ABSTRACT
President Reagan moved quickly on domestic issues in his first year in office. In mid-February 1981, he proposed a series of major changes in domestic policy in the form of revisions to the federal budget for fiscal year 1982. As the Reagan domestic program began to unfold in late summer of 1981, many of the state and local governments in the sample were preoccupied with their own fiscal problems. Massachusetts and Boston were preoccupied with fiscal problems caused in part by self-imposed tax limits that overshadowed any immediate effects of federal spending cuts. Even where federal cuts had a direct effect on state and local budgets, the operation of the federal, state, and local fiscal systems offered several ways of easing the initial effects of the cuts. Federal aid for capital programs assists state and local governments in funding mass transit, sewer, airport, housing, highway, and other construction projects.
