Mr. MYERS. I believe that. We have a little town just north of Fresno, in Madera County, in fact the county seat, in which a sign says "It Doesn't Cost to Shop in Madera, It Pays.' That is what we believe. Senator ANDERSON. Do you think then if the Federal Government spends this $260 or $290 million, even though it lends it interest-free to the community in that area and it will cost the Government $8 million or $9 million a year to do that, that after the projects are built and the people who are living on them, that $8 million or $9 million would more than come back to the Federal Government in business development, income taxes, and increase in wealth generally? Mr. MYERS. It is inescapable. With our $75 million valuation now it is inevitable we would quadruple in value. The Government's income from taxes alone would more than pay the interest. Senator ANDERSON. It is interest free and I have stoutly defended that for a long time because I think that the amount of money the Government loses on these reclamation loans have quickly come back to it, and I am glad to have you stress that point here today. Mr. MYERS. We have noted and studied with a great deal of interest Senate bill 1887 although it is not, in our opinion, perfect. There are some objectionable features as far as we are concerned, but we recognize, just like in labor negotiatitons, that you don't get everything you ask for, and that to get something you have to give something in return. Since we don't have anything, we can't give it, nor can we lose it. But we hope to gain something, and we, the people who are going to help repay the costs of it, are willing to go along with the language in Senate bill 1887. I am authorized to speak for my people along that line. We don't believe that we are sacrificing anything in that manner. I am not going to take too much more time, but I wanted to point out that we have established already that we have the source of supply. We have established beyond a shadow of a doubt that we have a need, and we have established beyond a shadow of a doubt that we have the land to put the water on if we can get it. We have the money available if we go about it in a sensible manner, and we have the people and the contractors and the equipment available so that we could start in the morning on one of the darnedest construction programs you ever saw in your life if it were authorized and ready to go. We have the technical know-how from our engineers, from the Federal Government, from the State of California, and from the people who are going to consume the water. We have the know-how, and the only thing we need right now as far as I am concerned is the authorization to restore the confidence that the people have in their government, whether it be city, county, State, Federal, or what have you. I think that with all of this silly bickering that we have by some of the selfish and even, I would go so far as to say, hoggish interests—and I am not accusing anyone by name, but we have some people who are selfish to the point of being hoggish in my opinion-the sooner we can get the people to sit down and agree that they have a problem that they will have to agree upon before we can ever settle anything, the sooner we can get to work on this program. Senator ANDERSON. I just want to ask you one question, Mr. Myers. I issued a release a short time ago as chairman of this Subcommittee on Irrigation and Reclamation, pointing out that if we wanted to sort of prime the economic pump instead of spending $160 million next year we could spend $330 million on projects already authorized. That was because there seems to be some unemployment here and there in the country. Is there unemployment in the Fresno area? Mr. MYERS. A tremendous amount of unemployment, Mr. Chair man. I just brought this little brochure from the Fresno County and City Chamber of Commerce, and they have employment figures in finance, trade, industry, transportation, and so on, and so forth, and the only place that employment is up is in real estate where the people are forced to sell their homes and this, that and the other. And there is one other instance where employment is up, and that is in residential power and things of that nature where there are new installations or things of that nature. All the rest of them show a minus in their report: 8.4 in finance. The employment in finance of real estate is up 2.1. It is off 59.8 in the trades. Senator ANDERSON. People get new mortgages. That would not be an extremely hopeful sign. Mr. MYERS. That is the only place that it is up. Senator ANDERSON. You do think that a project of this nature would be worthwhile to authorize from the standpoint of unemployment that exists in the area? Mr. MYERS. I certainly do. I think it would do an awful lot; even the authorization would restore confidence in the people of the valley even though the construction didn't start this year or even next year. But it would restore confidence and would mean that the State would