Koch sees Reagan as net gain for New York City

The mayor of the nation's largest city says he is highly optimistic about how big cities will fare with a Reagan administration in Washington. For his part, New York Mayor Edward I. Koch, a Democrat, says he already has established a "good relationship" with the Republican President-elect and notes that Mr. Reagan has already made specific commitments to aiding the city.

Nonetheless, the mayor conceded in an interview with the Monitor at his City Hall office that he remains "worried" about potential federal aid cutbacks.

"Sure, I'm worried about federal budget cuts," the mayor said. "I worried about the Carter budget, too. You have to understand that while the Carter people were quite good to us in terms of grants for specific programs over the three years of my administration, they actually cut us back in budget support by over $500 million.

"So while it [th federal government] gave on the one hand for special programs, it reduced the budgetary support that goes into [the] regular reasury that makes it possible . . . to have police, fire protection, corrections, and education. It reduced that part of it."

Commenting on President-elect Reagan's specific commitments to New York -- including a continuation of the federal loan guarantee program of emergency fiscal relief begun under President Carter -- the mayor revealed that a rEagan administration could be a net gain for the nation's largest city.

Underlying this optimism is the close working relationship that Mayor Koch already has formed with the President-elect -- a relationship which has started to spill over into their personal lives. The mayor has invited Reagan and his wife Nancy to stay at his official residence, Gracie Mansion, anytime they come to New York.

"I've established a good relationship with President-elect Reagan," the mayor stated. "And what we had with Carter was not so good, for us anyway."

While Koch's widely publicized pre-election meeting with GOP candidate Reagan and his advisers angered both President Carter and local Democrats, it serves to point up the business-before-politics approach to city government that has made Koch the best-liked mayor here since the late Fiorello La Guardia.

"I'm trying to run this city in a nonpartisan or bipartisan way in the sense that I want to run it as a first-rate business, . . . and I think President-elect Reagan appreciates the fact that for the first time in years this city has a truly 'gap'-balanced budget" -- one that is balanced according to the private sector's generally accepted accounting procedures.

In fact, many Democrats and Republicans alike say Koch is more like a Republican than a Democratic in both philosophy and practice.

The city is expecting more than a balanced budget. For the first time in nearly 20 years it may end the fiscal year with a cash surplus, according to a report by New York State's deputy comptroller, Sidney Schwartz. Mr. Schwartz estimated the surplus could be as much as $300 million on June 30, 1981. Mayor Koch says this estimate is probably too high.

"It's not as much as people think, but it is true, it looks like we will have a surplus," he said. He listed three major reasons: "There's been more action in the stock market and we get a tax on stock sales," "our real estate values have held up well," and "our sales taxes have increased."

To this brighter fiscal picture is added what Mr. Reagan has promised New York. According to Koch, this entails:

* A firm commitment that the new Treasury secretary will approve the remaining $600 million in federal loan guarantees for New York already authorized by Congress for fiscal year 1982.

* "The removal of special federal mandates such as special education for handicapped children or sludge removal from the harbor -- mandates which Congress has imposed upon us without giving us the dollars to meet the mandates.

"My position has been if the mandates are imposed by the federal government, th federal government should pay for them," Koch continued. "President-elect Reagan agreed. He said he believed that if the federal government mandated a locality to do something, it should pay for it. He said he would lift the mandates if the federal government doesn't pay for them."

However, in a third area of vital concern to New York and other major cities -- a complete federal assumption of welfare and medicaid costs -- the mayor expect little or no change for at least two years.

New York City's share of both welfare and medicaid benefits amounts to a whopping $1.1 billion annually, with $360 million of this total for welfare.

But the mayor said the city is making steady progress on its own in significantly reducing the welfare costs by cutting down on fraudulent claims.

Koch was optimistic about Reagan's effectiveness in presenting a strong US position on the Mideast. The mayor said:

"I think that the Reagan administration will be even better than the carter administration in the sense it will make it clear to the other Arab states and non-Arab states in the area -- and I'm talking about the Soviet Union -- that the US will not hesitate to protect its national interests; and I think the Soviet Union and some of the Mideast states there thought of us as a paper tiger , and I think Reagan is going to change that view."