The Treasury Department proposed legislation yesterday that would substitute a $1.04 billion fiscal assistance program for local governments next October for the anti-recession revenue-sharing program that has been in effect since early 1977.
While the current program bases eligibility for funds on the unemployment rate in states and localities, the proposed program broadens the eligibility criteria to include employment, per capita income or population.
Assistant Secretary of the Treasury for Domestic Finance Roger B. Altman said that 10,000 more local governments will be eligible for assistance today than under the criteria that just used the unemployment rate.
Nonetheless, Altman said, the broad thrust of the new prgram will be little different than the old one, although many individual communities will either lose or gain assistance.
He said that 24 percent of the $1.04 billion would go to the 10 most distressed major cities - Boston, Buffalo, Chicago, Cleveland, Detroit, New Orleans, New York City, Newark, Philadelphia and St. Louis. Big cities got most of the money under the counter-cyclical revenue sharing, too.
Critics of the counter-cyclical program charged that while the unemployment rate is a good measure of distress for urban areas, it is not always so good for smaller towns and rural areas, where the problems are of a long-term nature.
Under the program proposed yesterday, local governments could prove elegibility by having unemployment in excess of 4.5 percent or by showing disproportionately slow growth in any two of the three new criteria - jobs, per capita income or population.
State, which got one-third of the funds in the counter-cyclical program, will get no funds in the new program, which is part of the president's new urban initiative. The president will ask for $1 billion funding for fiscal 1980, which starts Oct. 1, 1979.
No city will be able to get more funds under the new program than it gets directly in the counter-cyclical program.
That means that a city like New York, that gets $135 million from the program directly plus a portion of New York State's allotment as well, will not get as much money as well, will not get as much money under the new program as it gets now, unless the state decides to substitute its own revenues for the federal funds it has beensending in the city.