    [Analytical Perspectives]
    [Special Analyses and Presentations]
    [9. Aid to State and Local Governments]
    [From the U.S. Government Printing Office, www.gpo.gov]

      State and local governments have a vital constitutional responsibility
    to provide government services. They have the major role in providing
    domestic public services, such as public education, law enforcement,
    roads, water supply, and sewage treatment. The Federal Government
    contributes to that role both by promoting a healthy economy and by
    providing grants, loans, and tax subsidies to State and local
    governments.
      \1\Federal aid to State and local governments is defined as the
    provision of resources by the Federal Government to support a State or
    local program of governmental service to the public. The three primary
    forms of aid are grants, loans, and tax expenditures.
    ---------------------------------------------------------------------------
      Federal grants help State and local governments finance programs
    covering most areas of domestic public spending, including income
    support, infrastructure, education, and social services. Federal grant
    outlays were $225.0 billion in 1995 and are estimated to increase from
    $236.7 billion in 1996 to $249.3 billion in 1997.
      Grant outlays for payments for individuals, such as Medicaid, are
    estimated to be 63 percent of total grants in 1997; for physical capital
    investment, 16 percent; and for all other purposes, largely education,
    training, and social services, 21 percent.
      States and localities receive Federal loans and guarantees mostly for
    the purpose of rural development. Outlays for direct loan and loan
    guarantee subsidies to State and local governments are estimated to be
    $0.2 billion in both 1996 and 1997. Information on Federal credit
    activities appears in Chapter 8, ``Underwriting Federal Credit and
    Insurance.''
      Federal aid to State and local governments is also provided through
    tax expenditures. Tax expenditures are revenue losses due to
    preferential provisions of the Federal tax laws, such as special
    exclusions, exemptions, deductions, credits, deferrals, or tax rates.
      The two major tax expenditures benefiting State and local governments
    are the deductibility of most non-business State and local taxes, except
    sales and excise taxes, from gross income for Federal income tax
    purposes, and the exclusion of interest on State and local securities
    from Federal taxation. These provisions, on an outlay equivalent basis,
    are estimated to be $75.2 billion in 1996 and $78.3 billion in 1997. A
    detailed discussion of the measurement and definition of tax
    expenditures and a complete list of the amount of specific tax
    expenditures are in Chapter 5, ``Tax Expenditures.'' As discussed in
    that chapter, there are generally interactions among tax expenditure
    provisions, so that the estimates above only approximate the aggregate
    effect of these provisions.
      Tax expenditures that especially aid State and local governments are
    displayed separately at the end of Table 5-4 in that chapter.

                   TABLE 9-1.  FEDERAL GRANT OUTLAYS BY AGENCY
                            (in billions of dollars)
    ------------------------------------------------------------------------
                                                                Estimate
                        Agency                       1995  -----------------
                                                    Actual    1996     1997
    ------------------------------------------------------------------------
    Department of Agriculture....................    16.4     17.6     17.8
    Department of Commerce.......................     0.4      0.6      0.6
    Department of Education......................    16.0     17.8     17.5
    Department of Energy.........................     0.2      0.2      0.2
    Department of Health and Human Services......   126.1    132.3    145.4
    Department of Housing and Urban Development..    22.8     22.0     23.3
    Department of Interior.......................     1.8      1.8      1.9
    Department of Justice........................     1.1      2.0      3.5
    Department of Labor..........................     7.3      7.4      7.4
    Department of Transportation.................    25.8     26.6     25.5
    Department of Treasury.......................     0.4      0.4      0.5
    Environmental Protection Agency..............     2.9      2.8      2.8
    Federal Emergency Management Agency..........     2.0      3.4      3.0
    Welfare allowance............................     0.0     -0.1     -2.1
    Other agencies...............................     1.8      1.8      1.9
                                                  --------------------------
        Total....................................   225.0    236.7    249.3
    ------------------------------------------------------------------------

