March 15, 2006

Senate seeks more grant funds under budget cap

By David Lawder

WASHINGTON (Reuters) - The U.S. Senate on Wednesday voted
to approve a budget resolution amendment that seeks to restore
$1.3 billion to the Community Development Block Grant program,
but the funds would have to be offset by cuts elsewhere.

The amendment, offered by Pennsylvania Republican Sen. Rick
Santorum, passed the Senate by a 60-38 vote. It calls for the
block grants, widely used by cities for redevelopment projects,
to be restored to their fiscal 2004 level of $4.3 billion,
representing an increase of about $1.3 billion over the Bush
administration's proposed fiscal 2007 funding level.

But because the amendment did not raise the overall budget
cap by a corresponding amount, any additional funds shifted to
the CDBG program would have to come from other programs.

Minutes earlier, the Senate rejected an amendment offered
by Democrats that would have restored the $1.3 billion in
funding by raising the budget cap.

Sen. Patty Murray, the Washington state Democrat who
proposed raising the cap, called the version passed by the
Senate a "sham" that will ultimately result in funding
reductions being approved by Congress later this year.

"This amendment is for show, since no money has been added
to the cap, leaving us next October and November in the
appropriations bill to either fund CDBG or cut transit and
Amtrak, which I know is important to many senators, and many
other critical housing programs," Murray said, adding that her
proposal would have restored "actual dollars" to the program.

Senate Budget Committee Chairman Judd Gregg, a Republican
from New Hampshire, called Murray's proposal a "liberal
amendment that increases the size of government and increases

The CDBG program, created in 1974, faced a 25 percent cut
in the fiscal 2007 budget after a 10 percent cut last year.
City officials have been lobbying Congress in recent days to
spare the program from further cuts, saying it provides
essential funding to make urban redevelopment projects such as
affordable housing economically viable.

City officials often use CDBG funds as seed money to
attract private investment to projects that are also frequently
financed with tax-exempt municipal bonds.

"We deserve full funding of CDBG at the $4.3 billion level,
not one cent less," Akron, Ohio Mayor Don Plusquellic told a
news conference earlier on Wednesday.

"We cannot continue to accept 5 or 10, 7, 8, 12 percent cut
year after year, because obviously at some point, the program
is not going to be viable."

According to a survey conducted by a coalition of urban,
affordable housing and community lobbying groups, the 14
percent reduction in CDBG formula grant funding between fiscal
years 2004 and 2006, will result in services reductions for
some 5 million low- and moderate-income Americans.

The survey found that states, cities and counties would be
able to assist 5,588 fewer businesses this year versus two
years ago and 5,843 fewer households would get homebuyer
assistance opportunities.

Santorum, who is seeking re-election in November, said his
amendment "expresses the strong sentiments that the CDBG
program should be funded more robustly."