Federal spending cannot exceed $535 billion in fiscal 1980 if President Carter is to keep his promise to reduce the deficit to $30 billion, a key administration official said here today.
Bowman Cutter, associate director of the Office of Management and Budget, told leaders of the National League of Cities that OMB now estimates revenues in the fiscal year beginning next Oct. 1 at $505 billion. That is an increase of $55 billion over the $450 billion taken in during the current fiscal year. Spending in this fiscal year is $491 billion, resulting in a deficit of $41 billion.
Cutter stressed that the 1980 figures are based on present estimates of revenue. A new estimate will be made in early January, and the budget will go to Congress in the latter part of the month.
An outlay of $535 billion would mean an 8 percent increase in federal spending. If all current federal programs were continued at their present levels and raised only for inflation - 10 percent - the outlay would be about $548 billion, he noted.
Administration officials have talked of cutting federal spending by $15 billion to $30 billion, and Cutter's remarks indicated the reduction could be somewhat below that range. However, the January projection could change the revenue estimate by several billion dollars.
Cutter's presentation to some 40 leaders of the league, which is holding its 55th annual convention here, was closed to the press. His comments were reported by George Gross, the league's director of federal relations.
In contrast to these latest forecasts, as recently as Oct. 30 the administration was projecting a $38.9 billion deficit for fiscal 1979, and on Nov. 11 Charles Schultze. chairman of the Council of Economic Advisers, projected a 1980 budget in the range of $530 billion to $534 billion.
After the session with Cutter, Mayor Tom Moody of Columbus, Ohio president of the league, said that "move total dollars will go to the cities" but that the increase would have been greater if the administration were not locked into a war against inflation.
"The early impression that there will be wholesale slashes is simply incorrect," Moody said. But when asked if the money going to cities next year would buy as much as it does this year, he replied, "Absolutely not."
Moody said Cutter told the leaders that "alternatives to general revenue sharing were under discussion at the lower levels of OMB. A couple of us advised him that it would be dangerous to look too hard at revenue sharing without consulting us."
The league wants Carter to send Congress next year a proposed extension of the Revenue Sharing Act. The federal government now sends $6.6 billion a year to states and localities under the popular program, which attaches very few strings to the funds. It is slated to expire Sept. 30, 1980. tr for add four
Carter campaigned in 1976 on a pledge to eliminate states from revenue sharing, a more the mayors would probably welcome. But they are wary of tempering too much with the program for fear that Congress might scrap it completely.
Cutter also told league officials no decision has been made on whether to try again in Congress next year to provide anti-recession aid to cities with high jobless rates. Carter Proposed extending the program this year, but the measure failed in the House.