[URBANTH-L] NEWS: Dramatic Cuts for the Dept of Housing and Urban Development (HUD)

[Angela Jancius]

This article, which was just forwarded to me, should interest many of you
who are working with poor/urban populations in the U.S.
- AJ


Bush Plans Sharp Cuts in HUD Community Efforts

By Jonathan Weisman
Washington Post Staff Writer
Friday, January 14, 2005; Page A01

The White House will seek to drastically shrink the Department of Housing
and Urban Development's $8 billion community branch, purging dozens of
economic development projects, scrapping a rural housing program and folding
high-profile anti-poverty efforts into the Labor and Commerce departments,
administration officials said yesterday.

The proposal in the upcoming 2006 budget would make good on President Bush's
vow to eliminate or consolidate what he sees as duplicative or ineffective
programs. Officials said yesterday that economic development programs are
scattered too widely in the government and have proved particularly
ineffectual at HUD.

Advocates for the poor, however, contended that the White House is trying to
gut federal programs for the poorest Americans to make way for tax cuts, a
mission to Mars and other presidential priorities. Administration officials
would not say how much the consolidation would save, but it could lead to
steep funding cuts. That is because the HUD programs would have to compete
for resources in Commerce and Labor budgets that are not likely to expand to
accommodate the shuffle.

"I'm always willing to look at consolidation, but clearly they're using
consolidation as a shield for substantial budget reductions," said Rep.
Barney Frank (Mass.), the ranking Democrat on the Financial Services
Committee, which has jurisdiction over housing and community development
programs.

The plan was detailed in a December memo from the White House Office of
Management and Budget to HUD. The document provides one of the first
concrete examples of the types of cuts in the works as the administration
comes to grips with a soaring deficit.

"The purpose of the exercise has nothing to do with achieving or not
achieving savings," said one administration official, who spoke on the
condition of anonymity to avoid preempting the Feb. 7 release of the
president's fiscal 2006 budget request.

"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," another official said.

HUD programs to be moved under proposal             Program's annual cost
Destination

Community Development Block Grant                             $4.7 billion
Commerce
Youthbuild USA high school dropout outreach                 $62 million
Labor
Brownfields Economic Development                                $23.8
million                     Commerce
Rural Housing and Economic Development                      $23.8 million
Eliminated
Empowerment Zones/Renewal Community                     $9.9 million
Commerce

SOURCE: Office of Management and Budget | Graphic: The Washington Post

Congressional housing aides say the $4.7 billion Community Development Block
Grant (CDBG) program -- the bulk of the community planning budget -- could
be cut as much as 50 percent. Cities have become dependent on HUD's
development programs, especially the CDBG, which has existed for 30 years,
city officials said. Stanley Jackson, director of the D.C. Department of
Housing and Community Development, said the city has used CDBG grants of $21
million to $22 million a year for clinics, recreation centers, day-care
facilities, literacy programs and housing development.

With housing and property values skyrocketing, the need for such programs
for low-income families has never been higher, he said.

"If this is a backdoor way of eliminating a program like CDBG, it would have
a profoundly negative impact on cities," said Jim Hunt, a vice president of
the National League of Cities and a city council member in Clarksburg, W.Va.

Under the plan, the CDBG program -- which provides multipurpose development
grants to state and local governments -- would be sent to the Commerce
Department. The Urban Empowerment Zones and the Renewal Community
programs -- both of which offer tax incentives for development in urban or
other troubled areas -- would also go to Commerce, as would the Brownfields
Economic Development Initiative, designed to revitalize abandoned industrial
sites.

Youthbuild USA, a $62 million program to teach teens home-construction
skills, would be sent to the Labor Department. The $24 million rural housing
and economic development program would probably be eliminated.

HUD would maintain the Home Investment Partnerships to build or buy
affordable housing, homeless assistance programs and housing assistance for
AIDS sufferers. The budget would eliminate $260 million in economic
development projects earmarked for this year by lawmakers. HUD could
ultimately lose a quarter of its $31 billion budget.

White House officials said HUD employees would have to stay on the job to
oversee outstanding grants for some time. But with Bush promising an
aggressive attack on domestic spending, the 817 HUD community planning and
development employees are girding for the worst.

"It's a body blow," said one career employee, who spoke on the condition of
anonymity for fear of being fired.

The proposal could face an uphill fight in Congress, said Frank, who called
the proposal "just appalling." With budgets tight, vested interests in the
Commerce and Labor departments would be expected to favor their programs
over the newcomers from HUD. "It wouldn't even be a fair fight," he said.

Moreover, HUD has evolved into an agency designed to support urban interests
and low-income citizens, while Commerce and Labor are more receptive to
business needs. Indeed, community development programs at HUD are far larger
than those at Commerce and Labor, said Saul Ramirez Jr., executive director
of the National Association of Housing and Redevelopment Officials and a
former deputy secretary of housing. The Commerce Department's Economic
Development Administration has a $320 million budget, a fraction of CDBG's
allocation.

"If there are any programs in Commerce that encourage direct economic
development to some of the most disadvantaged and blighted areas, those
programs are dwarfed by these programs," he said. "If [consolidation] is
what they want, the reverse should be proposed."

One White House official agreed that HUD programs have more of a community
focus, while the Commerce Department's Economic Development Administration
is more interested in economic growth. But, he said, "they're funding a lot
of the same things."

HUD's city focus may be why the White House is dismantling the HUD programs,
Frank charged. "HUD is the place where mayors and urban interests can put up
the strongest fight," he said.