                            Federal Grants by Agency
      Table 9-1 shows the distribution of grants by agency. Grant outlays
    for the Department of Health and Human Services are estimated to be
    $145.4 billion in 1997, 58 percent of total grants, much more than any
    other agency.
                      HIGHLIGHTS OF THE FEDERAL AID PROGRAM
      Major proposals in this budget affect Federal aid to State and local
    governments and the important relationships between the levels of
    government. Through the use of grants, the Federal government can share
    with State and local governments the cost and, ultimately, the benefits
    of a smarter, healthier, and safer citizenry. The Administration is
    committed to a Federal system that is more efficient and effective and
    to improving the design and administration of Federal grants.
      State and local governments will enjoy an increased level of
    flexibility under the proposals in this Budget. The Administration
    supports a fundamental change in the way the Federal Government finances
    and administers more than six hundred intergovernmental service delivery
    programs--concentrating on the outcomes, rather than regulating the
    inputs. Proposed, bipartisan legislation, the Local Empowerment and
    Flexibility Act, provides State and local governments with the
    opportunity to coordinate better Federal, State, local, and
    [[Page 168]]
    nonprofit funds and services, and to request waivers from Federal laws and
    regulations that impede innovation. Nonetheless, greater responsibility
    accompanies greater flexibility. Performance-based partnerships will
    help ensure that State and local governments will be held accountable
    for not only the results they achieve, but also how these results are
    achieved.
       Medicaid.--Medicaid is the largest grant program and has estimated
    outlays of $105.6 billion in 1997. The President's budget proposes
    reforms to Medicaid that would reduce the rate of growth in Federal
    spending, while preserving the entitlement to health coverage for the
    most vulnerable Americans--children, people with disabilities, and the
    elderly. The plan reduces the growth in Medicaid costs by imposing a
    ``per capita cap'' on Federal Medicaid spending and reducing and
    retargeting Disproportionate Share Hospital payments. Special payments
    to States and facilities to ease the transition into the new Medicaid
    system would be provided. Finally, the plan gives States unprecedented
    flexibility to administer their programs more efficiently. For example,
    the so-called ``Boren Amendment'' is repealed, eliminating Federal
    provider payment requirements for hospitals and nursing homes, and
    States are allowed to mandate enrollment in managed care without having
    to seek Federal waivers. This initiative is estimated to achieve savings
    of $59.0 billion over seven years.
      Health Insurance.--States would receive Federal funds to design and
    administer a program to assist people who lose health coverage if they
    lose their job. This program would help them purchase coverage for up to
    six months. The Administration is requesting $1.5 billion in 1997 for
    this initiative.
      To make insurance more affordable for small businesses, the Federal
    Government would provide grants to States for technical assistance in
    designing and implementing voluntary health insurance purchasing
    cooperatives. These grants would total $25 million per year beginning in
    1997 and continuing through 2001.
      Welfare reform.--The budget seeks to move families from welfare to
    work and to reform a range of related programs. Aid to Families with
    Dependent Children would be replaced with a work-oriented, time-limited
    conditional entitlement for cash assistance. States would have broad
    flexibility in designing programs and could automatically receive
    increased funding during economic downturns. There would be added
    funding for child care and work programs. Child support enforcement
    would be strengthened with new tools for States, and targeting would be
    improved in a number of programs.
      Education.--This budget includes funds to increase the technological
    literacy of children by proposing to help ensure that all students have
    access to technology-rich learning environments and to help charter
    schools meet the specific needs of a community's children. The
    Administration is requesting $250 million in budget authority for 1997
    and $2.0 billion over five years for the Technology Literacy Challenge
    Fund designed to help State and local communities leverage public and
    private sector resources necessary to integrate technology into schools.
    Charter schools would be allowed to customize their curriculum and
    obtain waivers from State and local rules and regulations in exchange
    for increasing student achievements. The Administration is requesting
    $40 million in budget authority for this initiative for 1997.
      Transportation.--Through the use of Federal-aid funds for revolving
    loans and other non-traditional forms of financial assistance, the State
    Infrastructure Banks (SIBs) program would provide States with greater
    flexibility in developing and financing transportation projects. The
    Administration is requesting $250 million in funding to capitalize SIBs
    in 1997.
      Training.--Opportunity Areas for Out-of-School Youth would provide
    grants to selected empowerment zones (EZ), empowerment communities (EC),
    and other communities meeting EZ/EC criteria in order to reduce
    significant unemployment among out-of-school youth through employment
    and training assistance, combined with other Federal assistance. Jobs
    for Residents will link unemployed youth and adults residing in
    empowerment zones and empowerment communities with jobs outside those
    areas. The Administration is requesting $250 million and $50 million,
    respectively, for these proposals.
      Housing.--The Administration proposes to consolidate HUD programs into
    three flexible, performance-based funds. It will award most of the
    funding by formula in the form of a block grant, but focus on clearly
    stated national goals. The use of funds by communities will be judged
    against measures that are consistent with national goals but tailored to
    the situation of each community. To support this reinvention, HUD will
    be transformed into a ``right-side-up, community-first'' agency by
    creating single points of contact for all major localities. HUD will
    move much of its staff out of Washington and into the communities to
    operate as problem-solvers.
      Agriculture.--The budget proposes a new, more flexible program for
    distributing the Department of Agriculture's rural development
    assistance. The Rural Performance Partnership Program would combine
    fourteen existing rural development programs into three funding streams:
    rural utilities, rural community facility infrastructure, and rural
    businesses. USDA's Rural Economic and Community Development State
    Directors would have authority to transfer funding among the three
    funding streams. Using performance measures and incentives, the State
    Directors would work with State and local governments, and other
    community-based organizations to direct funds to each State's highest
    rural economic development priorities. The budget requests $879 million
    in budget authority for this initiative for State and local governments
    and other intermediaries in 1997.
      Environment.--The Administration proposes two performance partnerships
    in the environmental area. One would allow States and tribes to combine
    several
    [[Page 169]]
    categorical grants (i.e., grants that specifically address air
    and water quality, or hazardous waste) and the other proposes to allow
    States to consolidate the clean water and drinking water State revolving
    funds. In addition, the budget requests funds for grants to expand and
    complement the Environmental Protection Agency's ``brownfields''
    initiative to cleanup polluted urban and rural areas.
      Additional information on these and other Federal aid proposals are in
    the 1997 Budget-Supplement volume. The consolidations noted above are
    discussed in Chapters 13 and 14, ``Improving Government Performance''
    and ``Building on Success.'' Chapter 6, ``Strengthening Health Care,''
    focuses on health issues. Chapter 7, ``Making Work Pay,'' details
    welfare reforms. Chapter 8, ``Investing in Education and Training,''
    discusses increases in assistance to help State and local and community
    schools. Chapter 9, ``Protecting the Environment,'' discusses
    environmental issues.
                             HISTORICAL PERSPECTIVES
      In recent decades, Federal aid to State and local governments has
    become a major factor in the financing of certain government functions.
    The rudiments of the present system date back to the Civil War. The
    Morrill Act, passed in 1862, established the land grant colleges and
    instituted certain federally-required standards for States that received
    the grants, as is characteristic of the present grant programs. Federal
    aid was later initiated for agriculture, highways, vocational education
    and rehabilitation, forestry, and public health. In the depression
    years, Federal aid was extended to meet income security and other social
    welfare needs. However, Federal grants did not become a significant
    factor in Federal Government expenditures until after World War II.
      Table 9-2 displays trends in Federal grants to State and local
    governments. Section A shows Federal grants by function. Functions with
    a substantial amount of grants are shown separately. Grants for the
    national defense, energy, veterans benefits and services, and the
    administration of justice functions are combined in the ``other
    functions'' line in the table.

