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Despite Upturn, States' Financial Outlook Remains Gloomy

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WASHINGTON--Despite indications that the national economy may be edging upward, state lawmakers' outlook for the financial vitality of their governments continues to be gloomy, a survey released here last week indicates.

Noting that he sees "signs of hope'' for the economy nationwide, Art Hamilton, the president of the National Conference of State Legislatures, last week said the needs of the states and their people still vastly outstrip the resources available to them.

Mr. Hamilton, the leader of the Democratic minority in the Arizona House, made the remarks last week at a press conference to release the results of the N.C.S.L.'s annual survey of state legislative leaders.

The outlook for education is for another year of modest, if any, budget gains, the survey suggests.

Still, the survey shows that education remains one of the top priorities of legislators, along with budget balancing and health care.

But between funding costly federal mandates and working within the tax restraints imposed by a restive electorate, states are unlikely to have much in the way of additional revenue to devote to education, the survey found.

Lawmakers in at least half the states, for example, said they foresee revenue shortfalls and the need to reduce budgets in 1993. Moreover, the survey points out, fiscal 1993 appropriations already represent the lowest rate of growth since 1983, falling below the expected inflation rate of 3.3 percent.

Less than 10 percent of respondents to the survey predicted a tax increase for elementary and secondary education.

Struggling With Reforms

"While the recent elections promoted 'change' as the policy watchword for 1993, the top items on legislative agendas will remain remarkably constant,'' according to the report. "Most state legislatures [will face] recurrent budget problems while struggling with major policy reforms in health care and public education.''

The survey found that many lawmakers believe their first task will be to find ways to cut the budget.

While local government aid is likely to be cut first, the report says, precollegiate education "remains the last in line for budget trimming and the first priority for increased appropriations.''

Representative Hamilton acknowledged that cutting local aid has a direct impact on school funding in some states. To help alleviate such tension, he said, the N.C.S.L. is working in conjunction with the U.S. Conference of Mayors and other groups to arrive at some sort of "truce'' on state mandates.

He also said the state lawmakers intended to convey to the incoming Clinton Administration the need to ease federal mandates, particularly in the costly area of health care, because they consume so much of state budgets and lessen flexibility.

Finance-Equity Agenda

The survey also reveals that revisions in state school-aid formulas will be near the top of the legislative education agenda for 1993.

For many states, that means wrestling with the volatile issue of school-finance equity. More than 20 states are in the midst of lawsuits challenging the fairness of current funding methods.

"We are going to try to bump along the best we can,'' said Mr. Hamilton, while noting that lawmakers are concerned that eventually "a gentleman or a lady in a black robe will tell us what to do.''

"We would like that not to happen,'' he added.

Also emerging near the top of lawmakers' priorities are early-childhood education and the concept of integrating educational and social services.

Among the education-reform initiatives legislators emphasized were outcome-based assessment, site-based management, and school choice and vouchers.

More than 100 key legislators from the states and territories participated in the survey. They submitted their responses to the N.C.S.L. in October and November.

Copies of the survey will be available in January for $35, plus $3 for postage and handling, from the N.C.S.L. Marketing Department, 1560 Broadway, Suite 700, Denver, Colo. 80202; (303) 830-2200.

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