Reagan Budget Would Cut Both Ways in California

California would be the major beneficiary of the military buildup proposed in the Reagan Administration’s fiscal 1986 budget, but critics charged Wednesday that the windfall would not protect the state from the effects of dramatic cuts proposed for social programs.

Children, the poor, the elderly and the disabled would be hurt the worst, contended Rep. George Miller (D-Martinez), a member of the House Budget Committee. “Lockheed doesn’t have an application window for those people. . . . (Defense spending) is not a jobs program,” Miller said.

About $5 billion of the anticipated $34 billion in additional Pentagon spending is expected to find its way to California defense firms. In comparison, the state would lose about half that amount in social spending cuts if historical trends hold true, according to estimates by the staff of the California Democratic congressional delegation.

The cutbacks would be felt in a wide array of government programs, ranging from Medicaid and child nutrition to sewer grants and mass transit. Moreover, they present California cities, counties and school districts with a special problem: finding revenue to fill budget gaps after the passage of Proposition 13, which greatly restricted local governments’ ability to raise the property taxes that had been the mainstay of their budgets.

Lawmakers and representatives of California agencies, who have spent the last few days poring over the budget proposed Monday by the Administration, agree that cuts are inevitable if the gaping federal budget deficit is to be closed.

“If we are going to work our way out of the (deficit), no one is going to be untouched,” said Rep. William M. Thomas, a Bakersfield Republican. But, he noted: “You can’t get there if everybody is looking after No. 1.”

In the 6 1/2 years since Proposition 13 passed, many local governments have relied on general revenue sharing--the no-strings-attached federal grants for a range of uses, from providing meals to the elderly to buying fire trucks.

The President is proposing to do away with revenue sharing, an extremely popular form of assistance, because there are no restrictions on how the money can be used. This year, the program is expected to bring California about $508.9 million in grants out of a total $4.57 billion provided nationwide this year, the state’s Democratic congressional staff estimates.

Los Angeles County alone has been receiving about $83 million a year in revenue sharing and has devoted the money almost entirely to health services. The loss of those funds would be “a disaster,” an official in the county’s Washington office declared.

“The money goes a long way to make up the deficits in our hospitals and clinics for taking care of medical indigents, many of whom are illegal aliens,” said the official, who asked not to be named. He predicted that the county would join national organizations of city and county officials to “fight tooth and nail to keep revenue sharing.”

The City of Los Angeles’ revenue-sharing loss would be about $54 million a year--funds that have been used for such purposes as safety, street lights, libraries and parks. The city also would lose a federal subsidy for its bus system, adding to existing pressure for an increase in bus fares next year, said Jim Seeley, the city’s legislative representative.

In some areas, the Administration budget would force the abandonment of grand projects that California cities and agencies had hoped to accomplish with federal dollars. A key loss for Los Angeles would be construction money that had been expected to fund more than half the initial phase of the proposed Metrorail subway system.

“There will be no further funding for Los Angeles,” said Ralph Stanley, administrator of the Urban Mass Transit Authority, which had provided $112 million in fiscal 1984 to complete the subway design and engineering phase. The agency has not yet handed over the $117 million that had been earmarked in this year’s budget.

Halt Park Acquisition

The government also plans to halt new park land acquisition during the next fiscal year, ending its purchases of acreage for such popular areas as the Santa Monica Mountains National Recreational Area.

The budget also proposes an end to subsidies guaranteeing air service for 135 small communities, including Blythe, Crescent City, Merced, Modesto, Santa Rosa, Stockton and Visalia. Transportation Secretary Elizabeth Hanford Dole asserted that the commuter airline business “has matured and adjusted to deregulation,” making continued federal assistance unnecessary.

In some areas, such as agriculture, California would not be hit as hard as other parts of the nation, where farmers predict that cutbacks in price-support programs would put them out of business. Many of California’s most important crops are not eligible for the program; thus, some farmers in the state say they stand to benefit more from reducing the deficit than from keeping government subsidies.

