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Governors Affirm Education as Priority Despite Threat of Federal Budget Cuts

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Washington--Facing almost certain federal budget cuts that could force them to raise taxes or reduce services, governors interviewed here last week nonetheless reaffirmed their commitment to education reform.

"We're going forward, not backward," said Gov. Mark White of Texas.

"Whatever emerges in Washington, in our state we're going to go ahead," commented Pennsylvania's Gov. Richard Thornburgh.

The governors were gathered in Washington for the annual winter meeting of the National Governors' Association, a biparti-san group that represents their interests in the capital. A few days earlier, state legislative leaders had gathered here for their own winter meeting, sponsored by the National Conference of State Legislatures.

Both meetings were dominated by concern over the federal deficit and the Reagan Administration's proposed 1986 budget. State leaders in both parties made it clear that they think the Administration is trying to balance its budget at the states' expense.

"That's exactly what they're doing," Gov. Richard Celeste of Ohio, a Democrat, said.

Concern over the deficit was so great that the governors' association approved a resolution calling on the Congress to adopt a balanced-budget amendment to the Constitution. The governors, the majority of whom are Democrats, also called for a one-year freeze on all federal spending--including Social Security--with the exception of means-tested entitlements for the poor.

The governors also endorsed tax reform, but ruled out proposals to eliminate deductions for state and local taxes, charitable contributions, and interest on state bonds.

Budgets Squeezed

With the exception of proposed cuts in student loan programs--which the governors opposed--they said federal education cuts would have little impact on their states, because the government pays only about 8 percent of the cost of education nationwide.

The Administration has asked for a $15.5-billion budget for the Education Department for the fiscal year 1986, including a freeze on most primary- and secondary-education programs.

Poorer states, though, which depend heavily on chapter 1 funds, would suffer considerably from even a freeze, according to one governor's aide. "We'll be faced with having to fund more [of the cost of remedial programs] with state funds," said William Prince, executive assistant to Gov. Richard Riley of South Carolina. "Given the nature of the state budget, we'll probably look at cutting back programs."

And to the extent that states lose revenue, from whatever source, it squeezes their budgets and makes it difficult to fund new programs, governors agreed.

In 21 states, schools account for more than 40 percent of the total state budget; their share nationally is 35 percent, according to the ncsl

"Obviously, education reform is in competition with hundreds of other items in the state budget, and to lose revenue makes that competition more fierce," Florida's Gov. Robert Graham said.

But, the Governor added, "Education has been, is, and will be our first priority."

Gov. Richard D. Lamm of Colorado agreed. "It is not a good time to be innovative in education. [But] if the President is going to be irresponsible, it doesn't mean we're going to be irresponsible."

Reforms Expected to Pass

Governors in states voting this year on new funds for education reform--including Governors Dukakis of Massachusetts, Brennan of Maine, and Kunin of Vermont--said they expected their proposals to pass, despite budget pressure due to federal cuts.

"I don't see any backing off no matter what the cuts are," Governor Brennan said.

"I think we're going to get the reform bill through," Governor Dukakis said. "But if next year we're faced with drastic cuts at the federal level, obviously, it will affect us."

"Obviously, the cuts will have an impact," Montana's Gov. Ted Schwinden said. "But failure to deal with the deficit could have potentially a worse impact."

Cut Services or Programs

In its budget proposal, the Administration seeks cuts in outlays to state and local government of $6.3 billion, according to ncsl and nga documents, or about 6 percent. New grant-in-aid budget authority would decline by $10.1 billion, or 18 percent.

Over five years, state and local governments would lose $97 billion, the documents estimate.

Given those cuts, John T. Bragg, deputy Speaker of the Tenessee House and president of the ncsl, said states would have to raise taxes by about 5 per cent, or else eliminate services.

"We know that when $51 billion is cut in programs the states administer, people are going to be standing at our Capitol doors looking for that money," Gov. William A. O'Neill, Democrat of Connecticut, told Republican lawmakers at an nga session. The states' surpluses wouldel5l"disappear in the whisk of an eye," Governor O'Neill said, "and the federal government will still have a $150-billion deficit."

Governors in some states said they would simply have to "do without."

"Most of these programs cut at the federal level will not be picked up, ... including student loans," said Gov. John V. Evans of Idaho, who described education as his "highest priority."

"I don't think there's any question that we'll be doing without," he said.

Hard Choices?

Governors feel the Administration's cuts are particularly unfair because defense spending is exempted and because most of the states, battered by the Administration's first batch of budget cuts and the recession that followed, have already been forced to make painful spending cuts and raise taxes.

In 1983 alone, 38 states cut their budgets, and the same number raised a total of about $7.5 billion in new taxes, according to the ncsl.

Governors now accuse the Administration of avoiding the same "hard choices" they had to make, and instead trying to rob state treasuries.

"It's frustrating to see them [the Congress and the Administration] wring their hands and say, 'It's too tough, we just can't do it,' when each of us has had to do it in our own states," said Anthony Earl, the Democratic governor of Wisconsin.

Now that the economy has turned around, state leaders are under pressure to reduce taxes or fund programs deferred during the recession. Still others are looking to stockpile their surplus funds in "rainy day" accounts, to hold in reserve for the next recession.

In the rush to reduce the deficit, governors also fear that the federal government seeks to shed itself of programs that are rightfully its responsibility.

"States are being asked to assume a growing number of federal respon-sibilities--despite the fact that they will need additional resources just to provide critical services they are responsible for," added Gov. John Carlin of Kansas, the president of the nga

For example, by 1990, states will need $15.4 billion in increased annual expenditures to provide for a larger school-aged population and to improve educational services, according to the Governors' State of the States report.

"Unfortunately, recent discussions in Washington, D.C., have focused on existing and projected state surpluses, rather than the appropriate role of states and localities," Governor Carlin said.

In the education field, the federal government has a responsibility to ensure access to higher education by maintaining financial-assistance programs, support research and development, and help prepare the workforce, the governors agreed.

Surpluses Questioned

The Treasury Department's estimate of state surpluses--$86 billion by 1989--was the main topic of discussion at the ncsl gathering, with state legislators trying to get the message across that surpluses are nowhere near that big.

"There seems to be some mythical conclusion about what that money is and how we came about it," said Joseph Harrison, Republican majority floor leader of the Indiana Senate.

"Two years ago, we had an $879-million deficit," added Lee A. Daniels, Republican minority leader of the Illinois House. "We enacted a temporary tax increase, which we didn't like. ... We feel we are willing to handle problems within the state, but we don't want Congress to force additional problems on us."

But U.S. Representative Trent Lott, Republican of Mississippi, gave state leaders little comfort. "Ohio is going to have a $350-million surplus, building toward a billion dollars. We're broke. ... You've got to help us."

"A $200-million surplus may not sound like much, but compared to a $200-billion deficit it looks real good," he added.

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