To the Congress of the United States:
I am today transmitting to Congress the National Public Works and Economic Development Act of 1979. To millions of Americans in distressed urban and rural communities this legislation will mean new private sector jobs and economic progress, new income and new hope for the future.
This legislation will help strengthen the economic development of distressed urban and rural communities. It will provide new private sector jobs and badly-needed income to the citizens of these communities. It will strengthen their tax bases and attract new private investment. It will help these communities support essential public services without imposing high property taxes on their citizens. And it will help these communities and their citizens become more self-sufficient in the future.
This legislation is based on one overriding fact of our economic life today. Our Nation can no longer afford to rely only on government to provide jobs and income to our disadvantaged citizens and to our distressed communities. We must continue to harness the vast resources of the private sector to help us meet these important challenges. The legislation that I am sending to Congress today is another major step in this direction.
Two years ago when I took office, our economy was struggling to recover from the deepest recession since the great Depression. Unemployment was high, industrial capacity was idle and the incomes of American workers were well below expectations.
Today more than 7.5 million new jobs have been created in our economy and factories across the country have regained high levels of production. Family incomes, after adjustment for inflation, have risen substantially and so have business profits. Our economy is much stronger today than when I took office, just two years ago.
Despite this period of strong economic expansion, there are numerous rural and urban areas that have not participated fully in our Nation's economic health. These areas still have very high unemployment, low average incomes, substantial poverty and loss of jobs. They do not have enough private investment to provide jobs to their residents, nor do they have the private sector tax base to support essential public services.
The problems of these rural and urban communities have not been solved fully by national economic policies. These communities require special targeted aid to bring in new private sector jobs and investment. Only with this targeted assistance can we be assured that all areas of our Nation, both rural and urban, will participate in the Nation's economic prosperity.
Since taking office, I have focused the resources of the Federal government on programs that will retain existing jobs, bring in new jobs and income, and expand the tax base of these economically troubled communities. I have expanded both the tax incentives and the Federal grant and loan programs available to businesses that remain or locate in these areas. With the help of the Congress we already have accomplished a great deal.
• I have proposed, and Congress has enacted, legislation establishing the Urban Development Action Grant (UDAG) program in the Department of Housing and Urban Development. This program, which I propose to fund at $675 million in my Fiscal Year 1980 budget, provides grants to economically distressed cities and urban counties for projects that create private sector jobs and new tax base in these communities. The first $599 million of UDAG grants have stimulated more than $3.6 billion of private investment in these communities. In addition, we have encouraged cities and counties to use more of their Community Development Block Grant funds for economic development projects.
• I have expanded funding for the economic development grant, loan and loan guarantee programs that are administered by the Economic Development Administration (EDA) in the Department of Commerce. EDA programs were funded at approximately $400 million in FY 1977 when I took office. If the legislation I am transmitting today is approved, our FY 1980 budget will contain approximately $1.3 billion in budget authority for EDA's economic development programs.
• With Congress' approval, I have greatly expanded the Farmer's Home Administration's business and industry loan program from approximately $350 million in loan guarantees in FY 1977 to $1 billion in FY 1980. This increase complements the substantial growth that I have proposed for FMHA's overall program.
• With Congress' approval, I expanded the existing Investment Tax Credit (ITC) to provide a ten percent tax credit for the rehabilitation of factories, warehouses, hotels, stores and other businesses. Previously, the ITC had applied only to new plant and equipment. My FY 1980 budget projects that $1.8 billion of private sector rehabilitation will be assisted by this tax credit.
• With the help of Congress, I have implemented a significant new tax credit to encourage private sector businesses to hire the economically disadvantaged. The targeted jobs tax credit will provide a tax credit of 50 percent of the wages, up to $3000, for any employee hired from one of seven target groups. My budget estimates that a tax expenditure of $500 million will be required to implement this program in FY 1980.
• I proposed and Congress enacted amendments to the Comprehensive Employment and Training Act (CETA) which include provisions to make CETA more responsive to the needs of private sector employers. CETA's new private sector jobs initiative will allow CETA to reimburse private employers for part of the wages and other expenses incurred as part of on-the-job training or job-upgrading programs. I have requested $400 million in a supplemental that is urgently needed this year to fund this program.
