Reagan and the 50 governors: what price budget cooperation?
The nation's governors are wary that their states will have to absorb a third of President Reagan's proposed spending cuts without the spending and taxing freedom to offset the loss.Skip to next paragraph
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They see Congress as the leading villain in the keeping strings tied to the federal money flowing to the states.
They doubt whether Mr. Reagan will be able to achieve his longtime goal of a new federalism, taking advantage of what many experts see as a new readiness of state governments -- with more expert staffs, longer legislative sessions, and, in general, a greater professionalism -- to manage government tasks such as schooling and road building.
Reagan told the governors meeting with him at the White House this week: "My dream has always been . . . not federal grants, but turning back tax sources to the states." And he said he was going to form a "coordinating task force on federalism."
Many governors feel states have become unequal partners to a federal giant in the modern federalism. And they would like nothing more than a direct share of federal tax resources. When Office of Management and Budget Director David A. Stockman raised the prospect of a 2-cent-a-gallon share of federal gasoline tax, to use on state road and bridge programs, there was a flurry of excitement among state officials.
"That's good news to us," said one National Governor's Association (NGA) budget expert in response to the Stockman suggestion."We've been waiting for tax-sharing ideas to surface from the Reagan administration. This is obsolutely the first one."
But there was a quick denial from the White House of any intent to levy such a tax.
Most of the governors feel that Reagan is likely to delay his philosophical goal of restructuring the federal-state balance of power. They believe he will have to use his White House clout first to attain his immediate economic goals in Congress.
On balance, the governors appreciate the overall effort -- the cut-everywhere approach -- in the Reagan economic package. But they worry many costs will be transferred from the federal budget to the states.
Some Democratic governors spoke out sharply against key parts of the Reagan plan. "It's an ill-conceived tax program," said New York Gov. Hugh Carey. The Reagan personal tax cuts would be highly inflationary, he said. Governor Carey favors "capital gains tax reduction, because it creates jobs."
As if in preview of a 1984 presidential bid, Carey drew attention to New York's success in easing inflation and unemployment in recent years, partly due to his tax and fiscal strategies.
Carey charged Reagan was "wholesaling his program through the media" to get the public to buy it and put pressure on Congress. "Congress," he says, "is still in postelection shock, feeling any opposition to Reagan many be dangerous."
California Gov. Edmund G. Brown Jr., another possible '84 Democratic contender, acknowledge: "Reagan's going to get a lot of his spending cuts -- maybe more than half."