go ahead with its drainage program and little irrigation programs and things that they have proposed, the counties and the farmers and the water districts, and I think it would reflect, and I believe it would do an awful lot to bring us out of the doldrums we are in now. Senator ANDERSON. Thank you, Mr. Myers. You were a good wit ness. Mr. MYERS. Thank you. Senator ANDERSON. Mr. Butler. Are there other people to testify besides Mr. Butler and Mr. Peterson? Speak now or forever hold your peace. All right. Will you state your occupation and your name for the record, Mr. Butler? STATEMENT OF WARREN W. BUTLER, VICE CHAIRMAN, BOARD OF DIRECTORS, THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Mr. BUTLER. Mr. Chairman and Senator Kuchel, my name is Warren W. Butler. I am vice chairman of the board of directors of the Metropolitan Water District of Southern California, a political subdivision of California, organized for the purpose of providing water to our member agencies on the coastal plain of southern California. We appreciate the time this subcommittee is giving to consideration of one of the important phases of the many-sided California State water problem. I am pleased to appear today not only to comment on the bill before you, but also to discuss the relationship which the project proposed unavoidably has to the entire California water problem, including the necessity of future deliveries of supplementary water supplies into southern California. Pursuant to instructions of our bord of directors, it is my duty to strongly oppose S. 1887 in the language and terms in which it is now written. So that our position may not be misunderstood nor misinterpreted, let me say immediately that our board does not now, nor has it ever, opposed the people of the 500,000 acres of this project obtaining the benefits of the United States reclamation laws together with Federal financing. But in the interests of the 6 million people who live within our district we must insist that the San Luis service area shall receive what they desire on a basis that will not be seriously disadvantageous to us. To understand what is involved, it must first be pointed out that the 500,000-acre San Luis service area, the proposed San Luis Dam and the proposed main delivery canal are geographically in a strategic location. They form, so to speak, the neck of the bottle through which a vast amount of water out of the Sacramento-San Joaquin Delta area must be delivered in the future to a vast additional area of the San Joaquin Valley and other portions of central and southern California in addition to the 500,000 acres. Thus the design of this neck of the bottle and its future operational policies become of exceptional importance. If the Federal Government is to have a San Luis project, it is therefore an unavoidable necessity that there be a contract covering the construction and operation of those facilities which must be jointly used to serve not only the 500,000 acres but also the several millions of acres which must be served by the State of California. Because of the preponderant interest of the State and the fact that the area it must serve lies beyond the San Luis service area through which water must be conveyed and in the interim stored, our board of directors believes that each facility of the San Luis Dam, Reservoir, and Canal, as soon as constructed, should be operated and maintained by the State of California and not by the Secretary of the Interior. Senator ANDERSON (reading) : As soon as constructed, should be operated * * *. Suppose the Department of the Interior put up most of the money for the construction. Do you still think it should not have anything to say about the operation? Mr. BUTLER. I didn't say, Mr. Chairman, that they shouldn't have anything to say about the operation. I recognize that a contract-plus provides for operation, you might say, down to the last detail if you are going to have a successful partnership. Senator ANDERSON. Maybe I did not quite understand what this statement says. It says that * our board of directors believes that each facility of the San Luis Dam, Reservoir, and Canal, as soon as constructed, should be operated and maintained by the State of California and not by the Secretary of the Interior. Mr. BUTLER. I think our concept would be this, Mr. Chairman : We will say that if this was ready for service long ahead of, we will say, Kern County or anybody else, that we wouldn't have any particular objection to governmental operation. But as soon as the State begins to service land on the other side, we think it should be then a State operation. Senator ANDERSON. I read it "as soon as constructed." I do not see any future tense in there. Mr. BUTLER. I appreciate that it says that, Mr. Chairman. The thing that was contemplated when this was written, I think, was the fact of getting the whole thing into operation, and we didn't go ino the study of which might be completed first and ready for service first and all that