not yet possible, at least in my judgment, for the States to assess the projected loss of revenue.

We do feel that it will be necessary to provide a lesser sum for the remainder of fiscal 1974, a much larger sum for fiscal 1975, and again, a smaller sum for fiscal 1976, although, to go back to what I just learned at the White House, this energy crisis could far exceed the lifting of the embargo as far as the Arab oil is concerned.

When we take into consideration that the State of Pennsylvania right now anticipates a loss of some $44 million in revenue in fiscal 1974 in gasoline revenue alone, due to the crisis, it becomes clear that projected across the 50 States, we undoubtedly are talking about billions of dollars.

The President has shunted off this economic matter-along with the rest of the problem-on the 50 Governors. The Federal bureaucracy has at the moment failed to respond vigorously. We the Governors must make the President, you of the Congress, and the people, aware of this crisis. It has come barreling down on us so rapidly that it is impossible to scale down expenditures for the approaching fiscal year.

With reduced income levels, it is doubtful that we could carry on governmental functions at the current pace. In fact, a recession could cause the States to expend more money. We can spot some areas where problems will occur: Welfare, medical care costs, and new demands for mass transit. That would only further widen the fiscal gap.

Unless we treat the economic consequences of the energy crisis at a national level, with support of the Congress, individual States will have to levy taxes.

But new and more burdensome taxes will further fuel the recession in each State's economy-and make the national economic situation even more critical than projected-and the long road back even tougher. I ask your support in this crucial matter. Thank you.

Chairman REUSS. Thank you very much, Governor Tribbitt.

[The following summary was attached to Governor Tribbitt's statement:]

SUMMARY OF ACTIONS TAKEN BY GOVERNOR TRIBBITT IN THE STATE OF DELAWARE IN RESPONSE TO ENERGY PROBLEM AND LATER ENERGY CRISIS

Action

January 18, 1973: Executive Order No. 1: Re Fuel Conservation-Directing State offices to begin program to conserve energy in State-owned or leased facilities.

May 4, 1973: Executive Order No. 8: Creating Delaware Energy Emergency Board to study conservation and allocation of fuel.

June 12, 1973: Executive Order No. 12: Dealing with energy conservation in State facilities during the summer.

August 24, 1973: Letter to John Love, the President's "Energy Czar" urging that the nation proceed with mandatory allocation program for middle distillate fuel as soon as possible.

November 7, 1973: Press Release: Announcing suspended action on series of recommendations of the Delaware Energy Emergency Board, pending President Nixon's major statement on energy crisis.

November 9, 1973: Executive Order No. 25: Reducing speed limit of State-owned vehicles to 50 mph.

November 12, 1973: Executive Order No. 24: Designating Monday. December 24, 1973, a holiday for State Employees to save fuel over holiday weekend. November 12, 1973:, Announced toll-free telephone number for emergency fuel information or requests.

November 12, 1973: Kicked-off public awareness program throughout state.

November 15, 1973: Proclamation: Declaring State of Emergency and convening the Delaware General Assembly into Extraordinary Session to consider legislation to alleviate the energy crisis in Delaware and grant Governor special powers to take action to protect interests of citizens.

November 16, 1973: Speech before Extraordinary Session of the 127th Delaware General Assembly re State of Emergency during energy crisis.

November 17, 1973: Press Release: Statement on the failure of the GA to pass a measure on the energy crisis.

November 19, 1973: Declared Friday, November 23, 1973 a State Holiday to conserve fuel over holiday weekend.

November 20, 1973: Signed S.B. 397 Providing the Governor certain authority and emergency powers during Energy Crisis.

November 21, 1973: Executive Order No. 29: Reducing speed limit to 50 mph on all highways within the state.

November 21, 1973: Executive Order No. 30: Ordering an inventory of various energy reserves and resources within the state.

November 21, 1973: Special Delivery letter to President Nixon: urging the President to directly contact all Governors to brief on the energy crisis in general and Arab oil shipments in particular.

November 21, 1973: Letter to Delaware's Congressional Delegation urging them to introduce legislation in Congress to provide subsidies to the states during the energy crisis, and recommending a formula therefor.

November 26, 1973: Letter to all Governors requesting their opinion on above proposal.

November 26, 1973: Letter to President Nixon transmitting copies of letters to Governors and Delaware's Congressional Delegation re subsidies and asking his comments or suggestions on the proposal.

November 26, 1973: Press Release: Regarding proposal of federal subsidies to states during energy crisis.

November 26, 1973: Announcement of approval by Bipartisan Joint Legislative Committee of Executive Orders 29 and 30.

November 30, 1973: Announcement that gasoline sales will be limited on Sundays on the Delaware Turnpike.

December 5, 1973: Letter to Robert Berney of the Advisory Commission on Intergovernmental Relations in Washington acknowledging his interest in proposal for federal subsidies.

December 5, 1973: Press Conference at which statements were issued relating to: 1) Executive Order No. 30, and 2) agreement of outdoor advertising agencies to reduce by 25 percent the lighting of outdoor billboards, poster panels and electrical signs during the energy crisis.

