I am pleased to transmit this report on the relationship of my 1986 budget proposals to the policies enunciated in the Statement of Policy and recommended program for soil and water programs sent to the Congress in December 1982, pursuant to the Soil and Water Resources Conservation Act of 1977 (16 U.S.C. 2006).

My Fiscal Year 1986 budget seeks to foster strong economic growth, lower interest rates, and expansion of export markets. These objectives are especially important for the long-term well-being of the agricultural sector of the economy.

The 1986 budget sets forth a vigorous and concerted effort to reduce the annual deficit built into the Federal budget structure. With no action to curb spending, deficits would exceed $200 billion for each of the next five years and the ratio of Federal debt to gross national product would continue to increase to intolerably high levels. Deficit reduction, without additional taxes, is absolutely necessary to meet our national economic goals.

Therefore, my 1986 budget proposes significant reductions in spending from projected current service levels in many programs and complete termination of some. In total by 1988, the budget recommendations would reduce spending growth by $105 billion and reduce the budget deficit by 42 percent. Achieving these savings will require cutbacks, terminations, reforms, and management improvement in many activities. It will require realignments of financial responsibilities among the Federal government, State and local governments, and beneficiary groups in many program areas. Soil conservation activities are no exception.

The 1982 Statement of Policy called for a greater role for State and local governments in working with private landowners to solve their individual resource conservation problems. It called for more efficient use of Federal resources by targeting assistance to critical problem areas, by improving management efficiency, and by eliminating program overlap and conflicting objectives. It called for focusing our efforts on those areas with critical erosion problems and pointed out that stewardship of the land is primarily the responsibility of the private landowner. All these themes are reflected in my 1986 budget.

The 1982 Statement of Policy anticipated future conservation budget levels within the range projected by the Program unless the demands placed on our financial resources by other competing national goals and interests made it necessary to propose lower amounts. The 1986 budget does envision reduced funding levels for Federal conservation programs.

The budget will continue the basic technical assistance program at a reduced level that permits the Soil Conservation Service to establish national priorities and to continue to provide Federal leadership for a national conservation program. In addition, the Soil Conservation Service will continue a reduced soil survey information program and will continue to develop plant materials for erosion control. Basic research and extension activities will also be maintained. Resource data collection, analysis, and program development activities can be funded on an ``as needed'' basis rather than as continuous activities.

Other programs such as direct Federal payments to landowners for installing conservation practices and to local units of government for flood control projects and for local resource and economic development activities are proposed to be discontinued. For the most part, these activities are well within the financial capabilities of State and local governments and private landowners if they act together to deal with local resource problems. Many are already doing so. In addition, our market-oriented farm program proposals will reduce the economic incentives to devote marginal, erosion-prone land to row crops.

These changes will produce a budget savings for the five-year period 1986 - 1990 of $2.8 billion and still provide the Federal leadership and technical assistance needed in the soil and water conservation area.

I look forward to working with the Congress as you consider resource conservation programs in the context of our national economic needs in the months ahead.

Sincerely,

Ronald Reagan

Note: Identical letters were sent to Thomas P. O'Neill, Jr., Speaker of the House of Representatives, and George Bush, President of the Senate.