The Office of Management and Budget has proposed cutting federal funds for the Tennessee Valley Authority by more than 70 percent, stripping away virtually all of the economic development programs that were the primary reason the agency was created during the New Deal.
The cuts, if approved by Congress, "would turn us into nothing more than a utility," said one TVA official.
OMB told TVA officials late last week that the agency's $135 million budget request for fiscal 1986 would be pared to $40 million.
According to the TVA, that size cut would eliminate the agency's economic aid programs and force it to abandon projects ranging from acid-rain and soil erosion studies to introducing new fertilizers and rebuilding wildlife populations.
The budget office left TVA enough funds to pay for a minimal dam safety program and maintain flood-control operations in its reservoir system.
The agency's $5 billion-a-year energy operation is self-sustaining. The Reagan administration has taken annual swipes at the TVA's budget for other programs, however, and succeeded in reducing the agency's federal funding by about 39 percent over the past four years.
The latest proposals essentially would dismantle the economic programs that had made the TVA one of the earliest and most enduring products of President Franklin D. Roosevelt's administration. Since 1981, the Reagan administration has made similar moves against other New Deal-style agencies, including the Appalachian Regional Commission and other regional development agencies.
In taking on the TVA, however, the administration may be running headlong into one of the most powerful political forces in the Southeast.
Although the TVA lost one of its most stalwart defenders this year with the retirement of Senate Majority Leader Howard H. Baker Jr. (R-Tenn.), the rest of the state's congressional delegation has closed ranks behind the agency.
Sen. Jim Sasser and Senator-elect Albert Gore Jr., both Tennessee Democrats, have promised to fight the proposal, and strategy sessions were under way yesterday.
The proposed cuts are likely to draw attention from a number of other interests, particularly environmentalists.
Among the programs slated for extinction, for example, are a study of acid-rain damage in the southern Blue Ridge Mountains and the TVA's acclaimed wildlife restoration projects, which have been credited with boosting populations of several threatened species.
According to the TVA, the cuts probably would force it to sell the Land Between the Lakes, a recreational area that serves as a demonstration on resource management and environmental education.
The agency's archeological inventory project also would be scrapped, and reclamation activities on abandoned mine lands would be discontinued.
Meanwhile, TVA officials attempted to draw a distinction yesterday between their operation and those of other economic development agencies that have come under attack by the budget office.
"We don't give grants," said TVA spokesman Craven S. Crowell in Knoxville. "We provide technical assistance."
Crowell said all three of TVA's board members were in Washington yesterday to appeal the OMB decision, arguing in part that the TVA is required to foster economic development under the 1933 law that created the agency.
"They're sworn to uphold the law and they've not been given the resources to perform," he said. "That's the thrust."