                                                                   Table 9-2.  TRENDS IN FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS
                                                                                  (Outlays; dollar amounts in billions)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Actual                                                                 Estimate
                                                    ------------------------------------------------------------------------------------------------------------------------------------------------
                                                       1960     1965     1970     1975     1980     1985      1990      1995      1996      1997      1998      1998      2000      2001      2002
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    A. Distribution of grants by function:

    Natural resources and environment..............      0.1      0.2      0.4      2.4      5.4       4.1       3.7       4.1       4.0       4.0       4.0       4.0       4.1       4.2       4.1
    Agriculture....................................      0.2      0.5      0.6      0.4      0.6       2.4       1.3       0.8       0.7       0.7       0.7       0.7       0.6       0.6       0.7
    Transportation.................................      3.0      4.1      4.6      5.9     13.0      17.0      19.2      25.8      26.6      24.5      25.0      23.5      21.8      20.6      21.5
    Community and regional development.............      0.1      0.6      1.8      2.8      6.5       5.2       5.0       7.2       9.7       9.1       8.1       7.2       6.1       5.7       5.7
    Education, training, employment, and social
     services......................................      0.5      1.1      6.4     12.1     21.9      17.8      23.4      34.1      36.6      36.4      38.0      39.2      40.4      42.0      43.9
    Health.........................................      0.2      0.6      3.8      8.8     15.8      24.5      43.9      93.6      99.2     111.2     117.5     122.9     128.4     131.9     136.7
    Income security................................      2.6      3.5      5.8      9.4     18.5      27.2      35.2      55.1      54.9      55.7      56.7      57.8      58.4      59.8      61.0
    General government.............................      0.2      0.2      0.5      7.1      8.6       6.8       2.3       2.2       2.2       2.3       2.4       2.7       3.0       3.2       3.4
    Other..........................................        *      0.1      0.1      0.9      1.2       0.9       1.4       2.0       2.9       5.4       5.6       5.9       6.4       6.4       5.3
                                                    ------------------------------------------------------------------------------------------------------------------------------------------------
         Total.....................................      7.0     10.9     24.1     49.8     91.4     105.9     135.3     225.0     236.7     249.3     257.9     263.9     269.1     274.4     282.3

    B. Composition:

    Current dollars:
       Payments for individuals\1\.................      2.5      3.7      8.7     16.8     32.6      49.3      75.7     141.2     146.0     156.3     163.0     169.2     175.1     182.9     189.1
       Physical capital\1\.........................      3.3      5.0      7.1     10.9     22.5      24.9      27.2      39.6      41.3      40.2      39.5      37.8      35.8      34.0      34.5
       Other grants................................      1.2      2.2      8.3     22.2     36.2      31.6      32.5      44.2      49.3      52.8      55.4      56.8      58.2      57.5      58.7
                                                    ------------------------------------------------------------------------------------------------------------------------------------------------
        Total......................................      7.0     10.9     24.1     49.8     91.4     105.9     135.3     225.0     236.7     249.3     257.9     263.9     269.1     274.4     282.3

    Percentage of total grants:
       Payments for individuals\1\.................      35%      34%      36%      34%      36%       47%       56%       63%       62%       63%       63%       64%       65%       67%       67%
       Physical capital\1\.........................       47       46       29       22       25        24        20        18        17        16        15        14        13        12        12
      Other grants.................................       17       20       34       45       40        30        24        20        21        21        21        22        22        21        21
                                                    ------------------------------------------------------------------------------------------------------------------------------------------------
        Total......................................     100%     100%     100%     100%     100%      100%      100%      100%      100%      100%      100%      100%      100%      100%      100%

    Constant (FY 1987) dollars:
      Payments for individuals\1\..................      9.0     12.5     24.7     35.1     46.2      52.9      66.1     106.8     107.6     111.8     113.3     114.4     115.1     116.9     117.6
       Physical capital\1\.........................     13.7     19.5     21.9     20.6     27.7      25.8      24.9      32.8      33.6      31.9      30.6      28.6      26.4      24.5      24.3
      Other grants.................................      6.3      9.8     26.9     49.6     53.5      34.1      28.5      33.1      36.1      37.8      38.7      38.8      38.8      37.4      37.3
                                                    ------------------------------------------------------------------------------------------------------------------------------------------------
         Total.....................................     29.1     41.8     73.6    105.4    127.5     112.9     119.5     172.7     177.3     181.5     182.6     181.8     180.4     178.9     179.2

    C. Total grants as a percent of:

    Federal outlays:
      Total........................................       8%       9%      12%      15%      15%       11%       11%       15%       15%       15%       15%       15%       15%       15%       15%
       Domestic programs\2\........................      18%      18%      23%      22%      22%       18%       17%       22%       22%       21%       21%       21%       21%       20%       20%
    State and local expenditures...................      15%      16%      20%      24%      28%       23%       20%       23%       N/A       N/A       N/A       N/A       N/A       N/A       N/A
    Gross domestic product.........................       1%       2%       2%       3%       3%        3%        2%        3%        3%        3%        3%        3%        3%        3%        3%

    D. As a share of total State and local capital
     spending:

    Federal capital grants.........................      25%      25%      25%      26%      37%       31%       23%       26%       N/A       N/A       N/A       N/A       N/A       N/A       N/A
    State and local source financing...............       75       75       75       74       63        69        77        74       N/A       N/A       N/A       N/A       N/A       N/A       N/A
                                                    ------------------------------------------------------------------------------------------------------------------------------------------------
        Total......................................     100%     100%     100%     100%     100%      100%      100%      100%      100%      100%      100%      100%      100%      100%      100%
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    NA: Not available.
    *$50 million or less.
    \1\Grants that are both payments for individuals and capital investment are shown under capital investment.
    \2\Excludes national defense, international affairs, net interest, and undistributed offsetting receipts.

