States' rites:

...The Congressional Budget Office has estimated that industrial bonds, mortgage bonds, and "private purpose" bonds - widely used by state and local governments - will cost the federal treasury $13 billion over the next five years...

...Reagan's vision of reordering the relationship between the states and the federal government...

...Of course, much of this fiscal portrait has been shaped by the recession, causing repeated shortfalls in every state's revenue projections within the last three years...

...The inherent disparity in revenue capacity among the states, with some having large populations and others, extensive mineral or similar resources, is exacerbated by economic competition...

...But with the welfare changes that have already occurred, the severe cutbacks, and the devolution of power to the states - all consequences of the 1981 budget act - Mr...

...Michigan budget analyst Diane C. Emling has observed that tax cuts, subsidies, abatements, and other incentives to induce the establishment of businesses, to foster a state "industrial policy," and to attract the middle class have become the operating policy of many statehouses...

...If you will recall, when asked how he proposed to deal with the status of the poor, he responded that citizens have a right "to vote with their feet" by moving...

...Reagan's New Federalism accepts - even welcomes - state differences in welfare support as an appropriate policy basis...

...The second turning point was the passage of California's Proposition 13 in 1978...

...Nixon, and Gerald Ford as well, proposed block grants to both states and local governments - in fact, mostly to the latter...

...Mr...

...In FY 1982, very few were inclined to do so...

...A full third of the $36 billion in fiscal 1982 federal reductions came directly from that thirteen percent of the budget providing grants to states and localities...

...Nixon's phrasing seems to have provided a somewhat worn label for Mr...

...Near the end of the states' fiscal year, July 1, the National Governors' Association chairman, Utah Gov...

...Although the ostensible purpose of the 1981 cuts was to provide more disposable income for the states to tap, the 1982 federal tax increases have severely diluted the possible impact of the cuts (the 1982 measure also put some clamps on the ability of state and local governments to aid businesses by covering some of their costs with tax-exempt industrial revenue bonds...

...By changing the rules of programs, not just funding amounts, the 1981 Omnibus Budget Reconciliation Act has fundamentally altered welfare programs to emphasize work and workfare...

...s JEREMIAH BARUCH (Jeremiah Baruch is the pseudonym of a Washington writer with position in government...

...This view is reenforced by a state survey of Reagan's FY 1982 program implementation, conducted by the Center for Law and Social Policy...

...and (3) the reform of the federal role in welfare...

...Lyndon Johnson, "Creative Federalism...

...but all agreed that lack of funds was the crucial factor to date: "The ultimate question is whether any government - state, local, or federal - is willing to put money into human services...

...A Princeton University study on the effect of Reagan's federal budget changes on state and local governments, led by Richard Nathan and Fred Doolittle, reveals that although the full impact of the block grants has yet to be seen, the cost appears to fall on the poor - particularly the working poor...

...taxes have been increased in all but five states and two of those may yet do so this year...

...Jimmy Carter, "New Partnership...

...but others under consideration are taxes on gasoline, corporate income, cigarettes and alcoholic beverages, and severance taxes...

...Survey respondents stated that it was of little import to the daily lives of the poor whether the programs were state or federally run...

...Mr...

...This is becoming increasingly apparent as the full implications of the Omnibus Budget Reconciliation Act of 1981 begin to fall upon states already burdened with the blessings of Reagan's 1981 tax cuts...

...many are in deficit, most are barely getting by...

...Well, at least power and responsibility have flowed back to the states - but not the funds...

...Obviously, legislation that would prevent these losses to the federal till will simultaneously make it harder for local governments to raise money through bonds or taxes...

...Richard Nixon, "New Federalism...

...At the same time, she points out, under the premise that "high benefit" centers attract the poor, states are developing protectionist attitudes especially poignant in those older industrial states that used to take pride in their humanitarian treatment of the poor...

...George Deukmejian...

...and 37 states have passed tax increases...

...Reagan's New Federalism also contrasts with the older version in that Mr...

...Here Reagan's approach to federalism differed significantly from that of President Nixon, even beyond offering cuts to the states rather than sweetening their appetite for responsibility with more money, as Nixon had proposed...

...Groups lobbying Congress and the administration have now adopted the tactics that their state counterparts have followed for several years...

...The administration's possible further closing of revenue sources comes at a time when most possible tax options have been considered by the states, with the sales tax leading the parade (either by raising the rate or broadening the base) and the personal income tax close behind...

...Fifty-four categorical programs, many of which provided monies directly to localities and non-profit organizations, were combined into nine "block grants" and given to the states to administer...

...Fourteen years ago, when President Richard Nixon advanced his New Federalism in August 1969, he certainly sounded like our present leader...

...Now that the 1984 fiscal year has begun, a state survey reveals that in order to balance their budgets forty-one states have had spending cuts (this on top of cutbacks in at least half the states in FY 1982...

...Reagan's federal 1981 tax cuts, ironically labeled the Economic Recovery Tax Act, have been estimated by the state legislators to reduce state revenue receipts by nearly $5 billion by 1986...

