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States, Localities Said Damaged by $42-Billion Cuts

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Washington--Compared with what they would have received if fiscal 1981 federal spending policies had remained in effect, state and local governments have lost $42 billion in federal assistance since President Reagan assumed office, according to a new analysis by a national public employees' union.

The analysis also contends that the across-the-board cuts in education and training, health and human services, public works, and economic-development programs have deepened the fiscal crisis of state and local governments.

The report, "State of the States," was released here last week by the American Federation of State, County, and Municipal Employees, afl-cio It includes a program-by-program study of cuts in 172 programs that account for nearly 90 percent of all federal aid to the 50 states, the District of Columbia, and Puerto Rico.

Prepared by Fiscal Planning Services Inc., a Washington, D.C., management-information-systems corporation that provides state governments with budget information, the report compares program policies and allocations for the fiscal years 1982 to 1984 with those for 1981 to derive both total and percapita budget cuts over that period for each state and locality.

Unlike earlier analyses of recent federal-spending patterns by the U.S. Census Bureau and the National Governors Association, the afscme study calculates the losses to states and cities in terms of the amounts they would have received under the policies in effect in the fis-cal year 1981. Using methods they term similar to those employed by the Congressional Budget Office, the researchers estimated "the dollar amount necessary to provide the same number of program participants with the same level of service" as in the base year, fiscal 1981. The calculations also factored in yearly changes in key costs of providing the service.

Referring to the Administration's expressed intent to expand the governance role of the states, the report charges that "the fact that deep cuts were sustained across all areas of federal assistance, if not most programs, is a strong indication that the cuts were sought without any vision of how to allocate fiscal or administrative responsibilities among the various levels of government."

"After three years at the helm, the Reagan Administration is well on the way to returning federal aid to state and local governments to pre-Great Society levels," the report adds.

The largest losses came in fiscal 1982, the year of the first Reagan budget, when $16.5 billion in federal aid was cut, according to the report. In fiscal 1983, the report found, $10.2 billion in aid to states and cities was cut. And in fiscal 1984, losses amounted to $15.2 billion.

The report says the major block-grants programs are "nothing more than a smokescreen for cuts." The education block-grants program was slashed by 20 percent over the three years, according to the report.

"We weren't all that surprised about the dimensions of the cuts because we'd known for quite a while that Reagan had made major cuts in vital programs for education, health care, and other vital services," said Robert McGarrah, afscme's director for public policy. However, a number of state-government officials who called afscme following the re-lease of the report expressed surprise and concern, Mr. McGarrah said.

The report does note that a few programs received budget increases from their fiscal 1981 levels. Those programs include the Elderly Feeding Program; the Women, Infants, and Children nutritional program; and Head Start. But the report maintains that, in most cases, it was only Congressional pressure that forced the increases.

Report's Findings Differ

afscme's findings differ from those of a report released last month by the Federal Funds Information for States System, a research arm of the National Governors Association. The ffis report found that although there have been large shifts in the distribution of federal funds to state and local governments, federal aid for education has remained relatively stable during the past two years. In fact, according to the report, aid for education increased by 13 percent from 1982 to 1984. (See Education Week, Jan. 11, 1984.)

afscme officials note that the ffis report examined only the "nominal dollar changes" in federal aid to state and local governments. They maintain that the report did not gauge the full impact of the current Administration's budget policies since it failed to compare federal aid under those policies to what it would have been had no policy changes been enacted.

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