Arizona Republic from Phoenix, Arizona • Page 1

nrm mi ir RE3YU0, CHASER Phoenix weather Variable high cloudiness. High 65-70, low 35-40. Monday's high 65, low 33. Humidity: High 72, low 19. Details, Page C-7.

All U3 TT TT There will never be a cure for the I 1 common cold as long as it a JLJt JLLrffJLL Ni comparatively painless way to get a couple days on. 85th Year, No. 236 Circulation 271-8381 Classified 271-9111 Other 271-8000 Phoenix, Arizona, January 7, 1975 1 (Four Sections, 56 Pages) OX 15 cents Senate Dems split on repeal of 4 food tax THE S' J) 0 J- Reoublle photos by Nvlt Lthn first time in his new office at the State Capitol. Gov. Raul Castro was given a jubilant embrace Monday by Mohave County Super ior Court Judge Frank X.

Gordon at a public reception after Castro's inaugura tion. To Gordon's right is his wife, Joan. In bottom photo, Castro takes a seat for the ta astro kes oath By GIL NEAL Senate Democrats disagreed Monday on whether or not they will seek repeal of the state's 4 per cent sales tax on food, but agreed tentatively on 16 other goals for the first session of the 32nd Arizona Legislature. The session begins next Monday. Seventeen of the state's 18 Democratic senators caucused as a majority and reviewed a list of prospective goals offered by Senate President Bob Stump, D-Tolleson, and by Senate Majority Leader Alfredo Gutierrez, D-Phoenix.

Only Sen. Sam Lena, D-Tucson, was absent. He has said he will resign from the Senate to become a member of Pima County Board of Supervisors. Possible repeal of the sales tax on food touched off the only spirited debate in the four-hour session. The senators were about evenly divided on seeking repeal of the tax immediately or waiting until the state's economic picture clarifies.

Gutierrez said repeal of the tax would cost the state $30 million in lost revenue each year, and a total of $52 million if the state reimburses cities and towns for revenues they would lose from the tax. "I am for repeal," Gutierrez said. "But I think it would be reckless to slash $30 million in revenue until we know how we are going to replace it. I think this is something we should approach very carefully." Sen. Manuel Pena, D-Phoenix, disagreed.

He argued that the repeal would not become effective until 1976 and that economists predict that the economy will be healthy again by that time and state revenues will be normal. "We also have a brand new $100 million coming in from the 1 per cent increase in the sales tax," he said. "I think the sooner we repeal the sales tax on food the better off we are. "I campaigned on that issue, and I favor a flat repeal," Pena said. "If we have to replace that revenue, I'd recommend Tennessee and Japan start paying us a severance tax for the copper they take out of this state." The Senators also agreed to explore using state retirement funds to purchase loans guaranteed by the federal Small Business Administration in an effort to increase yield on that type of funds and to stimulate the state's economy.

The Senators agreed that probable Continued on Page A-17 14 th overmen 32- minute ceremony and then rode for the last time in the official limousine, with the No. 1 license plate, to his apartment. Castro remained to accept the kisses, hugs and well-wishing of several hundred citizens during a post-ceremony reception in the State Executive Building lobby. Among them were the two Castro's job is done if he meets deadline Gov. Raul Castro has his work cut out for him if he meets this deadline.

A sign carried at his inauguration Monday by Harold Bates, perennial State Capitol picket, said, "We hereby give you one month to get Arizona back to normalcy." Bates ran for governor himself and drew seven votes. 'imm 'i i ir rriMr jrriirtiiMMfciiMMMiMa $2,4 million ordered paid to state for back welfare State's economic signs lag in December for 5th month By BONNIE as By DON BOLLES Raul Hector Castro, his left hand on a Bible, took the oath of office as Arizona's 14th governor Monday and promised to conduct the people's business in public view. "Arizonans deserve public officials who will serve the public rather than seek to protect the interests of friends, clients or their own selves," the 58-year-old Tucson Democrat said in a 13-minute inaugural address. The pledge drew strong applause from an enthusiastic crowd estimated by the Castro staff at 4,000 or more. Dignitaries and ordinary citizens occupied 2,000 chairs and stood throughout the State Capitol mall under 57-degree sunshine.

The number far exceeded the 700 who attended the 1970 inauguration of Republican Jack Williams. Retiring after eight years in office, Williams watched the torch pass to Castro in a Smokers get bonus to quit habit Associated Press BLOOMINGTON, Minn. -Leslie J. Renner thinks he has found a way to get smokers or at least some of them to kick the habit. Renner, president of the Leslie Manufacturing and Supply is paying bonuses to employes who don't smoke.

"I said to myself, 'What would turn my people to quit he recalled. "We all need a reason. I thought money might be a way to get to them." It worked with 9 of the company's 14 smokers. Under Renner's system an employe has $364 deducted from his pay each year based on a $7 per week estimated cost to a two-pack-a-day smoker at 50 cents a pack. Those who quit smoking get the $364 back at the end of the year with an equal company bonus.

Those who don't quit or try but fail get back only their own money. The nine nonsmoking employes will get the bonus. Renner, 49 and a nonsmoker, said he sees lots of benefits for his company, a manufacturer of drilling equipment with annual sales of about $4 million. He said he used to sit in his office with three aides, choking from the smoke. With less smoking, he said, "there is not as much loss of time from lighting up, opening the windows to let out the smoke and all the bad things that are done around the ashtray." living Democratic ex-governors, Ernest McFarland and Sam Goddard.

