Legislative leaders focus on block grants.

The top legislative priority for 1996? Block grants. With Congress rewriting the rules more dramatically than at any time since the New Deal, it's no wonder that the enormity of change has an urgency that usurps the predictable state concerns -- budgets, health care and education. NCSL's November annual survey of leaders indicates that most of the 23 states responding will be spending their energy this session defining and adjusting to the changes block grants will bring.

Balancing budgets and redesigning welfare programs. health care, work force training and other programs inextricably linked to the new federalism. But in mid-December, as state sessions were about to start, Congress and the president had yet to agree on a budget or to put the final touches on converting many current categorical and entitlement programs into block grants. States were waiting in the wings, Michigan notwithstanding (it redesigned welfare last summer). And although leaders expressed some anxiety about the decisions Congress will make, they seemed eager to distribute entitlements in a way that is best suited to their individual state.

Colorado Senate President Tom Norton echoed the sentiments of many in stating that his two major worries are "that the federal government will not allow the freedom to set true state priorities in programs, and that the budget will not be completed in time at the federal level" to allow states with short sessions to write their own budgets.

Maryland, like a number of states, stands to lose some $200 million to $300 million in federal Medicaid funds over the next seven years and is waiting to see if the welfare reform enacted in 1995 will be in compliance with federal guidelines. "We are concerned with the prospect of increased obligations with less, not more, control over the program," says Senate President Thomas V. "Mike" Miller Jr. And, Ohio House Speaker JoAnn Davidson said her legislature will also be "working to reconcile our recently enacted welfare reforms with any federal changes that are enacted."

Arkansas Speaker Bobby Hogue hopes that the new block grants will be "accompanied by fewer restrictions on the ability of states to administer Medicaid and welfare programs."

"If we're going to be made more accountable for the delivery of these programs, we must have the ability to administer them effectively and in a manner best suited to Arkansas. If Congress wants to change the nature of federalism, the states must be given the authority to assume their share of the load."

The budget was a distant second priority cited by the leaders. Budget issues ranged from dealing with revenue shortfalls to property tax reform. Three years ago budgets were cited as a major concern. Leaders from half of the states were predicting a revenue shortfall and the need for general fund budget reductions due to a slow recovery from the recession. Only Alaska, Hawaii and Wyoming indicated that they will face budget shortfalls this year. Of more importance to leaders in 1996 is holding the line on expenditures and providing the public with some form of tax relief. Although some states indicated they may attempt to reduce personal income taxes, others cited property taxes as their target. Iowa, Kansas, Nebraska and South Carolina will look at some type of property tax reform. Maryland may consider reducing the state's personal income tax. Predictably the states experiencing fiscal difficulties -- Alaska, Hawaii and Wyoming -- will look at tax increases to balance their budgets.

Education reform and safe classrooms were on the minds of fewer than half of the leaders responding. In previous years these issues have been at the top of almost every leader's list. Issues ranging from school choice to violence in the classroom were noted as priorities.

A number of states will include school-related crime among education issues they are tackling in 1996. Delaware and Missouri will address school safety as a priority education issue. Alaska, Indiana, Missouri and Nevada will take up issues ranging from teacher tenure to school choice, voucher programs, charter schools and school funding formulas. Iowa will examine technology in the classroom, and South Carolina will examine current programs and ways to put more money directly into classrooms

This year, crime prevention and public safety issues fall from the top of leaders' legislative lists with only about one-third indicating them as a priorities. Crime topped that list in both 1994 and 1995. During those years more than a dozen states held special sessions focusing on, or including, criminal justice issues. Many new measures were adopted and now are being implemented in the states including longer sentences for repeat, violent offenders and reform of juvenile justice systems incorporating tougher penalties for juveniles who commit weapon-related and other violent crimes. Protecting the public from sex offenders, especially those who prey on children, also has been an issue of high legislative activity in the past couple of years. Many states enacted laws to establish registries of sex offenders, and some are implementing measures like "Megan's Law" in New Jersey to provide notification to the public when certain sex offenders are released back into the community.

But criminal justice will be a continuing priority in 1996 in a handful of states. Delaware lawmakers, having recently authorized a new maximum security prison, expect to consider privatizing prisons. In Wyoming, the Legislature will deal with a shortage of prison beds and a lack of money to build new prisons. Leadership in Idaho a so report corrections issues as an expected priority. Missouri and Colorado will most likely review their concealed weapons laws in 1996.

Economic development returns to the list of top priorities for leaders, with about one-third reporting that their legislatures will look at some aspect of this issue. Ohio will continue work on a series of initiatives designed to revitalize distressed urban areas, stimulate job creation and expand rural economies. Indiana will look at privatizing government services and deregulating private businesses. California also will examine burdensome business regulations and high tax rates as obstacles to a healthy economic climate. Delaware will look at ways to attract new businesses through incentives. Maryland will develop a strategic plan to foster economic growth. Legislative leaders there have appointed a task force to study tools used in other states to attract businesses and methods to improve the business climate.

States will take up myriad other issues during the coming session, ranging from retail wheeling of electricity in New Hampshire and Nevada to ethics and campaign finance reform in Kansas. Nebraska and New Hampshire will look at gambling issues. California and Kansas will look at streamlining government services. South Carolina will examine methods used for electing judges. New Hampshire will review agreements between physicians and health maintenance organizations, and Wisconsin will review child welfare issues.