WASHINGTON -- State and local governments would support block grants that provided less money if it meant they had more flexibility in how they could spend the funds, state and local leaders said Friday.

Their comments came as the National Governors' Association, the U.S. Conference of Mayors, the National League of Cities, the National Association of Counties, and the National Conference of State legislatures announced plans to continue the partnership they developed last year while working for relief from unfunded federal mandates.

"We are determined to work together" to help Congress understand what legislation we need for the common good of our constituents, said Jane Campbell, an Ohio state representative and incoming president of the National Council of State Legislatures.

State and local government officials have an "extraordinary opportunity" to work with the new Republican majority in Congress to help reshape the relationship between state and local governments and the federal government, said Ohio Gov. George V. Voinovich, the pointman on federalism for the governors association.

Part of that reshaping could include an increased use of block grants to help states and cities deliver services, he said.

President Clinton said in his nationally televised address Thursday night that he intends to propose turning "dozens of programs over to states and communities that know best how to solve their own problems."

House and Senate Republican staff members have also frequently advocated using more block grants, while turning away from detailed regulations spelling out how states and localities must achieve a given goal.

"The goal is clean air," for example, not meeting the numerous steps it takes to get there, Campbell said.

Block grants that allow added flexibility "would be better than what we have now, even if it means less money," Voinovich said.

State and local leaders "take pride" in the success they have had in the last year in winning support for legislation aimed at deterring Congress from imposing further regulations on states and localities without providing adequate funding to carry out the requirements, said Victor Ashe, mayor of Knoxville, Tenn., and president of the U.S. Conference of Mayors.

That so-called unfunded mandates legislation is a top priority for both the House and Senate leadership in the new Congress and is expected to be passed and signed by the President by the end of next month.

Building on that success, the coalition plans to "present a united front" on other federal legislative issues such as the proposed constitutional amendment requiring a balanced federal budget, Ashe said.

The coalition intends to be in the middle of those negotiations when they get started early next year to make sure the federal budget is not balanced on the backs of state and local governments, Voinovich said.

Other legislative priorities for the state and local government groups include:

* Simplification of current tax-exempt bond statutes that restrict state and local governments from financing public facilities.

* Regulatory reform of requirements for testing contaminants in local water supplies.

* Reauthorization for Community Development Block Grants and the HOME Program with continued funding at current levels.

* Maximum funding for the Intermodal Surface Transportation Efficiency Act and opposition to using transportation trust funds to balance the budget.

* Legislation that authorizes local governments to direct the flow of municipal solid waste.

Through these common interests, the coalition pledged to remain united.

In the past, Congress was able to pick the coalition apart, but now "we are committed to work together to represent state and local interests" said Randy Franke, commissioner of Marion County, Ore., and president of the National Association of Counties.

"Together we can get more accomplished than if we are divided," said Carolyn Long Banks, Atlanta councilwomanat-large and president of the National League of Cities.

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