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Cuts to Block Grants Spark Bipartisan Outcry

Local leaders say reductions would be extra hard on Michigan

May 26, 2006 | By Charlene Crowell
Great Lakes Bulletin News Service

City of Jackson

In Jackson, city officials used some CDBG funds to improve accessibility for lower-income residents with disabilities.

Alarmed by a Bush administration proposal calling for further large budget cuts to a longstanding and popular community development program, elected and appointed officials around Michigan and across the country are organizing to defeat it.

The Bush proposal would cut the U.S. Department of Housing and Urban Development’s long-running Community Development Block Grants for next year by approximately $1 billion. That would reduce the program’s budget, which stood at $4.3 billion two years ago, to $2.7 billion next year—a 38 percent reduction since 2004.

Supporters of CDBG funding assert that the reduction is ill-conceived because the program works so well for so many communities. They add that, for the program to work correctly for the more than 1,100 towns and cities that receive the federal funds, the CDBG budget funding should not fall below $4 billion.

In previous years, most of the resistance to such cuts came from CDBG advocates who traveled to Washington, D.C. to testify against them. But in recent months, advocates have taken a different approach. Instead of wandering the halls of Congress, they are staying home and mobilizing residents and organizations there to attend local forums that present their members of Congress with direct, unvarnished, local perspectives on the program. The refrain at the forums is consistent and bipartisan: retain and fully-fund CDBG.

Activity in Michigan mirrors that nationwide pushback. From liberal and highly Democratic Detroit, to conservative and highly Republican Grand Rapids, and in dozens of suburbs with many different political colorations in between, elected leaders are telling representatives and senators that CDBG deserves full funding. They say that the program works so well because it allows local governments to set their own priorities for funding roads, water and sewer lines, public health and safety concerns, neighborhood revitalization, and local housing.

Some observers say that CDBG is even more crucial in Michigan because the state has the nation’s highest unemployment rate and soaring numbers of home foreclosures and personal bankruptcies. These trends, they say, are harming local budgets and stalling badly needed efforts to improve built-up areas in older rural, suburban, and urban regions. All have been losing economic vitality for decades in the face of sprawling development and the state and federal subsidies that encourage it.

A Windshield Tour

The Bush administration proposal would accelerate cuts to block grants for Michigan and other states.
Click here to enlarge diagram
According to the National Association of Housing and Redevelopment Officials, a Washington-based housing advocacy group,support for Michigan’s 48 “entitlement communities”—local governments that receive CDBG funds without having to compete for them—and the state’s own program, which awards money to other communities competitively, would fall from 2004’s $154 million to $99 million in next year’s budget, amounting to a 36 percent reduction in three years. The cuts’ effects would be widespread: 14 of the state’s 15 Congressional districts contain entitlement districts.

Those numbers—and a study of how such cuts would affect the six entitlement communities in his district—inspired U.S. Representative Sander Levin, a Dearborn Democrat, to join Paul Tait, the executive director of the Southeast Michigan Council of Governments, for a “windshield tour” of Southfield and Warren.

“Seeing firsthand how the CDBG program has allowed Warren to improve its residents’ quality of life,” observed Representative Levin after the tour, “has reinforced for me how critical it is that we stop the irresponsible cuts the president has proposed to the CDBG program. Our local governments in Southeast Michigan are already stretched thin, and these additional cuts will force hard choices that will hurt our communities.”

The study that Mr. Levin requested, performed by the Congressional Research Service, found that Warren’s appropriation for next year would be 20 percent lower—or $179,000 less—than last year’s, which was about $887,000.

According to a summary provided by the City of Warren to the Great Lakes Bulletin News Service, since 1982 the city has received CDBG funding totaling almost $29 million. The city spent the bulk of that amount—slightly more than $14 million—to rehabilitate 1,050 owner-occupied single-family homes, or about $14,000 per home.

Warren officials have spent the rest of the money on local road reconstruction projects, handicapped-accessibility, building code enforcement, blight removal, a new fire station and rescue equipment, and improvements to six municipal parks.

Representative Levin and Mr. Tait also were told during their tour that the CDBG cuts would jeopardize a highly successful program in Southfield. That city’s mayor, Brenda Lawrence, and on of its councilmen, Donald Fracassi, said the program assists low-to- moderate-income homeowners with lead-based paint abatement, roofing, and weatherization work. The program currently helps about 24 low- to moderate-income homeowners a year save money on healthcare, more expensive home repairs stemming from poor maintenance, and energy costs. As does the Warren program, Southfield’s project protects the city’s tax base by preventing blight, which lowers property values.

