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It's my point that if this committee is to ask for a nonstated ceiling on authorizations, the least that can be done is that the Appropriations Committee be informed of the administration's support of the add-on funds needed to get up to the authorized amount. This action will give you that dollar flexibility you are asking us to authorize. If I don't perceive that you are going to use the flexibility you seek from this committee for the purpose of picking up this unpredictable slack for the trust territory, then I have to keep you on a shorter leash, and that doesn't make sense for us or you.

Mr. CARPENTER. Well, of course, if we are able to secure the necessary flexibility in our authorization, and as the situation on categoric grant programs becomes clear, then we will have a certain amount of built-in flexibility of an extra

Mr. BURTON. My dear friend, you have one opportunity a year, and you are not now, for the next year, seeking a fully authorized amount. I can't conceive that OMB is so rigid in its policies that they wouldn't give you a green light in the sense that you could tell them you may need another $5 million, as long as it is openly understood we are not going to clear the obligation of that $5 million until we see how all this settles down for the trust territory. Then at least you're in a position to respond reasonably quickly to that situation. You are in no position to respond if you wait until revenue sharing clears up. Are you permitted to tell us whether this is all you sought, or whether this is all you are permitted to seek by OMB?

Mr. CARPENTER. The administration position, of course, is the two identical bills which are now before you here on the authorization. Mr. BURTON. I'm talking about the appropriations for next year. Mr. CARPENTER. As far as the appropriation, yes, that $56 million was an administration figure, and the cutback from the previous $60 million was part of the general reduction in funds throughout the-

Mr. BURTON. What kind of a policy is this when we're in the middle of negotiations, and we're cutting back on the trust territory? That's inconceivable in terms of anyone's interests, just inconceiv

able.

Mr. Clausen and I may want to talk with you and Mr. Kyl about this. Under these circumstances, I can't understand asking for anything less than you are authorized. You may not spend it. We may be displeased about that or pleased, but you ought to have the funds. available to spend if in the judgment of the administration it is still needed.

Do you want to respond to that?

Mr. CARPENTER. May I point out, Mr. Chairman, that the fiscal year 1974 appropriation request for $56 million is dependent upon the necessary authorization bill. We don't have an authorization bill now beyond 1973, so that the budget request for $56 million was submitted predicated on obtaining the necessary authorization request for 1974. Mr. SKUBITZ. Will the gentleman yield?

Mr. BURTON. I yield to the gentleman from Kansas.

Mr. SKUBITZ. Do I correctly understand that if we approve an open-ended authorization bill, the administration would be in a position to come back later for additional funds for some other program? Mr. CARPENTER. That is correct, sir.

Mr. SKUBITZ. This is the administration's position?

Mr. CARPENTER. In veiw of the general

Mr. SKUBITZ. It's difficult to conceive of the administration pursuing such a course. It is proposing this $56 million authorization, but if it later required funds, for example, for an education program or some other program, it could with this open-ended authorization, request a $62 million or even a $70 million appropriation that could be made in a supplementary appropriation later on?

Mr. CARPENTER. Yes, sir; that is correct.

Mr. BURTON. The gentleman from California, Mr. Clausen.

Mr. CLAUSEN. Gentleman, I will have a number of questions that I want to propound. Prior to doing so I think that I should make at least this observation, that the questions that we are asking of you are not only designed to build a record for this subcommittee, but also to justify our position before the full committee, and then also, of course, defend it on the floor of the House. I think it is fair to state that there has been generally expressed concern by some key members of our committee, and one in particular, and with the current chairman of the full committee, with regard to his personal reservations about open-ended authorizations per se.

So, I think I should just make the point that I would, at this point, have to have some reservations about open-ended authorization both from the standpoint of money as well as time.

Now, you have alluded to the fact that there are other Federal programs coming from other Federal agencies. I am just wondering if you could provide us with the amounts of funds to be contributed to the trust territories in the Pacific Islands by other Federal Agencies during the fiscal year of 1974.

Do you have that figure?

Mr. JOHNSTON. Yes, sir.

The estimate for fiscal year 1973 is around $9,311,000 from various additional Federal programs. The estimate for fiscal 1974 was $8,071,000, but of course, as we have been discussing, this is highly problematical at the present time because of our briefing just last month that some of these programs may be discontinued and that we are not yet included in the revenue sharing programs.

