MINNEAPOLIS -- President Clinton yesterday urged Congress to quickly pass legislation next year to curb unfunded federal mandates and laid out the conditions under which he would support a middle-income tax cut.

But in outlining his 1995 legislative priorities to a meeting of the National League of Cities, Clinton failed to mention a plan for increasing infrastructure financing that he said several months ago was in the works at the White House.

On unfunded mandates, Clinton said he is "working closely with lawmakers to make this bill a priority early, early in the next session of Congress."

House Republicans have also said ending unfunded mandates is a priority for them and made anti-mandate legislation a part of their Contract With America. Several top Republicans support the legislation, including Sen. Dirk Kempthorne, R-Idaho, and Rep. Tom Bliley, R-Va., the prospective chairman of the House Energy and Commerce Committee. Legislation to deter Congress from imposing unfunded mandates on states and localities was approved by House and Senate committees this year, but neither the full House nor Senate acted on the measure, which died when Congress adjourned in October.

Clinton, who spoke via satellite from the White House, also told the city officials that while he wants to see middle-income Americans receive a tax cut next year, such a cut should not bust the budget.

"I favor a middle-income tax cut," he said, "and I don't rule out working with the Republican Congress," which has said it wants to pass a tax cut. But Clinton said he would back a cut only "if we do it with real discipline and care."

The president said he has three standards for a middle-income tax cut: It would have to raise the incomes of middle-class Americans, help create jobs, and not increase the federal deficit.

Among his other legislative priorities, Clinton said he wants to pass a welfare reform bill and take another stab at reforming the health care system.

But the president was noticeably silent on the issue of infrastructure finance.

In July Clinton told a televised town meeting in Rhode Island that he would offer a plan for improving infrastructure finance to Congress in 1995. Several weeks later, White House aides said such a plan would be part of the president's fiscal 1996 budget proposal, which is expected to be released in February. As part of the process of developing the plan, the League of Cities in July gave White House officials, at their request, a proposal for easing curbs on tax-exempt bonds to promote infrastructure improvement and capital investment in economically distressed areas.

But over the last few weeks, administration officials explaining the White House's agenda for next year have not mentioned the infrastructure plan. In addition, National Economic Council head Robert Rubin canceled a trip he had planned to make here to brief the league of cities' board of directors on the progress the administration has made in developing the plan.

But the league's president, Mayor Sharpe James of Newark, N.J., said he was not concerned by Clinton's failure to discuss infrastructure in his speech.

"I think the president is still mindful" of the infrastructure issue, James said during a news conference yesterday. "I don't think he's abandoned that."

The league's chief lobbyist, Frank Shafroth, also said he believes the White House is still trying to come up with an infrastructure plan, but added that administration officials may be having some difficulty figuring out how to keep those proposals from adding significantly to the federal deficit.

"It's clear they are still trying to figure out how the president's budget can include some initiatives," said Shafroth, who is the league's director of policy and federal relations.

But other lobbyists have said they are more pessimistic. One said the administration appeared to be narrowing its agenda for the coming year and that infrastructure may fall victim to the cutback.

The lobbyist also said administration officials don't seem very close to having a plan. "These people have been talking for a year and it doesn't seem like they've gotten anywhere," the lobbyist said.

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