With the opportunity to counsel with men such as these, I know we can find the proper answer to this problem.

Thank you, Mr. Chairman.

Senator BENTSEN. Are there other members of the committee?

OPENING STATEMENT OF HON. ROBERT T. STAFFORD, U.S. SENATOR FROM THE STATE OF VERMONT

Senator STAFFORD. Mr. Chairman, I have a brief opening statement. I will not have to ask unanimous consent about placing it, because in the order of things I know it will come third after your own and that of the chairman of the full committee.

The Transportation Subcommittee today convenes the first of 2 days of hearings on immediate problems affecting orderly progress in the Federal aid to highway program.

During these hearings subcommittee members will seek assistance from witnesses in assessing the magnitude of the problems and what, if any, legislative relief is required. A highway project in my own State is at the center of one issue we must confront.

The Second Circuit Court of Appeals in enjoining construction of a segment of the U.S. Route 7 near Bennington, Vt., has ruled procedures followed by the Federal Highway Administration did not comply with the requirements of the National Environmental Policy Act. This decision brought about a virtual halt in the major Federal highway projects in three States under the jurisdiction of the second circuit, Vermont, New York, and Connecticut.

Today and next Monday this subcommittee, together with the Environmental and Land Resources Subcommittee of the Interior Committee will inquire into the reasons for an extent of the standstill in new highway construction in the area I just mentioned.

We will investigate whether administrative action can alleviate the problem. If it is evident that legislative relief is necessary, we will have to determine what language will permit needed highway projects to move forward while insuring the intent and procedures of the National Environmental Policy Act are complied with.

We will receive testimony from witnesses well qualified to assess the practical and legal consequences of any decision we might make.

I am certain with the benefit of the record we make during these hearings the committees involved can act to protect the environment while alleviating threatened disruption of worthwhile highway construction and increased unemployment.

The other issues we face concern temporary adjustments which may be needed to permit States to take advantage of recently released highway funds. I think it is important for all of us participating in these hearings to keep in mind that we are dealing only with what measures, if any, are needed in this short run to promote effective use of increased highway funds. Any changes made at this time could restrict our ability later in the year to responsibly and comprehensively revise the highway program.

I look forward to hearing from Governor Tiemann, Mr. Ritchie, and the panel of State Governors this morning. I am hopeful they will provide us with factual information upon which we can base productive and responsive decisions.

Thank you.

Senator BENTSEN. Mr. Montoya?

OPENING STATEMENT OF HON. JOSEPH M. MONTOYA, U.S. SENATOR FROM THE STATE OF NEW MEXICO

Senator MONTOYA. I have a brief statement. If you will excuse me later, since I am a member of this subcommittee, I will have to chair some hearings before the Appropriations Committee this morning starting at 10 o'clock.

Senator BENTSEN. Senator Montoya, I plan to testify before the Appropriations Committee at 10 o'clock. We will get someone to fill in for both of us.

Senator MONTOYA. As you know, I am one of the sponsors of S. 952, our esteemed chairman has joined me in sponsoring this as well as Senator Bayh, Senator Magnuson, and others since we introduced the bill.

I stated on March 5 when I introduced this legislation that it was designed to give badly needed financial relief to States which find themselves unable to make full use of their apportionments of the trust fund to build roads. Two very significant events have occurred since that time to increase the urgency of the need.

First, unemployment has risen to even higher levels than on March 5, and is going even higher. Each billion spent on roads will generate 125,000 to 150,000 jobs of various types, which ranks among the best investments in curing unemployment that is available to us in any public works. In March, the Department of Labor reported 8.7 percent, which did not include over a million who have quit looking for a job this year. To further deepen the crisis, the construction industry has now reached 24 percent on an unadjusted basis. Neither figure shows signs of bottoming out. Despite optimistic predictions by the administration, the unemployment crisis continues to deepen. It will require action, not predictions, to cure unemployment. This bill is a vital part of that action.

Second, Senate Resolution 69 on April 23 rejected President Ford's deferral of $9.1 billion of authorized trust fund expenditures. This money, paid into the Treasury through road use taxes, is now available to build roads. However, many States are in a very weak position to use the money.

The 1975 Joint Economic Report supports the urgent nature of the unemployment crisis, on page 27, where it states, "At unemployment rates of 8 percent and higher, a federally administered public service employment program is also needed. This should provide for 500,000 jobs at an 8-percent unemployment rate and an additional 500,000 jobs for each percentage point by which the unemployment rate exceeds 8 percent. Federal administration of this program is desirable for the following reasons:

"(1) A number of appropriate work projects are primarily or exclusively Federal in nature. These include work on a national transportation system, work in the national parks, forests, and recreation areas, work on Federal demonstration projects, and work of many other types.

"(2) The Federal Government, more readily than State and local governments, can provide work on temporary projects of 1 to 2 years' duration, avoiding the problem of displacement of regular employees by special public service workers.

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"(3) Unemployment is especially severe among persons between the ages of 16 and 25. In February the unemployment rate was 20 percent for those age 16 to 19 and 13 percent for those age 20 to 24. While the Federal component of the public service employment program should be open to persons of all ages, it would be especially suitable for these younger persons who are more mobile and better able to accept employment of a temporary nature and who would benefit from the job experience provided by this program."

