THE GOVERNORS will be holding their annual meeting next weeks in Atlantic City. Like most visitors to that now wide-open town, they will be counting their gains and losses -- though in much larger denominations that the wagers of even the highest rollers. Back in the early days of this administration, the governors took a gamble on the Reagan economic program. With only a few reservatons, they backed the substantial budget cuts proposed for federal grants to states and localities in return for the chance to run those programs with greater freedom from federal control.
As is so often the case with gamblers, the governors won some -- and lost some. As is usually the case, too, their dollar losses far outweighted their winners. Under the Carter administration proposed budget for 1982, federal aid would have been almost $100 billion, not enought to keep pace with inflation but still an increase over the adopted last week by Congress, it will be only about $88 billion.
There were, however, some non-financial gains that might translate into future dollar savings. While Congress sidetracked the administration's plans to convert major health, education and service programs into few-strings-attached block grants, over 50 small programs were folded into larger programs in the same areas and a still uncounted number of minor programs, perhaps 20 or 30, disappeared altogether in the final budget. In almost every one of the remaining programs, moreover, states gained more control over how and where to spend the money.
The Reagan budget thus reverses, if only modestly, the recent drift in federal-state relations. Over the last decade, states gained an increasing share of federal revenues, but at the expense of a considerably greater number of restrictions on the use of that money -- a trend that culminated last fall in Congress' decision to terminate the states' share of that freest of all federal money -- general revenue sharing. This is a moral victory for the governors, at least for the moment.When the administration begins looking in earnest, however, for the additional $50 or $60 billion in budget cuts it will need to meet its 1984 targets, the governors may begin to question the value of additional freedom to spend a very much smaller purse.
Already the governors are worried about a wholesale retrenchment in federal support for basic welfare and medical aid programs. These are properly national concerns because the need for such assistance is likely to be greatest in precisely those areas least able to meet it fromlocal tax resources. Arguing on this ground, the governors scored a significant victory it persuading Congress, despite strong administration pressure to the contrary, to reject a fixed cap on federal sharing in the Medicaid program in favor of a more flexible system of incentives of cost control by states.
Working out compromises like this what federalism is properly all about -- deciding what level of government can best do a particular job and how the financial burden can be fairly shared. At their meeting next week, the governors will be doing more than toting up their present losses.They'll be starting to review the basic rules of the games.