Summary: Revenue sharing funds represented about 13 percent of the $46 billion total federal aid to state and local governments in fiscal year 1974. However, the proposed fiscal year 1980 budget shows revenue sharing to be only 8 percent of the $83 billion federal aid to state and local governments. Congress is now faced with the difficult task of deciding what level of funding to authorize for the revenue sharing program. In the short term, if general revenue sharing is renewed, Congress may wish to strengthen the formula's ability to distribute funds based on need. If, however, Congress changes the objective of the revenue sharing program and directs funds only to distressed jurisdictions, then the executive branch should attempt to improve the criteria for measuring a government's financial condition. Attempts to consider all, or even most, of the factors influencing the fiscal health of 39,000 governmental units with widely diverse characteristics, and to devise a formula to allocate the funds accordingly, would be a complex task. Yet, if funds are to be allocated based on financial condition, such an effort would be required to achieve equity. While Congress may not want to withhold financial assistance from needy governments until a better method is found, efforts should continue to develop a better basis to identify and distinguish degrees of financial stress.
