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Reagan and the 50 governors: what price budget cooperation?

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He thinks Reagan will get only a one-year tax cut.

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Mr. Brown, however, thinks the Reagan package may serve the public's mood more than its needs.

"Investment, not hacking away at current programs, is what's needed," Brown says.Investment in resource development, training workers to compete with cheaper third-world work forces, high-speed rail transit, should be parts of a new deal for this decade, he said."Elect me president," he told reporters, "and I'll do it myself."

Most governors looked more to the job at hand: surviving with as little loss in federal funds as possible and trading what loss there is for greater flexibility in using the money.

"We're concerned about what Congress will do," a governors' spokesman says. "We're very much afraid they'll buy the cuts and not the flexibility. Congress has not been so free with flexibility. They tried to cut state revenue sharing two years ago and succeeded the past year, before Carter cut it."

Congress actually has turned block grant programs like CETA and LEAA in recent years into very categorial grants.

Instead of $100 billion in federal grants-in- aid anticipated under the Carter budget, state and local governments are told to count on $87.6 billion in Reagan's plan for fiscal 1982.

Defense and social "safety net" programs will grow, and federal debt interest will hold steady for the next couple of years, as the states see it. Spending for all other purposes in the federal budget will drop from 30 percent of outlays in fiscal 1982 to 18 percent in 1984, pointing to greater reductions in aid to states.

In fiscal 1982 alone $12.5 billion of the $34.7 billion in Reagan spending cuts proposed so far (with another $6.3 billion to come) would affect state and local programs. however, Reagan would switch 5 percent of the categorical programs to block-grant status to give states a little more spending flexibility.

Transportation and medicaid head the governor's list of federal aid cuts.

Through 1986, Reagan would cut $12.6 billion in highway spending and $6 billion in mass-transit money from "current policy" levels, the governors' budget analysts claim.

"In some states the roads are in such bad shape, states can't cut spending," one NGA official says. The President's budget cut team wants to slow construction of low priority highway projects. But they cannot identify the priority of these projects at the moment, so they are cutting major areas instead.

The Reagan "cap" on medicaid could prove much more costly than it appears, the governors warn. reagan added 5 percent to the Carter budget request for medicaid for 1981 and called that the cap for 1982. But for several years, the original budget estimates for medicaid have proved too low, and more funding had to be approved in spring supplemental action.

Other state worries: that Reagan's proposed CETA cuts will leave high-unemployment states with too little federal jobs aid, and that cutbacks in loan programs for farm and rural services will fall to the states to make up.