Almost a month ago, on May 14, I wrote the Department of Commerce urging that you give prompt attention to the language in the Senate Report on the Supplemental Appropriations Act which asked that you submit an immediate amendment to your 1977 fiscal year budget request to provide "start up" funding for the Title V Regional Development Commissions which will be created this year as well as the recent addition of the State of Nevada to the Four Corners Regional Commission.

As Chairman of the House-Senate Conference Committee that developed the Regional Development Act, I have been very pleased with the way that the Governors of the four Mexican border States have responded. After a great deal of work, they will be meeting later this month to send you their formal request for designation of the U.S.-Mexican Border Regional Development Commission.

The Governors of Puerto Rico and the Virgin Islands have also followed through on the authorizations in last year's Act and have sent you their completed application for designation of the Antilles Regional Commission. I am afraid I have to agree with the Governor of Puerto Rico who finds it somewhat ironic that the President has chosen Puerto Rico as the site of his economic "summit" conference while their application for regional economic development assistance has been awaiting approval for two months.

It is obvious that the Governors of all the states in the newly authorized commissions have acted very quickly and responsibly to the legislation signed by the President last December. The Federal response to the section of the Act that directs particularly the Secretary of Commerce "to invite and encourage the formation of a regional commission along the border with Mexico" has been rather discouraging.

It will really be unconscionable if bureaucratic delays in the Department of Commerce prevent the appropriation of "start up" expenses for the new Regional Economic Development Commissions which will be established during the next fiscal year.

I know that I am personally disappointed that your Department has not yet sent up the amendment requested by the Senate Appropriations Committee, or, for that matter, even acknowledged my letter of last month pointing out the need for early action to meet the deadlines of the Appropriations Committees that will have to be reporting your Fiscal Year 1977 Appropriations bills very soon.

This is also a matter of concern to the Public Works and Transportation Committee because we will be taking the extension of the Economic Development legislation to the floor of the House within the next few days and expect to be questioned on the status of the new Commissions at that time.

I am sending copies of this letter to members of the Appropriations Committee to urge them to support your budget request and if there is any way that I can help, please let me know.

Sincerely,

Jim Wright, M. C.

STATEMENT OF THE FEDERAL STATISTICS USERS' CONFERENCE

This statement is submitted on behalf of the Federal Statistics Users' Conference to express the views of our organization on the 1977 Budget requests for certain statistical programs of the Bureau of the Census and the Bureau of Economic Analysis of the Department of Commerce.

FSUC is an association comprising 200 organizations generally classified as business firms, labor unions, nonprofit research organizations, State and local governments, and trade associations. These members have a common interest in obtaining adequate, timely and reliable information from Federal programs in the light of certain criteria which FSUC has established, the principal one being that a statistical program should provide data of optimum usefulness at minimum cost.

The FSUC Board of Trustees has undertaken a careful study and review of the proposed programs of the Bureau of the Census and the Bureau of Economic Analysis. Members of the Board reviewed the programs that were outlined in Special Analysis G of the President's Budget and in the Appendix to the Budget. Representatives of both the Bureau of the Census and BEA attended a special meeting of the Board of Trustees in order to describe their proposed programs in more detail.

We believe that the proposed programs represent a minimum that is both necessary and essential in times of fiscal stringency. Aside from the need for initiating programs for the collection of new statistical data, a most important aspect of the development of the Federal statistical system is the need for improving some of our ongoing, current statistical series. We have found that in many instances too little attention or concern is given to certain inadequacies or weaknesses in some of our statistical data and the need for improving them. Certain programs are proposed by the Bureau of the Census and the Bureau of Economic Analysis that are designed to improve some of their current statistical series, mainly in the way of improving the reliability of some of the series and extending coverage of others in areas that are considered most necessary.

It is in

On the other hand, rapid changes in both our economic and social structure often require the initiation of new series of data to meet our emerging needs. portant here that a step-by-step approach be taken and appropriate developmental work be undertaken. We believe that both of these agencies are making a conscientious effort to take a step-by-step approach to obtaining a higher degree of accuracy and precision in their ongoing statistical series, as well as in initiating new series.

We urge that the Subcommittee give favorable consideration to the following proposed programs:

The measurement of inventory change has long been troublesome in the estimating of gross national product data. Recent patterns of rapid price changes have highlighted deficiences in current inventory estimates. Several specific projects have been included in the Census Bureau budget to improve statistics in this difficult

area.

As a step toward improving the accuracy and reliability of measures of current business inventories, the Census Bureau proposed to conduct an annual benchmark survey of inventories held by wholesalers. Such surveys are currently conducted for retail trade and manufacturing inventories. The proposed survey would be based on a subsample of the monthly wholesale sample, and as in the case of other annual surveys, would be conducted on a mandatory basis. The survey will be used for benchmarking

and for improving the monthly inventory estimates currently produced.

The Bureau also requests a modest increase in funds for undertaking other projects designed to achieve improvements in inventory data. An important one is to undertake a survey to determine the type of products included in each industry's inventory and their tumover rates in the manufacturing sector. For the GNP computation, the current dollar changes in inventories have to be converted to derive an equivalent of physical change in inventories. The proposed survey will provide the information needed to select the proper commodity price index or group of commodity price indexes for deflating materials, work-in-process and finished goods inventories to obtain this

measure of change in real inventories.

