The legislation being considered by this committee holds promise of bridging some of these gaps. One of the most serious is in the field of community facilities.

Under existing laws, the problem of community facilities in many rural areas is not being met on a broad enough scale. Nor do the Area Redevelopment Administration or the USDA have sufficient funds or authority to do this job adequately.

Moreover, we feel that assistance for constructing essential community facilities, such as water and sewer systems, should not be limited to those areas designated under the ARA Act. There are several hundred rural counties, in addition to the approximately 712 designated under ARA, that suffer from serious underemployment and low income. With the exception of a few uniquely fortunate areas, the small towns and rural communities of this country have not shared equitably in the Nation's prosperity and growth. The trend in job opportunities, incomes, numbers of people, facilities and institutions is downward. These sections of the country need the employment which a public works program would provide now. They also need the facilities now, for many of them cannot even begin economic and social rehabilitation until the physical facilities of their communities are installed or modernized. Unless the various legislation now under consideration by this committee is broadened, many of these areas will not be able to qualify for assistance.

It is our understanding that about half of the loan applications to the Community Facilities Administration are turned down because the communities applying do not have the financing ability to give reasonable assurance of repayment. This is not intended as a criticism of CFA, because that agency is charged with the responsibility of making loans that have reasonable expectation of being repaid. Undoubtedly, many communities, which have been turned down, would be eligible if they would increase their tax base. But it is also true that thousands of communities, particularly rural ones, have reached the end of the line as far as their taxing ability is concerned, while others have populations too small to amortize the cost of such facilities as water and sewer systems without charging prohibitive rates.

In the designated areas, this situation prevails on a wide scale. Under H.R. 10318, and the amendment offered by the President, it is doubtful that many rural areas could obtain much assistance, even though the legislation provides for a 50-percent grant and Federal loans to furnish the share required by the local community. The deterioration of these communities has reached such proportions in many areas designated under section 5b of the Area Redevelopment Act, that the ability to finance community public works projects has been exhausted or simply does not exist. It is, therefore, difficult to understand how there will be any considerable aceleration of public works in such 5b areas.

In the more numerous nondesignated rural counties, many communities still have some financing ability remaining, and would be in a position to participate in that part of the public works legislation which would go into effect immediately provided they are not excluded, as is presently proposed. Here I am referring to the $600 million proposed by the President.

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We are of the opinion that the interests of rural areas would best be served with the adoption of the provision in Mr. Blatnik's bill (H.R. 10113) for establishing a separate agency for public works coordination and acceleration. We believe this would result in the most effective and efficient implementation of the proposed legislation. Such an organizational structure would make the program less complex and cumbersome, and would, at the same time, place both the responsibility and authority in one agency instead of spreading it among many agencies.

Another serious gap that exists relates to the lack of grants for planning community facilities. Unlike larger cities, the smaller communities do not have the personnel or local experts to undertake planning. Often they cannot raise the funds for planning. To be eligible for a planning advance under section 702 of the Housing Act of 1954, a community must be able to show the Community Facilities Administration that it can definitely finance a project. Because of this stipulation, many depressed communities therefore cannot even qualify for planning advances.

To solve this problem we would suggest that direct grants be made to communities which find it an undue hardship to finance plans. The smaller communities are usually in desperate need of expert assistance in analyzing their problems and in formulating plans and programs. Such funds are not presently available on anything approaching a realistic basis.

If the rural segment of the Nation is to be helped by public works legislation, then provisions must also be made to provide for larger grants than 50 percent in those numerous cases where such are needed, and where without essential facilities the community is destined to deteriorate beyond a point where any program, Government or otherwise, can help.

While we believe an accelerated public works program, if designed to meet the problems we have described, can be an effective stimulant to the economy and at the same time provide urgently needed community facility improvements, we feel that an auxiliary program of housing construction could also contribute vitally to helping rural areas. And this would not require additional legislation. We refer to the rural housing loans program of the Farmers Home Administration.

