After the 'Fat' Years

THE budget crunch has eased in most states, just in time to help them shoulder the responsibilities being shifted down from Washington. That, at least, is one spin that can be put on the relatively rosy fiscal analyses put out this week by the Conference of State Legislatures.

The conference found an improv- ing economy is boosting state tax revenues, rebuilding state surpluses, and making tax re- ductions practical as well as popular. The timing may seem just right for newly Republican legislatures and governorships bent on shrinking their level of government, too. Now, presumably, it can be done with a bit less struggle.

In fact, political and financial struggles are about to intensify among states. State officials of both political stripes have a wary eye on Congress as they head into the '96 fiscal year. Their preoccupation: Will the block granting of federal programs be a boon, allowing the promised freedom and experimentation, or a tremendous new burden?

That question is insistent as senators and representatives in Washington wrestle with formulas for distributing the funds now dispersed through Aid to Families with Dependent Children (AFDC), a federal entitlement whose days are numbered. Will the dollars go to states according to the current split, which some view as the best compromise? Or should high-growth, largely Sunbelt states that anticipate larger populations of needy people get a larger share?

If relatively small AFDC generates state skirmishes over federal monies, a program on the scale of Medicaid - if it goes the block-grant route - could generate a war.

What state governments face, despite resurging tax revenues, are agonizing choices - how much of what the federal government sheds will they pick up, particularly concerning the poor? Will disparities in states' social spending grow even wider? And how will enlarged responsibilities in areas like health care and family assistance mesh with increased spending on schools and prisons?

States may be feeling less of a budget pinch right now, but the new fiscal environment being created in Washington assures that the lives of legislators and governors will be no less complicated and demanding in the years ahead.

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