Governors, White House Open Federal Aid Talks

Leaders of the National Governors’ Assn. opened talks with the White House on Saturday to solicit federal help for state governments facing their most severe financial squeeze since the 1982 recession. Progress, however, was slow.

Topping the governors’ agenda was a plan advanced by President Bush in his State of the Union address last week to “turn over” to the states perhaps $15 billion in current federal programs and the funds to pay for them. While the proposal would not give the states any extra money, it would in theory give them more flexibility in spending the money they already have.

But White House officials divulged few details. “They are still building the car as they head down the road,” said Booth Gardner, Democratic governor of Washington and chairman of the national association, which opens its annual winter meeting here today.

Gardner and Republican Gov. John Ashcroft of Missouri, vice chairman of the association, met with White House Chief of Staff John H. Sununu, Budget Director Richard G. Darman and domestic policy chief Roger Porter.

White House officials said the President would provide examples of specific programs that might be included in his turnover proposal in the 1992 federal budget to be released Monday. But they stressed that the features of the plan were still evolving, including the total amount of money that would be involved.

“We were told that the number was absolutely and totally flexible--it might be 5 (billion dollars), it might be 15, it might be 20, it could be 50,” Gardner said. “It was told to us: ‘Don’t get locked in on any specific numbers. It’s a concept we are talking about.’ ”

Whatever shape Bush’s plan ultimately takes, the President’s aides pledged that it would not resemble Ronald Reagan’s ill-fated “New Federalism” program, which stirred opposition from governors because it sought to transfer to them the full burden of welfare programs.

“John (Ashcroft) and I asked that it not be called New Federalism,” Gardner said. “They smiled and said absolutely, that this is a whole different concept.”

The governors hope to learn more about the Bush plan from Sununu when he addresses a closed session of the association today, and from the President himself, who has scheduled a session with the governors Monday at the White House.

Meanwhile, the governors are promoting their own multifaceted proposal for short-term and long-term assistance from Washington. Their recommendations include making recent expansions of the Medicaid program optional instead of mandatory, providing emergency funding to help states serve the growing number of jobless and preserving the deductibility of state and local taxes and the tax-exempt status of municipal bonds.

The states’ current financial difficulties reflect in part the shifting of governmental responsibilities from Washington to the state and local level, as well as increasing pressure from the courts for greater spending in such areas as education and prisons.

As long as the economy flourished, the states managed to keep pace with these demands. But the current slump has left as many as 30 states facing budget deficits, unless they move quickly to cut spending or raise revenues.

Eleven states, including California, face revenue shortfalls in excess of 5%, according to a staff study by the association. The study also predicts that recovery from the current recession will be slow, because state budget balances are much lower than they were at the onset of the 1982 recession.