The popular Community Development Block Grant (CDBG) program is fighting to survive. The Bush administration is trying to slash funding, while advocates, who are already predicting devastation from 2006 cuts, say the 2007 proposal would cause even more harm.
The CDBG Coalition, made up of groups pushing for increased funding, says cuts made to this year’s funding will slice services to more than five million low- and middle-income people.
Started in 1974, the CDBG program is a mainstay for state and local governments, valued almost regardless of political party. It allows flexible local spending for purposes serving low- and moderate-income people, including infrastructure, housing, economic development, and neighborhood improvements like tree planting. More than a quarter of fiscal 2005 CDBG grants went to housing or housing-related work, with the bulk of the rest going to public services and public improvements.
The Bush administration’s fiscal 2007 budget proposal would cut almost $1 billion from CDBG formula grants: a formal reduction from $3.711 billion to $2.975 billion, and, according to the National Association of Housing and Redevelopment Officials, a likely de facto cut of $200 million through a set-aside for incentive grants. But industry and Congressional sources predict strong advocacy will return CDBG at least to its 2006 level and might recover some of last year’s cut of about $400 million.
The budget proposal also seeks to change the program’s structure, including its grant formula. It again calls for a “Strengthening America’s Communities Initiative” (SACI), but abandons last year’s radical proposal to replace CDBG and several other grants with a program at the Department of Commerce.
The administration said it expects to send a proposal for changes to CDBG’s structure to Congress, but program advocates say legislators are unlikely to take up such issues until at least next year. Dianne Taylor, executive director of the Council of State Community Development Agencies (COSCDA), noted last year’s SACI proposal was never introduced in Congress; she doubted the formula proposal would be either.
The CDBG defense is already resuming. The CDBG Coalition has posted a survey detailing local effects of the 2006 losses and proposed 2007 cuts; industry groups are collecting success stories; Rep. Robert Ney (R-Ohio), chair of the House Financial Services Subcommittee on Housing and Community Opportunity, held field hearings in March where witnesses opposed the cuts.
Administration officials and industry representatives have meanwhile agreed on a set of CDBG performance measures, finalized in the March 7, 2006, Federal Register – a politically important step because the Office of Management and Budget has called the program “ineffective.”
Why cut CDBG?
So why does the administration want to cut CDBG funding? A spokesman for HUD would not say directly, referring instead to HUD Secretary Alphonso Jackson’s testimony before a congressional committee in March. In response to a congressman’s question about the rationale for the cuts, Jackson “argued that some cities do not need CDBG funds since they have the resources to pay for programs themselves,” according to a summary from the National Low Income Housing Coalition, whose accuracy HUD did not dispute.
Others have their own ideas about the administration’s reasons. Taylor suggested the current administration might have “a philosophical problem with block grant programs in general” – which she found puzzling given traditional Republican support for block-granting. She noted the fiscal 2007 budget proposal also calls for ending the Community Services Block Grant – and that the mere size of CDBG might make it a budget-cutting target.
When asked why the White House disliked CDBG, Rep. Barney Frank (D-Mass.) said it was “for being a domestic program. ... They don’t like any of them.”
Frank, the ranking Democratic member of the House Financial Services Committee, which would have jurisdiction over any CDBG formula revision, said politicians were only likely to accept changes to the program’s formula if they wouldn’t take money from existing recipients. At present, he said, most CDBG supporters are channeling their energy into preventing the cuts rather than debating the program’s structure.
Cardell Cooper, new executive director of the National Community Development Association, who oversaw CDBG in the Clinton administration as HUD’s assistant secretary for Community Planning and Development, said the more important question is, “are we slowly bleeding the program to death?”
Cooper said he knew that Jackson and Deputy Secretary Roy Bernardi understood CDBG’s value, but he was still hoping to meet and hear the views of Pamela Patenaude, who holds his former position at HUD.
He is not alone in his wish. Requests to interview Patenaude for this article were declined and few Washington housing advocates appear to have met her. But New Hampshire attorney Vincent Wenners Jr., a relative by marriage, said Patenaude learned the importance of community development programs from her maternal uncle John Mongan, who as mayor of Manchester, N.H., oversaw redevelopment projects that helped bring the city out of its post-industrial slump. That history would help explain why Patenaude’s career includes stints at HUD and in state-level community development as well as Republican party activism and staff work for the singularly conservative former Sen. Bob Smith (R-N.H.).
There is quiet agreement that CDBG’s current grant formula needs updating. For example, it still treats “pre-1940 housing” as indicating urban decay, which doesn’t account for renovation and unfairly favors the North and East.
A February 2005 HUD report, “CDBG Formula Targeting to Community Development Need,” proposes four alternative formulas of which HUD is believed likely to propose the fourth to Congress. (A spokesman confirmed HUD’s proposal would draw on this report.) It judges allocations’ fairness by a “needs index” whose 17 factors, critics note, were selected by the preparers of the study without public input.
The study reveals that allocations have been distributed unfairly, but not everyone agrees with its alternative proposals. Those include lowering aid to richer towns, ignoring the blight effect of vacant buildings, and refusing to count poor single non-elderly adults for fear of overpaying towns with large student populations. Formula Four would apply a single formula to all regions, whereas urban “entitlement communities” now receive 70% of CDBG aid.
Frank said targeting CDBG money only to poor areas was “anti-integration” because it would hurt the ability of richer towns to serve poorer people. He said redefining CDBG as a poverty program was part of “the general Catch-22 these conservatives try to do” – an attempt to reduce its support among moderate-income constituents. “First they say, oh, this program is only for the poor,” but “If a program is only for the poor it’s vulnerable.”