GOVERNORS and state legislators are beginning the struggle to adjust their budgets to the federal tax and budget cuts of last year. No one wants to face up to the full implications of the cuts in federal aid already made law, much less the near certainty of larger cuts to follow. Those states that could afford to make up the losses don't want to and those that want to can't afford it--a nice situation.
Some of the pain is self-inflicted. Many states stand to lose revenues because their personal, corporate or estate taxes are tied to federal tax rates that have been cut. These states could act to restore their own tax rates to previous levels without having to take the blame for actually raising state taxes. Other states with substantial surpluses from oil, gas and other resource taxes could easily absorb federal aid losses. Most of these favored states, however, have traditionally chosen to keep their social benefits at rock-bottom levels.
Some patterns of adjustment are emerging. In Maryland and Virginia, for example, the programs with the best survival chance are those with vocal middle-class constituencies. Often these advocates are not the ostensible beneficiaries of the services--the low-income elderly, for example-- but the providers, such as nursing home operators. That's helpful in preserving many humane services, but it also means that welfare and other basic programs that deal their benefits directly to the poor are likely to bear the full brunt of federal cuts.
Governors have recognized the likelihood of this perverse result in their repeated calls for a "Grand Swap" of federal and state responsibilities. As Tennessee Gov. Lamar Alexander said on the opposite page last Wednesday, states and localities would be willing to take back full responsibility for, say, education and highways if the feds were to pick up medical and welfare aid for the poor.
The basic idea is sound. Local control over services in which there is a strong, articulate local interest makes good sense. But distributing aid to the unpopular poor is properly a national job. The federal income tax is the fairest and most efficient way to raise money to meet their basic needs. State and local taxes tend to hit harder on the poor than on those who are well off. Moreover, downturns in local economies can shrink revenues at the same time that welfare needs are rising. National standards of adequacy are needed to protect the poor against the ignoble impulses of localities that would prefer to export their welfare problems to more generous areas.
The Reagan administration has yet to show that its concept of federalism extends beyond the practice of dumping unattractive federal problems into the laps of states and localities. That practice needs revision, not only because the patience of state and local officials is wearing thin, but also because it undermines important national interests.