So, where we are anticipating $8 million, it may be considerably less than that.

Mr. CLAUSEN. All right.

You made reference to the meeting of the Federal officials of region 9. Mr. JOHNSTON. Yes, sir.

Mr. CLAUSEN. One, was there any indication from those who were handling the briefing that the trust territory would be participating in revenue sharing?

Was there any indication, and if so, to what extent will they participate in the amount of financial reservation?

Mr. JOHNSTON. I would say that there was an indication that there there would be an attempt to include the trust territory in some of the special revenue-sharing programs, but not a commitment. Mr. BURTON. Would the gentleman yield?

Mr. CLAUSEN. I would be happy to.

Mr. BURTON. You are going to have a long period of uncertainty about the special revenue-sharing bills, such as special education revenue sharing. Because of that uncertainty, why should we not, at

least in the area where we can directly affect it, eliminate the uncertainty as it applies to the offshore islands.

That's the long and short of my position. Give you the flexibility. You ought to have the money so if you make the political decision to spend it, it is there.

Our position is really much more in the interests of the administration than that which I perceive to be advanced.

Mr. CLAUSEN. All right.

In the existing, ongoing categorical aid programs is there the same matching fund requirement that applies to the States and local political subdivisions.

Mr. JOHNSTON. In most cases; yes. The ruling has been made, however, that the U.S. grant funds which are sent to Micronesia and are then commingled with the fairly meager locally raised revenues, lose their identity to a certain extent as Federal funds, and that these can be used for the matching grants.

The best example of that possibly that we have at the present time is under the Federal Assistance to Airports Act where we put up the matching funds for building our much-needed airports and the Federal Government through the FAA puts up the balance of the

money.

Mr. CLAUSEN. I believe that's been on a 75 to 25 specifically for trust territories.

Mr. JOHNSTON. Yes, sir, but in some cases our matching funds, as I recall, have been waived. We are sometimes given slightly different treatment than other areas, but normally we do have the same matching fund requirements.

Mr. CLAUSEN. You know, Mr. Chairman, I'm not going to take too much time because I have some other questions, but I think I should at least bring to the attention of this committee a bit of a problem has come up as a result of the Interior Foreign Commerce recommendations the other day to eliminate the head tax which has been, as I understand, an inhibiting factor for some of the trust territories in being able to raise funds to meet their 25-percent requirement, and I won't prolong the discussion, but I think they have the rather unique situation-and there was an attempt to come up with some sort of an exemption. I will be very candid. It will be my attempt to discuss with the chairman of this to see if we couldn't go to the committee and maybe come up with an amendment, hopefully a committee amendment that would recognize this unique situation.

I won't take the time to go into it now, but I can see by the nodding of your head that you are aware of this situation and I want to discuss this.

Would you like to elaborate on that particular problem, their inability to come up with the matching funds?

Mr. JOHNSTON. Yes, sir; if I may. In our ability to come up with matching funds, or to support categorical programs that are dropped, in both cases we are a little bit in a bind compared to many other areas, in that our local revenues are very small. The Congres of Micronesia now, on a territory-wide basis can hopefully raise somewhere between $4 million and $6 million in the fiscal year 1974. The local governments have very limited revenues, and where in an American city or an American State which is included under the

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general revenue-sharing programs, they may be able to fairly quickly pick up some of the programs that are dropped, and undoubtedly will be, we are not in that position because our local revenues are not that strong. The same applies to our ability to provide the matching funds, but out of a very limited budget, a budget which, it has been pointed out, is even cut back from what we had anticipated. We are in a very tight position to provide either matching funds or to pick up any of the categorical programs that are dropped.

Mr. CLAUSEN. All right. What is the comparitive matching fund formula under the categorical aid programs?

Is it the same to that which obtains to the States?

I don't think I got an answer to that question.
Mr. JOHNSTON. In most cases, yes, it is.

Mr. CLAUSEN. So then, in some ways, the so-called revenue-sharing approach, if adopted and applied, might have the potential of minimizing some of the problems that the local entities have in raising the matching funds, which I think is a situation that occurs in many other sections of the country, and was one of the prime reasons, I believe, for advancing the special revenue-sharing program.

Is this correct?

