Do you know which government program contributed an average of 147,000 jobs and $13.1 billion to the U.S. economy annually between 2003 and 2008? Did you know that the same program has
lost more than $1 billion in funding since fiscal year 2010? Although county and city officials identify it as one of the most successful domestic federal programs, the U.S. Department of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) Program is on the chopping block yet again due to the sequester.
For over 40 years, the CDBG Program helped states and counties with federal dollars in assisting low- to moderate-income residents and spur local economic growth. The money goes directly to states and large cities (populations over 200,000), while counties with populations fewer than 200,000 and small cities with populations under 50,000 compete for funding from the state-run CDBG programs. HUD allows grant recipients to use these funds in various ways as long as it benefits low- and moderate-income persons, prevents or eliminates slums or blight, or addresses other urgent community development needs.
These federal grants have been used to create “business incubators” to revitalize historic areas and construct affordable housing, and to build senior centers. For example, the Georgia State CDBG Program awarded the town of Social Circle in Walton County $500,000 in CDBG funds to rehabilitate the rail system in order to persuade General Mills to locate a new SE distribution center in Social Circle. After the guarantee of rehabilitated railroads, General Mills built a 1.5 million square foot gold-certified LEED facility with $43.7 million in private investment and generated 200 new jobs. Often, counties and other local grantees use other resources to match CDBG money. According to HUD, the CDBG Program leverages an average of three dollars in non-CDBG funding for each CDBG dollar. This shows how states and local governments have maximized the impact of CDBG funds through private and public partnerships and efficient management.
What about the sequestration effect?
According to the Office of Management and Budget Report to the Congress on the Joint Committee Sequestration for Fiscal Year 2013, all of HUD’s programs await a five percent funding decrease due to the sequester. Therefore, an additional $165 million could be cut from the CDBG Program’s 2012 funding level of $3.3 billion. States, cities and counties rely on these funds to provide services for their most disadvantaged residents. With another decrease in funding, communities will be forced to fill gaps in their budgets by raising taxes or cutting back spending on local projects. In this fragile recovery, this is the last thing that counties need.