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February 16, 2005
Bush Budget Ghettoizes 18 Community Development Programs, Slashing Their Funds
by William Baue
Community development advocates criticize the proposed budget for fiscal year 2006, as the
consolidated programs will have to compete with one another for a smaller pool of funds.
SocialFunds.com --
Last week, President George W. Bush released his budget proposal for fiscal year (FY) 2006,
which begins October 1, 2005. The proposed budget reduces the Community Development Financial
Institutions (CDFI) Fund budget from $55.5 million in FY 2005 to $7.9 million in FY 2006.
 The Bush budget proposal also significantly restructures
the 35 community development programs currently under seven cabinet agencies by consolidating 18 of
them under the umbrella of the new Strengthening America's Communities Grant Program at the Commerce Department. The 17 unconsolidated
programs would experience some upward mobility, with their collective budgets rising almost $1
billion, from $10.9 billion in FY 2005 to $11.8 billion in FY 2006. Meanwhile the 18 programs
lumped together like ghetto residents would get their collective budgets chopped from by $1.6
billion, from $5.3 billion in FY 2005 to $3.7 billion in FY 2006.
Almost immediately,
community investment advocates including the National Community Capital Association (NCCA), the CDFI Coalition, and the Association of Community Organizations for
Reform Now (ACORN) criticized this proposed
consolidation.
"There are no data to justify the radical, sweeping scope of President
Bush's budget proposal to scrap the existing federal community economic development system and
replace it with an almost entirely unfunded shell," said Mark Pinsky, president and CEO of NCCA.
"I would describe it as 'popcorn policy,' which is to say there's a kernel of truth to what the
administration is saying, but there's also a lot of hot air."
"The kernel of truth is
that not all government programs work perfectly--that's true whether you're talking about
contracting to provide services in Iraq, or the Community Development
Block Grants, or the CDFI Fund," Mr.
Pinsky told SocialFunds.com. "The problem is that this does not seem to be a serious effort to try
and improve the role government can play in helping underdeveloped domestic markets emerge, but
rather it seems to be part of a deliberate 'war of the crumbs' strategy under which a variety of
interests and groups would be set at each other's throats to battle over an increasingly small
amount of funds."
The 18 merged programs would include the CDFI Fund, the CDFI Native
Americans Initiatives, the Bank Enterprise Award (BEA) Program, the Brownfields
Economic Development Initiative (BEDI), and
the Rural Housing and Economic Development (RHED), among
many others. The 18 programs are looked at by the Bush administration "as being direct grant
programs that have very similar types of goals for the end-user, but they are administered through
different processes and means," according to Troy Stang, public and legislative affairs director at
the CDFI Fund
"The knee-jerk reaction is that the CDFI Fund is being gutted," said Mr.
Stang. "The new plan is not quite ironed out yet, and the details are pending, and pending for a
reason, as the administration feels it's important as the new plan is developed to get input from
the community development industry and let these folks have a seat at the table."
"So
although the programs as they know them today, such as the CDFI Fund program, may lose their
identity, it's a great opportunity for CDFIs or constituents of any of the 18 programs to help
define what community development looks like in the new program," Mr. Stang told SocialFunds.com.
Mr. Stang explained that part of the $7.9 million allocation to the CDFI Fund would go to
administer the New Markets Tax Credit (NMTC) program, which would
remain intact under the Treasury Department.
The rest of the $7.9 million allocation would go toward administration and ongoing disbursement of
the CDFI Fund's current and past awards.
"The $7.9 million does not include any current
appropriation dollars for new awards to be made beyond 2005," Mr. Stang stated.
It remains
to be seen how the US Congress will respond to the Bush budget proposal.
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