When I addressed the United States Conference of Mayors last year, I committed this administration to develop a long-term, comprehensive urban policy. I pledged an overall strategy to improve the quality of life and strengthen the economic base of this Nation's cities.
In the first 8 months of my administration, I believe that we have taken significant steps to begin to fulfill that commitment, while at the same time preserving sound budget policy. The brief list below of the new fiscal and economic assistance provided to New York this year indicates the importance that I attach to helping our distressed urban areas.
The steps this administration has taken over the past 8 months represent a strong beginning, but they will not substitute for a comprehensive urban policy.
The Cabinet-level Urban and Regional Policy Group is formulating a long-term program that will address the critical problems facing residents of urban areas. The initiatives this group will recommend will provide particular benefits for cities such as New York.
Summarized below are significant administration actions which will provide fiscal or economic relief for New York City:
1. New Social Services Authorization
I am announcing today my approval of a settlement of $543 million against $2.4 billion in claims under the Title XX Social Services program, subject to congressional concurrence. New York State is expected to receive at least $214 million of this settlement. A substantial portion of this amount is expected to be passed through to New York City to provide significant new fiscal relief. The administration will send the necessary legislation reflecting the agreement to Congress in the next 2 weeks.
This agreement settles the largest outstanding financial dispute between the Federal Government and the States. I believe that this settlement, which involved close consultations with State officials, reflects a new atmosphere of cooperation between this administration and State and local officials. (Attached is a detailed description of the background and terms of this settlement.)
2. Seasonal Financing Loans
The Federal Government is continuing to provide loans to New York City under the New York City Seasonal Financing Act. A total of $1.5 billion has been loaned the city since July 1, including a $325 million loan on October 4. An additional $575 million is expected to be loaned during the remainder of the year.
The Treasury Department is working closely with State and city officials to facilitate the city's return to the public market.
The administration is also reviewing the city's borrowing needs for the post-FY 1978 period, and remains committed to working with the city to assure that those needs are met.
3. Countercyclical Revenue Sharing
The administration's extension of countercyclical assistance, which provided $121 million for the city in its fiscal year 1977, is expected to increase to over $130 million in fiscal year 1978. These funds are used by the city to maintain vital services, to prevent municipal employee layoffs, and to relieve the burden of local taxation.
4. Employment Training
The administration is increasing the city's funding under the Comprehensive Employment Training Act from $180 million in the city's fiscal year 1977 to $411 million in 1978. These funds have significantly helped the city to provide important services during its fiscal crisis and to create jobs for the unemployed.
5. Local Public Works
Under the administration's $4 billion public works program, assistance in the city will nearly double from $102 million in the city's fiscal year 1977 to $192 million in 1978. This assistance will provide a particularly critical boost to the city's depressed construction industry.
6. Community Development Block Grant
This special revenue sharing program supports a wide range of community and economic development activities. The administration proposed and the Congress has now enacted a dual distribution formula which increases aid for older distressed cities. This will add some $64 million more to the city's grant in the next fiscal year, for a total of $229 million.
The city will also be eligible for assistance under the newly enacted $400 million Urban Development Action Grant program, which permits the Secretary of HUD to make discretionary grants to stimulate private sector investment in distressed cities.
This proposal should be effective in leveraging significant private investment in cities such as New York.
7. Urban Mass Transit
On Monday, Secretary Adams announced discretionary mass transit grants totalling $280 million to the city's transit system and the commuter rail network surrounding the city. Most of the assistance is for the modernization of existing facilities, with the balance going to further progress on major additions to their system which began in previous years.
8. Westway Highway
The administration has approved an $800 million grant for this highway project, which State and city public officials believe will stimulate economic development on Manhattan's West Side.
In addition, the Federal Department of Transportation has approved the sale of the right-of-way of the Westway Interstate Highway to New York State. This sale is expected to result in approximately $80 million in revenues to the city, 90 percent of which is financed by the Department of Transportation and 10 percent by New York State. These funds will provide significant budget relief to the city.
9. Mitchell-Lama Housing
The Federal Government is in the process of insuring Mitchell-Lama housing projects, which will enable the city to raise $280 million in 1978 either through the sale of the projects or issuance of bonds.
10. Child Health Assessment
The administration's proposed Child Health Assessment Program, if enacted by Congress, in Federal fiscal year 1978, will provide $8.8 million in increased health services for children in New York City. This program is a major reform of Medicaid's periodic diagnostic program for children.
