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Statement of Cecil H. Underwood, Governor of West Virginia, March 1999

March 1999

Statement of the States' Co-Chairman

Statement of Cecil H. Underwood, Governor of West Virginia and States' Co-Chairman, Appalachian Regional Commission, Before the House Subcommittee on Energy and Water Development Appropriations
March 26, 1999
Rayburn House Office Building
Washington, D.C.

Mr. Chairman and Members of the Subcommittee:

As the states' co-chairman of the Appalachian Regional Commission, it is not only a duty and responsibility to be an advocate for the people of Appalachia, but it also is a reflection of my own personal commitment to the Region.

Forty years ago, in 1959, in the wake of the massive depression caused in Appalachia by the coal industry's giant stride to full mechanization, three governors spent an afternoon in Annapolis, Maryland, talking about what could be done to re-energize this area in the wake of those problems—the governor of Kentucky, the governor of Maryland, and the governor of West Virginia.

That is where the concept of a regional approach began. Our respective staffs had meetings subsequently and reached out to the other states comprising Appalachia.

Some years later, under President Johnson, the Appalachian Regional Commission became an institution in its own right. We all know how much we benefit, so I am particularly honored to serve this year as the states' co-chair.

A major milestone in the Commission's history occurred when Congress shifted funding for the Appalachian Development Highway System to the Highway Trust Fund. This renewed commitment to our highway system will enable us to make serious strides toward its completion. We have reason to be pleased with the impact of the highway system on the development of the Region. In a recently completed study done for ARC by the firm of Wilbur Smith Associates, we see dramatic indications of the economic benefits that are accruing to Appalachia from the partially completed system. The study demonstrates conclusively that the concept of an Appalachian Development Highway System works.

To follow up on the results of the study, the states are requesting that the Subcommittee consider a modest increase to our nonhighway allocation to be used to fund a development planning effort targeted to selected corridors of the Appalachian Development Highway System. A relatively small amount of money, in comparison to the highway investment, would enhance the benefit of existing corridors and optimize the benefits to be accrued from sections of the highway as yet unfinished. We believe that about $10 million of additional nonhighway money dedicated to developing economic strategies around the corridor system would result in a high return of benefit for the cost.

Last year, for the first time since 1980, we were reauthorized by Congress. This was an important signal to our people that they are not alone in their struggle to achieve parity with the rest of the country.

I can see the progress made, particularly in highways and other infrastructure, and it is obvious that the challenge is still there. Since 1960, the number of economically distressed Appalachian counties has been cut in half, from 214 to 108 in 1999. We still are faced with 108 counties that have not benefited equally from the economic growth of the Region. These are the most difficult examples of distress. We continue to seek alternate strategies for addressing the most serious kinds of economic distress in our Region.

A case in point is West Virginia's McDowell County, situated on the West Virginia–Virginia border and almost touching Kentucky. In 40 years, McDowell County has lost 70,000 people, down from a population of 100,000 to a population of only 30,000. It is plagued with infrastructure and communication problems.

As governor, I decided to try to do something for McDowell County to change the direction in which it was headed. With the assistance of the federal co-chairman, Dr. White, and the Appalachian Regional Commission staff, we spent a day meeting with the people and the leadership of McDowell County. We met 10 mayors and held four town meetings. We also met with the county commissioners and state legislators. We agreed on a strategy. The first thing we need to do is build leadership at the local level. We can't impose that on them, but we can build upon and motivate the leadership that is already there. With the assistance of ARC, we have engaged a consultant, the Rensselaerville Institute, which has a considerable track record. They are already at work.

Another part of West Virginia's strategy is to engage coal and land companies that own substantial parcels of land in the county. When the strategy is finally formalized into a plan, I believe those companies that have substantially benefited from their investments in McDowell County may be willing to assist us by reinvesting in the county. We already have had expressions of interest from foundations and corporations to help us with infrastructure development, educational improvements, and other critical components needed in McDowell County.

The Appalachian Regional Commission has been a catalyst in this process. It has provided the seed money, the technical expertise, and the promise of future resources necessary to meet the challenges posed to us by the chronic economic problems affecting this county.

There are numerous other "McDowell Counties" in the Appalachian Region and many counties that are on the precipice and in danger of falling into the economic condition that afflicts McDowell. The ARC in many instances is all that stands between these counties and economic catastrophe.

The Appalachian Regional Commission has been a good steward of public money. We have realized in the Region strong employment growth in the service and retail sectors. As a result, 1.3 million new jobs were added since 1988 to the Appalachian economy. In fact, since 1969, the Appalachian economy has grown by 51 percent. In West Virginia thus far during 1999, we have announced 2,870 new jobs, putting us on an early track to reach or exceed levels comparable to those we reached during 1998.

The creation of new jobs is critical to the growth of the Region. Just as important is the retention and expansion of existing businesses and companies. In West Virginia, ARC funds support training and education programs that help businesses improve their basic operations, train their employees, and prepare to compete in the national and global economies. These programs help locally based companies strengthen their bottom lines. The Appalachian Regional Commission's initiative to encourage entrepreneurship is a wise strategy, one that will have a long-term benefit for the Region. ARC has dedicated $15 million of its nonhighway money over a three-year period to this initiative.

One of the essential characteristics of the Appalachian program is its partnership model. This model allows the states, working together with the federal partner, to design a program that is flexible and responsive to the needs of the states and the people of Appalachia. In the process of accelerating the completion of our highway program by shifting Appalachian highway funding to the trust fund, we lost the flexibility that we had since 1988. This allowed us to use a small portion of each state's highway allocation for area development projects. This change results in a defacto reduction in the money that each state has for projects to address issues like we have in West Virginia's McDowell County and other similar counties.

This brings us to the fact that the ARC program funding, especially that funding dedicated to projects other than highway projects, is insufficient for the task at hand. This coming year, fiscal year 2000, the administration is requesting $66.4 million for the Commission's nonhighway activities. This is $2.6 million below our authorization level for fiscal year 2000. I request that we be funded at the full authorization level of $69 million.

All seven republican governors and six democratic governors can unanimously say that ARC has made a profound and positive difference in the lives of our people. ARC has narrowed the gap between the socioeconomic condition of Appalachia and the rest of the nation. It has done this by creating jobs, raising the quality of education and the job skill levels of our work force, and by providing the most basic services to our rural communities.

On behalf of all the governors of Appalachia, I thank the committee and you, Mr. Chairman, for your continued support for this most noble effort that we call the Appalachian Regional Development Program.