Bush to Slash Community Development Block Grants

by Randy Shaw on January 17, 2005

According to a report in the January 14 Washington Post, President Bush’s proposed 2005-06 budget could cut HUD’s Community Development Block Grant (CDBG) program by as much as 50 per cent. Bush also plans to shift the CDBG program from HUD to the Commerce Department, a shift designed to ease the future elimination of the program. Bush’s proposal would cause a permanent $10 million annual cut to housing and economic development programs in San Francisco.

According to the Post story (“Bush Plans Sharp Cuts in HUD Community Efforts,” by Jonathan Weisman), the Bush Administration will argue that cuts in the CDBG program and other economic developments under HUD are necessary to end “duplicative” programs. But as Congressmember Barney Frank told the Post, “Clearly they are using consolidation as a shield for substantial budget reductions.”

San Francisco relies on its annual $20 million CDBG appropriation to fund the administrative overhead for most of the city’s community-based nonprofit housing corporations. CDBG is also San Francisco’s chief source of citywide funding for nonprofit acquisition or rehab of affordable housing.

An incredibly diverse array of nonprofit organizations receive CDBG funds in San Francisco (my organization, the Tenderloin Housing Clinic, has received such funds since 1983). CDBG is heavily relied upon in major urban centers, most of which are in blue states—hence its targeting by the Bush Administration.

CDBG is primarily a brick and mortar program, one that creates visible impact and thousands of jobs. Given the current state of the economy, one would think it would be the last of all programs to face the chopping block.

While the proposed cut in the $4.7 billion CDBG program could be as high as 50 per cent, the White House Office of Management and Budget says this has nothing to do with saving money. According to an Administration official, “what we are trying to accomplish is to meet our obligation to people living in distressed communities, to hold communities accountable for helping those people and to become more efficient in the process.”

So we are cutting housing and community development assistance to better serve the poor. And with far less money to administer, the process will almost certainly become more efficient.

We went through this fight during the Reagan years. While CDBG funding is less than half of its 1980 value if adjusted for inflation, the program has survived with only small actual dollar cuts along the way.

But the price of the fight to save CDBG in the 1980’s was steep, and the same will likely hold true today. This is because the all-out effort to save CDBG left fewer resources to protect related programs with a smaller political base, such as funding for the Legal Services Corporation and for public housing.

This means that the best-case scenario could mean that the CDBG budget is spared but major cuts are made to other housing and economic development programs. The Bush proposal will even try to eliminate $260 million for economic development programs targeted for this year — with the election over, the Administration and its allies presumably no longer need to appear to care about inner-city unemployment.

San Francisco’s Mayor’s Office of Community Development will likely take the lead in organizing the city’s opposition to the cuts, and this is a rare time where we are fortunate to have Dianne Feinstein representing our interests in the Senate. Feinstein was mayor during prior efforts to curtail the program, and she will likely make saving CDBG a top priority.

California benefits from CDBG more than any state, but do not expect our Governor to come out publicly-or to do anything privately– to defend the program. The Chronicle and Examiner are too busy extolling Schwarznegger’s “boldness” and “vision” to press him to resist Bush budget policies that hurt the state’s residents.

The key arenas for this national battle to save CDBG are likely Minnesota, Pennsylvania, New York and possibly Florida. Minnesota’s Republican Senator Norm Coleman was a former mayor of Minneapolis so he knows the program’s value. Coleman has to do a few things each year to support his “moderate” label and this is right up his alley.

Philadelphia and Pittsburgh both need CDBG funds, and with extreme reactionary Republican Senator Rick Santorum facing perhaps the toughest re-election fight in America in 2006, he might feel the need to protect programs in these two large cities. This is also the type of issue the state’s Republican Senator Arlen Spector can use to look moderate while he approves Alberto Gonzales for Attorney General and a slew of conservative judges.

New York City gets as much CDBG money as any city except possibly Los Angeles, and its incumbent Republican Governor George Pataki faces an uphill re-election fight in 2006 against the state’s current Attorney General, Eliot Spitzer. If Pataki cannot stop the CDBG cuts then the only logic for his re-election—that he can better access federal funds from a Republican President and Congress-is gone.

Florida has not historically been a player in battles over urban programs, but this might change with its Governor and a Senate seat open in 2006. But so long as Jeb Bush is calling the shots, it’s hard to see the state’s Republicans publicly opposing a Bush Administration policy.

Our biggest advantage is the thousands of groups across the country receiving CDBG funds, and the millions who have been helped by the program. While many of these nonprofit groups do not organizing, that better change in a hurry for CDBG to survive.

Experience with anti-poverty programs over the past two decades shows that once they are cut, a new status quo is created and their budgets rarely increase to prior levels. If CDBG cuts go through this year, or if the program is targeted for a slower death via transfer from HUD to Commerce, there will be no second chance to save the program.

Bush’s budget confirming the details of his war on CDBG will be released February 7.

Given what has already been leaked about the HUD budget alone—cuts to Section 8 and public housing, elimination of rural housing programs, deletion of already approved economic development projects-we are in for one wild ride.

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