The Department also is responsible for local and regional technical assistance, liaison and communications, federal program coordination and community development block grant activities. OHIO In Ohio the SPUR project State Programs Urging Redevelopment constitutes a major effort on the part of the Department of Economic and Community Development. Through a reexamination of state legislation, an effort is being made to identify and interpret laws which would promote both housing and commercial/ industrial redevelopment activities. The division is currently distributing the findings of its reexamination effort in an attempt to make local governments aware of the options available to support their redevelopment activities. A digest of local government activities undertaken as part of the SPUR program is also being prepared. Additionally, the division has undertaken a survey of state agencies to determine the total number of housing functions administered at the state level. To date, they have identified 33 functions residing in 12 different agencies. From this, housing policy will be examined and analyzed from a total state perspective. The state resources include those of the Ohio Housing Development Board, which is in the process of becoming a fully authorized housing finance agency, in insuring some programs, providing technical assistance and authorizing seed money loans. WEST VIRGINIA In West Virginia, the state has launched a major effort to provide The HUD 701 and EDA - 302 planning programs will be coupled with the Mr. BROWN. Mr. Chairman, I, in welcoming the Governor, was grossly remiss in not welcoming also and introducing his charming wife. Mrs. Milliken, would you stand, please. Mrs. MILLIKEN. Thank you, Mr. Brown. Mr. ST GERMAIN. We appreciate Mr. Brown's bringing to our attention the presence of the Governor's wife. Certainly, those of us who are in the Congress appreciate the fact that anyone who is in public life has to have a very patient and understanding wife. Governor, I realize that you weren't responsible for preparing the list which I noted with this example of the community developmenttype organizations of the various States. But to whomever prepared the list, I want to express my chagrin at the fact that they did not note the very able, efficient, superior record of the Rhode Island Department of Community Development. It has been outstanding. And the plea that you make today certainly has been brought to this member's attention by the Governor of Rhode Island as well as the people in the department of community affairs in Rhode Island. So I can well understand their desire for more participation. I also congratulate the National Governors Conference for the fact that despite your feeling of having been "left out," you nonetheless do support the efforts and the thrust of the legislation before us. As you know, we all realize that the States, no doubt, would like to have increased participation. Year after year I am called upon by my particular department of community affairs because of their concern with the amount of funding they get from section 701. They have demonstrated to me an ability to do an even better job were they given additional funding, and they have in fact very seriously performed an outstanding service to the smaller communities of the State which without the assistance of the State department just could not in most instances have hoped to participate in the programs of HUD. Mr. Brown? Mr. BROWN. Thank you, Mr. Chairman. And thank you very much, Governor, for a very fine statement. I think that the role you are anticipating for States has been somewhat recognized already. As you know, in the Ford proposed budget, it was suggested that the nonmetro discretionary funds, in effect, be handled by the States. Secretary Harris in her testimony before us at the opening of these hearings indicated that she favored pooling the discretionary balances of the SMSA's in each State rather than allocating it through each SMSA. Well, if you put those two things together, it seems to me you then come up with the idea that all discretionary balances, whether in nonmetro or in metro areas, that they could be accumulated in a fund and handled by the States. In addition, as you point out in your statement, many States are combining their housing and community development activities. We know, for instance, in Michigan and other States that we have a fine State housing authority that has been doing a great job in providing section 8 housing. In fact there has been a great reliance placed upon State agencies to actually provide section 8 housing. They were out front before the conventional developers were in the field. If you recognize the emphasis, by Secretary Harris' testimony and the 1974 act, on combining housing with community development, it seems that you make an even stronger case for the State to have a more significant role. I have noticed, in communities in my district, an inability of smaller communities to be able to really utilize the program effectively. They don't understand it. They don't have the technical assistance, and so forth. I think, that to the extent we bring the help and the source of funding closer to those communities, so that they have greater access to the decisionmakers, that all of this would be very helpful. So I assure you that at least this member of the subcommittee is going to review very carefully and, hopefully, favorably the recommendations of the National Governors Conference and your recommendations that you made here today. Governor MILLIKEN. Thank you very much. Mr. ST GERMAIN. I want to make sure I get this clear. Are you also essentially agreeing with the Governor's intention that the allocation or the set-aside for the State agencies should be a little higher than has been indicated by the administration to the subcommittee? Mr. BROWN. Well, the chairman knows that philosophically and conceptually I don't believe in set-asides. I don't like them. However, in Secretary Harris's testimony I think she said she contemplated the States having a more significant role in this area. I just hope we can depend upon what she has said and how she intends to administer the program so that we have an adequate allocation of units to State agencies withoutcalling it "a set-aside." Mr. ST GERMAIN. Well, as the gentleman will recall-and I think the Governor has testified on that basis-in fiscal year 1977 there were 33,000 units, and now we are talking about-the administration is talking about 20,000 units. Would the gentleman, therefore, join this member in moral persuasion, if not of a set-aside, then to encourage the administration to perhaps increase that number rather than go down by 13,000 units: probably go up to 40,000 units? Mr. BROWN. The chairman, without getting into a numbers game, knows that I favor a greater role for the State housing agencies, and I would be glad to support any effort whereby the Department assures