The state of the State By DIANE ROSS

New federalism splits states

ONLY A HANDFUL of us showed up to cover the news conference Maryland called on the balanced budget amendment. It was midway through the six-day National Conference of State Legislatures in July in Chicago. So far the Conference looked like the other conventions in residence at the Hyatt Regency that week.

Almost all the reporters covering the National Conference were members of the Statehouse press corps in Springfield. Most of us had never covered a national political convention, let alone the U.S. Congress. But we had covered the Illinois General Assembly, and we expected the legislators to be doing something. David Broder of the Washington Post was there, but he didn't seem to know what they were doing; he found this conference helpful in sounding out congressional elections.

Broder must have known Maryland's news conference would be a bust: he didn't show up. We couldn't figure out what the balanced budget amendment had to do with the National Conference of State Legislatures, and the Honorable James Clark, president of the Maryland Senate, couldn't tell us. We gave him one last chance to give us a story.

If the National Conference had not taken a position on the balanced budget amendment, we asked, why was Maryland holding a press conference but not sponsoring an endorsement resolution? Because, he answered, resolutions have to be introduced far in advance, sponsored by more than one state and the process is too complicated for most delegates to understand. Come on. A legislative process too complicated for legislators? They know Robert's like bridge players know Hoyle.

The more we thought about Clark's answers the more we suspected the National Conference of State Legislatures was just another Illinois General Assembly — with 10 times the members. Leadership was probably backstage pulling the strings while the rank and file was down front watching the show.

The next day, the delegates got down to the voting. We weren't surprised the vote was so political; we just weren't sure who was on what side — and why.

New federalism dominated the National Conference; the position the states would take dominated the business meeting. Months earlier, the leadership of the National Conference (including Illinois Senate President Phil Rock, a Chicago Democrat and state party chairman) had drafted a resolution that implied the states had not yet taken a position on new federalism. The rationale was to keep negotiations open since Reagan was still detailing his proposal that the states swap Medicaid for AFDC and Food Stamps. But the wording of the resolution split the leadership; the minority argued that Reagan would infer that, by their silence, the state legislatures condoned the swap.

At the Chicago conference, a counter resolution to avoid such implications was drafted by the rank and file (led by independent Chicago Democrats and others in the Illinois delegation: Woody Bowman, Ellis Levin, Eugenia Chapman, Alan Greiman, Glenn Schneider, Dawn Clark Netsch and Susan Catania). It simply said that the states would neither accept nor reject Reagan's swap until he had spelled out every last detail. The leadership quickly killed the counter resolution in committee, but on the floor during the business meeting the rank and file moved to amend the original resolution. This move split the leadership again and left it powerless.

The business meeting at the National Conference looked a lot like a national political convention, except it was considering a host of resolutions instead of candidates. And, the rules were loose when it came to delegates — any state legislator was welcome.

The new federalism resolution was last on the agenda, and on the key vote to approve the amended resolution, the

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states deadlocked 22-22, with Illinois still to vote. Its delegation was also deadlocked 11-11. But in walked Rep. LeRoy Van Duyne, a Democrat from Joliet, and he voted for the amended resolution. In the final minutes of the business meeting, the National Conference of State Legislatures finally made news: it had refused to condone Reagan's swap. The real story was that the states had split over the new federalism, and in the eight-year history of the National Conference of State Legislatures, which represents the merger of four predecessors, no vote had ever been this close, no issue this controversial, no session this political.

How did that happen? By design or by accident? What about next year?

Broder suggested some answers: Small states no longer dominating large states at the conference; the gavel passing from the conservative Ross Doyen, Kansas Senate president, to the liberal Bill Passanante, New York House speaker; Republicans at the mercy of Democrats with the off-year elections only three months away. One legislator-delegate offered a simpler explanation -- and Rock (who voted for the amended resolution) agreed: The new federalism divides the states that have from the states that have not; the states that stand to win under Reagan's swap, from those that stand to lose; the states that can afford the loss from those that can't.

At the heart of the new federalism are the roles the federal, state and local governments play in the financing of the delivery of services. That hasn't been sorted out since the Federalist Papers were first published. Reagan has yet to lay out his guidelines.

Clearly the new federalism has the potential to create new coalitions among the levels of government and among the states. It could even provide shifts in power relationships between the legislative and executive branches. The question remains: How powerful is the National Conference of State Legislatures?

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