sort of thing. Senator ANDERSON. Does the bill as written contemplate the construction of a reservoir of larger than a million acre-feet storage? Senator KUCHEL. Subsequent to such an agreement. Senator ANDERSON. That is another thing. Mr. BUTLER. I have a comment to make on that later in this statement, Mr. Chairman. Senator ANDERSON. All right. It just seems to me that if you built yourself a house you are not going to let your neighbor run it. You would run it. If the Government goes ahead and builds a dam, canal, and reservoir, various other facilities, it is certainly not going to turn it over to the State of California to manage. Mr. BUTLER. California is not a single house. It is an apartment house, if I may beg to follow your analogy. Senator ANDERSON. If I put the money in an apartment house I still have something to say about it or I do not put in the money. I will tell you that. Mr. BUTLER. There is no desire on our part to prevent the Government from having anything to say about it. As you remember here, I said there must be a contract. Senator ANDERSON. I am trying to find out what you mean by your language. I am not trying to quarrel with you. Mr. BUTLER. Looking to the future, the preponderant interest of the State should require that all interest and control of the United States in any facilities of the San Luis Dam, Reservoir, and Canal should cease and title to all such works should be conveyed to the State upon repayment of the reimbursable costs to the United States. Senator ANDERSON. Do you feel that this project should be treated differently from every irrigation project in the United States just because it is in California? Mr. BUTLER. Mr. Chairman, this idea that you put forth yesterday about the Government being entitled to, in sense, get some return on these projects after they are theoretically paid out is something I don't think that our board has ever contemplated. We went into this from the point of view of saying, well, after the thing is paid off, naturally a single operation would be less cumbersome than a joint operation. That was the way we looked at it. Senator ANDERSON. Let me get back to another question. Mr. BUTLER. Yes. Senator ANDERSON. It will be paid off some day. When it is paid off should we take it and get some Solomon to slice it up and say, "This much belongs to Arizona, this much belongs to Nevada, and California owns this little piece over here," or will it still belong to the Federal Government? Mr. BUTLER. Could I comment on that? Senator ANDERSON. Yes, indeed. Mr. BUTLER. You know we are one of the contractors on the dam. In other words, our district signed the contract to pay off the 36 percent of the cost of those works through our power charges. The Government has made a lot of money off of us. Senator ANDERSON. So have you, have you not? Mr. BUTLER. Yes. Senator ANDERSON. You have not been financially damaged. Mr. BUTLER. No, but the Government made a profit of $12 million on the handling of our bond issue. The cost of the Hoover Dam is being paid with interest, and in 1987 all that we have is the right to a renewal of the contract. Presumably at that time the power rate will be raised up to the market rate. That is the thing that we face on the Hoover Dam. So the Government is not going to lose any money on the Metropolitan Water District. They are going to make a very nice profit. Senator ANDERSON. I do not thing there is anything wrong with the Government making a profit. Mr. BUTLER. I don't either. Senator ANDERSON. I sold some cotton one time as Secretary of Agriculture and made $200 million for the Government. Everybody raised Cain. It was the wrong thing to do, they said. You are supposed to lose money in the Department of Agriculture. I go along with the Government making a dollar once in a while. Mr. BUTLER. As a citizen, I am very much in favor of that, and it is one of the reasons I am a little bit concerned. Senator ANDERSON. I am more concerned as a taxpayer. The citizen part does not worry me half as much as the tax system. Let me go to the Parker and Davis Dams, which are in the immediate vicinity of the State of California. Mr. BUTLER. The Government made money off of us on Parker, too. Senator ANDERSON. You say you do not object. When they are paid off do you think Parker Dam should go to the State in which it might be located? Mr. BUTLER. One end of it is in California, and the other end is in Arizona, and, with the present state of relations, I don't know how that would work very good. Senator ANDERSON. Would not that joint operation be wonderful with Arizona with both hands around California's throat, and California with both hands around Arizona's throat? Senator KUCHEL. It is a very ugly picture that you paint. Senator ANDERSON. I do that only at the command of the silent voices that are not down here, Mr. Goldwater and others. Mr. BUTLER. I would like to point out, Mr. Chairman, that on the Parker deal we paid the entire cost of the dam. The result is the |