Virginia, Maryland and the District of Columbia would lose more than $96 million in federal aid if Congress approves President Reagan's "New Federalism" proposal to transfer welfare and food stamp costs to the states and let the federal government assume health care costs for the poor.
The greatest impact, according to preliminary estimates yesterday by officials in the three jurisdictions, would be in Virginia, where total assumption of the food stamp program and Aid to Families with Dependent Children (AFDC) would result in a net loss of $62 million a year, under current spending totals, if the federal government took over the cost of operating the Medicaid program.
The same transfer of responsibilities would cost Maryland $20 million a year, officials said, while the District of Columbia would lose $14.6 million.
Some state and city officials cautioned that eventually such a swap might prove financially beneficial to the three jurisdictions, chiefly because the Medicaid costs that would be assumed by the federal government are rising much more rapidly than those for food stamps and welfare.
Nonetheless, Gov. Harry Hughes of Maryland and D.C. Mayor Marion Barry, both Democrats, voiced substantial skepticism about the swap proposal. Gov. Charles S. Robb of Virginia, another Democrat, was only a bit less pessimistic in his assessment of the plan that Reagan disclosed in his State of the Union message Tuesday night.
Other Democratic officials also were critical of the plan. Republican congressmen from the two states reacted more favorably, contending that state and local governments could more efficiently administer various programs for the needy than the federal bureaucracy has done.
Hughes leveled the most stinging attack on the Reagan plan, which by 1991 would "turn back" more than 40 federal aid programs. The states then would have to decide whether the programs are worth keeping and would have to raise enough revenue through new or higher taxes to finance them.
"There is no way we could pick up that entire slack in food stamps and welfare costs ," Hughes asserted, continuing an attack on Reagan that began last week and is likely to be a theme of his reelection campaign. "I'm concerned that the purpose of Reagan's proposals is not so much to have each level of government perform its proper responsibility, but more to solve a huge federal deficit and to solve it at the expense of the states."
Hughes called the Reagan swap "a radical departure from 40 to 50 years of government."
The governor and other Maryland officials said poverty programs like welfare and food stamps should be guided by national standards and so should remain federal responsibilities.
"Providing for the poor people of this country is a basic need and should not vary from state to state depending on the whims of that state or that legislature or that governor," Hughes said.
Maryland would save $292 million if the federal government took over the state's share of the Medicaid program, which provides medical assistance to the poor, but the state would have to take on $312 million in welfare and food stamps expenses now paid by the federal government, budget officials said.
Hundreds of Marylanders probably would lose medical assistance in the trade-off, according to officials, because the state now uses its own funds to extend coverage to many who do not qualify for Medicaid under federal guidelines. Federal regulations disqualify people betwen ages 21 and 64 who are not totally disabled or blind and who do not have children. Maryland also uses state funds to subsidize prescription drug purchases by people with incomes marginally above the federal limits for Medicaid.
"Certainly the federal government won't pick up these programs," said Maryland Health and Mental Hygiene Secretary Charles Buck.
Despite the fact that Virginia would lose the most federal aid under the Reagan swap, Robb called the proposal a "good concept." But he quickly tempered his praise by noting that "we're already very hard pressed now. And if it's the intent of the federal government to return to the states the problems that are almost insoluble at the federal level, then I've got real problems with it."
If Reagan succeeds in transferring many federal programs to the states, Robb said, it is likely that in the long run the state would reduce social services to avoid unreasonably high tax bills.
"Yes, there is going to be some dimunition of services," he said, "but I think this is a real opportunity for the states and localities to work together. We may have to restructure programs in a radically different way . . . and I'm quite prepared to do that."
Reaction from others in Richmond, however, was mixed. State Sen. Edward E. Willey (D-Richmond), chairman of the Senate Finance Committee, said he was "very pleased" with Reagan's proposal for a federal takeover of the burgeoning Medicaid program. But Del. Archibald A. Campbell (D-Wythe), chairman of the tax-writing House Finance Committee, offered a skeptical view of the proposal.
"Ronald Reagan gets elected, gives a tax cut, and then finds he couldn't do it so he puts a monkey on the back of the states," Campbell said. "I think it's taking advantage of people who can't defend themselves."
Del. Richard Bagley (D-Hampton), chairman of the House appropriations committee, predicted that the state would lose money in the swap. "It's inconceivable to me that the president would swap programs that would net the government a bigger bill," he said. "The president is trying very hard to return the government to states and localities, and I hope he isn't proceeding too fast."
Mayor Barry said he liked Reagan's proposal to create urban enterprise zones as a means of making more jobs available in cities. Barry, speaking before the city's prospective loss of federal aid had been figured, said, "If we lose $1, I'm opposed to it."
He said the proposed termination of the federal programs over the next decade "scares me to death. These state legislators, particularly in the South, have tended not to be very sympathetic to the poor and blacks. I'm afraid if the federal government doesn't keep control over these program, we'll go into the years of the past, 15 or 20 years ago. The federal government made them do right."
Washington Urban League president Jerome Page said Reagan's proposal had little or no meaning for blacks and the poor. "You cannot ask low income and unemployed people to seize the opportunity to produce, save and invest . . . . You have to produce jobs first," he said.
The Republican assessment of the Reagan plan tended to be more cautious and optimistic. Rep. Stan Parris (R-Va.) said he thinks the impact of the Reagan budget cuts on the states "has been grossly exaggerated by some people. Many people have the conception that because a program is federally funded that the state has nothing to do with it. But that is not the case.
"So why is not reasonable to assume that it will be more efficient, more effective and less costly for the states to fund and administer the programs directly?" Parris asked.
Sen. John Warner (R-Va.) said the "concept of federalism the president outlined was born in Virginia. If it can't work here, it won't work anywhere else. I am confident Gov. Robb and the legislature will accept the responsibilities the president is turning back to them. I will work with them to make it happen."
Rep. Marjorie S. Holt (R-Md.) said she agrees with Reagan that various federal programs ought to be returned to the local or state level, which she said "will allow for transportation and social services to operate more efficiently."