Some municipal officials from around the country are in high dudgeon about a proposal to change the way Washington disperses money to states and cities. If they would please calm down and learn more about the plan they are denouncing, they might not feel so bad. They might even have the foresight to realize that in the long run it will help their communities.
The basic idea is to clarify the roles of federal, state and local governments in domestic assistance programs, cutting the bureaucratic morass that drains tax dollars and local initiative. The Reagan administration tried this several years ago under the label ”New Federalism,” but got chopped down by the same uninformed yelping that greeted this new proposal.
It requires Washington to pay most of the welfare bills now assumed by state and local governments and, in exchange, terminates major federal programs that benefit the population at large. Cities and states would lose federal grants for economic development and transportation, for example, but could replace them with money saved in welfare costs. The aim is for an even exchange between Washington and the 50 states. But states with huge welfare burdens–and Illinois certainly is one of them–are likely to come out ahead.
The concept has another advantage for a state like Illinois. The federal government would not dictate how and where the welfare savings are spent. The death of most federal housing programs has stymied state and city officials charged with providing decent homes for the poor. Under this proposal, that lost housing aid could be replaced. In fact, with the right kind of political pressure, the money could be used to break Chicago`s wall of misery, the giant public housing projects that are the subject of a continuing Tribune series.
Yet Chicago officials were among the angriest complainers when the federal-state swap was discussed at last week`s convention of the National League of Cities. Ronald F. Gibbs, Mayor Washington`s chief lobbyist on Capitol Hill, called it ”devastating.”
It would be devastating to Chicago and other Illinois cities if the state government shoveled its welfare cost savings into pork barrels that benefit only a handful of influential people. The proposal in its present form does not dictate what states can or cannot do with the savings, but that`s key to the philosophy behind this idea: A state, its municipalities and all of its civic and political constituencies will have to work out the spending patterns among themselves. The resulting fights could be vicious and destructive. They could also establish healthy new coalitions that Illinois and the Chicago area long have needed.
It`s possible that the state government would use its windfall to reduce state taxes. In that case, a municipality like Chicago would be free to levy a replacement tax and use the money as it sees fit. The key decisions would be made at the state and local levels; Mommy Washington no longer would give the orders.
This new version of New Federalism is by no means in finished form. It grew out of a top-flight, bipartisan panel formed by the Sloan Foundation to bring some sense and order to the tangled, inefficient, illogical division of federal, state and local fiscal responsibilities. Two panel members, former Gov. Charles Robb of Virginia and Sen. Dan Evans of Washington, drafted the recommendations into a bill introduced in the closing days of the last session of Congress.
The new Congress will have hot debates over many of its provisions. The proposed national welfare standard, the strong work and work-training requirements for welfare aid and the special federal grants to depressed urban areas may be modified. But the underlying principle–freeing states and municipalities to make their own decisions about how and where to spend tax dollars–is sound and should be preserved.
