in the Senate and House versions of S. 575 can be reconciled quickly. If that is the case, S. 575 will become effective much sooner than other measures which may ultimately be enacted.

It is my understanding that the concept of the alternative approach was developed as a result of recent field hearings by the Subcommittee on Economic Development. The proposal is appealing to me because of its flexibility, and because it closely parallels the assistance afforded both localities and individuals under the Federal Disaster Relief Act.

It brings the State governments into the picture as an instrumental force in triggering economic assistance and clearly takes into account present and prospective rises in unemployment and economic disruptions.

Having joined with this committee in its efforts to require the appointment of Federal coordinating officers in areas hit by natural disasters, I am pleased that the proposal under study by the committee includes a similar provision for areas experiencing severe unemployment and economic problems. The section authorizing grants, loans, and loan guarantees for attracting industry and holding major employers also would be beneficial and helpful.

Mr. Chairman, the proposal is flexible enough to meet a wide range of economic problems which exist now and can be anticipated in the future. I hope the committee will present the plan to its counterpart in the House.

I thank you.

The CHAIRMAN. Senator Spong, this will be helpful to us, to the subcommittee chaired by Senator Montoya, and I will work closely with him in that effort.

We want to accommodate you. You have expressed your desire to move to another assignment.

Senator SPONG. Yes.

The CHAIRMAN. Unless there is some compelling reason by a member, we will excuse you. Thank you very much.

Senator SPONG. I would like to point out to Senator Montoya in response to his earlier question that there is flexibility in this proposal which in my judgment would be more helpful than the Accelerated Public Works Act to Virginia.

Thank you very much, Mr. Chairman.

The CHAIRMAN. Thank you.

Governor Evans.

STATEMENT OF HON. DANIEL J. EVANS, GOVERNOR, STATE OF

WASHINGTON

Governor EVANS. Mr. Chairman and members of the committee, I am most pleased for this opportunity to come and testify before you. I appreciated the opportunity to appear before the subcommittee in Seattle last month. I, frankly, at that time had no idea that the proposal I made for a Federal Government response for responding to economic disaster would be so quickly and so decisively taken up and I am delighted with the potential for action on a very near-term basis by the Senate.

Today there are 160,000 people unemployed in the State of Washington. What makes this unemployment figure even more painful is

the fact that we have changed so rapidly from an era of full-time employment, economic boom if you will, to one of economic disaster.

In the Seattle area seasonally adjusted unemployment has increased from 32 percent in early 1969 to a rate of almost 13 percent today. In the State as a whole that rate has increased from 412 percent to something over 10 percent. I think by almost any criteria this would qualify as an economic emergency. I would like to speak this morning, however, specifically to some of the proposals under consideration by this committee and our response and suggestions to those proposals.

First, to be most effective, assistance should be quickly available and designed to meet the specific needs of the occasion, including the needs of individuals of local government and of business. State and local government today cannot respond completely to the needs of a true economic disaster, such as we face, just as they quite often cannot completely meet the needs of a natural disaster in their area. Necessary assistance is potentially available from a large number of Federal agencies and Federal programs. There is, however, today no real mechanism by or through which this assistance can be provided in an orderly fashion and in a prompt way whereas there is no need for meeting the needs of an economic emergency, there is an established mechanism for dealing with natural disasters.

Let me speak for just a moment to the specific question of accelerated public works. I think that only represents one form of needed assistance and frankly in some respects is a narrow form of needed assistance. The primary emphasis of that proposal in my view should be directed to the accelerated construction of those particular public facilities which relate to the maintenance and expansion of other economic activities. In other words, if they have a direct relationship to the development of future industry in any area, then I think it made some real sense. It simply is not enough to just accelerate public works on a broad basis.

The needs for individuals, for busineses, for governments who cannot directly benefit by accelerated public works have to be considered. Accordingly, I support the general outline and intent of the proposal forwarded to us by you, Mr. Chairman, and now under consideration by the committee. There are, however, some differences between that proposal and what we have been developing. The differences relate to the questions or considerations of eligibility, of administration of the program, and the nature of these assistance provisions.