“Our feeling generally is that if the economy is to improve, we have to move away from the government farm program,” said Jack King, a spokesman for the California Farm Bureau.

But in other areas, budget cutbacks will create special problems for the state. California, which is more dependent than any other state on migrant and illegal labor, would lose $49 million in federal funds for the education of migrant workers’ children and $30 million in money for schooling immigrants.

Moreover, the cuts would come at a time when the financial difficulty of educating immigrants and migrants is “growing, rather than diminishing,” said Stuart E. Gothold, Los Angeles County superintendent of schools.

“If the cuts are approved,” he said, “I think we are going to lose some of the gains we’ve made.”

The Impact in California These figures, from the staff of the state’s Democratic Congressional delegation, show how key programs in California would be affected by the President’s budget proposal. All figures are in thousands of dollars. PROGRAMS ELIMINATED

Approved in Proposed 1984-85 for 1985-86 Work Incentive Program (Jobs program for welfare beneficiaries) $33,948 0 Economic Development Administration (Grants to cities for public works) 1,972 0 General Revenue Sharing (No-strings-attached aid to cities) 508,880 0 Historic Preservation 694 0 -100% Community Services Bloc Grants (Subsidies for Meals on Wheels, services) 30,582 0 Mass Transit System Construction (Grants for new systems such as Metrorail) 185,000 0 Small Business Administration (Direct and guaranteed loans) 409,000 0 Export/Import Bank (Loans to exporters and buyers to facilitate exports) 545,000 0 National Direct Student Loans 17,436 0

Change Work Incentive Program (Jobs program for welfare beneficiaries) -100% Economic Development Administration (Grants to cities for public works) -100% General Revenue Sharing (No-strings-attached aid to cities) -100% Historic Preservation 694 0 Community Services Bloc Grants (Subsidies for Meals on Wheels, services) -100% Mass Transit System Construction (Grants for new systems such as Metrorail) *-100% Small Business Administration (Direct and guaranteed loans) -100% Export/Import Bank (Loans to exporters and buyers to facilitate exports) -100% National Direct Student Loans -100%

PROGRAMS CUT

Approved in Proposed 1984-85 for 1985-86 Low-Income Energy Assistance (Subsidies for heating bills) $98,258 $58,955 Community Development Bloc Grants (Aid for varied local projects) 378,181 340,363 Medicaid 2,028,068 2,013,710 Mass Transit Operating and Capital Funds (Operating subsidies and equipment) 338,683 152,093 EPA Waste Water Treatment Grants 175,000 171,850 Rural Water and Waste Disposal 3,708 3,170 Child Nutrition 446,500 390,240 Farm Price Supports (cotton, rice, wheat) 637,000 445,900 Agriculture loans 83,520 3,508 Highway Aid 992,860 900,760 Elementary and Secondary Education 1,248,422 1,148,798

Change Low-Income Energy Assistance (Subsidies for heating bills) -40% Community Development Bloc Grants (Aid for varied local projects) -10% Medicaid -3.6% Mass Transit Operating and Capital Funds (Operating subsidies and equipment) -55% EPA Waste Water Treatment Grants -1.8% Rural Water and Waste Disposal -14.5% Child Nutrition -15.8% Farm Price Supports (cotton, rice, wheat) -30% Agriculture loans -95.8% Highway Aid -10% Elementary and Secondary Education -8%

PROGRAMS FROZEN

Approved in 1984-85 Urban Development Action Grants (Aid for projects boosting local economic potential) $17,894 Foster Care 99,429 AFDC Welfare Programs 1,722,735 Nutrition program for needy 128,552 Food Stamps 600,268 Child Support Enforcement (Aid for tracking fathers who fail to make support payments) 97,082

Money Needed to Maintain Program Urban Development Action Grants (Aid for projects boosting local economic potential) $17,952 Foster Care 127,574 AFDC Welfare Programs 2,094,008 Nutrition program for needy 136,000 Food Stamps 698,995 Child Support Enforcement (Aid for tracking fathers who fail to make support payments) 104,000

*Exisiting $65-million obligation for Santa Clara light rail line would be honored