The happy crowd was so unrestrained that Castro was pinned against a window, and a dozen worried Department of Public Safety officers had to extricate him. He was pushed to an outside patio where six uniformed patrolmen forced the formation of a line. It was a busy but happy day for the international lawyer, who narrowly lost the 1970 election to Williams and then survived another cliff-hanger last Nov. 5. Castro ended his momentous day at the festive Inaugural Bali for an estimated 5,000 persons at the Phoenix Civic Plaza.

In his first day In office today, he was scheduled to fly to Window Rock for the inauguration of Republican Peter MacDonald to a new term as Continued on Page A-16 BARTAK drop hundreds of persons from the program in 1974 without first holding hearings to determine whether the persons dropped were, in fact, ineligible for the program. Local and regional Social Security officials Monday said they had not been informed of the federal court order and were uncertain when they Continued on Page A-17 imsMe VIET FIGHTING North Vietnamese forces overrun provincial capital 75 miles north of Saigon. Page A-2. OCCUPIED MONASTERY Wisconsin governor calls up National Guard to aid law officers at monastery occupied by Indians. Page A-8.

PRESCOTT COLLEGE Financially troubled school says it may not be able to reopen for 2nd semester. Page B-l. Page B-4 C-18 C-7-17 B-4 C-7 B-l D-3 A-8 Page B-6-9 D-7 C-6 D-9 C-l-5 D-9 C-7 D-l-6 Astrology Bridge Classified Comics Crossword Dean Dear Abby Editorials Financial Movies Obituaries Radio Log Sports TV Log Weather Women Today's prayer When You walk with me, dear Lord, I am filled with happy expectations as I face each responsibility of the day. Thank You for putting joy into my daily life. Amen.

The federal court here has ordered the Social Security Administration to make back payments of as much as $2.4 million to an estimated 1,055 Arizona disabled persons whose welfare checks were stopped last year without a hearing on their eligibility. A restraining order was issued by Judge Carl Muecke last week stopping the Social Security Administration from withholding payments as a resuit of a class action suit brought by the Maricopa County Legal Aid Society. The Arizona Department of Economic Security has estimated that 1,055 persons were dropped from the federal welfare program during 1974 without a hearing, but local Social Security officials contend the number is closer to 300. The welfare payments program for the permanently and totally disabled was turned over to Social Security Administration in January 1974 under a program called Supplemental Security Income (SSI). Before that, payments had been made by state DES welfare offices.

In December 1973 Congress amended the law transferring payments to the disabled from the state to the federal government. The law had provided that persons receiving such payments in December 1973 would automatically remain eligible for the new federal payments. But the December amendment moved that automatic eligibility date back six months to July 1973. The Social Security Administration, howevtr, was unable on such short notice to stop the checks to those who had gone on the disabled rolls during the last six montts of 1973. So their checks continued.

However, Legal Aid lawyers contended that Social Security then began to swing could "bottom out" in the next few months, the survey's director said. "It appears that runaway inflation has been stopped and that price increases now will be held to a more manageable level," said Dr. Harold Fearon, Arizona State University management professor. Fearon has been conducting the monthly survey for the Purchasing Management Association of Arizona for 12 years. A drop in the rate of increase in the price indicator shows a slowing of the pace of inflation, Fearon said.

The rate of decline moderated in two other indicators, new orders and production, suggesting that the bottom of the decline is approaching, Fearon said. A major decline in expenditures for new plants and equipment was indicated in responses to a special year-end question, Fearon said. The question, covering anticipated expenditures, showed expectations at their lowest level in several years, "mirroring the disappointing economic performance in 1974," Fearon said. Twenty-one per cent of those responding to the questions said they anticipated spending more for capital improvements in 1975 than they had in 1974 and 31 per cent said they expected no change. Forty-eight per cent said they would spend less.

Among the six regular indicators, employment showed its largest decrease in the survey's dozen years, Fearon said. Thirty-six per cent of the responding purchasing managers said their firms pared payrolls in December and 2 per cent said they added workers. In November, 36 per cent had reported cuts but 8 per cent had shown increases. By JOE COLE All indicators of economic performance in Arizona continued unfavorable in December for the fifth straight month, a statewide survey of purchasing managers shows. Despite the decline, moderation in some areas suggested inflation slowly is coming under control and the down- Debts are cut record amount in November Associated Press WASHINGTON Consumers cut back on their indebtedness by a record amount in November, the government reported Monday.

The statistics showed that shoppers cut back drastically on borrowing for new cars and personal loans and also trimmed the amount they owe for home improvements and on charge accounts. The Federal Reserve Board said the decline in consumer credit outstanding for November totaled $402 million, surpassing the record contraction of $376 million in June 1942. It was the first time consumers have cut back on their monthly indebtedness since November 1970. The steepest drops were among automobile buyers and persons interested in personal loans. Automobile credit outstanding plunged $361 million, the first drop in four years.

For personal loans, Continued on Page A-14 Prices paid for major items continued to follow the trend of slower upward increases begun in June, with December showing the smallest net increase in prices since November 1971, during the wage-price freeze. Higher prices were reported by 42 per cent; 10 per cent reported lower Continued on rage A-14 Phoenix added to list of high unemployment Phoenix Monday was added to the federal government's list of cities with major unemployment. The listing opens the way for preferential treatment in bidding for federal contracts. The list is compiled by the U.S. Department of Labor.

It includes metropolitan areas with unemployment rates of at least 6 per cent. The Arizona Department of Economic Security reported that as of Nov. 2 the Phoenix jobless rate was 7.7 per cent. A DES spokesman said the current rate may be up to 8 per cent. The rate is expected to continue climbing at least through March.

The latest statistics were compiled before Motorola laid off 1,500 workers, in addition to the 5,000 workers the firm furloughed earlier. Layoffs in metals and primary and fabricated in electrical equipment Continued on Page A-14.