      Federal grants for transportation increased to $3.0 billion, or 43
    percent of all Federal grants, in 1960 after initiation of aid to States
    to build the Interstate Highway System in the late 1950s.
      By 1970 there had been significant increases in the relative amounts
    for education, training, employment, social services, and health
    (largely Medicaid).
      In the early and mid-1970s, major new grants were created for natural
    resources and environment (construction of sewage treatment plants),
    community and regional development (community development block grants),
    and general government (general revenue sharing).
      In the 1980s changes in the relative amounts among functions reflected
    steady growth of grants for health (Medicaid) and income security and
    restraint in most other areas. The functions with the largest amount of
    grants are health and income security, with combined grant outlays of
    $166.9 billion or 67 percent of total grant outlays in 1997.
      Section B of the Table shows the composition of grants divided into
    three major categories: payments for individuals, physical capital, and
    other grants.\2\ Grant outlays for payments for individuals, which are
    mainly entitlement programs in which the Federal Government and the
    States share the costs, have grown significantly as a percent of total
    grants. In 1980, they were 36 percent of the total, and by 1995 they had
    grown to 63 percent of the total.
      \2\Certain grants are classified in the budget as both payments for
    individuals and physical capital spending. In the text and tables in
    this section, these grants are included in the category for physical
    capital spending.
    ---------------------------------------------------------------------------
      These grants are distributed through State or local governments to
    provide cash or in-kind benefits that constitute income transfers to
    individuals or families. The major grant in this category is Medicaid,
    which had outlays of $89.1 billion in 1995, increasing to an estimated
    $105.6 billion in 1997. Family support payments to States (AFDC), child
    nutrition programs, and housing assistance are also large grants in this
    category.
      Grants for physical capital assist States and localities with
    construction and other physical capital activities. The major capital
    grants are for highways, but there are also grants for airports, mass
    transit, sewage treatment plant construction, community development, and
    other facilities. Grants for physical capital were almost half of total
    grants in 1960, shortly after grants began for construction of the
    Interstate Highway System. The relative share of these outlays has
    declined, as payments for individuals have grown. In 1995, grants for
    physical capital were 18 percent of total grants.
      The other grants are primarily for education, training, employment,
    and social services. These grants increased to 45 percent of total
    grants by 1975, but declined to 20 percent of total grants in 1995.
      Section B of Table 9-2 also shows these three categories in constant
    dollars. In constant 1987 dollars, total grants increased from $127.5
    billion in 1980 to $172.7 billion in 1995, an average annual increase of
    2.0 percent. From 1980 to 1995, payments for individuals grew from $46.2
    billion to $106.8 billion, an average annual increase of 5.7 percent;
    grants for physical capital increased from $27.7 billion to $32.8
    billion, an average annual increase of 1.1 percent, and other grants
    decreased from $53.5 billion to $33.1 billion, an average annual
    decrease of 3.2 percent.
      Section C of this table shows grants as a percent of Federal outlays,
    State and local expenditures, and gross domestic product. Grants
    declined as a percent of total Federal outlays from 15 percent in 1980
    to
    [[Page 170]]
    11 percent in 1985 and 1990, and are estimated to increase to 15
    percent in 1996 and 1997, the same as in 1980. Grants as a percentage of
    domestic spending are estimated to be 21 percent in 1997.
      As a percent of total State and local expenditures, grants have
    declined from 28 percent in 1980 to 23 percent in 1995.
      Section D shows the relative contribution of physical capital grants
    in assisting States and localities with capital spending. Federal
    capital grants declined as a percent of State and local capital spending
    from 37 percent in 1980 to 26 percent in 1995, reflecting restraint in
    Federal spending and increased capital spending by States and localities
    financed from their own sources, such as taxes or borrowing.
    [[Page 171]]
         OTHER INFORMATION ON FEDERAL AID TO STATE AND LOCAL GOVERNMENTS
      Additional information regarding aid to State and local governments
    can be found elsewhere in this budget and in other documents.
      Major public physical capital investment programs providing Federal
    grants to State and local governments are identified in Chapter 6,
    ``Federal Investment Spending and Capital Budgeting.''
      Data for summary and detailed grants to State and local governments
    can be found in many sections of a separate document entitled Historical
    Tables. Section 12 of that document is devoted exclusively to grants to
    State and local governments. Additional information on grants can be
    found in Section 6 (Composition of Federal Government Outlays); Section
    9 (Federal Government Outlays for Investment: Major Physical Capital,
    Research and Development, and Education and Training); Section 11
    (Federal Government Payments for Individuals); and Section 15 (Total
    (Federal and State and Local) Government Finances).
      In addition to these sources, a number of other sources of information
    are available that use slightly different concepts of grants, provide
    State-by-State information, or provide information on how to apply for
    Federal aid.
      Government Finances, published annually by the Bureau of the Census in
    the Department of Commerce, provides data on public finances, including
    Federal aid to State and local governments.
      The Survey of Current Business, published monthly by the Bureau of
    Economic Analysis in the Department of Commerce, provides data on the
    national income and product accounts (NIPA), a broad statistical concept
    encompassing the entire economy. These accounts include data on Federal
    grants to State and local governments. Data using the NIPA concepts
    appear in this volume in Chapter 19, ``National Income and Product
    Accounts.''
      Budget Information for States (BIS) provides estimates of State-by-
    State funding allocations for the largest formula grant programs for the
    past, present, and budget year. These programs comprise approximately 85
    percent of total Federal aid to State and local governments. The
    document is prepared by the Office of Management and Budget soon after
    the Budget is released.
      Federal Expenditures by State, a report prepared by the Bureau of the
    Census, shows Federal spending by State for grants and other spending
    for the most recently completed fiscal year.
      Consolidated Federal Funds Report is an annual document that shows the
    distribution of Federal spending by State and county areas and by local
    governmental jurisdictions. It is released by the Bureau of the Census
    in the Spring.
      The Federal Assistance Awards Data System (FAADS) provides
    computerized information about current grant funding. Data on all direct
    assistance awards are provided quarterly by the Bureau of the Census to
    the States and to the Congress.
      The Catalog for Federal Domestic Assistance is a primary reference
    source for communities wishing to apply for grants and other domestic
    assistance. The Catalog is prepared by the General Services
    Administration with data collected by the Office of Management and
    Budget and is available from the Government Printing Office. The basic
    edition of the Catalog is usually published in June and an update is
    generally published in December. It contains a detailed listing of grant
    and other assistance programs; discussions of eligibility criteria,
    application procedures, and estimated obligations; and related
    information.
    [[Page 172]]
                           DETAILED FEDERAL AID TABLE
      Table 9-3, ``Federal Grants to State and Local Governments-Budget
    Authority and Outlays,'' provides detailed budget authority and outlay
    data for grants.

