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Michigan Groups Mobilize to Save Block Grants

Bush proposal threatens many local governments’ budgets

April 4, 2005 | By Charlene Crowell
Great Lakes Bulletin News Service


A federal block grant paid for new playground equipment at Grand Rapids’ Eastern Elementary School as part of a neighborhood revitalization project.

Galvanized by a Bush administration proposal to sharply cut funding for a popular program that supports economic development in municipalities across the country, a coalition of Michigan groups is urging state and federal officials to publicly oppose the idea.

The Michigan Coalition for Community Investment, which represents a growing number of governmental associations and citizen groups, says the 30-year-old program is crucial to large cities and small towns and is launching a major effort this week to stop the cuts. The program, the U.S. Department of Housing and Urban Development’s Community Development Block Grants, brought more than $150 million in federal funding to the state’s rural, suburban, and urban communities last year.  So called federal "block grants" are used to pay for housing, infrastructure projects, job training, broadband telecommunications, business assistance, municipal programs, and a host of other uses designed to improve the economy, increase jobs, and strengthen the quality of life.   

On February 3, Bush administration officials announced their proposal to merge CDBG and 17 other federal economic programs and reduce their funding by $1.9 billion. Those programs, now administered either by HUD, the Department of Agriculture, the Treasury, or the Department of Health and Human Services, would be transferred to the Department of Commerce and consolidated into two significantly smaller programs.

The announcement of the proposed cuts to CDBG are stirring up a storm in Michigan, a state which last week posted the highest unemployment rate in the nation. Faced with three straight years of hefty budget deficits, the state has already cut its primary support to local governments — state revenue sharing — for two straight years. Further losses of federal revenues, some local officials warn, would have dire consequences for all of the state’s cities and towns. Local jurisdictions are already struggling to maintain services and boost redevelopment efforts in areas that are fading due to high unemployment levels and sprawling development patterns.

Hard and Harder
Arnold Weinfeld, director of state and federal affairs for the Michigan Municipal League (MML), a statewide organization representing Michigan cities and towns, explained why his members oppose the proposed cuts, the move, and the consolidation.

 “In Michigan,” Mr. Weinfeld said, “examples abound in both large and small communities of the successes the CDBG program has had in creating stronger communities and a better quality of life.”

Although the proposed block grant cuts would affect many different kinds of communities, some officials say the reductions would hit the state’s largest and poorest cities particularly hard. Linda Smith, executive director of U SNAP BAC, a Detroit community development corporation and board president of the Community Economic Development Association of Michigan, said the proposal is a major threat to her city’s ongoing revival efforts: “Without many of these programs, we will not have the ability to rebuild our neighborhoods in Detroit,” Ms. Smith said.  

Using even stronger language, other Detroit leaders echoed her warning. In early February, Walt Watkins, the city’s director of economic development; Anika Goss-Foster, executive director of Detroit Local Investment Support Corporation; and Donna Givens Williams, chair of the Community Development Advocates of Detroit and executive director of Vanguard Community Development Corporation, issued a formal statement opposing the White House proposal.

The trio’s statement said the proposed cuts would be “devastating to a city already facing financial crisis,” and urged Congress and other elected officials to make strong public statements against the reductions “on behalf of a city that cannot withstand another major financial blow.”

Among the other Michigan organizations joining the statewide effort to prevent the cuts are the Southeast Michigan Council of Government (SEMCOG), Detroit Regional Chamber, Grand Valley Metro Council, Michigan Suburbs Alliance, and Michigan Land Use Institute.

Some Cross Party Lines
CDBG supporters point to what they say are the long-running program’s great success in stimulating investment in communities of all sorts. According to a coalition of organizations that lobbied Capitol Hill, including the U.S. Conference of Mayors, National Association of Counties, and National League of Cities, on average every dollar of CDBG public funding has leveraged approximately $2.79 in private funding for projects that boost local economies and employment levels.

According to one tally by several urban political groups, the program has leveraged close to $324 billion in privately funded economic development projects. Professor Stephen Fuller of George Mason University found that in its first 25 years CDBG projects generated two million jobs and added more than $129 billion to the U.S. economy. 

Michigan’s Congressional delegation is divided over the Bush proposal. On March 2, Democratic Senators Debbie Stabenow and Carl Levin joined 55 other senators from 33 states in signing a letter to the U.S. Senate Budget Committee that urged full restoration of CDBG funding and retention of HUD as its administrator. On March 17, both Michigan senators also voted with 64 of their colleagues for a resolution that amended the Senate Budget Resolution for FY 2006. The resolution, which passed, proposed to keep the program intact and funded at the current level.