Known as the Southfield Home Improvement Program, the effort awards funds on a sliding scale and come in the form of low-interest loans. As homeowners repay them, the money is then used to help other homeowners. Without continued federal funding, the program will have to reduce the number of homes it helps each year.

According to Mayor Lawrence, “Many Southfield residents who have found themselves in desperate need have been helped by this important emergency relief funding. CDBG funds are of vital importance to Southfield and every other metro-area community.”

Among other activities, Southfield also uses CDBG funds to repair roads and support a seniors’ bus system, neighborhood code enforcement, emergency relief, youth education and enrichment programs, and an ash-borer control program.

One Region’s Concern
Regional leaders are also voicing their concern about the cuts. For example, on April 28, the Southeast Michigan Council of Governments’ executive committee unanimously endorsed a resolution urging Congress to fund CDBG at $4.5 billion in FY 2007 and reject any formula changes that would harm communities currently receiving such funds. 

SEMCOG Manager of Community and Economic Development Naheed Huq pointed out that her agency, the state’s largest metropolitan planning organization, is doing more than voting for a unanimous statement of support.

“During National Community Development Week,” Ms. Huq told the Great Lakes Bulletin News Service, “executive committee members and other community representatives also accompanied SEMCOG staff on visits to local Congressional offices. They provided information on how the CDBG program is used within individual communities for neighborhood revitalization, public services, and economic development that primarily benefits low- and moderate-income households.”

“CDBG continues to be recognized as one of the most successful federal community development programs,” Ms. Huq added, “because of its flexibility that allows local decision makers to address local needs.”

The deputy director of Detroit’s Department of Planning and Development, Alan Levy, said he was glad to hear of SEMCOG’s strong support of federal block grants. He said that the grants are “vital to the health of Detroit’s neighborhoods and the metropolitan region as a whole.”

Detroit has already seen its federal block grant fall 16 percent since 2004, from $45.8 million to $38.8 million. The Bush proposal would cut Detroit’s funding by another $9.8 million next year.

Colin Hubbell, a Detroit developer involved in a number of projects that are bringing new housing and business activity to the economically distressed city, said he was glad SEMCOG is taking such a strong stand.

“SEMCOG’s support is important symbolically and in practice,” Mr. Hubbell said. “And I think that in the recent past, when almost every type of funding mechanism has eroded for the Motor City, SEMCOG’s actions in effect draw the line and say to everyone, ‘Enough.’” 

A Cross-Country Movement
The hue and cry against cutting block grants extends well beyond one of the nation’s most economically troubled state. During the recent Congressional spring recess, many legislators responded to the complaints they are hearings in their home districts by holding hearings on the matter.

In Ohio, U.S. Representative Robert Ney, the Republican who chairs the Housing and Community Opportunity Subcommittee of the House Standing Committee on Financial Services, held hearings in Mount Vernon, Cambridge, and Logan, Ohio.

“I have significant concerns about these proposed funding levels for CDBG,” Representative Ney said, “and I look forward to staying engaged in this debate as the budget and appropriations process moves forward.”

And in California, Democratic Representative Maxine Waters, the same subcommittee’s ranking member, held a hearing along with Representative Ney in Los Angeles on April 12. The event drew a remarkably large crowd: More than 700 citizens representing over 100 CDBG programs turned out.

Vowing staunch opposition to the proposed cuts, Representative Waters said: “CDBG is a program that benefits all of America and is popular with both Republicans and Democrats. Unfortunately, the president’s proposed cuts are just the latest example of this administration’s disregard for the will of Congress and the American people.”  

The results of the campaign to reverse the Bush administration’s cuts will become apparent soon. The House Committee on Financial Services anticipates subcommittee reports to be completed within a few weeks. If that happens, the House Appropriations Committee could take action on the question before the upcoming Fourth of July recess. 

If Congress heeds the candid concerns expressed by Representative Waters, the final House vote on funding next year’s CDBG funding could mark a dramatic reversal.

“My colleagues and I are deeply troubled by the proposed cuts to CDBG,” Ms. Waters said. “By acquiescing to these cuts, the Department of Housing and Urban Development is abdicating its responsibility to communities nationwide that depend on these funds.”

Charlene Crowell is the Michigan Land Use Institute’s state policy director. Reach her at charlene@mlui.org.

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