December 7, 1973: Resolution proposed for adoption by Middle Atlantic States Governors, requesting Congress to enact legislation providing "substantial Energy Crisis Revenue Sharing to the various states" during the crisis. December 10, 1973: Press Release: Announcing lighting cutbacks of at least 25 percent on the Kennedy Turnpike and other state highways.

December 11, 1973: Press Release: Announcing agreement with management of Dover Downs and Brandywine Raceway on at least a 25 percent overall cutback in energy consumption.

December 11, 1973: Press Release: Announcing 1) Governor Tribbitt's attending the special convening of the National Governors' Conference "Committee on National Resources and Environmental Management”, and 2) his invitation to make a presentation before Congressman Reuss' Special Fact-Finding Subcommittee of the Joint Economic Committee relating to his "unique energy crisis revenue sharing proposal".

December 12, 1973: Announcement of agreement by Delaware Retail Association of a 15 percent energy cutback by all members of the Association.

Chairman REUSS. What are the principal tax sources of Delaware's revenue?

Governor TRIBBITT. The principal single source of Delaware revenue, sir, is the personal income tax. That is the largest single source of income. Corporate franchise taxes run a close second, and graduate on down. But franchise taxes and personal income taxes are two of our largest single sources of income.

Chairman REUSS. What is the topacket of your income tax?

Governor TRIBBITT. 19.8 percent.

Chairman REUSS. Individual?

Governor TRIBBITT. Yes, sir.

Chairman REUSS. Does Delaware have rate constitutional prohibition against going into debt?

balanced budget.

Governor TRIBBITT. We do not have a constational provision, sir. We have a statutory requirement requiring the vernor to present a Chairman REUSS. Now, what you are suggesting here is that the Federal Government go further into debt. We have a mulated large deficits in the past, and it looks as if the Federal deb will continue to grow. Why not just change your statute so that you in share the deficits with us?

Governor TRIBBITT. Mr. Chairman, speaking for my om Stateand I presume this is true in a great many States-all State would then have to change their philosophy of financing the State government and then go to the theory of perhaps deficit spending. The Federal Government has been in this area of deficit spending. And I am sure this was the same kind of question that was asked when the revenue sharing was originally promoted.

Chairman REUSS. When it was originally promoted it was sold on the idea that the Federal Government was going to be running a surplus, and in order to get rid of some of the surplus, we should share it with the States and local governments. But that unfortunatley didn't turn out to be true. If we in the Congress vote this plan, would you be willing to come down here and explain to our irate constituents why we are continuing deficit financing?

Governor TRIBBITT. If you have irate citizens who are in that category, I would take the same position that has been taken in the past, that with revenue sharing goes any other service that the Federal Government furnishes the State.

I might say to you, Mr. Chairman, if I may add, sir, that whatever route Congress goes, if they go the route of trying to control, for example, gasoline consumption, if they go the route of additional taxes and use that route over rationing, that will indeed provide additional revenue for the Federal Government. And I would look in that area, sir, to share in that.

Chairman REUSS. You indicate the amount of the Federal appropriation?

Governor TRIBBITT. No, sir, and I didn't know how I could, sir. I can't even at the moment, sir, estimate what the energy crisis economically-how it is going to assess our State in the loss of revenue in relation to unemployment or forms of presently received revenue. I know it is going to have an economic impact. But I have no way at the moment, sir, of estimating-I know we are talking about a large sum of money.

Chairman REUSS. You base your program on the need to combat the unemployment that will ensue from an energy shortage. Would these sums, which under your proposal would be given by the Federal

Government to the States, hayything the State wanted? be spent on combating unemployment, or could they be spent go, as you see, that far in my proposal. Governor TRIBBITT. I did in the area of unemployment should cerBut those areas of percentat of the category in which it was given to tainly be looked at in then that area of unemployment, I would say, the Federal Government the 10 percent I wasn't quite specific on. But the two other perced to be as per my formula, sir. ges I would say would fall in the category in

yes. The other categor

which they are interf a State chose to use these Federal energy crisis

Chairman REU

revenue sharing unds to reduce its taxes, that wouldn't have much of an effect op ombating unemployment, would it?

or

Governor KIBBITT. I didn't look at it, sir, in the light of reducing

taxes.

Chairma REUSS. But could not these funds be so used?

Governor TRIBBITT. That would depend, I would think, on the amount of money, if Congress should consider this favorably, that it would be the recipient of. But the purpose here is to take up the slack that che energy crisis is going to cause in my State and the other States by reason of the falling economy, to pick up the present levels of revenue presently received from taxes that we are presently imposing. Chairman REUSS. So that the purpose would be to reduce State taxes over what they would otherwise have to be?

