NUMBER of predictions have been made about the likely effects of President Reagan’s New Federalism on state spending. Many critics A believe that &dquo;faced with worsening fiscal constraints, some states [will] simply drop many of the programs altogether&dquo; (Elder and Kiser 1983: 56). According to a survey by the National Governors’ Association (NGA), the proportion of states saying they would reduce activities rather than maintain them at present levels was well above two-thirds &dquo;for all but a few program activities&dquo; (Davis 1982; National Governors’ Association 1982). In the environmental area, state officials have predicted that reduced federal assistance will result in decreased environmental activities and may result in negative impacts on the environment (General Accounting Office 1982). Indeed, it has been suggested that &dquo;these reductions [have] significantly weakened the ability of states to implement their existing [environmental] control responsibilities&dquo; (Davies 1984: 151). Others suggest that states and localities will respond to the cuts in federal spending by picking up defunct national programs (Gray 1983). If anything, some argue, &dquo;reductions in federal aid should result in increases in requests for state monies to make up for aid losses&dquo; (Hedge 1983: 207). The empirical evidence to date, on the other hand, suggests that &dquo;most state governments [have been] unable or unwilling to maintain service levels in the face of federal aid cuts. The most common response to the FY 1982 federal aid cuts was to cut the services affected&dquo; (Nathan et al. 1983: 204). However, these findings have also led some researchers to conclude that &dquo;it is important to disaggregate both geographically and by program
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