11. Welfare Reform
The administration's welfare reform package will result in an estimated $525 million in fiscal relief to New York State with approximately $175 million of that going to New York City. This added relief would be effective in 1981 under the proposal.
12. Fuel Bill Payments
A new program under the Community Services Administration assists people who had difficulty meeting last winter's large fuel bills. Of the $200 million available, $21.1 million went to New York State, including $1.1 million to New York City, to supplement other funds also available to help city residents.
13. Trends in Federal Grants
New York City's Financial Plan Statements show the following trends in total Federal grants:
Federal grants 2 as a
grants 1 percent of
City fiscal year (in millions) city revenues
1976 $2,750 19.9
1977 3,188 22.2
1978 3,670 24.5
1 Including capital grants.
2 Excluding capital grants.
In 2 years, from FY 1976 through 1978, total Federal grants are projected to increase by 35 percent. In the same period, Federal non-capital grants will provide over 4.5 percent more of current city revenues.
DETAILED DESCRIPTION OF THE RETROACTIVE SOCIAL SERVICES CLAIMS SETTLEMENT
President Carter has approved an agreement, negotiated by the Department of Health, Education, and Welfare with State representatives, to settle the largest outstanding financial dispute between the Federal Government and the States. The agreement involves payments to 28 States for the cost of social services provided to low-income families and individuals from 1969 to 1975.
Under the agreement, 19 States will receive Federal payments totaling $532 million, and 22 States ( 13 of them also members of the group of 19) will have Federal Government claims against them dropped. The States, in turn, will drop all further actions against the Federal Government.
The Congress will be asked to authorize $543 million for the settlement. Eleven million dollars will be held as a contingency figure to be allotted as a part of the final agreement.
The action, contingent upon the approval of Congress, is part of a settlement between HEW and a total of 28 States of some $2.4 billion in disputed payments. Of this $2.4 billion, $1.56 billion represented State claims that were never paid by HEW, and the balance represented payments that had been made by HEW but whose validity the Department disputed.
The dispute over these claims goes back into prior administrations. It has resulted in years of expensive and inconclusive litigation between the States and the Federal Government. It has been a nagging irritant in the relations between HEW and the States.
The dispute began in the early 1970's when HEW took two actions: (1) it refused to pay 19 of the States some $1.56 billion in social services claims; and (2) it sought reimbursement from 13 of these 19 States, plus 9 other States, of Federal funds already paid to the States for social services.
The focus of the dispute has chiefly been over the types of social services for which the Federal Government should reimburse the States and whether certain State procedures were proper.
These services were covered under the old Titles I, IV, VI, X, XIV, and XVI of the Social Security Act, which became obsolete on October 1, 1975, when Title XX became effective. Title XX of the Social Security Act is the new consolidated Title authorizing Federal payments for social services provided by the States.
The social services covered such areas as day care for children, protective services for neglected or abused children, drug and alcohol abuse services, counseling on family planning, and a variety of services for aged, blind, or disabled persons.
The agreement now reached would pay, on a formula worked out between the Department and the States, a portion of the pending unpaid claims. In addition, 22 affected States will not be asked for reimbursement of funds already given them. (See attached table.)
The amounts to be paid to the States may be adjusted slightly if existing claims by the States are adjusted, or if additional claims are filed.
Proposed settlements by State
payment due U.S. claims
from HEW Proposed against States
State (1969-75) payment dropped
Arizona 5. 2
Arkansas $3. 8 $2. 2
Connecticut 38 22 6. 0
Florida 28. 7 11 29. 1
Georgia 7 .3 6. 0
Idaho 1. 1 .6
Illinois 87. 3 32. I 188.4
Kentucky 2. 4
Louisiana 16. 7
Maine 2. 2 1.3
Maryland 24. 7 14. 3
Massachusetts 142 75
Michigan 57. 1 32. 6 8.4
Minnesota 49. 4 28. 6 4. 0
New Jersey 1.3 .7
New York 914 214. 4 490.0
Ohio 15. 1 5. 7 5. 0
Oklahoma 13. 8
Pennsylvania 4. 2 1.6 2. 8
Rhode Island. 1. 2
Tennessee .004 .0015 .5
Texas 92. 7 34 34. 7
Washington 32. 8 19 5. 6
Wisconsin 65 36. 5 6. 3
Total 1,560 532 830. 0
Note: The statement was released at New York, N.Y.