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Cuts In Revenue Sharing

March 10, 1985

THE STATEWIDE EFFECT A key target in proposed federal spending cuts is revenue sharing money, an important source of income to local governments, but only .5% of the U.S. budget. President Reagan has proposed that revenue sharing funds going directly to local governments in California be reduced by 37%, from $2.63 billion to $1.65 billion next year. The U.S. budget proposal also would reduce payments to the state for programs run by the counties by 20%, from $2.54 billion to $2.03 billion. The California League of Cities has compiled this sampling of cuts: DIRECT PAYMENTS TO LOCAL GOVERNMENT

Program % of Proposed Reduction Mass Transit, Discretionary Funds - 55% Highway Aid - 9% Mass Transit, Capital Expenditures - 64% Sewage Treatment, Construction Grants - 2% Rural Water and Sewage Disposal Funds - 15% Community Development Block Grants - 10% Small City Block Grants -100% Historic Preservation -100% Urban Development Action Grant -0.3% General Revenue Sharing -100%

PAYMENTS TO STATE FOR LOCALLY RUN PROGRAMS

Program % of Proposed Reduction Foster Care - 28% Aid to Families with Dependent Children - 20% Food Stamp Aid - 16% Child Support Enforcement - 7% Maternal and Child Health programs - 16%

THE EFFECT IN ORANGE COUNTY More than two years ago, county officials adopted a controversial plan to wean social service organizations from dependence on revenue sharing funds dispensed by county government. Now, fewer than 10 such organizations share about $100,000 out of the county's $14 million in revenue sharing funds. The agencies have been told that this is the last year in which they would receive any assistance. The county, anticipating an end to revenue sharing, earmarked the money for one-time capital projects such as sewers and road improvements so that county government would not be "hooked" on the funds. The county's special service districts, such as those handling water and libraries, do not receive revenue sharing money. However, some of the 26 cities have relied on revenue sharing for items ranging from paramedic salaries to new city halls.

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