By SHELLEY DAVIS

ALTHOUGH no definitive answers about how to deal with these tight energy times came out of Sangamon State University's 1981 Intersession, "Energy Decade: Food, Resources and the Environment," one thing seemed apparent — these are also tight money times and dependency on the Washington purse for energy funding will have to end. If the Reagan budget is approved, the federal bucks that used to go to state energy programs will stop.

The first hint of what was to come in the energy arena came early in the Reagan administration with threats that the U.S. Department of Energy (DOE) would be retired from duty. This did not happen, but what came next were drastic cuts in most of the department's energy programs, despite a proposed overall budget increase of $1.6 billion for federal fiscal year 1982.

Spared from the Reagan trimming were defense (increased $1.4 billion) and nuclear energy research and development (increased about $860 million). However, renewables, conservation and coal weren't so lucky. In each of these areas, cuts of at least 50 percent were proposed. In addition Reagan hopes to divert hundreds of billions of dollars that will be reaped from the windfall profits tax away from alternative energy development and into Social Security and defense.

The effects of the cuts in energy programs will not be felt immediately at the state level since the state and federal fiscal years differ by three months. By this time next year, however, state officials are predicting that state energy programs in those areas of federal budget cuts will begin to run out of fuel. The only hope is funding from the Illinois General Assembly — a prospect that seems unlikely at a time when everyone is scrambling after every state penny.

So what does the state's future look like in its energy programs under the Reagan administration? First, the Illinois Institute of Natural Resources (IINR) will be out of business as far as energy goes. It will be facing a loss of about $3 million in federal funds for state fiscal 1983. This represents the total appropriation for conservation and other energy extension projects, spelling certain death for these programs next year. Even during the state's fiscal 1982, the crunch will be felt with a loss of about 17 percent in federal money. Alternative energy demonstration projects, however, will still be on board because they have been receiving about $2 million from the Coal and Energy Development Bond Fund. The state has appropriated $1.6 million for fiscal 1982 and IINR officials are hoping that will continue.

Coal, on the other hand, will not be as severely affected by federal budget cuts since it does not depend to a great degree on those dollars. Although Reagan has proposed scrapping the $3 billion Synthetic Fuels Program for fiscal 1982, Illinois will still be a candidate if any money is available. Money for a coal gasification plant project may also be available from the state's Coal and Energy Development Bond fund.

Efforts to increase use of Illinois coal will continue. Sen. Kenneth Buzbee (D., Carbondale), chairman of the Energy Resource Commission, has introduced a proposal that will create several coal agencies to coordinate coal research and also provide for a tax incentive program for industries that convert to Illinois coal. For the first budget year the program is expected to cost about $400,000 (estimates do not include the cost of the incentive program). Most of the money needed, Buzbee said, will come from the Public Utility Fund. This fund is made up of fees utilities pay to support the operations of the Illinois Commerce Commission and IINR. Presently, Buzbee said, the fund is about $5 million over what is needed for the operational costs of either agency and will be returned to the utilities if not used.

Buzbee also hopes to attract some federal dollars, which he admits will not be easy in light of the large cuts for federal fiscal 1982 in coal research and development. But he is pushing his program with the knowledge that he can't put all of his eggs into Washington's fiscal basket. The state, he said, can no longer afford to sit back and blame Washington for not developing its 162-billion-ton coal reserve. Illinois must move away from its pattern of consistent underfunded and inefficient programming efforts, he said.

Also on the chopping block for federal cuts is the weatherization program for elderly and low-income persons and the Low Income Energy Assistance program, both administered by the Illinois Department of Commerce and Community Affairs (DCCA). Not only is the funding level being cut, but the money for both programs will be combined with other grant programs. This will result in distribution of the funds being left to the discretion of local officials instead of being earmarked for particular needs. Fears at the state level are that the weatherization program, in particular, will cease to exist. It is a program that DCCA conservatively estimated saved about 600 barrels of oil equivalent during the heating season. The effects of these changes at the federal level ultimately will mean ever escalating heating bills for persons that can least afford them — the elderly and low-income.

The budget cuts mean a return to a time when the feds kept their noses out of the business of state and local governments, energy or otherwise.

And, like it or not, local governments will have to educate themselves and scrounge around for funds if they wish to cut down on energy consumption by conservation or alternative energy techniques. Local governments and the state will be forced to take a long, intensive look at what resources they have and how much they can afford to sink into an energy plan. At the state level, officials will have to re-evaluate the worth of their programs, eliminating those that don't produce in terms of energy saved versus cost incurred. □

2/ May 1981/ Illinois Issues