Pelosi Joins 180 Members of Congress to Oppose Cuts to Community Development Block Grants

Mar 8, 2005
Press Release

Pelosi Joins 180 Members of Congress to Oppose Cuts to Community Development Block Grants

March 8, 2005

Washington, D.C.-- House Democratic Leader Nancy Pelosi joined 180 Members of Congress in sending a letter to House Budget Committee Chairman Jim Nussle (R-IA) and Ranking Member John Spratt (D-SC) opposing cuts to the Community Development Block Grant (CDBG) initiative proposed by President Bush. The letter was circulated by Congressmen Barney Frank (D-MA) and Christopher Shays (R-CT).

President Bush's Fiscal Year 2006 Budget would transfer CDBG and 17 other community development initiatives to the Commerce Department and then cut the new program by 35 percent.

The letter states: "This funding reduction would have a significant negative impact on the ability of states and localities to address local housing and community development needs . . . Last year, $1.16 billion of CDBG funds were used for housing, resulting in 112,000 homeowners receiving assistance to rehabilitate their homes, 11,000 families becoming first-time homebuyers, and 19,000 rental housing units being rehabilitated."

The proposed CDBG cuts will have a particularly severe impact in San Francisco where every dollar provided by CDBG funds leverages an additional three dollars. More than 120 community-based organizations in San Francisco rely on these resources to provide housing, job training, domestic violence prevention, child care, assistance to the homeless, small business development, and other services. The proposed cuts would directly impact more than 19,000 low-income San Franciscans and indirectly impact more than 52,000 low-income San Franciscans.

"For years, Community Development Block Grant funds have supported a broad range of critical services for San Francisco's diverse population," Pelosi said. "The proposed cuts would devastate community development initiatives that revitalize distressed neighborhoods and that produce new, affordable housing. As we have seen before, the President has named this initiative in a gentle way -- Strengthening America?s Communities -- but the impact will be harsh."

Below is the full text of the letter.

March 8, 2005

Honorable Jim Nussle
Chairman
House Budget Committee
309 Cannon House Office Building Washington, D.C. 20515

Honorable John M. Sprat Ranking Member
House Budget Committee
B71 Cannon House Office Building Washington, D.C. 20515

Dear Sirs:

As you near consideration of the FY 2006 Budget Resolution, we are writing to express our opposition to proposed cuts in the FY 2006 HUD budget, and particularly, to oppose inclusion in the Budget Resolution of the budget proposal to cut funding for the Community Development Block Grant (CDBG) program and to transfer that program to the Department of Commerce.

The FY 2006 Budget includes a proposal to consolidate 18 programs, including CDBG, into a new program to be operated by the Department of Commerce. Proposed funding for this consolidated program would be 35% lower than the combined FY 2005 appropriated level for these 18 programs. The pro rata reduction for CDBG alone would be $1.42 billion.

This funding reduction would have a significant negative impact on the ability of states and localities to address local housing and community development needs. Housing would be particularly hard hit. Last year, $1.16 billion of CDBG funds were used for housing, resulting in 112,000 homeowners receiving assistance to rehabilitate their homes, 11,000 families becoming 1st time homebuyers, and 19,000 rental housing units being rehabilitated. Since housing would presumably no longer be an eligible activity in this new Commerce Department program, communities throughout the nation would lose this valuable affordable housing resource.

We are also concerned that adoption of this proposal could eliminate funding for a large number of communities. Although the proposal does not include a detailed funding formula for the new program, it states that it "targets resources only to communities that need assistance, based all poverty and job loss, " further noting that only "38% of CDBG funds currently go to States and communities with poverty rates that are lower than the national average." A dramatic narrowing of funding eligibility would jeopardize the ability of countless moderate-income communities to create jobs and affordable housing opportunities for lower income working families.

The Department of Housing and Urban Development, in its "Highlights of FY 2004 CDBG Accomplishments," states "The CDBG program is based on the concept that local communities and states can best determine priority community development needs and then develop strategies and programs to address those needs. This local flexibility is a hallmark the program. The process includes significant citizen participation." The proposed changes to CDBG would jeopardize the flexibility and local control that are the hallmark of the program.

CDBG is a program that works. Therefore, we support full funding for CDBG, and believe it is premature for the Budget Resolution to even address such a far-reaching change to the program before the committees of jurisdiction have even had an opportunity to hold hearings on the topic.

We thank you for consideration of this request.

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