Community Development Funds in Budget Crosshairs

Among the many items awaiting Congress as it returns from spring recess is the little matter of the federal budget. President Bush has presented his proposal for the fiscal year beginning October 1. Now, it’s up to the Senate and House to agree on their own version and then start hammering out the appropriations bills.

Surely it will surprise no one to learn that cuts are coming. As part of his $2.77 trillion package, the President calls for elimination or significant curtailment of 141 domestic programs. Even then, expenditures will fall $354 billion short of revenues.

Given that context, it sometimes seems a bit unseemly to object to particular cuts. After all, everyone needs to shoulder their fair share. Right? The problem, however, is that rural America has been shouldering it’s “fair share” for a long time…and then some. As but one example, rural America gets fewer federal dollars per capita than does urban/suburban America, and even the dollars it gets tilt heavily toward subsidy rather than productive investment.

Sadly, and for the second year in a row, rural communities—and indeed communities of all sizes—are in the budget cutter’s crosshairs. And while the list of targets is long (see http://www.rupri.org/ruralPolicy/publications/2007budgetanalysis.pdf), one in particular stands out: Community Development Block Grants.

For those unfamiliar with the program, Community Development Block Grants (CDBG) are administered by the U.S. Department of Housing and Urban Development, which gives the grants to larger cities, counties and states. States, in turn, award their share of funding to smaller rural communities. The beauty of the program lies in its flexibility. Communities get to spend the money on the things that will best improve life for their moderate and low-income citizens--decent housing, better infrastructure and more economic opportunity.

As Jason Boehlert, Legislative Director at the National Association of Development Organizations put it, “The average person can’t tell you what the CDBG program is, but they can sure as heck tell you about the importance of the water treatment plant, the off-ramp, the sewer system or the senior citizen center that was built with CDBG.”

As for the program’s importance, Judge Penny Redington, Executive Director of the Texas Association of Regional Councils, had this to say, “There’s nothing else than can take [CDBG’s] place. Many rural communities have no other options for building and repairing infrastructure. It’s the only avenue available for many rural communities.”

So why then the administration’s willingness last year to eliminate CDBG entirely (Congress restored funding) or to slash it this year by 26 percent or $775 million?

One theory is that the federal government—specifically, the Office of Management and Budget, which develops the President’s budget and oversees spending—just doesn’t understand the program and all the good it does for middle- and low-income America. Indeed, an OMB evaluation of CDBG concluded that the program is “not performing.” That evaluation, say CDBG users and advocates is flawed, relying as it does on measures that simply don’t fit the program. As one bureaucrat who knows the program put it, “CDBG does a world of good, but how do we show it?”

Other theories suggest the administration doesn’t like the program because it’s most vocal supporters are big-city mayors—many of whom are Democrats; or because it thinks the program should be more focused on creating jobs in “development-ready” communities rather than on helping lagging communities become development ready.

Whatever the root of the administration’s dislike, Charlie Stone, Executive Director of the Texas Office of Rural Community Affairs, which handles CDBG funds for the state, sees great irony in the fact that an administration bent on cutting CDBG used the program to send some $11 billion in flexible aid to storm-ravaged communities to help them rebuild in the wake of Katrina and Rita.

“They’re contradicting themselves,” Stone told me.

Fortunately, the administration doesn’t have the final say on CDBG. And in all likelihood, Congress, as it did last year, will restore some of the program’s funding. Some, but not all. Faced with a big deficit and the need to appear fiscally responsible to a disgruntled electorate this November, Congress will still make cuts. As a result, rural communities across the nation will have to make do with less…again.