First, as far as eligibility is concened, I think we could destroy the benefit and destroy the ability of the Federal Government even to react and respond to economic emergency if the eligibility requirements were so broad as to make most of the Nation eligible for economic disaster relief.

I think we have to concentrate in the areas where the problems are the most difficult and concentrate Federal aid in that respect where it can do the most good. We suggest for major labor areas or for States as a whole that there be an unemployment rate of 6 percent or more with the rate exceeding the national unemployment rate by at least 50 percent on a seasonably adjusted basis.

Now we differ a little bit from the committee's original approach in relating this directly to the national unemployment and recognizing

seasonable changes. Especially in our State we have seasonable cycles that really do not respond to economic disaster, they are natural consequence of seasonable type industry in our State.

Other special impact areas may be declared eligible when there is a closure or a severe curtailment of a major public or a private facility or when identifiable public policy actions have or will produce the criteria listed in No. 1 above.

Now the eligibility requirements then we suggest ought to be a little more restrictive, easier to administer and would, we believe, allow a more necessary focusing of necessary resources.

In terms of administration I hope the committee will attempt to make as many of the provisions of economic disaster relief as automatic as possible. Only when they are automatic do we have an opportunity to respond quickly and effectively to the problems of economic disaster and to minimize the long-range consequences of economic disaster.

Not all provisions, of course, can be made automatic and therefore we strongly do endorse the concept of a State coordinator appointed by the Governor to coordinate activities at the State level and within the State level and also the necessary designation of a Federal coordinator so that at these two levels of Government there are single points of contact where all of the elements, all of the pieces of an economic disaster program could be put together and could be distributed. The third major element I wish to speak to before responding to your questions relates to assistance provisions. As we have stressed above, an effective economic program simply cannot rest entirely on accelerated public works. The needs really should focus on three categories: The problems of individuals affected by economic disaster, the problems of State and local governments affected and the problems of businesses who may not be directly involved in an economic slowdown but who may be very well seriously affected by the secondary

consequences.

The most apparent need is for economic relief to individuals and families directly involved in an economic emergency. Many of these, of course, are items your committee has under serious consideration-the extension of unemployment compensation benefits to those who have exhausted their benefits. In Washington State we have taken the initiative by providing the extended benefits not only to one of the first States to respond to the Federal proposal for extended benefits, but on top of that we have embarked on an additional 13 weeks of fully Statefunded benefits which, when totaled with our regular and with the State-assisted unemployment compensation benefits, total a maximum of 52 weeks of regular and extended benefits per individual.

Our action at the State level, however, is seriously draining the unemployment compensation fund of our State, which has been by far the most stable and the largest of any State in the Nation. We have a very large unemployment compensation fund-have had for many years. It is under serious pressure now because of our extension which is fully funded at the State level.

We simply are reaching a point where I believe very strongly an economic disaster program ought to include the triggering in of fully Federal-financed unemployment compensation benefits when they go beyond those already 50 percent Federal-funded elements.

Rent and mortgage payment assistance is under consideration. We strongly believe that this is of real importance to many citizens in our State. We are finding the difficulty of people, many of them today unemployed, who have great skill, who had substantial incomes, who have very large continuing responsibilities for home purchase and family expenses. They face some very serious problems which mortgage assistance payments and loans would be of great help for them.

Public service employment is another separate element that the Federal Government has embarked upon. We have had two such grants from the Federal Government. They have been of enormous benefit to our State. As a portion of a total concentrated economic disaster program this certainly should be an individual and, hopefully, an automatic element.

We have found that this can be an immediate response to economic disaster. We have been able to put into effect within less than the 30day period the effective public service employment programs funded by the Department of Labor last fall and most recently just a week

or two ago.