that this is done. But I don't like statutory set-asides. Mr. ST GERMAIN. I appreciate the gentleman's position as far as the statutory is concerned, but I am glad to know that he also feels that we should encourage the State agencies who have performed in this area so credibly. Thank you. Mr. Blanchard? Mr. BLANCHARD. I guess the only question I have relates to how we channel Federal money, which after all is the money of the taxpayers in Michigan and everywhere else. The taxpavers have contributed substantially greater sums of money to our Federal Treasury than they have received back, as our Governor knows. But one of the criticisms that people like myself get is that we create a program and then we carve out a role for-in welfare it might be for different categories of people and, then a role for various units of government, and then the limited sum of $4 billion a year-it is a limited sum for problems of housing and community development-it gets spread out among so many cities and so many units of Government that it ends up not having the impact we would like. And I am wondering-counties want a role, cities of different sizes want a role, the States want a role-really your message is, States count, too. and I have to agree with you, but doesn't this add to the cost of programs if we are funneling moneys through different agencies? And how, for example in Michigan, how much additional cost would there be to have the State involved, to play a role in the community development program? Would you be able to help with the allocation of discretionary money without any real additional cost? Do you have ongoing programs that would absorb that anyway in terms of staffs so that you wouldn't have to slice off 10 or 20 percent for administration? Governor MILLIKIN. Congressman Blanchard, in my comments I acknowledged that some 10 years ago and even more recently relatively few States were involved in community operations. They did not see a role in their cities, large or small. But that has a'l changed, and most States today are operating a very sophisticated way and have basic commitments to the resolution of urban problems. And I, of course, can cite Michigan which is quite typical of a number of other sttates. In recent years we have moved very aggressively. As you know, in the Michigan State Housing Development Authority, where we have a billion dollar bonding capacity, we have adopted revenue-sharing programs that funnels money from the State directly back to the localities. I have recommended this year to the legislature an urban grant fund that goes back to those areas. I am recommending to the legislature specifically a youth employment program to try to get to some of the problems, economic and social job-related problems that afflict our cities. What I am really saying is that the States now, Michigan being only one example among many, are deeply involved in trying to help solve many of these problems which plague us. And therefore it doesn't make sense to me if we have a Federal block grant program which has established a direct relationship from the Federal Government going into entitlement cities, for example, without relation to the priorities that have been established at the State level, without relationship to the State involvement in trying in a number of different directions to cope with those problems. And I am essentially saying-and the Nation's Governors are saying and they are requesting me this morning to say-that we believe in the interest of effective policy development implementation that it is extremely important that the State as the single coordinating agency at the State level would be involved with the Federal Government in the allocation of these dollars and the technical planning and coordination and assistance that can only be done at the State level. And if you function in that manner, utilizing the resources available at the State now, then I think, going back to your basic question, the dollars are going to be most efficiently and effectively utilized with a minimum of administrative and other costs and overhead. I, in the strongest possible way, urge this subcommittee to consider that essential and fundamental role that the States ought to play, both in the ability to be recipients of grants out of the discretionary balances, and of course in the planning and the coordination role. Mr. BLANCHARD. Let me just pursue that a moment. I happen to agree with you. I am just trying to figure out how I explain to a city like my hometown, Ferndale, Mich., a program in which money goes from HUD to some of the entitlement cities, some of it goes to Oakland County, some of it under your plan goes to the discretion of a more coordinated program to the State. And then you have the Council of Governments, which has another role, and I have everything but the school districts coming and wanting a share which may happen for all I know-of the action. And we have so many levels. I am wondering, if we were to carve out a role for the State, do you think it is necessary to have the Council of Governments or other areawide planning agencies involved with a role? Because we add so many layers of input, not to mention citizen participation, environmental impact statements, and I am afraid that the money is going to move far too slowly to satisfy anyone. I am just looking for some guidance from your experience. I am not sure there is an answer to what I have raised, but I just see this maze of involvement which sounds good, but in sum slowing down the process of offering the kinds of desperate assistance that you and I know our State needs. Governor MILLIKEN. Well, I might say that of course State agencies are now deeply and continually involved with various units of local government and regional associations. And it makes sense, it seems to me, to involve them further in the manner that I have described. I think, in addition, as Congressman Brown has noted, there are a number of particularly smaller communities outside of the metropolitan areas that do not have now-and probably never will be able to have the technical competence and planning abilities which are already available at the State level. And the result is they are unable to effectively use some of the funds that they may be entitled to. Mr. BLANCHARD. Thank you. Mr. ST GERMAIN. Mr. Lundine? Mr. LUNDINE. Welcome, Governor. I really appreciate having you here as a spokesman for the Nation's Governors during this time of evaluation of our housing and community development programs. I see that in your summary of State programs you have discretely not included the State of New York. I would, however, suggest that we do learn from failures as much as we do from success, and New York State has had the most spectacular failure in housing and community development, perhaps, of any State. I wonder what lessons you as a Governor draw from the virtual collapse of the Urban Development Corporation in New York, which was |