Magazine article Management Review

Fed to States: Do More with Less

Magazine article Management Review

Fed to States: Do More with Less

Article excerpt

Privately, state and local government officials say that they are sorry it took the riots and senseless killing in Los Angeles after the verdict in the Rodney King trial to get Washington to realize that the country is in the middle of an urban crisis. But the violence was really more a matter of when and where, not if, it was going to happen.

For the past 10 years, big city mayors and state governors have complained that they are expected to deliver an increasing array of social, economic and health services while Washington cuts federal aid to local government. Now state officials say that without immediate, major, longterm help from Congress and the White House, the troubles in L.A. just may be a taste of a simmering inner-city frustration, which could explode in other cities if something is not done soon. As Baltimore Mayor Kurt Schmoke told the Senate last May, just because the initial violence subsided quickly in Los Angeles, "nobody should think it's over."

The California riots focused attention not only on the nation's cities, but also on the delicate question of the state of race relations in the country and the growing gap between the nation's urban underclass and the suburban middle class--both frustrated by the realities of the current recession. How President Bush and Congress respond to these issues, and whether Washington has the political will and imagination to seek new--and possibly expensive-- solutions to these problems in a time of increasing budget deficits and an uncertain economy could have a major impact on both the November elections and the course of national domestic and economic policy for years to come.

Immediately after Los Angeles burst into flames, White House spokesperson Marlin Fitzwater tried to tie the riot to "the destructive forces of the social welfare programs of the '60s and '70s that did not work." While many question how effective these programs have been at solving (perhaps even institutionalizing) urban problems, local government and welfare experts say that is not the whole picture. Besides misdirected efforts, the overall lack of attention to inner city needs in recent years, combined with cutbacks in federal funding and new Washington-imposed social mandates, also are to blame.

"A lot of programs of importance to urban areas were cut substantially over the past 12 years, so I don't understand how the White House can say they were solely at fault," says Helen Ladd, a public policy professor at Duke University. According to Ladd, between 1980 and 1988, federal assistance to urban local government in current dollars was cut by haft. "Adjust for inflation and it's even more," Ladd adds.

As a percentage of total state and local government spending, federal aid peaked at 26 percent of outlays in 1978, reports the Advisory Commission on Intergovernmental Relations. By 1990, only 18 percent of local budgets were subsidized by the national government. During this time, the economy was strong and state governments could make up some of the lost federal city support. The recession, however, put a stop to that. In turn, "local government got a double whammy over the past 12 years that has resulted in a kind of fend-for-yourself federalism when it comes to local issues," says John Shannon of the Urban Institute, a Washington think tank.

Michigan's Republican Governor John Engler contends that Congress and the White House have further "wrecked" local government budgets by expanding or creating new domestic spending and regulatory programs that must be implemented by the state without any fresh financial help from Washington. In 1990, for instance, 20 bills were enacted, adding billions to local budgets for such things as healthcare, the environment and Social Security payments for public employees. The two highest-ticket federally regulated programs are Medicaid payments providing healthcare for low income individuals, which cost local governments $38. …

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