Job training and retraining is available under a number of Federal programs but when it relates especially to economic disaster the ability to pull together quickly and under one head through a Federal coordinator these job training and retraining programs and to work them closely with a State coordinator would make them much more effective in minimizing the effect of economic slowdown.

Relocation assistance is another element that could be of great value. We have a number of highly skilled people in our own State. Frankly we hate to see them relocate but the individual needs of people for job opportunities that may not exist and may not be in the foreseeable future in an area makes relocation assistance desirable, I believe, to help people relocate when jobs may be available in other parts of the Nation.

As far as government is concerned, the second major element where assistance is needed, I previously stated before the subcommittee and I would state again most emphatically that I firmly believe there is a strong need for this Congress to respond to the revenue sharing proposals, both special and general. Only then can we really reach an effective and flexible Federal system that will serve the best needs of our Nation and help us to most rapidly reach national goals.

We suggest as it relates to economic recovery programs that a special triggering of supplemental revenue sharing of incremental funds be appropriate to the emergency situation. The designation of an eligible area might very well, for instance, result in the provision of supplemental block grants in such categories as manpower, community development, and rural development in three of the special revenue sharing programs that are now before Congress.

In the meantime there are several other actions that could be of value to local and State governments. The reduction of Federal matching requirements could be of enormous and immediate assistance to both State and local governments. It puts a great strain on our State and I might say that our legislature adjourned at 4 o'clock in the morning yesterday after struggling for 4 months with continuing and increasing needs the needs of greater public assistance payments, the needs that are pressed upon the State from economic problems while at the same time facing shrinking, not growing, State revenues.

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The necessary outgrowth of that has been a budget that calls for no salary increases for the next 2 years for teachers, for State employees, for anyone in government. It calls for a decrease, not an increase, in public assistance payments and in medical care for people who are destitute. It calls for the laying off of some 2,000 State employees because there simply is insufficient revenue to support them. Much of this could be relieved if during a period of economic emergency the requirements for Federal matching funds could be relieved. This especially on an interim basis prior to revenue sharing could achieve something of the same end result. We propose then in terms of non-Federal matching requirements, there be an automatic acrossthe-board reduction when economic disaster areas are triggered in perhaps 50 percent of all Federal aid programs in the area.

This could be of immediate and very important benefit to local governments struggling, as most of us are, with inadequate revenue systems-revenue systems that simply do not and cannot respond rapidly enough to economic changes-incremental Federal funding, supplemental funds for the economic or affected area as an addition to or a partial substitution for supplementary agency funding.

These block grants would include public assistance block grants for increases in program costs when you have a very substantial increase directly related to economic slowdowns, public facility block grants for projects related to the maintenance and expansion of permament job opportunities in the affected area. I understand this is something being considered by this committee.

Technical and planning assistance can be of real value and many Federal programs today allow for this. The coordination of all through the Federal coordinator and the making of an automatic cut-in for these affected areas would be of real help. In extreme situations, and I think this perhaps comes to the last point, there should be a provision for tax relief for State and local governments as provided with relationship to property taxes under the Natural Disaster Act. The third and final area I want to comment on very briefly is in relationship to businesses. I have spoken of the needs for individuals, the needs for governments, the need for business to have some help during these periods of economic emergency could relate to investment tax credits, provided as a stimulus for the creation of new and substitution job opportunities.

This is a step I have proposed within the State of Washington. It would require in our State constitutional change which we are now attempting. Business loans or guarantees during times of economic emergency could assist businesses over these temporary periods. Many businesses sound in nature find temporary difficulties, financial difficulties for which business loans and guarantees particularly could be of help.

Preferential Federal purchasing could be of assistance also. These would not require really any additional funds of the Federal Government but in the carrying out of existing Federal programs the purchasing of many billions of dollars which the Federal Government undergoes each year where there are businesses available to provide the materials and supplies the Federal Government needs and where it could offer relief to an economically distressed area. These bid price differentials could be a part of a total economic recovery program.