|Proposed Budget Cuts
Impacting Community Development
The 2007 Bush Administration Budget On February 6, President Bush
submitted his FY 2007 budget to Congress. The $2.77 trillion proposal
cuts discretionary funding by 5% or $15 billion by eliminating or
reducing 141 programs, cutting overall spending in more than a dozen
departments and agencies, and shrinking entitlement programs, including
Medicare by $65 billion over 5 years. The budget also includes
significant increases in the Defense and Homeland Security budgets. In
addition, the President proposes to make the 2001 and 2003 tax cuts
permanent, which over time would squeeze funds available for
discretionary spending even more.
The Budget's impacts include:
- An overall $2.1 billion cut in HUD budget. There is more
money for Section 8 vouchers and project-based funds, the HOME program,
and for Homeless Assistance grants. Left on the cutting room floor are
the public housing capital fund, Section 202 elderly housing with a
$200 million cut, Section 811 housing for the disabled with an almost
50% cut, and CDBG with a 1/3 total formula cut (a $1 billion cut). The
CDBG program will remain at HUD, but HUD in conjunction with the
Commerce Department will determine additional performance goals and
standards under the yet-to-be filed legislation to create the much
touted and controversial Strengthening America's Communities Initiative
(SACI). HUD is also prepared to submit legislation that will change the
current formula by which CDBG funds are allocated to communities.
- The budget includes elimination of Section 4 funding from
the HUD budget for the second consecutive year. Other eliminated
programs include programs that support nonprofit capacity building,
funds for the Rural Housing and Economic Development Program (RHED),
Section 108 Program, and the Brownfields Program. The budget also
eliminates the HOPE VI program, rescinding unobligated funds. In a
separate budget, Neighborworks America received a $3 million increase
to a total of $120 million.
Other Programs of Interest:
- The budget also affects USDA rural housing funds. It
eliminates Section 515 rental development program and funds to support
the building of capacity of nonprofits through the Rural Community
Development Initiative (RCDI), as well as a new fund established last
year for rental housing development and preservation. There is a
significant cut proposed for the rural rental assistance program with
contract periods reduced from 4 years to 2. Increases include funding
for the Self-Help Homeownership Program and Section 502 direct loans
for rural homeownership, although its companion guarantee program
suffers a cut.
- Elimination of funding in the Department of Treasury budget
for the CDFI Program (Technical Assistance and Financial Assistance),
the Bank Enterprise Award Program (BEA), and the CDFI Native American
Initiatives. Only $7.8 million is available to administer the New
Markets Tax Credit Program. This is an overall reduction of $46.6
million from 2006 levels.
- Funding for the Community Service Block Grant Program
(CSBG) in the Health and Human Service budget is targeted for
elimination. This program supports many rural community developers.
- Funding for the AmeriCorps Program in the Corporation for
National Service budget is targeted for a 17% cut in its state and
national grant pool.