Now, this problem is one not only of providing help in the present unemployment situation, but helping us preserve an economic plant and add to it, in terms of increasing employment possibilities for the future, and one of the questions asked earlier this morning pertains to this. I think it is most important to us.

It means extension particularly of waterlines and more particularly of sewerlines, a field, incidentally, in which the Federal Government, to my knowledge, makes no direct contribution of any significance today. It is most important in terms of providing the community facilities which are a necessary counterpart or counterpoint to any largescale industrial expansion.

Now, the third point I want to make is that the impact on the local community is not merely in terms of unemployment or costs directly attendant thereto, such as our welfare cost, but we are also experiencing a direct loss of assessments, because long-continued unemployment, as a result, lowers the economic business plan of the community to the point that on real estate taxes and the like the valuations must come down, and it is significant to note that in the last month the city of Detroit has lost $170 million in assessments, approximately $115 or $120 million of that being in inventories and assessments on equipment, and the other $52 to $60 million being on real estate assessments.

This will result in a direct loss of revenue to the city, on the one hand, of close to $4 million, while, on the other hand, our welfare costs have been approximating $13 million and more a year.

Now, as a result of this I would particularly like to stress my being in favor of these bills, but to also urge that, in your consideration of those bills, serious consideration be given to the ability of the local community to contribute.

We like the principle, in general, of matching funds and, incidentally, I think in the Detroit area we have a long record of trying to do things for ourselves. As a matter of fact, the intercounty supervisors committee was established on the principle that we want to do at the local governmental level all that is humanly possible for us to do without calling on either State or Federal assistance, but this is a point where the responsibility is more in the local government and meeting the responsibility will take more than local resources.

Now, a community that has been attacked by unemployment like ours begins to lose its ability to participate financially immediately on a matching basis on these programs, and we would like to urge that, in your consideration of these bills, you give consideration to these four points:

First of all, the possibility of making a local contribution at as small a level as possible.

Secondly, possibly working out a program for deferred contribution by the local community in order that the work can be started immediately and at once.

Along with that would be the third point, and that is the possibility of scheduling the payment of the local contribution over a longer period of time, perhaps, such a period of time as the impact of the improvement would be felt in the local economy so that it would help to pay for its own costs; and, finally, that the local contribution, if deferred, the deferment would be at a low interest charge to the local community or no interest charge.

We feel that this legislation now under consideration is again one of the needed tools, along with the others, that the Congress has adopted, that we need very much and we urge most strongly enactment of bills along this line.

Mr. BLATNIK. Thank you very much, Mr. Connor. You will be given the opportunity to revise your remarks.

Mr. SCHWENGEL. Mr. Chairman?

Mr. BLATNIK. Mr. Schwengel.

Mr. SCHWENGEL. I would like to ask a brief question.

You say the common council of Detroit will introduce this bill at its session tonight?

Mr. CONNOR. The resolution endorsing the proposed legislation will be adopted tomorrow.

Mr. SCHWENGEL. Will be adopted tomorrow?

Mr. CONNOR. Right.

Mr. SCHWENGEL. How many members are there of the common council?

Mr. CONNOR. Our common council consists of nine members elected at large from the entire city on a nonpartisan basis.

Mr. SCHWENGEL. Now, how do you know that they will endorse this?

Mr. CONNOR. Because approval has been given in a meeting of the whole committee already.

Mr. SCHWENGEL. How many people have read this bill?

Mr. CONNOR. There have been considerable-like any other legislative body, I hesitate to speak for what my colleagues have or have not done.

I have read it, and I know that several of the others have read it, and there has been such discussion before the common council that I am sure all are familiar, at least, with the broad outlines and purposes and objectives.

Mr. SCHWENGEL. Do they know, for instance, that Mr. Meany testified before this committee that if it is fully implemented it would only employ 250,000 and mostly those would be on a temporary basis over the United States?

Mr. CONNOR. Mr. Meany, of course, was speaking on a mass level. I am speaking particularly in terms of the local level, local but still important in terms of the national economy.