                 Table 9-3. FEDERAL GRANTS TO STATE AND LOCAL GOVERNMENTS--BUDGET AUTHORITY AND OUTLAYS
                                                (in millions of dollars)
    ----------------------------------------------------------------------------------------------------------------
                                                Budget Authority                             Outlays
                                   ---------------------------------------------------------------------------------
     Function, Agency and Program       1995         1996          1997          1995         1996          1997
                                      Actual      Estimate      Estimate       Actual      Estimate      Estimate
    ----------------------------------------------------------------------------------------------------------------
    National defense:
      Department of Defense--
       Military:
        Military Construction:
          Military construction,
           Army National Guard....          70   ............  ............           4            15             9
      Federal Emergency Management
       Agency:
          Emergency management
           planning and assistance  ...........  ............  ............          64            10   ............
                                   ---------------------------------------------------------------------------------
          Total, national defense.          70   ............  ............          68            25             9
                                   =================================================================================
    Energy:
      Department of Energy:
        Energy Programs:
          Energy conservation.....         268           149      168               240           228           173
      Tennessee Valley Authority:
          Tennessee Valley
           Authority fund.........         252           254      265               252           254           265
                                   ---------------------------------------------------------------------------------
          Total, energy...........         520           403      433               492           482           438
                                   =================================================================================
    Natural resources and
     environment:
      Department of Agriculture:
        Natural Resources
         Conservation Service:
          Resource conservation
           and development........  ...........  ............  ............           5             3             2
          Watershed and flood
           prevention operations..          39            69       85               244           235           118
        Forest Service:
          State and private
           forestry...............         103            82       88               103            83            86
      Department of Commerce:
        National Oceanic and
         Atmospheric
         Administration:
          Operations, research,
           and facilities.........           5             3        3                 3             1             1
          Construction............          56            40       32                11            51            56
          Coastal zone management
           fund...................  ...........  ............  ............          -3             8             4
      Department of the Interior:
        Bureau of Land Management:
          Miscellaneous permanent
           payment accounts.......          81            78       75               163            79            75
        Minerals Management
         Service:
          National forests fund,
           payment to States......           2             2        2                 2             2             2
          Leases of lands acquired
           for flood control,
           navigation, and allied
           purposes...............           1             1        1                 1             1             1
        Office of Surface Mining
         Reclamation and
         Enforcement:
          Regulation and
           technology.............          52            48       51                31            53            50
          Abandoned mine
           reclamation fund.......         138           140      146               160           121           159
        Bureau of Reclamation:
          Bureau of reclamation
           loan subsidy...........           9            12       13                 6            18            13
        United States Fish and
         Wildlife Service:
          Cooperative endangered
           species conservation
           fund...................           9             8       16                 7             8             9
          Wildlife conservation
           and appreciation fund..           1             1        1                 1             1             1
          Sport fish restoration..         243           266      300               237           228           237
          Miscellaneous permanent
           appropriations.........         247           240      231               191           207           229
        National Park Service:
          Urban park and
           recreation fund........  ...........  ............  ............           4             5             3
          Land acquisition and
           State assistance.......          25             2        2                23            28            20
          Historic preservation
           fund...................          46            36       38                47            48            41
          Everglades restoration
           fund...................  ...........  ............      80        ...........  ............           40
          Miscellaneous permanent
           appropriations.........  ...........            1        1        ...........            1             1
      Environmental Protection
       Agency:
          State and tribal
           assistance grants......       1,885         2,863    2,852             2,455         2,500         2,579
          Environmental programs
           and management.........         456   ............  ............         232           128            55
          Abatement, control, and
           compliance loan subsidy  ...........  ............  ............           9             4             2
          Hazardous substance
           superfund..............         120           120      145               153           153           125
          Leaking underground
           storage tank trust fund          61            41       58                63            43            49
                                   ---------------------------------------------------------------------------------
    [[Page 173]]
          Total, natural resources
           and environment........       3,579         4,053    4,220             4,148         4,009         3,958
                                   =================================================================================
    Agriculture:
      Department of Agriculture:
        Cooperative State
         Research, Education, and
         Extension Service:
          Extension activities....         439           428      423               435           429           425
          Cooperative state
           research activities....         226           222      222               225           231           222
        Agricultural Marketing
         Service:
          Payments to States and
           possessions............           1             1        1                 1             1             1
        Farm Service Agency:
          State mediation grants..           3             2        3                 3             2             3
          Outreach for socially
           disadvantaged farmers..           3             1        3                 1             3             2
          Commodity credit
           corporation fund.......         115            10       54               115            10            54
                                   ---------------------------------------------------------------------------------
          Total, agriculture......         787           664      706               780           676           707
                                   =================================================================================
    Commerce and housing credit:
      Department of Commerce:
        National Oceanic and
         Atmospheric
         Administration:
          Promote and develop
           fishery products and
           research pertaining to
           American fisheries-....           5             6        7                 2            10            11
        National Institute of
         Standards and Technology:
          Industrial technology
           services...............           4             6        6                 3             4             4
                                   ---------------------------------------------------------------------------------
            Total, commerce and
             housing credit.......           9            12       13                 5            14            15
                                   =================================================================================
    Transportation:
      Department of
       Transportation:
        Federal Highway
         Administration:
          High priority corridors
           loan subsidy...........           6   ............  ............           6   ............  ............
          Alameda corridor project
           loan program...........  ...........  ............      59        ...........  ............           21
          Orange County (CA) toll
           road demonstration
           project subsidy........           8   ............  ............  ...........  ............            2
          Highway-related safety
           grants.................  ...........            2   ............           9            12             8
