Mayors Unhappy With Bush Plan to Transfer Programs to the States : Financing: Cities fear loss of funds. Governors like the idea of having more flexibility in running projects and distributing federal money.

President Bush ran afoul of mayors Monday with his plan to transfer to the states control of billions of dollars in domestic programs, but he found a receptive audience in the nation’s governors.

Mayors vowed to try to strike changes in the $3.1-billion Community Development Block Grant program from the Administration’s list. The program provides two-thirds of that amount directly to cities without passing through state hands. It is the only remaining major direct urban aid since Congress killed revenue sharing during the Ronald Reagan Administration.

“We think that (transferring the program to state control) would be a huge mistake,” said Mayor Joseph Riley of Charleston, S.C., a Democrat and former president of the U.S. Conference of Mayors. “If ever there is a classic example of ‘if it isn’t broke, don’t fix it,’ it’s certainly the Community Development Block Grants.”

Riley said cities use the money for low-income housing projects, neighborhood renewal and urban services. He said mayors would “very strenuously resist” transferring the program to the states.

Mayor Jerry Abramson of Louisville, Ky., said many state legislatures would spend the grant money in rural and suburban areas, rather than on the urban problems it was designed for.

“The federal government pulled the rug out from under us before,” with cuts in aid to cities, Abramson said. “This would not only pull the rug out, it would remove the house, and we’d be standing in the middle of the field.”

The White House provided governors with few details of its proposal other than a list of more than $20 billion in selected programs that could be transferred to the states.

The Administration asked governors to choose programs worth $15 billion or more from the list and to take full responsibility for running them with money from federal block grants.

The list includes programs to fight drugs, improve waste-water treatment plants, upgrade libraries and administer food stamps and Aid to Families with Dependent Children.

Bush met with nearly all the governors at the White House and said his proposal should not be dismissed as a repeat of the Reagan Administration’s unsuccessful attempt to shift federal responsibilities to the states.

Washington Gov. Booth Gardner, a Democrat and chairman of the National Governors Assn., said the proposal is “something that is very attractive to the states” because it gives them more flexibility in spending.

Bush, in remarks before meeting privately with the governors, predicted that Congress would be reluctant to give up control of programs it appropriates money for.

“I am not naive,” Bush said. “We’re going to have to fight together to get this through the Congress.”

The proposed grants were in five areas: $1.77 billion in education; $2.2 billion in Environmental Protection Agency construction grants; $9.66 billion in welfare, social services and energy assistance to low-income families, $6.9 billion for housing and community development programs and $421 million for law enforcement assistance.

The law enforcement assistance is part of the Administration’s anti-drug efforts. That money is now provided in grants by the Justice Department to the states, and both the federal government and city leaders have complained that states have been slow to apply for the money and to distribute it to local police forces.

The EPA grants are for construction and upgrading of waste-water treatment plants by local governments. Among the education programs identified were money for libraries and so-called impact aid payments, which Congress provides to selected local governments to offset the lost tax base and added expense of big military bases or other installations.

Most of the programs involve money the states are already receiving in one form or another, but governors said they are attracted to the Administration’s promise to give them more flexibility in running the programs or distributing the money.

Gov. John Ashcroft of Missouri, a Republican and vice chairman of the governors’ association, said the changes would save states “about 4 million bureaucrat hours of paperwork.”

Newly elected Ohio Gov. George V. Voinovich, a Republican and former mayor of Cleveland, was less enthusiastic. “I’ve been through this before for 10 years,” he said.

Kansas Gov. Joan Finney, a newly elected Democrat, said that, although the plan sounded good, “In practice, I’m a little skeptical.”