CDBG grants are a versatile funding source, often considered the most flexible available from the federal government. They help pay for diverse community development initiatives aimed at low-income Americans. HOME is the largest federal block grant delivered to states and localities with $2 billion in annual funding, dedicated to building affordable housing for low-income households.
Donovan warned in testimony delivered to the Senate Appropriates Committee last month that the cuts to HOME would prevent states and cities from constructing 2,100 housing units in the coming fiscal year. He also cautioned that cuts to CDBG money, a little more than $3 billion in FY 2013, would have a detrimental effect on the economy, noting that 21,800 jobs were created or sustained by that federal money in 2012.
Donovan repeated those figures to the NLC crowd and appealed to the difference they’ve seen those programs make in their own communities.
"We have to reverse sequestration. We have to figure out how to put these crazy cuts behind us," he said. “We need to fix this, and not just for a month or two. We have a lot of work to do, and we can't keep lurching from crisis to crisis.”
The automatic budget cuts known as sequestration went into effect March 1 after House Republicans and the White House failed to reach an agreement on an alternative deficit reduction plan. Discretionary domestic spending, which includes programs like CDBG and HOME, would be cut 5 percent by the end of the fiscal year, though any cuts could likely be reversed if the GOP leadership and Obama administration reached a deal in the near-term.
According to estimates from the federal Office of Budget and Management, HOME would be cut by $50 million. The $19.3 billion Community Development Fund, of which CDBG is a part, would be cut by $965 million. Because both programs leverage private dollars in additional to their public funding, Donovan said hundreds of millions of dollars in private capital would be lost as well.
HUD will work with cities to weather the cuts as well as they can, Donovan said. In the next month, the department will release new HOME rules intended to improve the performance of contractors who receive grant money and enhance oversight of spending. Also in the next few weeks, HUD will release new planning tools for CDBG recipients to help them identify their needs and provide technical assistance.
But those are only stopgap solutions, Donovan said, and the real fix is getting Congress to understand the importance of these programs. He pledged to work with local leaders to document their success “so we can come back to Congress and say: ‘Look at the difference this is making.’
“I need you to make the case to Congress... for a compromise that creates jobs and gives people a pathway to the middle class,” Donovan said. “In America, we don't leave neighborhoods behind because they're struggling. We invest in their futures together.”
