Reinventing Federalism

WASHINGTON. — Washington. -- The Clinton administration's National Performance Review, by a team working under Vice President Gore, aims not just to "reinvent" the federal government but federal-state-local relations too.

And despite the political compromises built into it -- so as not to ruffle the feathers of a prerogative-conscious Congress -- the report provides state and local governments with their best opportunity in a generation to reform the way Washington handles, mishandles, funds and regulates them.


One of the most onerous burdens on the states and localities, for example, is trying to make sense of the mishmash of some 600 federal grant-in-aid programs adopted over the years by different Congresses with different priorities and pet constituencies.

Many of the programs are tiny. Still, thousands of government workers spend millions of hours yearly writing regulations, checking applications, monitoring each other, diverting into an administrative black hole a big chunk of the cash originally intended to alleviate urban poverty, assist students or protect the environment.


The Gore report would combine at least 55 of Washington's grant programs into six "flexible" grants in such areas as water quality, defense conversion and environmental management.

The report authors would have preferred combining 200 to 300 programs. But the 55 is a start.

Far more exciting, Gore & Co. propose allowing state and local governments to consolidate grants themselves.

States, cities and counties will have the power to mix funds from different programs, simply by notifying Washington of what they're doing. They won't even have to ask for permission unless one of the grants is over $10 million.

The local governments, in combining the grants, will even have the power to select one agency's set of rules and regulations in spending the money, and to ignore the others.

When a city is struggling to assist the homeless, for example, it will now be able to capture federal funds earmarked not only for the homeless, but monies appropriated for housing, transportation, job training, child care, health, mental health, alcohol and drug abuse. And then it can keep just one set of books, and adhere to one set of rules.

The concept sounds simple, but in today's intergovernmental world, it's revolutionary. "When you simply merge categorical grants," says David Osborne, author of "Reinventing Government" and head of the team that wrote the Gore report, "Congress in time imposes more rules and 'recategorizes' them." The "bottom-up" consolidation method resolves that problem.

If Congress buys the formula, it will be a rare admission by Washington of its own fallibility, and need for partners. State and local managers have been absolutely bugged by the hundreds of mandates Washington imposes on them -- facilities for the handicapped, clean air, fair housing -- usually without any extra XTC funding to carry them out. So the report says the president should direct government regulation writers to go easy on new rules, and set up a forum in which federal and state-local officials could thrash out mandate problems.


The solution, again, isn't perfect but a worthwhile start. So is the idea to set up a Cabinet-level "Enterprise Board" to oversee grass-roots initiatives in the nine "empowerment zones" and 95 "enterprise communities" passed as part of the Clinton economic plan. Getting federal agencies to work together is always tough, but without direction from the top, they rarely try at all.

Likewise, for public housing, the report says the Department of Housing and Urban Development has to break the "hierarchical, rule-bound, bureaucratic" ways its regional offices try to micromanage local housing authorities.

Instead, it should shift to results measurement. The best-performing local housing authorities will be relieved of virtually all federal regulations, and even be allowed to negotiate with non-profit community groups to get housing built and operational.

On job placement, training and work-force development, the report suggests breaking the monopoly of federal and state employment services.

Instead, funding under some 150 federal labor and training programs would flow -- based exclusively on performance -- to any career centers, public or private, that can get a charter to operate.

Mr. Osborne's team -- a group of policy wonks including such word- and idea-craftsmen as Roger Vaughan, Janet Topolsky, Larry Haas, Kathleen Sylvester and Stephen Ruud -- has written a government report that President Clinton calls "fun to read."


The bad news is that the administration, as yet, has no battle plan to get all this passed into law.

The good news is that the states, counties and cities, for the first time in years, have a tangible set of reforms to fight for.

Neal R. Peirce writes a column on state and urban affairs.