A proper percentage of those 250,000 jobs in the Detroit area would be what we would hope to have, and we trust that it would be substantial.

Mr. CRAMER. You are limited to 1212 percent of all of the money spent, and if this State got 122 percent that would limit it very substantially for the State of Michigan.

Mr. CONNOR. We did

Mr. CRAMER. Twelve one-half percent of $25 million

Mr. CONNOR. We do not think that this bill

Mr. CRAMER (continuing). Would be very little this year.

Mr. CONNOR (continuing). Would be the total answer. We think it is one of the tools, some of which are available and some of which are in contemplation by the Congress that would help.

It is an important one of the tools, however, and we think it ought to be added to the weapons with which we have to attack this problem.

Mr. CRAMER. Will the gentleman yield?

Mr. SCHWENGEL. Yes.

Mr. CRAMER. The reason it was brought out when the Governor was here was because it was clearly shown that if Michigan got its full 122 percent it would not mean more than the employment of 8,000 to 10,000 people a year.

Now, that is not the answer to Detroit's problem. And what disturbs me is that the Governor of Michigan and the Governors of some of these other States, and the mayors of some of these other communities, and the present representative of the American Municipal Association-do you represent the National Association of County Officials?

Mr. CONNOR. In this testimony I am talking in terms of the Intercounty Supervisors.

Mr. CRAMER. I see. But I understand we will hear from the county association later.

Mr. CONNOR. That is right.

Mr. CRAMER. But the impression that I assume is being left, and 1 know it is the impression being left throughout the country, is that for the unemployment and the communities which have these problems this is the answer; that this is going to employ our people; that this is the solution, a 100-percent Federal grant to these public works programs, when the truth of the matter is that this is "peanuts."

This is hardly a start on the real problem, and I think you put your finger on a lot of the substantial problems that exist, such as automation and what have you.

But to suggest, as the Governor did, for instance, by coming in and listing nearly $800 million worth of public works projects that could be financed by this in the State, and listing them in that manner, by that suggestion, why, every community in Michigan is now assuming that if this bill passes they are going to get some help.

It is false. If this whole program is instituted, these projects are not all going to get help, and this humdrum public relations support of this proposal, which is very small and very niggardly to start with, I am afraid, is leading a lot of people into believing throughout the country that this is the answer when, honestly, it is not the answer. At best, it is a very temporary thing on a minimal basis.

Mr. CONNOR. Mr. Chairman, I think I can assure the Congressmen that, at least in the Detroit area, we are not looking toward any one program as the total solution.

Our mayor will be here tomorrow to testify. We have a broad range and diversified attack that we are trying to make on this total problem which needs to be approached in several directions.

However, I must insist that even 8,000 to 10,000 jobs in our area would be important.

Mr. CRAMER. The whole State of Michigan, not just your area. Mr. CONNOR. Well, even five or six out of the whole State. We find that we are very much concerned with preserving jobs in our company and in our efforts to secure even 100 new jobs in our community. So if we can, through this one bill, receive aid and assistance which would provide 4,000 jobs, and half of the population of Michigan is in the Detroit area, that would be a big help.

So I assume we would be entitled to about half, and it would be a very significant part of the total.

Mr. CRAMER. And even though the cost to the Federal Government for that very small increase is $600 million

Mr. CONNOR. That is the total. It, of course, would not be the total of the cost of the 4,000 in Detroit.

Mr. BLATNIK. Well, it is obvious that there are areas, such as yours, where acute economic situations exist and are a major problem, a very grave problem.

No one has contended that this is the answer to the whole economic problem but, certainly, thorough consideration and deep thought should be given to doing something. If it is not enough, it does not mean that we should continue to do nothing.

We will just continue to have recessions if we do not have something. I contend that it is within the skill, the knowledge, and the competence, plus the technical ability that we have in this country, and plus the tremendous capabilities, I contend it is within those tremendous capabilities of our industries to do our best to keep men and women, who want to work, at work, and keep the economy on the uptrend and as healthy as it can be.

