February 8, 2011 / 7:47 PM / 9 years ago

U.S. cities, counties gird for community grant fight

WASHINGTON (Reuters) - U.S. cities and counties are getting ready to fight for federal grants they say keep local economies strong and residents employed, after President Barack Obama signaled he is open to cutting them.

In Sunday’s edition of The New York Times, Jacob Lew, director of the White House Office of Management and Budget, wrote that Obama will seek to pare 7.5 percent, or $300 million, from Community Development Block Grants in the budget he proposes next week.

Obama has said he is committed to reducing the country’s projected $1.5 trillion deficit by cutting spending in many areas.

But city and county officials, still smarting from the 2007-09 economic recession that devastated municipal budgets, say lower grant amounts from the federal government will hurt their poorest citizens and they fear Obama will suggest deeper cuts.

“It is literally the lifeblood for creating affordable housing in Philadelphia,” Michael Nutter, the city’s mayor told Reuters, saying the program commonly called “CDBG” has helped get homeless people off the street and built up neighborhoods in the City of Brotherly Love.

“Everyone knows that it works. You will hear as much about it from Republican mayors as from Democrat mayors,” he said.

The grants help finance housing, sewer, streets and economic development in low- and moderate-income neighborhoods, Lew wrote. He added the Obama administration is “very aware of the financial difficulties” cities and counties face.

“CDBG funds provide immediate, direct, and tangible benefits to millions of Americans right where they live,” said National Association of Counties Executive Director Larry Naake in a statement, calling Lew’s proposal “alarming.”

For Donald Plusquellic, mayor of Akron, Ohio, Lew’s suggestion comes after years of slashing CDBG and other federal aid. His city uses CDBG, which started in 1974, to keep people in their homes and help small business stay afloat, he said.

“I know that everybody’s expected to sacrifice. But the cities have been cut over the last 30 years in so many ways,” he said, adding he was “very disappointed.”

“President Obama worked on the local neighborhood level and he knows how valuable these funds are to address neighborhood problems that city budgets just can’t afford right now,” he said.

Local governments have been hit hard by rising unemployment rates and the end of the housing boom, both of which drove down tax revenues. The drop in income has forced them to cut spending on health and assistance programs as well as education and emergency response.

Former U.S. President George W. Bush tried to wipe out CDBG. Reversing that course, Obama put aside $4.4 billion for CDBG in the budget he proposed last year.

Saying that reducing the federal deficit “is imperative to the country’s and our communities’ fiscal well-being,” National League of Cities Spokesman Greg Minchak questioned whether CDBG cuts would have any “real impact on that goal.”

“Unfortunately, the converse is true for the local economies of cities and towns. The impact of this cut on thousands of projects and programs at the neighborhood level, and the jobs supported by those projects, will be very real,” said Minchak, whose group represents city officials.

Since Republicans took control of the House of Representatives in last November’s elections promising to cut spending, states and local governments have worried about slashed federal assistance.

The Republican Study Group, a caucus of more than 170 conservative House members, has suggested eliminating CDBG and some Republicans are putting forward $32 billion in cuts to domestic programs.

“If the president is going to cut it 7.5 percent what is the new Republican House going to do?” said Tom Cochran, executive director of the U.S. Conference of Mayors, casting Lew’s editorial as the opening salvo in negotiations on CDBG.

“We will be examining the budget on February 14. We are concerned about other cuts,” he added.

Akron’s Plusquellic said cutting aid to cities “seems un-American to me.”

“At some point, if some of the congressional leaders are successful in cutting this program ... we will be spending more money fixing up cities in Iraq than in America,” he added.

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