In the past eight years, Salt Lake City has seen millions of dollars in funding it once enjoyed disappear back into state and federal coffers, forcing city officials into an inescapable fiscal corner.

Support from the federal government to Salt Lake City as well as to other cities across the country has dwindled significantly because of the Reagan administration policy of "New Federalism," officials said.And money shared with the state of Utah has dropped dramatically over the years as the state Legislature, attempting to balance its own budget, voted to keep millions that once went to the state's capital city.

"I describe it as being put in a box with no room to turn in any direction," Salt Lake Mayor Palmer DePaulis said.

Because the state and federal governments "balance their budgets on the backs of the city," Salt Lake has been forced to raise fees, reduce services and maintain the status quo on property tax, officials said.

"And we're the ones that take the heat," said DePaulis, describing the city as the government with the closest relationship to the taxpayer.

Among the areas where losses have been most visible are the federal revenue sharing program, the federal Urban Development Action Grant program, Community Development Block Grants, state retention of city sales tax and the diversion of state road moneys.

In all these areas, Salt Lake City once enjoyed amounts ranging from thousands to millions of dollars. Now, in some instances, the city gets nothing or only a fraction of what its former slice of the pie was.

Federal revenue sharing, a program under which the federal government shared billions of "no-strings-attached" money with cities, ended in fiscal 1986. Salt Lake City immediately lost access to millions.

In fiscal 1985-86, the city received $4.4 million in revenue sharing funds. In 1988, Salt Lake City got nothing.

DePaulis points to the Reagan administration's New Federalism policy, ostensibly a means of shifting power to the states. But the policy fails to include the necessary monetary support.

"The box has gotten so that it's right against my nose," DePaulis said. "Local governments have taken the biggest burden for balancing the federal budget."

This summer, Congress killed the U.S. Department of Housing and Urban Development's Urban Development Action Grant program used to help Salt Lake City and other cities with economic development proj-ects.

"The old adage of doing more with less has been pretty poignant," city Capital Planning Director Rosemary Davis said.

Since 1985, the city has won $17.6 million in Urban Development Action grants for six economic development projects in the city, including the downtown City Centre project. Never again can the city expect such federal support.

Without it, the city won't see the $44 million contributed by developers to the project. Nor will the city be able to maintain its $300,000 economic development fund, an offspring of the Urban Development Action program, Davis said.

Other federal funds, such as Community Development Block Grants, which help fund housing, capital improvement and neighborhood proj-ects in low-income areas, have been halved - from $7.5 million in 1980 to less than $4 million this year, Davis said.

Utah's capital city hasn't only lost support from the federal government. Salt Lake City also has watched millions evaporate from its ledgers and reappear in the state of Utah's coffers.

A 1983 law passed by the Legislature changing the way local sales tax is distributed by the state Tax Commission really raises the ire of city officials.

Under the 1983 law, cities (and counties) could raise their sales tax by one-eighth to seven-eighths of 1 percent. In 1987, the state was to return another one-eighth percent to cities, creating a full 1-cent sales tax for cities.

But the 1985 and 1986 Legislature voted to keep 6/64 of the sales tax it was to return in 1987. The money was needed to pay for flood damage and the Great Salt Lake pumping project.

The state promised then to return that last fraction, valued now at $30 million by the Utah League of Cities and Towns, to municipalities in 1990 under a distribution plan based on point of sales and population.

Because the state is keeping some sales tax money, this year the city will lose a hefty $1.9 million in sales tax revenue it would have earned under the 1983 law, said Susan Roberts, a city revenue specialist.

The manipulation of the sales tax by the state is another example of the state "balancing their budget on the backs of cities and towns," said David Spatafore, lobbyist for the Utah League of Cities and Towns.

Moreover, Spatafore and Salt Lake officials complain that the Utah Tax Commission collects sales tax revenue from cities and redistributes it on a quarterly basis without paying interest in the interim.

No interest on, say, $2 million the state holds for Salt Lake City would cost the city $40,000 a quarter, city Finance Director Lance Bateman estimated. Yearly, that means a loss of $160,000 to the city.

The city has also lost road funding it once got from the state. The 1987 tax increase swelled highway user funds by $9.3 million at the state level, according to a Utah Department of Transportation annual report.

But much of those funds is being diverted elsewhere, particularly to the Utah Highway Patrol, so most cities saw a net decrease in state support, the report said. Salt Lake City lost $66,000 as a result of the diversion, the report said.

"Any kind of loss we look at as significant," Deputy City Engineer Rick Johnson said. The money would have gone a long way toward street repair and construction, he said.