Evolving Federalism: The Texas Response to Reagan's Block Grants, PRP 52
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The Sixty-Seventh Texas Legislature adopted a two-year state budget without knowing how much federal money the state would receive once Congress disposed of President Reagan's block grant and budget cut proposals. The Sixty- Eighth Legislature will face similar uncertainty in setting Texas's '83-'85 budget, due partly to incoherent federal policies and partly to rapidly changing economic and demographic conditions in the state. Texas survived the first round of the Reagan budget cuts without making any significant changes in state and local government operations. However, even a quick analysis of events shows that the state's good fortune was accidental; it was not a well-planned and coordinated response to Reagan's "new" federalism. More importantly, the state and its local governments in Texas cannot withstand large shifts in intergovernmental fiscal responsibilities without making major changes in constitutional and statutory provisions which unduly restrict them in planning and managing their fiscal affairs. This report reviews the response of Texas to Reagan's federalism, the "newest" period in a predictable pattern of shifts in intergovernmental relations. It places the Reagan proposals in a historical context; outlines Congress' actions on his fiscal year 1982 and 1983 federal budget proposals; and details the reactions of several state and local agencies to absorb cuts in federally funded programs. Finally , it analyzes the constitutional and statutory provisions restricting state and local government fiscal operations and recommends actions in five areas which would vastly improve the ability of Texas to keep its economic health.