Governor and the general assembly in making their decisions with respect to appropriate executive and legislative action is included. The appendix also includes a reprint of an article, Ordeal of an Industrial Valley, from the November 1955 issue of Fortune magazine. The article is a comprehensive study of the impact of the August 19 flood on the industry of the Naugatuck Valley and should be helpful in understanding the problems which faced the flood recovery committee.

STATEMENT OF POLICY

The Connecticut Flood Recovery Committee was born of disaster. In effect, its assignment was to meet a violent act of nature with the thoughtful acts of men. In its work, the committee has faced a great number and variety of problems: Appraisal of the scope, depth, and implications of Connecticut's greatest disaster through realistic assessment of the damage, both human and material; The setting of immediate objectives for relief which also fit the long-range patterns of recovery;

Evaluation of responsibilities of the State to its citizens and their communities; of business and its components, small and large; of social agencies, both private and governmental;

The recognition of opportunities—after accepting the facts of disaster-as means of improvement of the State's total resources rather than a restoration of the status quo;

The definition of principles and standards, moral and dynamic, by which the committee could measure and judge its recommendations.

The members of the committee, from the time of its formation in the shadow of death and destruction, have worked in an overall philosophy. This approach toward potential actions of men aimed to temper acts of nature called for no new principles. Rather it demanded a simple restatement of those oldest human, social, and economic principles by which we all live and move. These have been the working beliefs of the committee:

That disaster, however widespread, is but the sum of the individual loss and calamity;

That disaster-sudden and extraordinary misfortune-must be met by those means which ease the intolerable burden on the individual. The lives lost in disaster cannot be restored; but the material loss to the survivors must be shared if the total community is to survive;

That no one should profit by disaster, either directly or by any competitive advantage in civic, commercial, political, or personal affairs;

That disaster should not become a means of hasty settlement of problems and issues of long standing not inherent in the emergency;

That recovery plans should not perpetuate old errors, or merely restore the obsolete and inadequate, or limit the opportunities for a new approach which are the only potential good in any disaster.

Connecticut's two worst natural disasters in our memory have struck thousands of our fellow citizens with acute hardship. Many have lost family, friends, homes, jobs, businesses, and personal belongings. Nothing we can do will erase from their minds and hearts the frightening and dreadful experiences they have undergone. But all of us can unite in mobilizing the available resources of the State to alleviate the material and economic hardships the floods have caused. In its recommendations, the committee has been conscious of the precedents which will be set by the State of Connecticut in all of its activities born of disaster. New ground will be plowed and no one can say for sure whether or not it will be productive. The measures proposed now are conceived as answers, in part at least, to problems existing now. They should not be considered as setting a rigid pattern for the future.

The problem of direct grants

AID TO FLOOD VICTIMS

One stark fact stands out in the consideration of what was undoubtedly the most difficult problem which the committee had to face, that is, there is nothing fair or equitable about a disaster and, as yet, no fair and equitable means of making restitution has been found. While this generalization applies to all phases of a disaster, it is particularly evident in the case of the individual homeowner and the small-business man.

Traditionally the job of immediate relief has been undertaken by private agencies such as the Salvation Army and the Red Cross. Subsequent rehabilitation of the family has primarily been the responsibility of the Red Cross. These organizations have played their role vigorously and competently, often under the most trying circumstances. There were few, if any, instances of flood sufferers who wanted for food, clothing, and shelter. When the Red Cross workers finally close their books on the Connecticut floods of 1955 and depart for another disaster somewhere else, all of the families which have suffered lossin many cases not once, but twice-will be in a position to keep going and to eventually establish a satisfactory way of life.

With financial resources dependent solely upon voluntary contributions, the scope of the Red Cross rehabilitation program is of necessity limited. Contrary to the concept entertained by many, it could not possibly approach the level of full compensation for loss without consideration of the financial ability of the individual to sustain loss. In the field normally covered by Red Cross about 10,000 homes and shops suffered from the August and October floods, varying in degree from minor damage to complete destruction. Of these 10,000 flood victims, about 7,500 or three-fourths of the total will receive Red Cross grants of money amounts totaling over $9 million. The reports of town officials and other representatives of the stricken areas which have come to the committee have, without exception indicated that the rehabilitation job done by the Red Cross has been excellent.