          Motor carrier safety
           grants.................          82            73       89                66            75            79
          Federal-aid highways....      20,719        17,671   21,720            18,945        19,842        19,090
          State infrastructure
           banks..................  ...........  ............     250        ...........  ............           37
          Miscellaneous
           appropriations.........         321   ............  ............         192           295           175
          Miscellaneous highway
           trust funds............         -11   ............  ............         102            97            70
        National Highway Traffic
         Safety Administration:
          Highway traffic safety
           grants.................         190           169      185               155           146           165
        Federal Railroad
         Administration:
          Office of the
           Administrator..........           3   ............  ............           3   ............  ............
          Local rail freight
           assistance.............          10   ............  ............          16            13            11
          Alaska railroad
           rehabilitation.........  ...........           10   ............  ...........            4             6
          Railroad research and
           development............  ...........            6        1                 2             6             4
          Conrail commuter
           transition assistance..  ...........  ............  ............           1             2            13
          Northeast corridor high-
           speed rail
           infrastructure program.           5             1       10        ...........            1             5
        Federal Transit
         Administration:
          Research, training, and
           human resources........  ...........  ............  ............           2             5             5
          Interstate transfer
           grants-transit.........          48   ............  ............         152            27            12
          Washington metropolitan
           area transit authority.         200           200      200               218           206           159
          Formula grants..........       2,492         2,052    2,152             1,901         2,109         1,972
          Transit planning and
           research...............          55            54       54                43            45            56
          Discretionary grants
           (trust fund)...........       1,691         1,665    2,880             2,025         1,978         1,983
          Miscellaneous expired
           accounts...............  ...........  ............  ............          12            14            10
        Federal Aviation
         Administration:
          Grants-in-aid for
           airports (Airport and
           airway trust fund).....          67         2,214    1,350             1,826         1,622         1,483
          Research, engineering
           and development
           (Airport and airway
           trust fund)............          41            60       60                33            57            63
        Coast Guard:
          Research, development,
           test, and evaluation...           1             1        1                 1             1             1
          Boat safety.............          50            60       45                62            43            42
        Research and Special
         Programs Administration:
          Pipeline safety.........          12            12       14                10            11            14
          Emergency preparedness
           grants.................           5             6        6                 5             6             6
                                   ---------------------------------------------------------------------------------
          Total, transportation...      25,995        24,256   29,076            25,787        26,617        25,492
                                   =================================================================================
    [[Page 174]]
    Community and regional
     development:
      Department of Agriculture:
        Rural Utilities Service:
          Distance learning and
           medical link grants....           8             8       20                 6            26            17
          Rural water and waste
           disposal loans subsidy.  ...........          109       61        ...........           86            95
          Emergency community
           water assistance grants          10   ............  ............          15            12             6
          Rural water and waste
           disposal grants........         415           331      490               295           379           357
          Rural development
           insurance fund subsidy.         212   ............  ............         150   ............  ............
        Rural Housing and
         Community Development
         Service:
          Rural community facility
           loans subsidy..........  ...........           42       13        ...........           27            20
          Rural community fire
           protection grants......           3             2        2                 3             3             2
        Rural Business and
         Cooperative Development
         Service:
          Rural technology and
           cooperative development
           grants.................           2             2        3        ...........            1             2
          Rural business and
           industry loans subsidy.  ...........            6        7        ...........            6             7
          Rural business
           enterprise grants......          34            32       32                23            29            31
      Department of Commerce:
        Economic Development
         Administration:
          Economic development
           assistance programs....         431           339      334               322           441           417
      Department of Housing and
       Urban Development:
        Community Planning and
         Development:
          Community development
           grants fund............       4,819         4,600    4,900             4,333         5,093         4,931
          Urban development action
           grants.................         -18   ............  ............          20            37            30
          Supplemental assistance
           for facilities to
           assist the homeless....  ...........  ............  ............           8             6             3
          Community development
           loan guarantees subsidy  ...........           33       47        ...........           17            40
      Department of the Interior:
        Bureau of Indian Affairs:
          Operation of Indian
           programs...............          91           101      102                91            93           111
          Indian direct loan
           subsidy................           1   ............  ............           1   ............  ............
          Indian guaranteed loan
           subsidy................          10             5        5                 9            10             6
      Appalachian Regional
       Commission:
          Appalachian regional
           development programs...         266           164      164               182           170           192
      Federal Emergency Management
       Agency:
          Emergency management
           planning and assistance         124           122      125                79           112           124
          Disaster relief.........       2,874         2,798      256             1,693         3,142         2,735
                                   ---------------------------------------------------------------------------------
          Total, community and
           regional development...       9,282         8,694    6,561             7,230         9,690         9,126
                                   =================================================================================
    Education, training,
     employment, and social
     services:
      Department of Commerce:
        National
         Telecommunications and
         Information
         Administration:
          Public broadcasting
           facilities, planning
           and construction.......          19             8        8                15            28            21
          Information
           infrastructure grants..          37            50       56                 9            31            44
      Department of Education:
        Office of Elementary and
         Secondary Education:
          Indian education........          78            59       79                69            75            66
          Impact aid..............         728           660      614               803           808           687
          Chicago litigation
           settlement.............  ...........  ............  ............           6             7             5
          Education Reform........         487           671      691                60           530           647
          Education for the
           disadvantaged..........       7,173         7,302    7,662             6,785         7,098         7,423
          School improvement
           programs...............       1,226         1,217    1,304             1,288         1,473         1,268
        Office of Bilingual
         Education and Minority
         Languages Affairs:
          Bilingual and immigrant
           education..............         179           134      234               189           200           159
        Office of Special
         Education and
         Rehabilitative Services:
          Special education.......       3,006         3,343    3,336             2,938         3,511         3,281
