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Bureau of Labor Statistics, U.S. Department of Labor -- preliminary

Mr. CANTOR. In recent years, grants in aid to the States and localities, including revenue sharing, have grown substantially-from $49.8 billion in 1975 to an estimated $88.9 billion in 1980.

This is indicated on table 3 which I have submitted for the record.

Mr. FOUNTAIN. Without objection, a copy of table 3 will be entered in the record at this point.

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Budget of the U.S., Special Analysis, various issues

Mr. CANTOR. But both in relative and real terms the increases have been slight; the share of the Federal budget devoted to State and local aid has declined slightly; and, the modest recent growth in the portion of State and local outlays supported by the Federal Government is primarily the result of the temporary economic stimulus measures enacted in 1976 and 1977. These programs—local public works, temporary employment assistance and antirecession fiscal assistance-provided $9.2 billion in State and local government aid in 1978. In 1979, the total dropped to $5 billion. This year, as the phaseout of these programs proceeds, these stimulus grants will provide only $2.5 billion in aidà 2-year drop of $6.7 billion in annual aid, roughly equivalent to the loss that would occur if revenue sharing were eliminated. Moreover, since the 1976 legislation capped revenue sharing payments at $6.8 billion per year, the general revenue sharing component of the total grants has shrunk substantially—from approximately 13 percent of the total in 1975 to less than 8 percent in 1980. By 1983 according to the administration's January budget projections, assuming renewal at current levels, the GRS proportion will fall to only 6 percent of total grants.

Another factor which must be noted in considering the nature and amount of the Federal Government's aid to the States and localities is the fact that much of the increase in recent years has been for grants to States for payments to individuals. Most such grants require State or local matching payments and the largest and fastest growing programs in this area-medicaid and public assistance--are programs which are addressed to national issues and problems. In our view they should be paid for by the Federal Government directly and not be considered as programs geared to aiding States and localities in performing their own functions and responsibilities. Grants for payments to individuals increased from $17.7 billion in 1975 to an estimated $34.2 billion in 1980—or by 97 percent—and these grants now account for 38.5 percent of the total aid. The balance, an estimated $57.7 billion for 1980, is available to underpin State and local activities and investments in their more traditional functions as providers of police and fire protection, education, roads, public transportation, water and sewer, and the like. This information appears in table 3.

Mr. Chairman, we would also like to emphasize our strong opposition to the efforts of the administration and others to reduce or eliminate the one-third share of the revenue sharing entitlement that goes to the States. Such cutbacks would simply lead the States to make up the lost funds by cutting back on their own programs of aid to local communities. The effect would be most severe in States and communities with the greatest fiscal problems and cutting out the State share could trigger the reversal of a long-term positive trend toward greater State responsiveness to the needs of local communities.

Since the early 1960's, for example, State direct aid to local governments increased from a rate of some $9-$10 billion per year to $66 billion in 1978. In 1960 such aid accounted for less than 30 percent of State expenditures. In 1978 such aids accounted for over one-third of a much higher total.

This trend is most dramatically illustrated by the sharp increase in State contributions to the financing of schools and public welfare and in the fact that in 1978 in all but four States, the local government played a smaller financial role than the State. This is illustrated in table 5 which I have submitted for the record.

Mr. FOUNTAIN. Without objection, a copy of table 5 will be inserted in the record at this point.

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