Local leaders far from sold on Reagan block grants

The launch vehicle for President Reagan's "new federalism" is sputtering on Capitol Hill, as mayors and governors squabble over who will control reduced funds from Washington.

the key issue is "block grants" -- the administration's proposal to consolidate 83 education, health, and social-service programs into six broad categories of federal aid. What concerns officials around the United States is that the overall sum will be reduced from $14 billion to $11 billion in 1982 and much more in future years.

What particularly worries local leaders is that most of the money now will be funneled through the states. Mayors and governors thus are pitted against one another in dividing up a reduced pie. The controversy is reflected in Congress, where lawmakers -- including key Republicans -- have been doing some heavy tinkering and outright rejecting of Reagan's block grant proposals.

The White House finds this especially worrisome since it has been counting on its block grant proposals as the key to softening the blow of reduced federal spending. Administration official say that such grants in place of more numerous categorial programs can reduce administrative overhead by at least 10 percent and the National Governors' Association agrees.

But this apparently is not enough to convince many outside the administration of their worthiness. Part of the problem is the perception that states -- particularly those dominated by rural interests -- will not adequately respond to the needs of urban areas.

"Too many states have a benign attitude toward central cities, and until they change, it is inappropriate to funnel money to states without minimum requirements. This is not a partisan issue. It is a fundamental issue of intergovernmental relations," says Mayor Richard Carver of Peoria, III. Mr. Carver, a Republican, led his party's local officials in support of the Reagan candidacy.

As Seattle Mayor Charles Royer points out, President Reagan "received his education in federalism during eight years at the head of perhaps the most sophisticated state government in the country. . . . For better or worse, the rest of the country is not California."

Noting that most state capitals are in smaller cities and some state legislatures meet infrequently, Mayor Royer in a recent Washington Star guest column worried that "many of our state capitals are not ready for the political and fiscal hand grenade being tossed to them by the President."

Others agree with Georgia Gov. George Busbee that state administrative and management capacities have been vastly improved in recent years. He also notes that states already have taken over most local welfare and education costs and provided much in the way of property tax relief.

"State legislatures have long since been reapportioned, state work forces professionalized, state revenue-raising capacity expanded, state administration and planning systems modernized," he says in response to Mayor Royer. "The states. . . now represent the best hope for the nature of our communities great and small."

Mayors are not the only ones concerned about the effects of block grants.

A coalition of 63 national organizations including the League of Women Voters , the National Urban League, the Children's Foundation, and the American Association of Retired Persons -- recently voiced their opposition to a proposal that would mean "less assistance to those in genuine need." They also noted a General Accounting Office report suggesting that block grants actually could increase administrative costs as states form new bureaucracles.

On Capitol Hill, block grants are being held up in the Republican-dominated Senate as well as the Democratic House. Compromises may emerge later this summer, but so far the Reagan administration's federalism scorecard shows more losses than wins.