Washington Drops the Ball on Immigrant Funds : Budget: California should be compensated for costs of implementing federal mandates.

In the long run, the costs of illegal immigration in California are potentially more damaging to the state’s economy than many of the natural disasters that have hammered the state in recent years.

President Clinton deserves praise for his quick response to the Northridge earthquake. Unfortunately, the new federal budget proposal does not respond to California’s ongoing fiscal disaster. The budget proposal for 1994-95 continues a federal attitude that over the years has denied states’ pleas for funding to carry out federal mandates.

The refusal to include $3.1 billion in direct reimbursement to California for illegal-immigrant services required by federal policies is a major blow to a state struggling to deal with so many problems over which it has so little control.

Already in critical condition as a result of the lingering recession, defense contract cutbacks and a series of natural disasters, California’s projected 1994-95 budget imbalance may be doubled if the federal government fails to meet this obligation.

It is utterly unfair to stick California taxpayers with the perennial burden of paying for health, welfare, education and incarceration costs for more than 1 million

illegal immigrants.

Inaction on this problem will damage California’s economy and its ability to compete. It hurts our ability to recover from the recession by forcing increases in taxes or further reductions in spending for programs necessary to the state’s economic future, such as higher education.

California has lost hundreds of thousands of jobs during a recession that has lasted more than three years, and the state Department of Finance estimates that it will take the taxes paid by 700,000 working Californians just to cover the costs of services for illegal immigrants.

California’s economy cannot absorb several billion dollars year after year to pay the costs of programs that are the responsibility of the federal government. The drain on California’s general fund revenues threatens the quality and availability of essential services for the state’s legal residents.

Congress must act to amend funding into the budget proposal. In addition, California and other states should continue to pursue a lawsuit that would force the federal government to meet its obligations.

The proposed budget also underscores the need for a federal law that would require Washington to fully compensate states for direct costs incurred in compliance with federal mandates. The National Taxpayers Conference, representing taxpayer groups in 33 states, called for such a law last October.

Presidents and governors have reacted quickly to California’s natural disasters--earthquakes, floods and fires. Their actions are appreciated, but they are virtual slam dunks, politically. Their voter ratings ebb and flow with the public perception of conduct when confronted by emergencies.

The Northridge earthquake is deserving of every disaster relief dollar that Congress can appropriate. It is of utmost importance to help the most populous region of the state get back on its feet. Unfortunately, it will make it tougher to persuade Congress to allocate additional dollars to California for federally required services to illegal immigrants.

Instead of viewing this as an insurmountable challenge, it should be seen as a rare opportunity for everyone, from the White House to the statehouse, from the public sector and the private sector, to pursue what is fair and equitable. California’s economic health is at stake.