It would seem logical that because of the desire of the administration to stimulate new employment opportunities, the FHA's housing loan program would not be allowed to grind to a slow halt. Congress authorized $430 million for this program last year. Yet only $75 million was allocated by the Bureau of the Budget. Since the inception of the program last October, the entire $75 million has been committed and FIA now has on hand $80 million in loan applications which it cannot honor.

Here then is is a program which meets a great need; one that has proved vastly popular, which has been authorized, which can create many jobs, and which can improve rural communities, but which is not being utilized to the extent possible.

We respectfully submit that if the decline of life and livelihood in rural America is to be halted, a broader program of loans, grants, and technical assistance is urgently required. We think that prevent

ative action in the public sector of the economy is at least as justified as curative action; that responsible government can and must afford the means of dealing effectively with these basic needs which are beyond the capabilities of much of rural America.

Mr. BALDWIN. Mr. Chairman.

Mr. BLATNIK. Mr. Baldwin, first may I say the Chair wants to commend the gentleman for a very realistic statement, and obviously one based on very accurate, first-hand, practical knowledge of the problems in rural areas.

You raised some very interesting problems that have not been called to our attention so far, and you presented them well. We assure you they will be given careful consideration. Practically, even though many of the rural areas need help badly, they cannot participate as required by the present law of Area Redevelopment Act and the community facilities program. They cannot participate with other communities which are also hard hit, but which can raise the local participation. The communities that cannot raise this money will not be eligible because they are not classified as a labor surplus area, or Area Redevelopment Act area.

In the President's proposed amendment to the $600 million emergency program which is to get underway at once, he does recommend in his proposed legislation, and I quote:

SEC. 8. (c) If the President determines that an area suffering unusual economic distress (because of a sustained extremely severe rate of unemployment or an extremely low level of family income and severe underemployment) does not have economic and financial capacity to assume all of the financial obligations required, a grant otherwise authorized pursuant to this section for a project or program in such area may be made without regard to any provision of law limiting the amount of such grant to a fixed portion of the cost of the project or program.

It is the Chair's opinion that that could perhaps in some part answer the question about the problem you have raised, which is a very valid one.

Mr. MURRAY. We would agree with that, Mr. Chairman.

Mr. BLATNIK. On page 7 of your statement another important point is raised which is not too well understood, or very often mentioned Since most of these projects would be small, three-fourths of them on the local level, it has been my experience also that small municipalities and small villages and townships simply do not have the technical help to do the advance planning. In many cases their advance planning consists largely of telling the township supervisor or village clerk to draw up application papers, on which he does the best he can, and submits it to the Community Facilities Administration. They just do not have the help of a competent engineer. One reason for the slowness, as you stated, of the present community facilities program, in addition to the loans, is this very problem. It is a very important point and I bring it out because I appreciate your making it and stating it as clearly as you have.

Are there any questions on my right? Any questions on my left? Mr. BALDWIN. Yes, Mr. Chairman.

Mr. BLATNIK. Mr. Baldwin.

Mr. BALDWIN. Mr. Murray, you mention on page 8 the Farmers Home Administration housing loan program. You are referring, I

take it, to the direct loan program to people in rural areas to enable them to build houses. Is that correct?

Mr. MURRAY. Yes, sir.

Mr. BALDWIN. You have mentioned that we authorized $430 million last year for this program, and you have pointed out that the Bureau of the Budget is only asking for $75 million, and that has been committed, and there is a $80 million backlog of applications. Does it not appear to you to be inconsistent for the Bureau of the Budget to come to us now and say we should appropriate $25 million this year in a speedup of a public works program, when the Bureau of the Budget is putting a speed slowup into effect as far as the Farmers Home Administration direct loan program going into effect is concerned?

Mr. MURRAY. It would appear so, sir.

Mr. BALDWIN. This is the thing that bothers me. The same Bureau of the Budget that approved a program to speed up public works has deliberately slowed down the Farmers Home Administration home loan program, and the Veterans' Administration home loan program, which collectively would provide great help to those same rural areas you mentioned in your testimony.

