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Frost belt sees its federal funds sink slowly in West; Northern states say Sunbelt corralling benefits from their taxes

By Lucia MouatStaff correspondent of The Christian Science Monitor / September 9, 1981



Chicago

Many Northern and Midwestern government and business leaders are convinced that their region is subsidizing the Sunbelt. They say the frost belt is getting the cold shoulder from Washington -- in the form of less money from the federal till. They argue they should be getting a larger return of federal tax dollars in view of the region's current economic needs.

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Returns to the economically distressed Northern states and cities are pitifully slim, they claim. Regionally, the Midwestern states have been hit hardest. Together, Iowa, Minnesota, Illinois, Wisconsin, Indiana, Ohio, and Michigan sent $30.2 billion more to Washington in taxes in fiscal 1979 than they got back. The Mid-Atlantic states of Delaware, Maryland, Pennsylvania, New York , and New Jersey also had a negative balance of $7.8 billion.

In contrast, the 14 Southern states received $14.4 billion more than they paid out. And the Western states, (excluding California which had a deficit), had an overall surplus of $7.6 billion.

Most of the frost-belt leaders agree that this favoritism was justified when the South was poor and the West undeveloped. But they argue that those days are past and now the older cities of the North -- beset by high unemployment and loss of manufacturing -- are in greater need. They argue that the Reagan administration's budget cuts only accentuate the existing regional gap. And they see few signs of a more equitable spending arrangement for the scheduled increases in defense.Most of the prime contractors and bases are in the South and West.

"The policy made sense when the South didn't have a tax base and the West was undeveloped, but the North can't afford to give that kind of subsidy anymore," says Northeast-Midwest Congressional Coalition spokesman Andrew Lang.

To underscore what they see as a pressing need for an equitable treatment in tax dollars, frost-belt leaders have been banding together in an effort to call attention to the problem whenever they can.

On Capitol Hill, for instance, Rep. Carl D. Pursell (R) of Michigan, a leader of the five-year-old bipartisan Northeast-Midwest Congressional Coalition, says he and his colleagues from the North raise the issue of regional contrasts "constantly."

"We identify it every day in every battle," he insists.

Midwest government and business leaders stress they are only asking for a larger share of federal dollars because of need.

"I don't think any state deserves to get back every dollar it sends to Washington," insists Dr. Douglas Roberts of the Michigan department of management and budget. "The issue is: Should redistribution take place because of a change in need? We do have a need. Our unemployment is high and many more here need welfare and assistance than they did a few years ago."

"We're only asking the federal government not to be punitive," says William H. Bryant, president of the Greater Cleveland Growth Association. "An appallingly large amount of money has been used in the Sunbelt to build water facilities and highways which allow that region to compete more successfully in attracting new business. . . . Just let us keep that money to begin with, with no strings."