          Rehabilitation services
           and disability research       2,171         2,227    2,296             2,113         2,359         2,381
          American printing house
           for the blind..........           7             6        6                 7             6             6
        Office of Vocational and
         Adult Education:
          Vocational and adult
           education..............       1,364         1,368    1,393             1,449         1,481         1,413
        Office of Postsecondary
         Education:
          Student financial
           assistance.............          63   ............  ............          82            76             3
          Higher education........          33            27      159                35            30            45
        Office of Educational
         Research and Improvement:
          Libraries...............         133           108      110               109           155           117
          Education research,
           statistics, and
           improvement............          17            13      260                22            21            44
      Department of Health and
       Human Services:
        Administration for
         Children and Families:
          State legalization
           impact assistance
           grants.................         195   ............  ............         358             3             1
    [[Page 175]]
          Payments to States for
           the job opportunities
           and basic skills
           training program.......       1,300         1,000    1,000               953           959           988
          Family preservation and
           support................         150           225      240                38           132           201
          Social services block
           grant..................       2,800         2,800    2,800             2,797         3,183         2,839
          Children and families
           services programs......       4,604         4,298    4,967             4,463         4,528         4,574
          Payments to states for
           foster care and
           adoption assistance....       3,597         4,322    4,445             3,244         3,740         4,144
        Administration on Aging:
          Aging services programs.         877           828    1,328               951           776         1,006
      Department of the Interior:
        Bureau of Indian Affairs:
          Operation of Indian
           programs...............          88            84       89                88            80            83
      Department of Labor:
        Employment and Training
         Administration:
          Training and employment
           services...............       2,764         3,251    3,880             3,620         3,618         3,513
          Community service
           employment for older
           Americans..............          87            77   ............          77            82            78
          State unemployment
           insurance and
           employment service
           operations.............         127           150      176                34           132           140
          Federal unemployment
           benefits and allowances         101           101      114               103            95           121
          Unemployment trust fund.       1,103         1,004    1,029             1,080         1,065         1,012
      Corporation for National and
       Community Service:
          Domestic volunteer
           service programs,
           operating expenses.....         136           116      176               140           121           166
          National and community
           service programs,
           operating expenses.....          84            86       98                52            82            92
      Corporation for Public
       Broadcasting:
          Corporation for public
           broadcasting...........          95            92       87                95            92            87
      National Endowment for the
       Arts:
          National endowment for
           the arts: Grants and
           administration.........          44            35       37                45            38            36
      Institute of Museum
       Services:
          Institute of Museum
           Services: Grants and
           administration.........           7             5        5                 8             9             5
      Allowances:
          Welfare reform..........  ...........          -70     -280        ...........          -63          -259
                                   ---------------------------------------------------------------------------------
          Total, education,
           training, employment,
           and social services....      34,880        35,597   38,399            34,125        36,561        36,437
                                   =================================================================================
    Health:
      Department of Agriculture:
        Food Safety and Inspection
         Service:
          Salaries and expenses...          41            40       42                41            40            41
      Department of Health and
       Human Services:
        Health Resources and
         Services Administration:
          Health Resources and
           Services...............       1,756         1,692    1,782             1,435         1,530         1,518
        Centers for Disease
         Control and Prevention:
          Disease control,
           research, and training.         602           621    1,127               521           594           767
        Substance Abuse and Mental
         Health Services
         Administration:
          Substance abuse and
           mental health services.       2,195         1,854    2,098             2,444         2,105         2,024
        Health Care Financing
         Administration:
          Grants for cooperatives/
           health insurance for
           the temporarily
           unemployed.............  ...........  ............   1,544        ...........  ............        1,544
          Grants to States for
           Medicaid...............      89,241        83,252   104,470           89,070        94,892       105,571
      Department of Labor:
        Occupational Safety and
         Health Administration:
          Salaries and expenses...          71            71       73                70            69            73
        Mine Safety and Health
         Administration:
          Salaries and expenses...           6             6        6                 6             6             6
      Allowances:
          Welfare reform..........  ...........          -63     -327        ...........          -63          -327
                                   ---------------------------------------------------------------------------------
          Total, health...........      93,912        87,473   110,815           93,587        99,173       111,217
                                   =================================================================================
    Income security:
      Department of Agriculture:
        Agricultural Marketing
         Service:
          Funds for strengthening
           markets, income, and
           supply (section 32)....         461           431      400               480           431           400
        Rural Housing and
         Community Development
         Service:
          Rural housing for
           domestic farm labor
           grants.................          11            10       10                11            26            19
          Supervisory and
           technical assistance
           grants.................  ...........  ............  ............  ...........            1             1
          Rural housing
           preservation grants....           7             4        4                 7             8             5
        Food and Consumer Service:
          Food donations programs
           for selected groups....         183           215       65               209           217            91
          Food stamp program......       2,925         2,976    3,089             2,740         3,061         3,084
          Commodity assistance
           program................         190           166      172               194           166           186
    [[Page 176]]
          Special supplemental
           nutrition program for
           women, infants, and
           children (WIC).........       3,447         3,691    3,877             3,401         3,684         3,823
          State child nutrition
           programs...............       7,365         7,846    8,559             7,387         8,111         8,445
      Department of Health and
       Human Services:
        Administration for
         Children and Families:
          Family support payments
           to States..............      17,491        17,094   18,101            17,133        17,366        17,956
          Low income home energy
           assistance.............       1,419         1,000    1,000             1,419         1,252         1,025
          Refugee and entrant
           assistance.............         358           357      337               346           352           344
          Payments to States for
           the child care and
           development block grant         935           935    1,049               933           935           946
      Department of Housing and
       Urban Development:
        Public and Indian Housing
         Programs:
          Public housing operating
           fund...................       2,900         2,900    2,900             2,762         2,874         2,894
          Drug elimination grants
           for low-income housing.         290           290      290               178           180           308
          Revitalization of
           severely distressed
           public housing projects         500           500      650                31           128           283