Weeks before that vote, Republican Senator Norm Coleman, the resolution’s sponsor, had commended President Bush’s efforts to cut the deficit in half in five years and bring fiscal accountability to Washington. But days after the White House’s announcement that it wanted to cut CDBG, Senator Coleman conceded that he and the President now disagreed on how best to reduce the deficit.

“There are some areas where I think the President’s budget got it totally wrong,” Senator Coleman said. “The cuts and changes to the community development block grant program, the lifeblood of community development and revitalization, are nonstarters.”

Michigan Delegation Splits
While strong bipartisan support for CDBG is evident in the Senate, it is less so in the House of Representatives. Although 181 House members from 45 states publicly support CDBG, only 17 of them are Republican. So far, Michigan’s 15-member House delegation reflects that party line split. To date five Michigan representatives, all of them Democrats, have publicly taken a “no cuts and no move” position: John Conyers, John Dingell, Dale Kildee, Carolyn Cheeks Kilpatrick, and Sander Levin.

In some cases, the lack of support seemed surprising, given the amount of money the program sends to certain districts. For example, Representative Joe Knollenberg’s 9th Congressional District includes Farmington Hills, Pontiac, Rochester Hills, Royal Oak, and Troy; together those communities received almost $5 million in block grants in 2004. Thaddeus McCotter’s 11th Congressional District represents Livonia and areas of western Wayne and Oakland Counties; together, those areas received more than $10.5 million in CDBG funding last year. Both representatives hold influential House positions; Mr. Knollenberg is on the House Appropriations Committee, while Mr. McCotter is Assistant Majority Whip and a House Budget Committee member. 

Threatening Cities Large and Small
The program’s direct funding flows well beyond southeast Michigan and includes southwestern communities like Niles and Benton Harbor; central Michigan communities such as Midland; and western Michigan communities such as Wyoming, Kent County, Norton Shores, Muskegon, and Muskegon Heights — many heavily Republican areas.

One voice from the state’s west side speaking out for retaining CDBG is Grand Rapids Mayor George H. Heartwell. His city, the state’s second largest, has had much success in recent years rebuilding its badly faded core, thanks to both federal funding and private investments.

“You can drive through the City of Grand Rapids and see the success of the program in rehabilitated homes and improved sidewalks and streets,” he said. “You can talk to residents who say they feel safer as a result of organized crime prevention and neighborhood watch programs. You can talk to parents whose children are free from the hazards of lead paint. You can see public and private investment in businesses and housing developments. Without the CDBG program Grand Rapids and cities across the nation run the risk of reversing these positive trends."  

While CDBG is frequently viewed as a pro-urban program, it also assists small, often rural communities. In FY 2004, CDBG funneled more than $42 million through the Michigan Economic Development Corporation to such areas. These “non-entitlement” funds are awarded competitively and support economic development infrastructure and planning, grants and loans, and broadband telecommunications in cities, townships, and villages with populations of less than 50,000.

The program, according to MEDC’s guidelines, funds projects that cost CDBG no more than $50,000 and can be completed within 24 months. Recipients must demonstrate that private dollars will double the public investment. The projects must also retain or generate at least 10 permanent, full-time jobs costing CDBG no more than $10,000 each; assist existing, viable businesses; and, for infrastructure projects, use local revenues for at least 10 percent of the total funding. More than 1,600 local governmental units in Michigan were eligible to apply for the program last year.

Smart Growth proponents favor the MEDC small-town guidelines because they guide money toward existing communities rather than sprawl-inducing greenfield development.

The drive by Michigan organizations to stop the cuts is part of a larger, national effort. The National Association of Counties, National League of Cities, National Association of Housing & Redevelopment Officials, Local Initiatives Support Corporation, United States Conference of Mayors, and National Community Development Association are mobilizing their members to reverse the Bush proposal.

Tony Lentych, executive director of the Community Economic Development Association of Michigan, another strong opponent the cuts, warned that, even if groups manage to turn back the budget-slashing attempts this year, it is only the first of several such battles on the horizon.

“This was just a first attempt,” he predicted. “We will see this proposal again and again.”

For a list of Michigan jurisdictions that receive CDBG support directly from the federal government, as well as the amount each received in Fiscal Year 2004, click here. Charlene Crowell is the Michigan Land Use Institute’s Lansing and Detroit policy specialist. Reach her at charlene@mlui.org.

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