President Obama is considering a nearly eight-percent cut in federal funding for Community Development Block Grants (CDBG) to states and local municipalities. Often used to help with affordable housing and job training for lower income people, CDBG grants in 2010 totaled $4.4 billion. Obama’s current proposal would result in $300 million in lost aid.
While this may seem drastic, the President’s proposal pales in comparison to the one that was passed in Congress earlier this year which seeks to cut CDBG dollars by 62.5 percent in 2011 and eliminate it completely in 2012.
What is CDBG anyways?
Started in 1974 by President Ford, CDBG provides state and local governments with flexible grant dollars to address a wide range of community needs. Designed to support local decision making, CDBG currently provides financial assistance to 1209 state and local governments. It is one of the U.S. Department of Housing and Urban Development’s (HUD) longest continuously run programs. The CDBG statute “identifies poverty, neighborhood blight, deteriorated housing, physical and economic distress, decline, suitability of one’s living environment, and isolation of income groups, among others, as important components of community development need”.
So how does the CDBG formula work?
HUD’s formula for allocating CDBG funds includes variables that were identified in 1970 and last updated in 1978. Within this framework, funds are allocated between metropolitan cities and counties (70%) and the states (30%). Two separate formulas are used to allocate funds, both of which consider population and poverty rates. The two formulas differ in their consideration of overcrowding, growth lag, and housing stock. For all eligible grant recipients, the higher of the two scores is assigned.
What is happening in Minnesota?
In Minnesota, seventeen cities and counties receive direct CDBG appropriations, and many more benefit from pass-through dollars appropriated to the State.
In 2010 in Saint Paul, CDBG provided $2.1 million for programs including energy efficiency home rehabilitation, library expansions, youth empowerment initiatives, and neighborhood cleanup.
In Minneapolis the dollar amounts are even greater, with $14.4 million being allocated in the 2010 budget. This past year funds were spent on (among other things) low-income housing developments, graffiti removal, restorative justice programs, and youth violence prevention. As shown in the graph below, CDBG appropriations have been declining in the city of Minneapolis during the last twelve years.
Local government fights back!
Minnesota’s very own Elizabeth Kautz, Mayor of Burnsville, serves as the President of the United States Council of Mayors (USCM). Earlier this year a bipartisan group of 30 mayors had angry words to share about the potential cuts and strongly urged the Senate not to approve the Congress' proposal (video below). As succinctly stated by Philadelphia Mayor Michael Nutter, "Everyone knows that it works. You will hear as much about it from Republican mayors as from Democrat mayors".
BY Chris Romano