A number of suggestions have been made that the State should pay preflood market value for destroyed properties that lie in the path of proposed highway projects. Disregarding the constitutional question, the administration of such a program would involve serious inequities and would create more problems than it would solve. A study of this matter indicates that in many instances the Red Cross has provided a new home in a new location with the family rehabilitation plan being worked out on the assumption that the State would pay only the present value of the destroyed property as provided by existing law. Any further compensation by the State would obviously result in duplication for some individuals with no benefit to many others whose homes were destroyed but who did not happen to be located on the route of a new highway.

In spite of an earnest desire on the part of the committee to develop a sound plan of providing greater financial aid to individuals than is possible under the Red Cross program, it reluctantly came to the conclusion that it could not do so with respect to the 1955 floods. It strongly recommends, however, that the question of disaster insurance be thoroughly studied at the Federal level in the hope that a reasonable solution to this problem may be forthcoming in the near future.

Recommendation. This committee, after considerable study of the problem of direct grants of money by the State to victims of the Connecticut floods of 1955 and concluding that there is no sound way for the State to make such grants, recommends that the legislature urge the Congress of the United States to make a comprehensive study of the possibilities and problems of a Federal disaster insurance program.

Unemployment compensation

One of the first proposals presented to the committee for its consideration and one which is related to the question of direct grants concerns changes in the presently existing unemployment compensation act. The present act provides a maximum benefit of $35 per week for an individual worker with an additional allowance of $3 per week for each dependent up to a total of $52 per week. These amounts are payable to unemployed persons for up to 26 weeks after a waiting period of 1 week. The fund from which these allowances are paid was created and is maintained by a graduated unemployment tax on employers' total payroll. The variations in the percentage rate reflects the unemployment experience of the individual employer.

Several different proposals for changing the present Unemployment Compensation Act were presented for consideration by the committee. The principal feature of each was the waiving of the 1-week waiting period for employees who were out of work because of the flood. The committee, after considering the problem, was unable to agree that a change in the act was in order at this time.

The view of those members of the committee who felt that no change should be recommended is based on the concept that unemployment is a personal disaster regardless of its cause and that the present Unemployment Compensation

Act reflects the general assembly's judgment as to an equitable means of alleviating such a disaster. The hardship to an individual resulting from the loss of his job is just as great if the reason for the lost job is a fire or a flood or just plain lack of work due to poor economic conditions. In the face of the suffering and financial loss experienced by those subjected to actual flood damage, it appears inequitable to give preferred treatment to those whose only loss was employment and who were, therefore, no worse off than other unemployed individuals. In the majority of cases there was only a brief interruption in employment, or no interruption at all, because of the vast amount of cleanup and repair work to be done immediately following the flood. Those opposing a change do so because they believe that it is not justified as a flood-relief measure. In arriving at this decision no attempt has been made to assess the adequacy or inadequacy of the present act as a means of alleviating the disaster of unemployment. The legislature may wish to consider the overall question of unemployment compensation, but since it is not in reality a flood-relief matter, it is suggested that this subject should be deferred until the next regular session of the general assembly.

Those of the committee who believe that a change should be made in the Unemployment Compensation Act point out that the State created the unemployment compensation fund for replacement of income during unemployment. This fund, today, is at near record heights of over $225 million. The severity of the losses experienced demonstrated to previous skeptics and inadequacy of present benefit payments with their average of $27 a week including dependency allowances. Workers who have thus been thrown out of work through no fault of their own should be able to utilize the resources of the unemployment fund during their unemployment. But the following changes are needed to bring them maximum assistance while preserving the spirit and intent of the law:

1. Immediate payment by elimination of the waiting week.

2. Increase in amount and duration of benefits including dependency allow

ances.

