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Reeling Under Budget Cuts

April 01, 1985

The Reagan Administration's major rationale for proposing the elimination of revenue sharing is that state governments are sitting fat and happy out there with big budget surpluses while the federal budget is sinking in red ink. It is a phony argument because, first, the states are not all that affluent and, second, the states do not get revenue-sharing funds.

Revenue sharing goes to cities and counties, not to states. And 39 of California's 58 counties are in for a double-whammy from the Reagan budget, if its proposals are accepted by Congress. Down in the fine print of the budget is a proposal to change the formula by which the federal government shares its timber sales revenues with counties in which the sales are made and the forests are cut.

During a tour of the state this week, leaders of the County Supervisors Assn. of California acknowledged that revenue sharing is bound to succumb soon to current political moods. But they at least would like to have one more year in which to adjust to the change and attempt to win some new revenue source from the Legislature. California received $510 million in general revenue sharing from Washington this year, of which the counties split $254 million.

Years ago the idea was that revenue sharing would be supplemental money to pay for one-time projects such as street and road improvement, the purchase of computer equipment or the construction of jails or other facilities. But in reality, which includes the passage of Proposition 13,most counties have been forced to fold the revenue-sharing money into their basic budgets. Los Angeles County, for instance, uses all its $81 million for health care. Contra Costa's funds go for welfare, Imperial's for law enforcement, Ventura's for fire fighting.

A one-year grace period for a phase-out of revenue sharing seems reasonable, given the budget adjustments that the counties will have to suffer.

The timber receipts are another matter. The Administration proposes to give counties a 25% share of net receipts after the Forest Service subtracts the cost of building timber roads, reforestation and the costs of conducting the sales, often at prices that subsidize the timber industry. The counties currently get one-fourth the gross income to be used for road construction and maintenance or to support local schools. The idea is to compensate the counties for the effect of the harvesting in their areas.

In this budget year the program provides $238 million to the nation's counties, of which the 39 in California share about $44 million. That would be cut more than 80% under the Administration proposal.

This loss would be relatively insignificant for most of the larger counties, but it would be devastating for some of the state's rural regions where the federal government is a big, non-taxpaying property owner and where unemployment remains high. In Plumas County the timber receipts amount to 60% of the county road budget and 25% of the school budget. Over the past five years the timber income has been the equivalent of 70% of the property-tax revenue collected in Sierra County.

This is an obvious bookkeeping gimmick conjured up by the Office of Management and Budget with minimal effect on the budget deficit--less than half the cost of a single MX missile--and with little thought about the consequences to the localities involved. Congress should put a quick end to the idea.

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