When retiring Virginia Gov. Charles S. Robb told his colleagues in the Council of State Governments last December that they should "prepare for the possibility that federal funding -- with the exception of income-support programs -- may be completely shut off," it seemed like scare talk to many. It turns out Robb was simply anticipating the fiscal 1987 budget Ronald Reagan sent to Congress last week.
Buried far back in the supporting documents with which the budget bureau inundated Washington last Wednesday was a historical table showing where federal aid to states and cities has been and where it will go, under Reagan's plans. The table does two things that are critical to understanding the trend: it corrects for inflation and it separates out intergovernmental aid from those programs where the state and local governments simply act as transmission belts for federal dollars going to (mostly needy) individuals.
Using constant 1982 dollars, here's what it shows: federal aid to state and local government hit its peak in 1978 at $75.7 billion. It started down in Jimmy Carter's final two years, then dropped sharply to $50.3 billion in the first full Reagan budget. It has been pretty steady since then, but if Reagan has his way, that number will drop to $40.3 billion in the next fiscal year and to $31.2 billion -- less than half the pre-Reagan level -- by fiscal 1991.
In that final year, federal aid to state and local governments would amount to only 3.9 percent of federal outlays (one-third the 1978 level) and a minuscule 0.7 percent of the gross national product -- close enough to Robb's predicted zero level to make him look like a prophet.
There are two comments that can be made about this trend. The first is that no one should ever underestimate Ronald Reagan's persistence. Ten years ago, in his first full-scale campaign for president, he set forth a controversial plan for unloading vast federal responsibilities on the states.
TAKE 028841 PAGE 00002 TIME 11:39 DATE 02-09-86 What was regarded as a colossal political blunder in 1976 can become an accomplished fact in 1986, if Reagan sticks to his guns and uses the Gramm- Rudman trigger to enact across-the-board cuts in unprotected domestic programs.
The second point is that, whether he succeeds in all his ambitions or not, state and local governments are increasingly going to find themselves in a go-it-alone game. As voters and taxpayers, you need to understand that it is a new world facing your mayors and city councils, your legislators and governors.
Just how tough that new world can be was spelled out the other day by two legislators who were in town. Both are tough politicians from conservative states, and neither could possibly be called a crybaby.
State senate majority leader David E. Nething of North Dakota, a Republican, and state finance committee chairman Rep. John Bragg of Tennessee, a Democrat, are the current and former presidents of the National Conference of State Legislatures.
Both knew that the states were going to get it in the neck in the first Gramm-Rudman budget cuts, but when we talked, they hadn't seen the specifics of Reagan's proposals. What both of them talked about was the fundamental injustice of the federal government's attempting to balance its budget on the backs of the states and the cities.
Bragg compared it to "a hostile takeover" in the corporate world, saying that federal officials are exploiting "the fiscal stability of the states to solve their problem, and they're not even consulting with us."
Nething said, "I have the fear that Congress is not going to come to grips with it (Gramm-Rudman) and will make cuts across the board without knowing their effects." Commenting on the efforts by both Reagan and Congress that led to three-quarters of the budget's being protected from Gramm-Rudman cuts, Nething said, "In the states, we don't set aside any pets. We make everyone justify his spending -- and then people will support the taxes to pay for what's left."
That is, of course, the dramatic difference between the federal and state records in the past five years. When Reagan's first federal-aid cuts hit in 1982, in the depths of the recession, some 40 states raised taxes, Bragg pointed out. That made it possible for them to absorb some of the later cuts, but now they face a new double or (in some cases) triple whammy.
Reagan is proposing a further giant slash in federal aid. At the same time, through tax reform, he is moving to end the deductibility of state taxes, which increases the cost of revenue-raising in the states. In some states, such as Nething's, the agriculture and oil price declines, which have been welcomed by the administration, are knocking the props frm under the economy.
Is it any wonder that John Bragg says, with some scorn, "The federal government has paralyzed itself, and now it is going to paralyze the states."