It is being done in every major industrialized country in the world. No major industrialized country in the world has the unemployment rate that we have and have had particularly over the last 8 years.

Mr. SCHERER. The real cause is the high production cost. That is the real evil. It is our labor costs and high taxes that make it impossible for us to compete any more with foreign made products. That is the real evil.

Mr. CONNOR. Mr. Chairman, if I might offer one more comment: I would like to point out that in the city of Detroit we have held the line on our costs of local government to the point that there has been no appreciable increase in that during the last several years and, as a matter of fact, by reducing the assessments on personal property, particularly inventories and equipment, from 90 percent where it was, cash value, just a few years ago down to a present of 70 percent we have been attempting within the full limit of our abilities, at the local level, to assist in keeping local production costs, at least our contribution to them, at the lowest possible minimum.

Mr. SCHERER. I was not talking about your cost of local government. I was talking generally about industrial production costs being up due to our continuing high labor costs, continuing high taxes in this country. We are losing our markets both foreign and domestic because of these.

Mr. CRAMER. Well, if the gentleman will yield

The other side of the problem is that we are faced with some of the problems that your community has.

How are these things going to be financed?

We are faced in this particular legislation with the basic question of who should decide, the Congress or the President?

Should Congress delegate this much authority to the President? We are faced with the further question: Is it better to accelerate present programs and to go into new construction and so forth under the present programs, in which there are hundreds of millions and, yes, just billions of dollars available for acceleration, as a means of

increasing employment, or should we start an entirely new program which could mean 100 percent Federal grants to any type of local public works program?

Now, you admit that these are very serious considerations and Congress does not have only one solution available. The thing now that bothers me with regard to this testimony is that the assumption is that the direction that the administration proposes the delegation of this substantial authority and so forth is the only direction available. Now, that is not true. There are other directions, such as acceleration orders under the present programs, where money is already available; $89 million, for instance, in Area Redevelopment alone out of $90 million made available that has not been used.

There is $500 million in community facilities that can be 100-percent. Federal loans for construction, and no interest loans for advanced planning, for advanced planning, for instance.

Now, Congress has a lot of alternatives and we think it is our duty to consider all of these alternatives, and not to rubber stamp what the President sends down here as a proposal when, as a matter of fact, it is, in large measure, extremely unsound.

on.

Mr. CONNOR. I will say one other thing. I do not

Mr. BLATNIK. You may say that, and then we would like to move

Mr. CONNOR. All right. Most of the existing programs in the public works field, we feel, in the Detroit area are discriminatory against the larger cities. They have a ceiling or they have a declining scale for the larger city on the degree of participation that is possible.

We feel that any other approaches that may be suggested that will go to meeting this problem, we are in favor of, because, among other things, we want to keep the Detroit area at a high productive level so that it can continue to be a major contributor to both Federal income tax and otherwise to the whole economy of the Nation. Mr. BLATNIK. Gentlemen, thank you very much.

The Honorable James B. McKinney, mayor of Sacramento, Calif., will speak on behalf of the American Municipal Association.

STATEMENT OF JAMES B. MCKINNEY, MAYOR OF SACRAMENTO, CALIF., ON BEHALF OF THE AMERICAN MUNICIPAL ASSOCIATION

Mr. BLATNIK. Mayor McKinney, I have a deep appreciation for your time and realize that you, too, have to catch a plane this afternoon.

Mr. MCKINNEY. Yes, this afternoon.

Mr. JOHNSON. Mr. Chairman?

Mr. BLATNIK. Mr. Johnson?

Mr. JOHNSON. I would like to welcome Mayor McKinney here today. He represents the capital city of the great State of California, and he has a very fine city.

Mr. McKinney has been one of the fine young mayors who have come up in California, and I am sure that my colleague, Mr. Baldwin, joins me in welcoming our mayor from north California here this morning.