Mr. MURRAY. This housing program has proved to be a great thing. It has restored hope to many communities that have not seen a new house in many years. It is an outward sign to many that a dying community still has some life in it, and I think it restores some hope. Many of these communities are just sick, and they are bemoaning the past, but when these people express confidence and build new homes in these towns through such programs, I think it helps to boost the morale of the area substantially.

Mr. BALDWIN. I am sure you are right, and I would like to point out further that when the Bureau of the Budget clears some $25 million for a speedup public works program this year, the mechanics of that would move slowly, because it would be something that is a little bit new. However, if the Bureau of the Budget released that same $25 million into this Farmers Home Administration, where the applications are already on file, then those loans could be processed immediately, because they have the applications on file and are ready to build. Is that not true?

Mr. MURRAY. I would think so. In fairness to the Bureau of the Budget, I have not read-or this has not been firmed up, but I understand the Farmers Home Administration requested additional funds for this program and that the request for about $20 million has been granted. They requested $50 million additional for the rest of fiscal 1962.

Mr. BALDWIN. They requested $50 million?

Mr. MURRAY. I think this has not been firmed up.

Mr. BALDWIN. But even if that request of $50 million is granted, it would not take care of the $80 million of applications that are on file, let alone the fact that we do not know how many have been discouraged by finding out that there was this backlog ahead of them. Mr. MURRAY. Yes, sir. That is true.

Mr. SCHERER. May I interrupt.

Mr. BALDWIN. Yes.

Mr. SCHERER. Do you know why the Bureau of the Budget has allocated only $75 million for these direct loans out of the $430

million authorized by the Congress? Do you know why they have done that?

Mr. MURRAY. I do not know why, but perhaps I might suggest a reason. This was a brandnew program. It was instituted in October. Perhaps the Farmers Home Administration did not accurately estimate the interest that would be created in this new program, and for that reason only part of the $430 million was allocated for this particular year.

Mr. SCHERER. But nothing, so far as you know, could prevent the allocation of additional sums if this program has been so successful. Mr. MURRAY. No, sir. It is my understanding that the entire amount could be allocated in 1 year, if they wished. Isn't that correct, Mr. Partridge?

Mr. PARTRIDGE. Yes, sir. It is my understanding that there is the authority there to use such funds as may be needed. Of course, the program was created for a period of 4 years. I assume that the Bureau of the Budget, as is always true of these programs for a definite length of life, may have proceeded on the basis of apportioning the funds over the life of the program. It was our feeling before the program began that substantially more than the amount they did allocate for this year would be required.

We think this program is needed, and definitely needed. It is sound and it has some precedent in the direct loans program for farm housing which was previously in existence. The credit record on these loans has been quite good, and we see no reason why there should be as much delay as there is.

Mr. SCHERER. It could be for the reasons I have previously stated; namely, that such a good program as you say this is that the reason for perhaps not allocating any more funds at this time is just the lack of cash.

Mr. PARTRIDGE. This is possible, sir. I frankly do not know.

Mr. SCHERER. You do not know of any other reason, especially when we do have this unemployment that has been suggested here? Mr. PARTRIDGE. I know of no other reason.

Mr. SCHERER. This would help the unemployment situation, would it not, if these funds were released?

Mr. PARTRIDGE. It definitely would. Yes, sir.

Mr. BALDWIN. Will the gentleman yield?

Mr. BLATNIK. Mr. Baldwin.

Mr. BALDWIN. In further comment on the point you have made about it being a 4-year program, the $75 million so far allocated is not even a fourth, and if $25 million is added this is not even a fourth of the total. If the Bureau of the Budget says that there is an emergency requiring the speedup of public works program for which legislation is required, then certainly if they have a slowdown here they could be speeding up this program for which they have all the necessary authority to spend the money. Wouldn't you agree with that?

Mr. PARTRIDGE. Yes, sir. We do agree. Referring back to a statement Mr. Murray made, I think that the need and the speed at which this program would move was considerably underestimated. It was felt that since it was in its first year of operation in its present form, applying as it does both to farm and nonfarm rural housing, perhaps