The turnover rate information will be used to determine the proper time lags for the price index to reflect the different prices at which commodities enter stocks over a period of time.

The importance of inventory data and the needs for improvement have been clearly established. The proposed programs for improvement are essential in order to aid policy-makers in their analysis of current economic conditions.

Another important program of the Census Bureau calls for improving the comparability of commodity classifications used in collecting data on imports, exports, and domestic production. The requested funding is needed to enable the Department of

Commerce to meet its obligations as enumerated in the Trade Act of 1974.

A modest increase in funds is requested by the Bureau of Economic Analysis for fiscal 1977. However, the proposed increase will facilitate the expansion and strengthening of two BEA data series that are extremely valuable and widely used by Federal, State and local government officials as well as by non-government analysts and decision makers.

BEA proposes a revision and strengthening of its estimates of personal income for States, metropolitan areas, and counties. A major improvement in this series will be in the incorporation of new data on dividends, interest, and on nonfarm proprietor's income and expenditures information. We also understand that annual estimates of personal income for metropolitan areas and counties would be available 13 to 14 months after the close of the calendar year rather than the present 17 to 18 months. The improvements proposed are responsive to several highly important needs of statistics users: more reliable personal income data at the local level as well as an improvement in timeliness in making the data available.

The second program calls for an expansion of input-output statistics for analyses of energy and material shortages. This project would expand the detail in BEA's national input tables to provide additional information on the production and consumption of each type of energy and other potentially scarce basic materials and resources. The enlarged and refined data system would be used to evaluate the impact of shortages of energy and other basic materials and resources on production, employment, costs, and prices, and to evaluate alternative policies to minimize the impact. Furthermore, it would be used to evaluate the impact of changes in the level and composition of GNP on the requirements for these materials and resources in order to anticipate potential supply problems in the future, and to trace the effects of alternative policies to balance supply and demand for the materials and resources. In addition, it would contribute to analyses of the possible spreading of price increases for scarce resources to other sectors of the economy. A unique feature of input-output analysis is that it permits estimating the impacts on each of the industries as well as on the economy as a whole.

The need for this type of information was made clear during the period following the Arab oil embargo. Calculations, using BEA's input-output tables, of the effect of GNP of oil supply shortages were very tentative and subject to large errors because of the lack of the type of information which would be developed in this program. The proposed project would provide a much firmer data base and the capability to respond to a wider range of policy questions.

CONCLUSION:

The Federal Statistics Users Conference appreciates the opportunity afforded by the Subcommittee to present our views on the budget requests for statistical programs of the Bureau of the Census and the Bureau of Economic Analysis of the Department of Commerce.

LETTER FROM OTIS R. BOWEN

May 19, 1976

Dear Mr. Chairman:

I am writing on behalf of the Committee on Crime Reduction and Public Safety of the National Governors' Conference to request favorable consideration by the Subcommittee on State Justice, Commerce and the Judiciary of adequate FY 77 appropriations for the Law Enforcement Assistance Administration. This important and valuable program is strongly supported by the Governors who recognize the contributions that it has made in the fields of criminal justice and crime prevention. I am sure I speak on behalf of all Governors when I say that adequate funding for LEAA ranks as one of our highest legislative priorities for the 94th Congress.

Recently this program has received sharp criticism from several quarters. This criticism received support recently from the counterpart House Appropriations Subcommittee which cut LEAA's FY 77 appropriation to $600 million. If sustained, this cut would be disastrous to the states and localities. The greatest percentage of LEAA funds is invested in state and local projects, not in federally administered programs. greatest impact of cuts in LEAA's present funding level would be felt in these same state and local projects.

The

The following specific project examples describe merely a flavor of the broad range of useful efforts undertaken at the state and local level as a result of the LEAA program.

In Iowa, LEAA funds have enabled the extensive use of communitybased corrections to relieve the crowded conditions of state penal facilities.

In Missouri, block grant funds have been used to help provide employment opportunities for young adult offenders in an attempt to divert them from the criminal justice system.

In Massachusetts, block grant funds have helped maintain an alternative high school which accommodates, as part of its program, numerous young people with histories of involvement in the criminal justice system.

In Indiana, LEAA funds have helped the Indianapolis Public Schools establish an alternative school rehabilitation program for youthful offenders in the sixth to eighth grades.

The Governors strongly support the block grant nature of the program. We believe the block grant concept is an important development in federalstate relations and strongly resist efforts to recategorize block grants and remove decision-making authority from the state and local level. LEAA has assisted the states to develop comprehensive criminal justice plans, and to generally improve the criminal justice planning process at the state and local level. This is no small accomplishment. It would be regrettable in the extreme if, at the point when states are genuinely beginning to demonstrate progress in the fight against crime, Congress should make severe cuts in LEAA appropriations. The Governors hope you will respond to the accomplishments and demonstrated progress of the program, and not to criticism that may be out of date, no matter how well intentioned.