As a result of these actions and the legislation I am transmitting today, the Federal government will provide more than $3 billion of direct expenditures and tax expenditures and almost $3 billion of loan guarantees to stimulate private sector jobs and investment in economically troubled communities and to encourage private sector businesses to hire the economically disadvantaged. This amounts to a 700 percent increase in both the amount of budgetary assistance and the amount of loan guarantee aid provided for these purposes above Fiscal Year 1977 levels.
To assist these communities further in regaining their economic and fiscal stability, I am hereby transmitting to Congress the National Public Works and Economic Development Act of 1979. This legislation is part of my overall effort to strengthen the Federal government's economic development programs. That effort will include:
• the National Public Works and Economic Development Act of 1979;
• a $275 million increase in the authorization for the UDAG program submitted early in March;
• a reorganization plan to be submitted later this year that will transfer the Farmers' Home Administration's (FmHA) business and industrial loan program and the Small Business Administration's (SBA) State and local development corporation programs to EDA;
• separate legislation that will consolidate the programs currently managed by SBA and FmHA into the consolidated economic development financing program in EDA. This legislation will be submitted after Congress has completed action on the reorganization plan; and
• legislation that will reauthorize and expand the work of the Multi-State Regional Action Planning Commissions.
The National Public Works and Economic Development Act of 1979 will strengthen and expand the Federal government's ability to bring private sector jobs and investment to economically troubled urban and rural areas. The bill provides various incentives—grants, direct loans to businesses, loan guarantees and interest subsidies—to encourage businesses to invest in areas with high unemployment, low average incomes, significant poverty and loss of jobs. The bill will help to rejuvenate economically troubled communities in both rural and urban areas.
There are three major elements to this legislation. The first is a consolidated and substantially expanded public works and economic development grant program. It consolidates into one grant program the authorities previously included in Titles I, IV and IX of the current EDA legislation. The public works and economic development grants will be available for the design, construction and rehabilitation of public facilities; the capitalization of State and local government revolving loan programs; the funding of State economic development projects; the provision of assistance to private sector businesses that expand or locate in economically troubled areas; and the financing of special projects that provide immediate jobs for the unemployed. I will request $575 million of budget authority in F¥ 1980 for this grant program.
A second part of this legislation authorizes a variety of financing incentives to encourage private sector businesses to remain, locate or expand in economically distressed urban and rural areas. The consolidated economic development financing program will make available direct loans, loan guarantees and interest subsidies to businesses that provide private sector jobs in economically distressed communities. It consolidates the loan and loan guarantee assistance currently available under EDA's Title II program with the financing incentives previously proposed for the National Development Bank. It will be the foundation for the consolidated economic development loan and loan guarantee program that I have proposed as part of my reorganization effort. My budget proposes that $570 million of budget authority and $1.8 billion of loan guarantee authority be available for this program in Fiscal Year 1980.
The third key part of this legislation will provide economic development planning assistance to urban and rural areas and technical assistance to both the public sector and the private sector. It will help State and local governments and the private sector strengthen their capacity to work together to rebuild the economic base of economically distressed urban and rural communities. I will request that approximately $90 million of budget authority be provided in Fiscal Year 1980 for this program.
The National Public Works and Economic Development Act will provide the foundation for the consolidated economic development loan and loan guarantee program that I announced as part of my reorganization proposals. Later this year, I will transmit to Congress a reorganization plan that transfers to EDA the business and industry loan program from FmHA and the State and local development company loan programs from SBA. This reorganization plan will bring the major economic development loan and loan guarantee programs together into one economic development financing program in EDA. It will make it possible for the Federal government to provide one stop service to urban and rural communities and private businesses that are seeking economic development loan and loan guarantee assistance. It also will streamline Federal aid in this area, reduce Federal red tape and improve the management of the economic development financing programs. After Congress has acted upon the reorganization plan, I will submit legislation that consolidates the SBA and FmHA program requirements into EDA's economic development financing program.
The economic development legislation, reorganization plan and accompanying program consolidations will substantially expand the economic development aid available to rural and urban areas. I intend to ensure that both rural and urban areas are guaranteed a fair share of the new resources. In addition, I will take every step to preserve and strengthen our capacity to deliver this aid to rural and urban areas efficiently and promptly.
This package of economic development legislation and reorganization proposals represents an important departure from previous urban and rural assistance efforts. For the first time, the Federal government is committing substantial resources to attracting private sector jobs and investment to the lagging areas of our country. For the first time, we are asking the private sector to join us in our redevelopment efforts. I am hopeful that Congress will join me in this sensible approach to urban and rural problems and will enact this important legislation.
The White House,
April 4, 1979.