A fiscal tug-of-war may erupt between the statehouse and Massachusetts local governments in the wake of President Bush's proposal last week to transfer federal aid from local municipalities to the states, city officials said last week.

Local leaders reacted to Bush's plan to divert up to $15 billion in grant programs by forming a coalition of Massachusetts mayors to fight the proposal. The group met Saturday to discuss the threat and to come up with a plan of action.

Mayors League

The Massachusetts Mayors Association, led by Boston Mayor Raymond Flynn, voted to fight the local aid cut, propose alternative cost-cutting options, and form a committee to hammer out a final solution with Gov. William F. Weld '66, the Boston Globe reported last week.

"What I'm foreseeing is a cutting of federal funds even more than in the past," said Cambridge Mayor Alice K. Wolf. "In the end they won't fund money, they'll just retract money. It's all smoke and mirrors," she said, referring to the federal government's attempts to camouflage cuts by switching funding from one program to another.

As a result of the federal cuts, "we're going to have very major cuts in Cambridge," Wolf said.

The federal plan comes at a particularly tough time for the city, which has already been severely hit by the Weld administration's stringent budget cuts.

State penny-pinching has already affected Cambridge's budget plans for the next year--which will operate under a one percent decrease--and will continue to affect the 1993 and 1994 fiscal years said City Budget Director Louis Vepasquale. Vepasquale said that the city is running this year's budget at the same level as last year's.

Although "it's difficult to put hardcore numbers together," Vepasquale said that the cuts will likely result in a 10 percent reduction in state aid. This figure translates into a loss of at least $4 million for the city.

"That's a pretty devastating cut right off the top," he said.

The city is also estimating at least another $2-$4 million loss from other state cuts in human services, Vepasquale said.

Wolf said the city might soon be forced to pick up a $1 million tab for teacher pensions that Massachusetts may no longer fund. And she said new charges on the city will include a $1.4 million charge for Medicare payments.

And according to Councillor Francis H. Duehay '55, Cambridge has few ways of generating revenue to offset the federal and state cutbacks.

"We have very limited access to new taxes," he said, adding that funding cuts will likely affect city programs in housing, transportation and child care.

"We will try to find ways to supplement [the losses], but we can't supplement totally," Wolf said, adding that unless the Massachusetts municipalities are successful in their fiscal battles with the state, the effects of the cuts will soon be evident in the streets of Cambridge.

"I think we're going to have a war between local and state government," Duehay said.