Contact: Antonia Ferrier (202) 224-5344
Friday, March 10, 2006

WASHINGTON, D.C. –U.S. Senator Olympia J. Snowe (R-Maine) and 44 of her Senate colleagues sent a letter to Senate Budget Committee Chairman Judd Gregg (R-NH) and Ranking Member Kent Conrad (D-ND) urging them to oppose budget cuts to the Community Development Block Grants (CDBG) program. The President’s Fiscal Year (FY) 2007 budget proposes 25% in cuts to this program.

“CDBG funds are essential to providing affordable housing to low-income people in communities across our nation,” said Snowe. “It would be irresponsible to cut funding for this program by 25 percent and leave struggling families without access to homes and shelter. I hope that congress supports this program and fully funds it in order to ensure that we are adequately addressing the housing needs of some of our most vulnerable citizens.”

The CDBG program provides billions of dollars in flexible funding to states, localities, and other community organizations for economic development and public works projects. Maine's CDBG program provides funding and technical support for projects that achieve local community and economic development objectives, while principally benefiting Maine’s residents with low-to-moderate income. These programs are only available to Maine towns, cities and counties for the benefit of Maine residents.

Since 1998, Maine communities have received $23.4 million in funding for economic development, housing, and infrastructure projects and over that same time nearly 3,800 jobs have been created through CDBG funding. Regardless, Maine’s CDBG allocation was cut from $31.7 million in 2005 to $28.9 million in 2006. 2007 funding is expected to be reduced to $21.7 million which would equate to a loss in Maine of $10 million in funding from 2005 to 2007.

The text of the letter is below:

Dear Chairman Gregg and Ranking Member Conrad:

As you near consideration of the FY 2007 Budget Resolution, we urge the Budget Committee to oppose the budget proposal to cut funding for the Community Development Block Grants (CDBG) Program by nearly $1 billion, or 25 percent. Instead, we urge the Budget Committee to maintain the Federal government’s commitment to community development programs at the Department of Housing and Urban Development (HUD) and support a budget allocation of $4.3 billion in Function 450 for CDBG.

The communities that have benefited from CDBG will be devastated if the HUD proposal to cut funding is enacted. CDBG serves more than 1,100 entitlement communities, urban counties and states, and more than 3,000 rural communities nationwide. It is the centerpiece of the Federal government’s efforts to help states and localities meet the needs of low-income communities. The Program funds vital homeownership, housing rehabilitation, public improvements, public services and economic development projects in communities nationwide. It also supports community-based organizations and the crucial work they do to deliver human services and rebuild neighborhoods.

CDBG is one of the most effective Federal domestic programs to revitalize neighborhoods with proven results. Over 95 percent of the FY 2005 CDBG funding went to activities principally benefiting low- and moderate-income persons. Twenty-eight percent of CDBG funds supported housing activities in distressed communities, 24 percent supported public improvements, 15 percent went to the provision of public services, and 7 percent supported economic development activities. In FY 2005, CDBG housing projects assisted over 166,000 households, including financial assistance to new homeowners and rehabilitation assistance to the elderly and other existing homeowners. Economic development programs benefiting from CDBG last year created or retained over 91,000 full-time jobs. CDBG also has a strong record in business retention: CDBG has ensured that over 80 percent of the businesses assisted through the program were still in operation after three years.

The CDBG formula allocation was funded at $4.41 billion in FY 2001. Since then, the formula allocation has decreased by $670 million, or 15.2 percent, with a five percent cut in FY 2005 and a 10 percent cut in FY 2006. The FY 2007 HUD budget would reduce the formula funding by an additional 25 percent, cutting the formula allocation by over a third in just three years.

In light of these drastic cuts, communities have struggled to continue their programs and have discontinued critical projects for low- and moderate-income persons. We therefore ask you to reject the proposed cut and ask you to support $4.3 billion in funding for the CDBG Program.

Thank you for your consideration. We look forward to working with you to ensure that communities across the country can provide good jobs, affordable housing, and public services to meet the needs of all Americans.

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