          Housing certificate fund  ...........  ............     290        ...........  ............           29
          Public housing capital
           fund...................  ...........  ............   3,200        ...........  ............        4,276
        Community Planning and
         Development:
          Emergency shelter grants
           program................  ...........  ............  ............          84            35             1
          Supportive housing
           program................  ...........  ............  ............         115           158           157
          Homeless assistance fund       1,120           823    1,120                12           198           412
          Shelter plus care.......  ...........  ............  ............          17            50            50
          Home fund...............       1,400         1,400    1,550             1,179         1,240         1,401
          Youthbuild program......          40   ............  ............          20            21            18
          Innovative homeless
           initiatives
           demonstration program..  ...........  ............  ............          17            19            19
          Housing opportunities
           for persons with AIDS..  ...........  ............     171        ...........  ............          138
        Housing Programs:
          Annual contributions for
           assisted housing.......       5,666         7,220    3,652            13,903        11,776         8,107
          Congregate services.....         -12   ............  ............           6             9             9
          Section 8 moderate
           rehabilitation, single
           room occupancy.........  ...........  ............  ............          17            41            51
          Homeownership and
           opportunity for people
           everywhere grants (HOPE
           grants)................          62   ............  ............          75            96            87
      Department of Labor:
        Employment and Training
         Administration:
          Unemployment trust fund.       2,317         2,376    2,565             2,317         2,308         2,497
      Federal Emergency Management
       Agency:
          Emergency food and
           shelter program........         130           100      100               130           100           100
      Allowances:
          Welfare reform..........  ...........           68   -1,526        ...........           66        -1,472
                                   ---------------------------------------------------------------------------------
          Total, income security..      49,205        50,402   51,625            55,123        54,909        55,690
                                   =================================================================================
    Veterans benefits and
     services:
      Department of Veterans
       Affairs:
        Veterans Health
         Administration:
          Medical care............         186           208      232               186           208           232
        Construction:
          Grants for construction
           of State extended care
           facilities.............          47            47       40                64            41            44
          Grants for the
           construction of State
           veterans cemeteries....           5             1        1                 3             5             3
                                   ---------------------------------------------------------------------------------
          Total, veterans benefits
           and services...........         238           256      273               253           254           279
                                   =================================================================================
    Administration of justice:
      Department of Housing and
       Urban Development:
        Public and Indian Housing
         Programs:
          Violent crime reduction
           programs...............  ...........  ............       3        ...........  ............            3
        Fair Housing and Equal
         Opportunity:
          Fair housing activities.          33            30       33                27            21            29
      Department of Justice:
        General Administration:
          Community oriented
           policing services......       1,100         1,803    1,976                45           638         1,542
        Legal Activities:
          Assets forfeiture fund..         224           205      205               224           205           205
        Office of Justice
         Programs:
          Justice assistance......          58            58       62               571            43           101
          State and local law
           enforcement assistance.         289           388   ............          19           144           250
          Juvenile justice program         128           128      127                 7            55           124
          Crime victims fund......         178           230      164               137           201           134
          Violent crime reduction
           programs...............         742         1,405    1,924                74           743         1,158
    [[Page 177]]
      Department of
       Transportation:
        Federal Transit
         Administration:
          Violent crime reduction
           programs...............  ...........  ............      10        ...........  ............            1
      Department of the Treasury:
        Departmental Offices:
          Department of the
           Treasury forfeiture
           fund...................          81            86       86                77            54            71
        Violent crime reduction
         programs:
          Violent crime reduction
           programs...............           9             7        7                 3             7             7
      Equal Employment Opportunity
       Commission:
          Salaries and expenses...          26            26       28                26            26            28
      Ounce of Prevention Council:
          Ounce of prevention
           council................           2             2        8        ...........  ............            2
      State Justice Institute:
          State Justice Institute:
           Salaries and expenses..          12             5        5                12             5             1
                                   ---------------------------------------------------------------------------------
          Total, administration of
           justice................       2,882         4,373    4,638             1,222         2,142         3,656
                                   =================================================================================
    General government:
      Department of Agriculture:
        Forest Service:
          Forest Service permanent
           appropriations.........          86           295      291               320           295           291
      Department of Defense--
       Civil:
        Corps of Engineers--Civil:
          Permanent appropriations           5             6        6                 5             6             6
      Department of Energy:
        Energy Programs:
          Payments to States under
           Federal Power Act......           2             2        2                 3             2             2
      Department of the Interior:
        Bureau of Land Management:
          Payments in lieu of
           taxes..................         101           100      102               101           100           102
        Minerals Management
         Service:
          Mineral leasing and
           associated payments....         474           508      515               474           508           515
        United States Fish and
         Wildlife Service:
          National wildlife refuge
           fund...................          19            18       18                20            18            18
        Insular Affairs:
          Assistance to
           territories............          78            67       67                60            70            66
          Trust Territory of the
           Pacific Islands........         -12   ............  ............          23             2             2
          Payments to the United
           States territories,
           fiscal assistance......          83            84       86                83            84            86
      Department of the Treasury:
        Bureau of Alcohol, Tobacco
         and Firearms:
          Internal revenue
           collections for Puerto
           Rico...................         206           232      297               206           232           297
        United States Customs
         Service:
          Miscellaneous permanent
           appropriations.........         138           149      153               135           149           153
      Commission on National and
       Community Service:
          Salaries and expenses...  ...........  ............  ............          28   ............  ............
      District of Columbia:
          Federal payment to the
           District of Columbia...         712           712      770               714           712           770
                                   ---------------------------------------------------------------------------------
          Total, general
           government.............       1,892         2,173    2,307             2,172         2,178         2,308
                                   =================================================================================
          Total, grants...........     223,251       218,356   249,066          224,992       236,730       249,332
    ----------------------------------------------------------------------------------------------------------------