Governor TRIBBITT. Mr. Chairman, I don't know whether I can accept the word "reduced." But in lieu thereof of additional taxesif in one of the smallest States we have a tremendous loss in revenue like I quoted here in the State of Pennsylvania, $4 million in its gasoline taxes, this would be a formula for coming to the Federal Government to satisfy the present status quo, Mr. Chairman. That is what I had reference to.

Chairman REUSS. Well, thank you very much, Governor Tribbitt, for your lively and informational statement. And I appreciate your coming down here.

Governor TRIBBITT. Thank you again, sir, for your courtesy in waiting for me.

Chairman REUSS. Thank you, sir.

We will now stand in adjournment.

[Whereupon, at 12:47 p.m., the subcommittee adjourned, subject to call of the Chair.]

[The following information was subsequently supplied for the record:]

RESPONSE OF HON. JOHN C. SAWHILL TO ADDITIONAL WRITTEN QUESTIONS POSED BY CHAIRMAN REUSS

Question. In priority allocations, what criteria will be used to determine the tough choices which will need to be made among various industries?

Answer. The criteria used are the ones set forth in the Emergency Petroleum Allocation Act of 1973 and incorporated in the Federal Energy Office Petroleum Allocation and Price Regulations, January 15, 1974. Specifically, they were related to the needs of people living in America for food, shelter, health and sanitation services, comfort, recreation, transport services for themselves and their goods, jobs to earn income and other factors.

2. Specifically, what inter-industry priorities exist:

Question a. The military has asserted its priority. Does the 300,000 barrels mentioned include oil for re-export to South Vietnam to resupply their stocks? Answer. None of the fuel claimed by the military was to be re-exported to South Vietnam.

Question b. The petrochemical industrie.

regulations include them? What priorities im serious hardship. Will the new dependent on these products? t within the range of industries Answer. The new regulations have a special stocks which calls for the allocation of petrocpart, J, for petrochemical feedmum extent practicable, to assure petrochemicical feedstocks, to the maxi100 percent of current requirements. The regulatroducers supplies equal to levels for petrochemical production of 90 percent of also authorize allocation pane and 100 percent of current requirements for butse period volume for prodeal with the allocation of petrochemicals among the The regulations do not them, but the allocation levels authorized for petroche dustries dependent on make it easier for petrochemical-using industries to get al production should Question c. Consumer vs. industrial use: Is there a min supplies they need. fort level guaranteed, or will all necessary supplies be allated to industry? Answer. The regulations authorize 95 percent of base perio volume for residential use of butane and propane. For middle distillates and sidual fuel oil, the regulations authorize 100 percent of current requirements for pace heating in residence and schools after taking into account a 6-degree Feduction in indoor air temperature. If the temperature reduction requirement causes exceptional hardships for certain individuals, State offices may grant resef. Some industries are authorized 100 percent of current requirements for sono petroleum products. Others are authorized 100 percent of base period volume

consumer com

Question 3a. What is the actual capacity for switching back to coal from oil during 1974?

Answer. The realistic capacity is 280 thousand BBLs of residual oil per day. Question b. How many plants have the capability?

Answer. Thirty-three plants on the East Coast have the realistic capability. Question c. How much coal is available for the switch (i.e. mining and transportation capacity)?

Answer. The incremental surge capacity is 55 to 68 thousand tons per day. Question d. What percentage of the residual shortfall does this represent? Answer. About 34.5 percent of the estimated 812 thousand BBLs per day shortfall.

Question e. Do individual decisions to switch to coal depend on the assessment of how long the embargo will continue?

Answer. In most cases, no.

For additional information, see Attachment 1.

Question 4a. What provisions are being made to insure adequate regional distribution is achieved?

Answer. To meet imabalances that may occur in any product subject to the regulations, the FEO may order the transfer of specified amounts of product from one region or area to another.

Also, without prior FEO approval, refiners and importers are authorized to reduce monthly allocable supplies for any region or State by up to 5 percent and to increase the total quantity available in another region or State experiencing shortages significantly greater than in other parts of the nation, to meeting imbalances caused by unusual weather, seasonal demand or other circumstances beyond their control. Moreover, suppliers are not necessarily relieved of their obligation to serve purchasers in regions in which the suppliers have terminated or significantly reduced marketing and distribution activities.

Queston b. How do you plan to evaluate transport needs of Los Angeles and Houston versus heating needs of New England and Wisconsin?

Answer. The regulations authorize 100 percent of current requirements for passenger transportation services whether in Los Angeles, Houston or other cities and towns, or between one city and another. The regulations do not authorize allocation levels for individuals traveling in their own automobiles. Allocation levels for heating users, whether in New England, Wisconsin or elsewhere in the nation, are as given in 2 (c) above.

ATTACHMENT 1

Approximately 54 utility plants on the East Coast are capable of converting back to coal from oil. Coal consumption would be approximately 163 thousand tons per day, but 649 thousand BBLs of residual oil per day would be saved. Attainment of this scale of conversion probably is not possible as the short term less than 1 year because of the inability to obtain the necessary quality and quantity of coal in 1974, and the environmental risk which would result.