I stated on October 9, 1974, on the occasion of the EPA waste water construction hearing, that if present trends-of unemployment continue, 15 percent could become 25 percent by the end of 1974. We cannot take the position that there is no answer. There is an answer, and part of that answer must come out of our hearings today. The prediction of 25 percent unemployment was unfortunately accurate, and the upper limit is not in sight. I trust that the second part of my prediction, that there is an answer and part of that answer must come out of our hearings today, will also prove to be true. The hearings on October 9 produced a quickened pace of road construction.

The opinion can be heard that increased Federal assistance is not vital; that the States will find some way to respond if the usual Federal share is provided or if a short-term loan is offered.

There was a revealing article in the Washington Post on April 25 entitled, "U.S. Funds Unclaimed By Local Governments. Several billion dollars in Federal grants-for programs ranging from drug control to flood prevention-have yet to be claimed by local governments." Speaking to the road issue, the article continues, "Interstate highway funds are also plentiful. Massachusetts and the District of Columbia have already rejected $70 million to build Interstate highways, and many millions earmarked for other States have yet to be obligated under the 1973 Highway Act, which expires June 30. For instance, as of March, Delaware had claimed only $3 million of an allotted $24 million, and Iowa had received only $5 million of $128 million."

Department of Transportation spokesmen say in some cases local governments can't meet the 10 percent matching requirements on Interstate funds and the 30 percent matching requirements on Interstate Federal highways. Many projects, as in the case of the District, are also threatened by citizen opposition to highways or adverse court decisions.

In most cases, unused Federal funds revert to the agencies that dispense them and are added to the next year's allotments-but not always to the same States. Thus, alert local governments can increase their share by claiming unused funds.

"That's one good feature of people not taking what they're entitled to," said Richard Eckfield, who has been retained by the cities of San Jose, Dayton, and Seattle, to oversee their acquisition of Federal funds. "I am in the midst of building my own interstate in San Jose out of funds not claimed by other States-and I've already got money for a few miles."

Federal money, without making it usable, is obviously not enough. There is further compelling evidence in the recent "Joint Economic Report" that States cannot carry an increased burden. It states:

State and local governments have experienced a significant deterioration in their fiscal position in the past year. The aggregate State and local government deficit for 1974 was above $7.5 billion, compared to a $4 billion surplus in 1972 and a balanced position in 1973. This weakened financial position of State and local governments is a result of both inflation and recession.

Later the same report continues:

Unfortunately, Federal Government assistance to State and local governments has not been sufficient to stabilize State and local finances in the present situation. In 1974, when inflation and recession were already beginning to squeeze State and local governments, the real value of Federal grants-in-aid actually declined 2 percent (NIA basis) from the level of aid offered in 1973. For 1975 and 1976, when the impact of inflation will continue and the impact of recession will be even more severe, the fiscal year 1976 budget offers less than a 6-percent increase in Federal assistance. Furthermore, Federal aid to State and local governments will decline for the third successive fiscal year as a percentage of total Federal outlays, as a percentage of total domestic Federal outlays, and as a percentage of State and local expenditures.

The alternative to increased Federal funding of the sagging roads construction program is increased State taxation to raise revenues for the State matching share. Certainly such taxation, however painful to less prosperous States, would be preferable to losing job intensive road construction projects and Federal apportionments. If it is done, it will just as certainly undermine Federal Government efforts to initiate an economic recovery by returning purchasing power to consumers through easing the tax burden. We must face the hard fact that we cannot halt deepening national unemployment by looking to the States. I strongly favor a financially sound and conservative approach to road construction, with its excellent job opportunities. But we cannot equate a conservative approach with a donothing approach. What it takes to halt deepening unemployment is jobs, and what is now required to translate released trust funds into jobs is financial relief to the States. I trust that this hearing will give us full information to proceed without delay to give the States that relief.

That is my position on this legislation, Mr. Chairman. I hope Governor Tiemann can address himself to the particular needs of the States and to the contribution that this legislation may make to ease the unemployment situation in this country.

Thank you very much.

Senator BENTSEN. Thank you very much, Senator. [S. 952 and H.R. 3786 follow:]

94TH CONGRESS 1ST SESSION

S. 952

IN THE SENATE OF THE UNITED STATES

MARCH 5, 1975

Mr. MONTOYA (for himself, Mr. BAYH, Mr. MAGNUSON, and Mr. RANDOLPH) introduced the following bill; which was read twice and referred to the Committee on Public Works

A BILL

To provide States unable to meet the matching requirements for Federal-aid highway funds with moneys to cover Federal Highway Administration apportionments.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, SECTION 1. For the purpose of assisting any State in

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4 meeting the requirements for State funds to match any sums 5 apportioned to such State under the provisions of section 104 6 of title 23, United States Code, prior to June 30, 1975, the 7 Secretary of Transportation is hereby authorized upon the 8 request of any State to provide an increase in the Federal 9 share payable for any project. The increase of the Federal 10 share shall be made available from future apportionments of

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