WASHINGTON - Vice President Al Gore's task force on reinventing government yesterday proposed consolidating 55 federal grant programs totaling $12.9 billion, while giving state and local governments greater control over up to $200 billion in annual grants.

The White House group's report appears to tie its self-described "ambitious" offer to streamline the grant programs, however, to a proposal to reduce federal payments to state and local governments for administrative costs by $3.3 billion over the next five years.

With little explanation, the report says that, "in return for greater administrative flexibility," it expects "over 75% of state and local governments will accept a fee-for-service option in place of existing cost reimbursement procedures from FY1995-1999."

The lower administrative costs apparently would stem from the simplified reporting and paperwork requirements that would occur as the grant programs are streamlined, the report says.

Gore and President Bill Clinton acknowledged in releasing the report that it will not be easy to implement the nearly 800 proposed changes aimed at trimming the federal work force by 252,000 and cutting spending by $108 billion over the next five years.

"The task is daunting; it will take years to accomplish," Gore said. But Clinton s:aid he is committed to quickly carrying out the portions of the report that can be accomplished administratively through executive order.

White House aides said that by the end of the week, Clinton will issue his first executive order calling on all federal agencies, including the Internal Revenue Service, to establish customer service standards.

Most of the report's most far-reaching cost-saving proposals, however, will require legislation and will take considerably more time to implement, the aides said. "The savings will not become real unless Congress gets on board," said one White House aide.

The report's grant consolidation proposal is drawn from a legislative proposal drafted during the Bush administration by the National Governors' Association and the National Conference of State Legislatures.

Under the proposal, 20 existing job training programs would be merged into one $5.5 billion grant; 10 education programs into a $1.6 billion grant; 10 small environmental programs into a $392 million grant; six water quality programs into a $2.66 billion grant; and six defense conversion programs into a $460 billion grant.

On the other hand, the report appears to contain a first-time proposal to give state and local governments more control over the use of funds in another 600 categorical grant programs. The report notes that the latter proposal, dubbed "bottom-up consolidation," is complicated and has not yet been drafted into legislation.

"The details of this proposal will be negotiated with important state and local organizations, such as the NGA, NCSL, U.S. Conference of Mayors, and the National League of Cities, before legislation is drafted," the report says.

Roughly outlined, the proposal would give local governments the authority to mix funding from different programs - with simple notification to Washington - when combining grants smaller than $10 million each. Consolidations involving more money would require approval from the federal government, the report says.

When different grant regulations conflict, the local government would select which set of rules to follow, the report says.

The new procedures "represent a way to improve state and local performance without tackling the thorny political problem involved in consolidating 600 grant programs, reconciling thousands of rules and regulations, and anticipating every possible instance when flexibility might be necessary," the report says.

Clinton aides acknowledged that getting Congress to approve the ambitious grant proposals and other major reforms in the report will be difficult, since each individual program has an entrenched constituency on Capitol Hill.

Former President Bush, for example, proposed consolidating many of the same grant programs targeted by Gore into a $15 billion block grant to the states, but his proposal never received serious consideration in Congress.

One aide said enactment could take up much of Clinton's term. "The public will be won over by seeing a sustained effort over the next four years," he said.

Still, aides said they believe that the atmosphere on Capitol Hill is as good as ever for accomplishing such reforms, especially after this year's bruising budget battle when many members of Congress pledged to ruthlessly cut federal spending.

A couple of the report's more minor recommendations on grants can be carried out administratively, such as the creation of a cabinet-level board to oversee initiatives like the recently passed Urban Empowerment Zone program.

It also recommends that the President issue a directive limiting unfunded mandates on state and local governments.

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