the Federal Government?" And, with that, they commenced a long series of complaints.

It seemed to me that if the Federal Government is trying to help local governments, something has gone wrong when the very people you are trying to help are complaining about what's happened. So that set in motion this bill's development.

I think that there are a couple of general types of problems. I think one is that, unfortunately, the power of the Federal dollar is often used to leverage decisions at the local level which really should not be made in Washington. And that that is very unfortunate.

I think the second question is just the paperwork, the fact that to compete for relatively small amounts of funds, which a small community would be doing, it's simply not worth the effort in completing the application forms and complying with the grant requirements once the community is successful.

You have made some positive suggestions.

This bill is certainly a long way from being carved in stone at this point. This is the opening day and the whole purpose of the hearing is to encourage people who are interested, particularly local governments, to come forth with their suggestions as to how the bill should be improved and what should be in it.

Oftentimes we concentrate so much on the details of the bills that we lose sight of what the general thrust is, and that, eventually, if it's a concept that's worthwhile, I would hope that those who are in the Government and who are interested in it would really get behind it and push for it.

Last fall I had an experience in connection with my work on the Finance Committee of offering an amendment to the social security financing bill which would provide a 10-percent reduction in social security taxes for State and local governments as well as nonprofit employers.

The support that we received from local governments was just terrific.

They really made that bill a mission, and as a result it passed on the floor of the Senate by a very substantial margin.

Unfortunately, it was finally washed out in conference. But I think that the people who are here today from State and local governments have a tremendous amount of clout in this Congress if they are willing to use it and if we can put together a bill which does not solve every problem, but at least addresses the major problems that these small communities are having, then it would seem to me we have an excellent chance of getting it passed through the Congress.

Senator DOMENICI. I would like to close, Mr. Chairman, with just two comments.

I don't believe that the duplication of effort and inconsistencies necessarily always are interagency. I want to give you another example of how it works within one agency.

I think a very fertile ground for you to review would be to get HEW in with reference to their educational grant programs. As of 1 year ago, in every school district in my State that had more than one program of a categorical nature-be it title I bilingual, any special grants under it, or title II-in each instance there is a different auditing procedure at a different time of year requiring different standards. Therefore, within a public school district, a grant officer had to keep, as in one case, four different sets of books in order to comply with the auditors. He was not audited one time by the Department of Education with reference to the grants, but each of four were audited by different audit teams at different times of the year.

I think that there just has to be a way that, either through a bill of this type or by showing the appropriate committees here in the Senate that we created that monster, if we did it, that somebody has to clear it up. Otherwise, it ends up in frustration for the beneficiaries who think their Government is not their friend at all, as you have indicated.

In addition, I, too, agree with you that you want to come up with a bill that will address some or all of the problems and just not create another Office which seems to sound like it's there to help. If it takes a long period of time to iron out a complex issue, I would urge that you do that, and that the committee try to find some way to get at, at least part of the problem that we obviously know exists and that you will hear much more about in the weeks to come.

I thank vou very much, Mr. Chairman.

Senator DANFORTH. Thank you very much for coming. [The prepared statement with attachments follow:]

PREPARED STATEMENT OF SENATOR DOMENICI, SUBCOMMITTEE ON INTERGOVERN

MENTAL RELATIONS

Mr. Chairman, members of the subcommittee. I am pleased to have the opportunity to address myself to the legislation now before you, the "Small Communities Act of 1978." First, I would like to take the time to commend my colleague, Mr. Danforth, for this far-sighted piece of legislation which is designed to provide some relief to small communities which anply for Federal assistance.

Coming from a State primarily composed of small communities of less than 50,000, I am all too aware of the difficulties facing these communities in attempting to keep in stride with the exorbitant amount of regulations and paperwork necessary during the application process.

By way of example, last fall I was contacted by the small city of Truth or Consequences, N. Mex., concerning the town's lack of capability to maintain an

in-house staff to keep up with this government "redtape". Specifically, the city made reference to its experiences in receiving funding for a wastewater treatment project. It took approximately 8 years for the city to finally complete this project, and only after numerous changes and a final cost figure that was more than twice as large as originally anticipated.

66

The city also made reference to the problems of putting this wastewater treatment system in when not just one agency, but rather ten Federal and five State agencies were involved. As the city Manager so aptly explained this situation, . . all with a different set of regulations, financial accounting systems, reporting procedures and with assumed authority to make decisions (which in many cases are retroactive for the convenience of the agency) effecting the day to day operations of a municipal government and in many cases do not reflect the intent of the Congress."

The final portion of the city manager's letter offered recommendations to address the problem facing small communities. The major thrust of his recommendations involved creating a more standardized system, by consolidating different agency regulations, financial reporting procedures, engineering services contracts, etc. These recommendations are the basic thrust of the Danforth legislation before you today. This legislation calls for a consolidation of grant rules and regulations of different agencies to make the application process easier and less burdensome for small communities. I wholeheartedly support this approach and am pleased to be a cosponsor of this bill.

As Mr. Danforth pointed out when he introduced this bill, only 37 percent of all U.S. residents live in communities over 50,000, however, these communities receive the majority of Federal moneys available. The little communities, where the majority live, just aren't able to keep up or hire the people necessary in order to go through the lengthy application process. I have attached a copy of the letter which I received from the City of Truth or Consequences and request that this be made a part of the hearing record. I believe that this letter provides just one more example of the need for reform in this area. I have also attached my recent statement from the Record on this legislation.

I do appreciate the opportunity to briefly address this area of great concern to me, and I do hope that this Subcommittee will favorably deal with this legislation.

STATEMENT OF SENATOR PETE V. DOMENICI

Mr. President, for some time I have been extremely concerned about the problems that small communities must face as they apply to government assistance programs. I have repeatedly been contacted by municipal leaders who find it nearly impossible to comply with the exorbitant amount of regulations and keep up with the paperwork generated.

By way of example, last fall I was contacted by the small city of Truth or Consequences, New Mexico concerning the town's lack of capability to maintain an in-house staff to keep up with this government redtape. Specifically, the City made reference to its experiences in receiving funding for a wastewater treatment project. The project, which was conceived in 1970, with an estimated cost of around $1 million, underwent numerous changes and last fall was scheduled to be completed in February of this year at a cost of $2 million—twice as much as was originally projected.

Because of T or C's difficulties, I began to explore possible remedies. Because part of the difficulty was a paperwork problem, I turned to the Commission on Federal Paperwork and its final report to see if the problems facing a community such as T or C were addressed. The solutions posed by the Commission, while among other things included the establishment of a special agency on federal parerwork. did not begin to address itself to the real essence of the problems facing small communities.

I was in a quandary as to where to turn next. I knew that last session in the committee reorganization bill, S. Res. 4, a section had been included to require each committee to consider the impact of any legislation being reported out in terms of the paperwork involved, however, that amendment did not apply to past laws and the impact that they were currently having on the country. Fortunately, the Senator from Missouri (Mr. Danforth) has proposed a bill entitled the "Small Communities Act of 1978." I commend my colleague on this important piece of legislation, for this bill is a first step in addressing the specific problems that face a small community as it attempts to approach the

federal government for assistance. What this bill does is to consolidate grant rules and regulations of different agencies to make the application process easier and less burdensome for small communities. I am happy to join the Senator from Missouri as a cosponsor of this legislation and hope that this bill will begin to draw attention to the plight of the small community.

As well, I would like to request that the letter which I received from the city of T or C be included at this point in the Record, for I believe that this is an extremely good explanation of the difficulties facing small communities who apply for federal assistance.