...With all states looking to their neighbors to seduce job creating industry and dump the financially burdensome poor, a downward spiral may be generated among the states until Mr Reagan's New Federalism looks like a very old Federalism...

...Although the programs transferred to the states were cut by twenty-five percent under the two preceding GOP presidents, the full impact was postponed until now because of double funding during the transition from categorical programs to block grants and because of carry-over funds from previous years...

...The nation's states had ended their 1982 fiscal year facing the "worst fiscal crises since [the] Depression," according to the National Conference of State Legislatures...

...The conduct of domestic public policy was being changed on the federal level as well, with the advent of the Reagan administration's budget buzz saw...

...The 1981 Omnibus Budget Reconciliation Act also had a second major consequence - decentralization of power to the states...

...With the onslaught of the recession, Reagan budget cuts could hardly have come at a worse time for the states' fiscal status...

...It discovered that a significant number of female-headed working poor households lost not only AFDC, but also Medicaid, food stamps, and childcare benefits...

...Reagan's devolution of power has gone only to the states - not to localities...

...There wasn't a statehouse that did not feel the repercussions of this movement-resulting in state spending cuts and reduced services, and in a number of responsibilities being returned to the localities notwithstanding their own retrenchments...

...namely, they have been successful if they have prevented major cuts in their programs rather than looking to any growth...

...California's problems have been repeated in most states - but with less flair...

...OMB cites state and local tax deductibility as costing $28.8 billion in fiscal 1983 alone...

...2) the devolution of power from Washington to the states...

...Apparently they have not seen the recent studies demonstrating the inherent capacity of the 1981 budget act to advance three main elements of Ronald Reagan's New Federalism: (1) the reduction of the federal government's involvement in domestic affairs and spending...

...But Ronald Reagan had something else besides a retreaded label - he had the Omnibus Budget Reconciliation Act of 1981...

...and Ronald Reagan (once again),'' New Federalism...

...It may be gone all right, but only because Reagan has substantially fulfilled Nixon's (and much of his own) goal of a New Federalism...

...Many press accounts have dismissed Reagan's New Federalism as "bogged down," "dead in the water," or suffering "total oblivion...

...This third major change arising from the 1981 Act, as noted by the study, constitutes a more profound shift than many have realized...

...Some even felt that a good state-run program might be more responsive...

...The administration has also targeted the tax savings created by the leasing arrangements of the 1986 accelerated cost recovery system which allows state and local governments to sell public facilities to businesses and then to lease them back (estimated by some to involve $2 trillion in property and equipment...

...This survey found that the Omnibus Budget Reconciliation Act imposed AFDC (Aid to Families with Dependent Children) eligibility restrictions which largely affected working poor women...

...Moreover, a large portion of the additional $24 billion cuts had reduced transfer payments to individuals - payments which the states were called upon to replace...

...Nixon claimed his proposals "represent the first major reversal of the trend toward ever more centralization of government in Washington, D.C...

...Concern for the poor may again have to fall behind, as it has before in our history, to demonstrate anew that the needs of the nation's poor exceed the responsive capacity of private charity, and of towns and cities, of counties, and yes, even of the States...

...It has prompted Richard Nathan to say that the 1981 Omnibus Budget Reconciliation Act "was as important a single piece of social legislation as the 1935 Social Security Act in that it marked a turning away from the national government's building up of programs to aid the poor...

...But hasn't Reagan's "new" New Federalism gone the way of the "old" into the dusty federalism files of previous presidential phrasemakers...

...Washington report STATES' RITES THE NEW FEDERALISM VIA BUDGET CUTS Every president has had a theme, scheme, or dream to cope with the conflicts between the states and the federal government: Teddy Roosevelt had "New Nationalism...

...Scott M. Matheson, reported: "The states have absolutely used up their traditional surpluses...

...And now the states' governors and budget officers are calling the current state fiscal condition "the bleakest ever...

...40 states have instituted or continued hiring freezes...

...Reagan will not have to attempt to reconstruct a national welfare policy (as Nixon did in his family assistance plan...

...Moreover, in search for ways to reduce the nation's incredible deficit without a tax increase, the administration is pushing hard for measures which Congress is seriously considering that would close other revenue doors for the states...

...Some of these consequences have caught recent national attention - just take a look at the recent gridlock in the California legislature's budget snarl with Gov...

...A major factor in last year's highly publicized breakdown in New Federalism negotiations with state and local groups was Reagan's refusal to accept federal responsibility for welfare...

...Nixon held that welfare should be a national responsibility...

...After . . . power flowing from the people and the states to Washington, it is time for a New Federalism in which power, funds, and responsibility will flow from Washington to the states and to the people...

...22 states had to lay off workers...

...The disastrous fiscal consequences of the 1981 Omnibus Budget Reconciliation Act for the states were not unforeseen...

...In December 1981, Merrill Lynch stated that "the planned Reagan administration cutbacks in federal expenditures bear the greatest challenge to the credit standings of certain state/local governments and the market for tax-exempt securities since the Great Depression.'' President Reagan's budget tax reductions are the culmination of a trend that has been developing since the mid-1970s, the first landmark being the New York City fiscal crisis, which had a sobering impact on cities' spending across the country...