Hanging On

A contentious plan to replace 18 grant programs with one has managers in suspense.

During a Senate vote on a proposal to cut funding for 18 community development grant programs, lawmakers were quick to criticize the White House's bigger plan-to consolidate the programs into one.

Part of President Bush's fiscal 2006 budget, the proposal earmarks $3.7 billion to create the Strengthening America's Communities Initiative, which would replace grant programs at five departments. That is $1.6 billion, or 30 percent, less than the $5.3 billion that went to all the programs in fiscal 2005 and at least $400 million less than went to the largest-the Housing and Urban Development Department's Community Development Block Grant.

Senators on both sides of the aisle, including Edward Kennedy, D-Mass., and Norm Coleman, R-Minn., said their states would lose millions through the HUD cuts alone. The Senate voted 68-31 to fund the 18 programs on the chopping block.

Such resistance has not fazed David Sampson, assistant secretary of Commerce for economic development. The White House wants to put the Strengthening America's Communities Initiative under his roof. The objective of "creating the conditions for economic growth" is most consistent with the Commerce Department's mission, administration officials argue.

Although the Senate rejected the grant program cuts, the administration still is writing legislation to create Strengthening America's Communities. Sampson is visiting lawmakers, speaking with state and local groups, and writing editorials to smooth the path for the upcoming legislation.

"You don't put something like this out there and expect that it's automatically going to be embraced," Sampson says. The proposal would address the lack of coordination and goals that plague the programs, Office of Management and Budget officials contend. "These programs often cannot demonstrate they are having any positive impact on the communities they serve," Clay Johnson, deputy director for management at OMB, told the House Government Reform Subcommittee on Federalism and the Census in early March.

But others point to plenty of accomplishments. In a letter to Senate Budget Committee leaders, 14 organizations-including the National League of Cities and the U.S. Conference of Mayors-said the Community Development Block Grant program funded the creation of 90,000 jobs and the rehabilitation of 130,000 rental units and single-family homes in 2004.

Critics doubt Commerce's ability to administer a consolidated program. The department "does not have the vital infrastructure or institutional capacity to provide a comprehensive approach to neighborhood development," 57 senators wrote in a letter to the budget committee. Commerce administers only one of the 18 programs to be consolidated. "Replicating HUD's CDBG program within the Department of Commerce would require rebuilding HUD's infrastructure and would result in inefficiencies, greater complexity and less aid to fewer cities-an approach [that] does not serve America's communities or taxpayers," the lawmakers said.

In Sampson's view, the Bush plan would free up more money for the neediest communities. Overhead costs would be lower under the single program, he says. It would replace "some of the lowest-rated programs in the entire federal government in terms of achieving the results intended," he says. "To try to fix them [individually] would require 18 separate fixes, and that's simply not feasible."

A recent study by HUD's Office of Policy Development and Research found that the agency's eligibility criteria, which haven't seen major changes in 26 years, are outdated, resulting in less precise targeting of money to the communities most in need. Commerce would have to develop a fair system for holding grant recipients accountable for using the money efficiently, the report says. A lack of accountability is commonly cited in OMB assessments of the current programs.

Sampson acknowledges that a "great deal of discussion" is necessary before the legislation can be completed. An advisory committee, including representatives of rural and urban areas, state and local elected officials, and academics and economists, will help Commerce nail down details.

Though the jury still is out, the Commerce Department is making sure it's ready to ramp up the new program next fiscal year, Sampson says. Officials will draw on expertise at other departments, including HUD, which has roughly 800 people administering community development programs. But deciding staff size is "some time down the road," according to Sampson, who would not predict how many positions could be eliminated if the consolidation is enacted.

In the meantime, employees disbursing grants for the existing programs should continue to make the improvements recommended by OMB and others, Sampson says. "Commerce has a program that is being consolidated into this new program, and I can assure you that all of our staff is keenly focused on continuing," he says.

The Strengthening America's Communities proposal is one of 17 major reorganizations in Bush's fiscal 2006 budget plan aimed at saving nearly $20 billion. But as illustrated by the battle over community development grants, cutting programs won't be easy. Of the 99 programs facing elimination, 56 have survived past shutdown attempts. And of the 55 programs slated for reductions, 27 have escaped previous tries.

If Sampson is worried that members of Congress will block the new grants program, he's not letting them see him sweat. "We're very optimistic about the legislative road ahead of us," he says.