Lawmakers ask White House to flesh out grants consolidation plan

Lawmakers on Tuesday sought details on a White House proposal to save $1.6 billion by consolidating 18 community development grant programs administered by five Cabinet departments into a single program residing at the Commerce Department.

The consolidation is one of 17 major overhauls of discretionary programs recommended by President Bush in his fiscal 2006 budget. Together, the overhauls, designed to eliminate duplication and fix other flaws identified in Office of Management and Budget performance evaluations, promise net savings of $1.9 billion in fiscal 2006. But the White House must first sell the plans on Capitol Hill.

There is "broad recognition" that the 35 community development programs administered by the federal government need to be reformed, said Rep. Michael Turner, R-Ohio. The administration has yet to demonstrate, however, that the proposed "massive realignment of programs associated with long-standing and complex problems" is the right fix, he said at a hearing of the House Government Reform Subcommittee on Federalism and the Census.

President Bush's plan entails merging community development programs--three from Health and Human Services, seven from Housing and Urban Development, three from Treasury, one from Commerce and four from Agriculture--into a "Strengthening America's Communities Grant Program." The single program would receive $3.7 billion for fiscal 2006, $1.6 billion less than the $5.3 billion the 18 programs received collectively for fiscal 2005.

The 30 percent drop in funding would have an "enormous impact" on state and local governments, Turner said. HUD's Community Development Block Grant program, the largest of the 18 programs slated for consolidation, received $4.2 billion in fiscal 2005, he noted. That is nearly $500 million more than the single grant program would receive next year.

Clay Johnson, OMB deputy director for management, contended that the funding dip won't hurt communities. The consolidation would help grant money reach the neediest localities more efficiently, he said. White House performance assessments have indicated that the current approach to disbursing the grants lacks coordination and fails to hold communities accountable for using the money wisely.

Communities should welcome the proposed overhaul, said David Sampson, the Commerce Department's assistant secretary for economic development. "Although it may make sense inside the Beltway, distressed communities across America do not understand why they need to spend local tax dollars to hire grant writers and experts to figure out how to access federal grant money from these 18 programs," he testified.

But Commerce is not necessarily the appropriate place for communities to turn for one-stop development grant shopping, Turner said. "The administration has not spelled out a clear rationale for reducing the historic role of HUD in addressing these issues," he noted. "The Commerce Department does not have historical successes in urban revitalization."

Johnson argued that Commerce is best-suited for the job because its mission of "creating conditions for economic growth and opportunity" is consistent with the mission of the proposed consolidated grant program. Commerce plans to draw on HUD's expertise, Sampson told lawmakers. HUD has roughly 600 field workers and 200 headquarters employees involved in administering development programs, said Roy Bernardi, the department's deputy secretary.

HUD and Commerce play distinct and important roles in community development, a consortium of state and local groups including the U.S. Conference of Mayors and the National League of Cities stated in written testimony. The groups noted that they oppose the Bush proposal in part because they would like to see those roles preserved and in part because HUD's CDBG program has a "long record" of success and is the place localities turn when they need help rehabilitating homes, building youth centers, or embarking on other community-oriented service projects.

But the White House rated the CDBG program as "ineffective" in a formal assessment designed to inform budget decisions. The program has too broad a mandate and fails to target grant funds to the most needy areas, OMB evaluators noted in comments accompanying President Bush's 2006 budget request.

After consulting with mayors, county officials, city officials and other stakeholders, the administration plans to unveil a detailed legislative proposal, Sampson testified. Commerce is creating an advisory committee to "provide assistance with some of the most complex and contentious issues regarding this proposal, such as eligibility [for the grants] and what accountability measures [will] look like," he said.

Stakeholder groups told lawmakers they would welcome more details and a chance to provide feedback. "It is difficult to quantify one's concerns without knowing the specifics," James Hunt, vice president of the National League of Cities, noted in written testimony.