Gross Income Sets Welfare Pay--Justices

In a boost for federal budget-cutting, the Supreme Court today unanimously overturned a ruling that the Reagan Administration had said would add millions of dollars in unwarranted welfare benefits.

The 9-0 decision found that 45,000 California families are receiving an average of $83 more a month than Congress intended when it approved budget cuts in 1981.

In Sacramento, the state Department of Social Services had no immediate comment.

The Administration said that if it had lost the case it could have meant hundreds of millions of dollars more in benefits nationwide.

Justice Harry A. Blackmun, in his opinion for the court, said the U.S. 9th Circuit Court of Appeals erred in 1983 in interpreting the 1981 budget cuts.

The dispute was over the method of calculating the income of recipients of Aid for Families with Dependent Children.

The 9th Circuit said the figure should be based on net income, after deductions for federal, state and local taxes and Social Security.

But the Supreme Court agreed with the Administration that the 1981 budget cuts intended for aid payments to be based on gross income--before the various deductions.

Blackmun said he agreed with the appeals court that the Administration’s view of the 1981 budget cuts “threatens to dissipate any incentive to employment, in some cases perhaps even forcing recipients who wish to work to apportion a smaller sum to family expenses than if they stayed at home.”

But, he added, “it seems plain to us that the risk of creating disincentives to employment . . . did not trouble” Congress when it passed the budget cuts in 1981.