President Reagan sent a scaled-down block grants program to Congress yesterday after telling a group of state and local officials at the White House that this latest "New Federalism" plan is not a scheme to reduce federal aid to their governments while foisting responsibility for expensive programs on them.
Last year the president proposed putting several federally supported programs into a $47 billion plan that would have reduced federal aid to state and local governments by 25 percent. The plan was strongly criticized by local officials and members of Congress who complained that it gave authority over programs to local governments without providing sufficient funds.
"I'm pleased to tell you that . . . today we're transmitting to Congress our revised federalism initiative which incorporates four major megablock grants to state and local governments," Reagan told elected officials from seven southern states at a briefing on the plan.
"These legislative proposals represent a continuation and expansion of our efforts to return authority, responsibility and revenue resources to state and local governments."
Energy Secretary Donald P. Hodel also told the president that, despite consumer anger over higher bills, there is enough support in Congress for the administration to try removing price controls on natural gas.
Response from key congressmen is "generally favorable," Hodel told the president at a meeting of the Cabinet Council on Natural Resources.
The president said that the revised block grants plan was drafted with the help of state and local officials and will guarantee "funding for the programs at levels enacted for fiscal 1984. And it is not a vehicle for budgetary savings."
The plan proposed by Reagan includes only $21 billion in programs compared with the $47 billion program he proposed last year. Under that plan the federal government would have assumed Medicaid costs while the states picked up the cost and operation of welfare and food stamp programs.
The revised proposal sent to the Congress yesterday has four segments:
* A state block grant of $11 billion a year for 22 social services, health, education and community services programs.
* A local block grant of $7 billion which combines the revenue sharing program and parts of the community development block grant.
* A transportation block grant of $2 billion for states to consolidate six highway programs in urban and rural areas plus bridge repair programs.
* And an $850 million rural housing block grant to states for four programs for low-income rural housing construction and repair.
In 1981 Reagan won approval for a program to consolidate 57 categorical grants into nine programs. In 1982 Congress approved an urban mass transit block grant and a job training block grant.
The current proposal restricts options of local governments in how they can spend funds from the block grants until 1988. Then they would be free to use the money for whatever they decide is the greatest need in their area.