Senate Refuses to Revive Revenue Sharing : Ignores Warning That It Will Mean Higher Property, Sales Taxes

The Senate, struggling to agree on a fiscal 1987 budget, blocked an effort Thursday to revive the general revenue-sharing program, which is scheduled to expire this year.

“If the general revenue-sharing program is eliminated, then there will be no other choice than for local governments to increase property and sales taxes,” Sen. Jim Sasser (D-Tenn.) warned. However, other senators argued that the federal government, which is running a deficit of about $180 billion, has no spare revenues to share.

The Senate voted 54 to 41 to table--and in effect kill--the amendment by Sens. Daniel Patrick Moynihan (D-N.Y.) and John Heinz (R-Pa.) to maintain revenue sharing for the next three years at $4.6 billion a year.

Both California senators, Republican Pete Wilson and Democrat Alan Cranston, voted with the majority to shelve the amendment.

‘Consummate Partnership’

The Senate Budget Committee’s spending plan for fiscal 1987 holds revenue-sharing funds to $1.8 billion and calls for the program to end at midyear, but backers of the amendment argued that the program should be preserved longer to continue what Sasser called “the consummate federal-state partnership.”

Unlike other federal grants to local governments, revenue-sharing funds come earmarked for no particular purpose, which means that local officials may decide for themselves how to use them.

Orange County has been preparing for the loss of revenue-sharing funds.

Jim Hayes in the Community Services Agency of Orange County, said the county is receiving about $10 million in federal revenue-sharing funds for the fiscal year that ends June 30 and adding it to about $4 million in interest built up on previous funds.

To Draw on Funds

Hayes said that between July and September, the county expects to receive about $1.45 million in new money, well below the more than $2 million expected before budget cuts that were imposed earlier this year.

When the program ends, the county will have $25.4 million in revenue-sharing funds received but unspent, Hayes said, $16.7 million of which has not been earmarked for specific projects.

“When we get into budget hearings (in August), we’ll probably be drawing on that $16.7 million for capital projects and other things needed to balance the budget,” he said.

Hayes said last year the county used more than $27 million in revenue-sharing funds to help balance the county’s more than $1-billion budget. This year, there will only be the $16.7 million available for the same purpose, he said.

“We’re definitely going to feel the end of revenue sharing,” he said.

Last year the Board of Supervisors unanimously proclaimed support for Reagan’s proposal to end federal revenue sharing.

“The participation and support, even the sacrifice of every agency in government throughout the United States, I believe, is needed in order to address what could be a national disaster, if it is not already,” Supervisor Harriett Wieder said, referring to the federal deficit.

Two weeks before making the statement, Wieder had argued that the program should be retained. She changed her mind after attending a National Assn. of Counties meeting in Washington that was addressed by Reagan and U.S. Sen. Robert Dole.

The Republican-led Senate also set aside efforts to restore funds to several health and nutrition programs as it continued its drive to produce a budget that will reduce next year’s projected deficit by almost $40 billion, to $144 billion. Unless Congress meets that goal, the new Gramm-Rudman law will force automatic spending cuts in an array of popular domestic programs, just weeks before this fall’s congressional elections.

The law also adds new discipline to this year’s budget debate because it raises procedural hurdles that make it difficult for senators to offer amendments that add to the deficit. For every move to increase spending, they generally must find compensating spending cuts or allow for new taxes.

Senate Deeply Divided

Although it voted Thursday to hold the line on several programs that have strong political support, the Senate remains deeply divided over how to reach its deficit-reduction goal. Clouding the outlook was renewed talk of oil taxes, which President Reagan has promised to veto.

The Budget Committee’s proposed spending package has drawn criticism from many Republicans because it would include $18.4 billion in new taxes and would cut $25 billion from Reagan’s defense spending request. Moreover, the Senate voted Wednesday to add $300 million for additional spending on education.

“I don’t think the (committee’s) budget resolution . . . has any chance of passing,” Sen. Warren B. Rudman (R-N.H.) said.