3. Maintenance of workers' credits for the future.

4. Restoration of eligibility to workers unable to qualify because of the flood. The employers of this State should also receive assistance by the suspension of charges for these additional benefits paid as a result of the flood. The purpose of the fund is to charge employers for benefit costs over which they have some control; in case of a flood, they have no control. The additional charges should and can be absorbed by the fund generally. Those advocating a change in the law believe that these proposals are the minimum this committee should recommend both to discharge its responsibility and to reflect in some measure the wishes of the great majority of our citizens.

Sales- and use-tax remissions to flood victims

The flood recovery committee suggests that flood victims be relieved of paying sales tax on replacement of equipment and goods damaged or lost due to the floods. This would mean that householders who found it necessary to replace major items such as ranges and refrigerators would not have to pay sales tax on these replacements. The same rule would apply to business and industry flood victims in the replacement of equipment. Since such purchases would not have been necessary if the floods had not occurred, the exemption of these replacement sales from the sales tax will have no material effect on the total estimated income to the State. To simplify the administration of this suggestion, it is believed that the exemption should apply only to items costing $35 or more.

Recommendation.-We recommend, therefore, that for a period of 1 year beginning August 19, 1955, the sales and use tax be refunded or remitted on all pur chases of separate items or any group of associated or like items, subject to the tax, costing $35 or more, provided that an affidavit is furnished to the seller by the purchaser affirm that such purchases were made to replace goods destroyed or damaged beyond repair as a direct result of the floods.

Abatement of local property taxes

Under existing laws, property taxes may be abated by local authorities only for those persons who "are poor and unable to pay the same." With proper safeguards, this provision should be liberalized to permit the abatement of such taxes for a limited period in cases where the property owner suffered substantial flood damage. Property tax abatements will reduce the income of the abating municipality and this loss of income should, in the opinion of the committee, be recoverable by the towns and cities from the State.

Recommendation.-The committee recommends that municipalities be authorized to abate taxes on property damaged 50 percent or more, provided the taxes abated were due but not payable (including a 30-day grace period) until after the date of the damage caused by the August and October floods, and that the State be empowered to reimburse, subject to audit, the municipalities for taxes so abated.

Estimated cost to the State, $2,100,000.

Waiver of interest on delinquent taxes

As further relief to disaster victims, the committee approves the waiver of interest on delinquent property-tax payments during the period of emergency. Recommendation.—It is recommended that the appropriate local officials be authorized to waive interest payments on delinquent property taxes where flood damage is involved for the duration of the emergency as determined by the general assembly.

Acquisition and relocation of temporary homes

Shortly after the August flood, it became evident that prompt action would have to be taken to provide temporary houses in certain disaster areas. Arrangements were made by the State to obtain from the Federal Government, at no cost, 300 temporary housing units located at Groton. The committee agreed that the State should take whatever steps were necessary to transport these housing units to the disaster area and to pay the transportation cost as well as the cost of setting the houses on a foundation.

When it became apparent that not all of the 300 units would be required in the disaster areas, it was recommended that any units not needed for housing be made available for the use of small-business establishments of the size and type eligible for Red Cross aid.

Recommendation.-We recommend that the legislature appropriate the necessary moneys to reimburs the funds from which expenditures were made to relocate and make available for use the 300 housing units obtained from the Federal Government.

Estimated cost to the State, $180,000.

Extension of the State home mortgage loan program

A number of families in flood-affected areas are former homeowners or moderate-income renters. Because of financial loss as a result of the flood, these families, desiring to build or buy their own homes, might find it difficult to obtain mortgage financing through conventional sources. It is our opinion that assistance in the form of low-interest-rate mortgags should be provided to these families. Recommendation.-Therefore, we recommend that legislation be enacted to provide low-interest-rate mortgages to flood victims comparable to the mortgages granted under the State homeownership mortgage program. Such defects as an unrealistically low interest rate and the sale of State mortgaged property to a purchaser not qualified for such a loan should be remedied. The amount to be made available for this program, if any is found to be necessary, to be determined in the light of circumstances at the time the general assembly meets. Extension of State moderate rental housing program

