President Bush's policy of tax and spend has replaced the Reagan prosperity with the Bush recession and knocked state and local government budgets, which had grown flush with revenues during the 1980s, deep into deficit.

From New York to California, states are experiencing financial crises. Once-prosperous California faces a pit of red ink that is $13 billion deep.This is an enormous change from the 1980s, when state and local government budget surpluses offset much of the federal red ink - thus preventing the high inflation and interest rates that so many forecasters mistakenly predicted would follow in the wake of Washington's deficits. As a result of the state and local surpluses, the United States enjoyed one of the smallest public sector budget deficits in the world during the 1980s, thus contributing to the success of Reaganomics.

But now the revenues have disappeared along with the economy's growth, and a rec-ord federal deficit is accompanied by rec-ord state and local budget deficits. In every state taxpayers and businesses are scared, because they know the budget ax is going to fall on their spending, not the government's, as politicians release proposals for higher taxes with the same frequency as balloons in a July 4th parade.

The only reason for the higher taxes is to maintain swollen government payrolls that have grown many times faster than the population.

The Bureau of the Census of the U.S. Department of Commerce compiles statistics on the growth of population and public employment for each state. These statistics make it clear that our tax monies are used for little else than padding public payrolls.

New York is in fiscal crisis, in part, because during 1980-89, while its population grew 2 percent, public employment grew 30 percent - 15 times faster.

New Jersey last year enacted the largest tax increase in the history of the 50 states because, during the decade when its population grew 6 percent, public employment rose 29 percent.

Kentucky, Indiana, Kansas, Maine, Massachusetts and Wyoming also managed to pair low population growth, ranging from 1 to 7 percent during the decade, with a rapid expansion in government employment, ranging from 24 to 33 percent.

Only 11 states bucked the trend: Alaska, Arizona, Louisiana, Maryland, Montana, Nevada, New Hampshire, New Mexico, Pennsylvania, Rhode Island and West Virginia.

Government has ceased to be our servant and has become our master.