Mr. JOHNSTON. I think it would alleviate our problems considerably. Mr. CLAUSEN. But I am a little bit concerned, as expressed by the chairman, that there is a degree of uncertainty here about whether or not all or any part of the special revenue-sharing package will go forward, and in the meantime we could conceivably-well, I should say you could conceivably put in something in the way of an administrative limbo in being able to make the necessary budget commitments, and so therefore we're going to have to, I believe, have some continuing sessions on this between the executive as well as the legislative branch because of continuity, flexibility, all of these factors.

Mr. SKUBITZ. Will the gentleman yield?

Mr. CLAUSEN. I'd be happy to yield.

Mr. SKUBITZ. I want to state to my colleague that I have brought to the attention of the Committee on Interstate Commerce the need for permitting the trust territories and the Virgin Islands the right to continue to charge a head tax because of their airport situation.

I had intended to present an amendment yesterday to this effect but I had cattlemen running out of my ears yesterday and my office was full and the telephone ringing with three of us on it answering calls from Kansas cattlemen about the proposed rollback. I couldn't get down to the committee meeting, and therefore Mr. Kuykendall made the presentation for me, but I am sorry to learn it was defeated.

I am hopeful, Mr. Chairman that we are able to do something on the floor because I'm fearful that my colleagues on the Interstate Commerce Committee are not fully cognizant of the real problems that exist in the islands.

One other point. I know on the Virgin Islands that even though $12 million is available to be matched, the Virgins have been able to match only about $11,000. This, I believe, emphasizes the dire circumstances that exist in the Virgin Islands.

There has been some suggestion that perhaps the matching basis be on a 90-10 percentage unless the islands were to be permitted to exempt themselves entirely.

How does that sound: That in place of a 75-25 matching grant, it be changed to 90 and 10?

Mr. CARPENTER. Well, looking at it from our standpoint-and of course we have general responsibility for all the territories-I would say that a reduction to 90-10 would certainly be very helpful if there couldn't be approval of some waiver exemption for the territories for the head tax.

Mr. SKUBITZ. Thank you.

Mr. CLAUSEN. Yes. Well, I am pleased that my friend from Kansas did bring this up. I was aware of the fact that he had intended to offer the amendment, and I think it would be helpful if we could have you, Mr. Carpenter, prepare a statement for some of us that would like to work out a special exemption provision that would permit the trust territories to continue the head tax in their areas, and explain the uniqueness of the situation because I see we have one of two alternatives.

If they can continue the head tax in those areas, it is my understanding that this would provide them with enough in the way of basic funds to provide the matching funds, is my understanding. I'm a little bit afraid that if we go to the 90-10, we may set in motion some sort of a hassle on the formula that may apply elsewhere, and then defeat our objective.

Mr. SKUBITZ. Will the gentleman yield?

Mr. CLAUSEN. Yes.

Mr. SKUBITZ. I think the difficulty is that the trust territory and Guam and the Virgin Islands want to be exempt, but we aren't getting much cooperation at the moment from Puerto Rico. Obviously it is difficult to exempt some and not all.

Mr. DE LUGO. Will the gentleman yield?

Mr. CLAUSEN. I will yield.

Mr. DE LUGO. Let me first of all thank our good friends, the gentlemen from California and the gentleman from Kansas for raising this point, and the Chairman, who has also supported us on this. I'm very glad it has been raised because it will take very strong, unified action at this point to save the day.

The gentleman from Kansas has pointed out he went to battle for us. We made as strong a case as we could for the exemption, but there was a general reluctance by a large number of members of the committee to give us this exemption. They felt that this would open the dikes. There was more sympathy for the change in formula to 90-10, since it is not unusual to treat the territories or the offshore areas differently or they have unique problems, which are understood by the Members of Congress. It is the reason we have been able to progress because we have friends such as you in the Congress.

Again, I thank the gentlemen, and I hope that we will be able to go to the committee as a unified group.

Mr. CLAUSEN. Returning to would it be possible then, Mr. Carpenter, for you to give some thought to giving us the benefit of your thinking in the form of a memorandum so that we can discuss this matter with the Committees on Interstate and Foreign Commerce, and the pros and cons of the two suggestions; namely, the continuation of the head tax on the one side, and the possibility of a 90-10 formula and the situation as you see it.

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