Because a large number of tenement houses and rental units were destroyed or made uninhabitable by the floods, many people in the affected areas are living in crowded, undesirable circumstances. The 1955 general assembly made $15 million available to housing authorities for the construction of moderate rental units to alleviate the housing need of families displaced by highway or other public construction. The committee feels that this program should be extended in the flood areas to provide proper housing for persons displaced by the floods. Recommendation. It is recommended that the legislature make additional funds available for moderate rental housing in the flood areas, the amount of such funds for this program, if any are found to be necessary, to be determined by the legislature in the light of existing needs.

Liberalization of law regulating bank loans for housing repair

To further ease the housing shortage in flooded areas, it is the opinion of the committee that savings banks and savings departments should be permitted to make mortgage and housing repair loans for flood repairs upon terms and conditions more liberal than presently allowed.

Recommendation.-We recommend, therefore, that legislation be enacted liberalizing the terms and conditions upon which savings banks and saving departments may make mortgage loans and home repair loans for the repair of flooddamaged houses.

Small Business Administration loans

Lawyers handling Small Business Administration loans submitted legislation to broaden chattel mortgages so as to permit advances over a period of 1 year and to cover after-acquired property acquired within the 1-year period. It was felt that this legislation should be adopted.

Recommendation.-It is recommended that legislation be passed to accomplish the above objective.

Liquor legislation

The Liquor Control Commission brought to the attention of the committee the problem arising in the flood areas by reason of the fact that only limited credit may be extended to dealers in liquor.

Recommendation.-It is recommended that legislation be passed to grant the Liquor Control Commission power to suspend the credit provisions of the Liquor Control Act during times of emergency.

Succession taxes on estates of people dying on date of floods or prior thereto

A problem exists in the situation where an individual died prior to the floods but while the estate was in probate and property of the estate was subsequently damaged or destroyed by the floods. It is desirable that provision be made for the filing of an amended inventory and appraisal and succession tax return in such cases.

Recommendation.-It is recommended that legislation be passed to accomplish the above objective.

Misrepresentation in sales of flood-damaged goods

One of the unfortunate byproducts of Connecticut's flood disasters is the socalled closeout sale. Itinerant vendors vacant stores and advertise closeout sales of flood-damaged goods which goods are, in fact, shoddy merchandise rather than flood damaged. The purchaser is defrauded and the reputable, established merchants whom the Red Cross, the banks, and such agencies as the Merchants' disaster committee, and the United Service Clubs committee are trying to get back on their feet are the victims of unscrupulous and unfair competition. Such a situation requires corrective action.

Recommendation. The committee recommends the adoption of legislation outlawing misrepres: ntation in so-called closeout sales and requiring all transient vendors to make a deposit of $500 with the State treasurer and secure a license as prescribed by local ordinance.

AID TO TOWNS

Reimbursement of grand list losses

Many towns and cities suffered destruction of, or severe damage to, taxable property with the result that the taxable resources which make up their grand lists have been greatly reduced. While the need for municipal revenue may be even greater than it was prior to the floods, the value of the property which is the source of these revenues has depreciated or, in some instances, disappeared. The State should reimburse its political subdivisions for tax loss due to reduction of their grand lists.

Recommendation.-The committee recommends that the State make grants to municipalities equal to their loss of income resulting from grand list reductions because of the floods, basing such grants on property assessments for the grand lists of 1954 and the tax rate in effect on August 19 or October 15, 1955, whichever applies, provided that such grants shall be limited to a period of 1 year and be subject to audit by the State.

Estimated cost to the State, $1,575,000.

Extension of time to assessors and boards of review for filing returns

The statutes now provide that the State tax commissioner may extend the time within which assessors and board of tax review may file completed grand lists by as much as 30 days. Because of the floods, additional time may be required to compile the abstracts and hold the necessary hearings before the board of review.