[Budget of the U.S. Government]
[VI. Investing in the Common Good: The Major Functions of the Federal Government]
[20. Community and Regional Development]
[From the U.S. Government Publishing Office, www.gpo.gov]
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20. COMMUNITY AND REGIONAL DEVELOPMENT
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Table 20-1. FEDERAL RESOURCES IN SUPPORT OF COMMUNITY AND REGIONAL DEVELOPMENT
(In millions of dollars)
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Estimate
Function 450 1996 -----------------------------------------------------------------
Actual 1997 1998 1999 2000 2001 2002
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Spending:
Discretionary Budget Authority... 11,645 9,313 10,920 8,333 7,681 7,751 7,870
Mandatory Outlays:
Existing law................... 317 343 -112 63 126 255 63
Proposed legislation........... ......... 157 5 20 ......... -15 -13
Credit Activity:
Direct loan disbursements........ 1,963 2,313 2,460 1,908 2,118 2,210 2,143
Guaranteed loans................. 839 1,454 1,941 2,055 2,090 2,159 2,022
Tax Expenditures:
Existing law..................... 2,650 2,700 2,740 2,720 2,700 2,640 2,425
Proposed legislation............. ......... 40 450 551 565 544 489
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Federal support for community and regional development helps build the
Nation's economy, and helps economically distressed urban and rural
communities earn a larger share of America's prosperity. The Federal
Government spends over $12 billion a year, and offers about $2.7 billion
in tax incentives, to help States and localities create jobs and
economic opportunity, and build infrastructure to support commercial and
industrial development.
The needs of States and localities are varied and hard to measure.
Still, Federal programs in this area have proved successful in creating
stable and healthy communities that offer greater economic opportunity.
The Government helps communities with basic infrastructure needs pay for
constructing roads, improving water and sewage systems, and constructing
affordable housing. For those affected by layoffs and rising job
insecurity, Federal programs promote jobs skills through employment
training and education, and promote access to jobs by helping businesses
and rehabilitating commercial properties. Communities that are hard hit
by natural disasters receive Federal assistance to rebuild
infrastructure, businesses, and homes. States and localities also use
these Federal funds to leverage private resources for their community
revitalization strategies.
Department of Housing and Urban Development (HUD)
HUD provides communities with flexible funds to promote commercial and
industrial development; enhance infrastructure; clean up abandoned
industrial sites, or ``brownfields''; and develop strategies for
providing affordable housing close to jobs. HUD estimates that projects
for which it provided economic assistance from 1993 to 1996 created or
saved 1.4 million jobs.
Community Development Block Grant (CDBG): The CDBG program, for which
the budget proposes $4.6 billion, gives States and localities flexible
funds for activities that meet one of three national objectives: (1)
benefit low- and moderate-income persons, (2) help prevent or eliminate
slums or blight, or (3) meet other urgent community needs that pose
immediate threats to public health. Every Federal dollar spent for CDBG
leverages an estimated $2.31
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in private and other investment. Communities spend CDBG funds to improve housing, public works, public services, and economic development, and to acquire or clear land.
Seventy percent of CDBG funds go to over 900 designated central cities
and urban counties, the remaining 30 percent to States to award to
smaller localities. CDBG's Section 108 Loan Guarantee Program gives
Federal guarantees to private investors who buy debt obligations issued
by local governments, thus giving communities efficient financing for
housing rehabilitation, economic development, and large-scale physical
development projects. Indian CDBG programs provide services for Native
Americans, primarily focusing on public infrastructure, community
facilities, and economic development. In 1996, 84 Tribes received a
total of $49 million in CDBG grants through competition.
HOME: The budget proposes $1.3 billion in flexible HOME grants to
States and communities to address their most severe housing needs. This
program (classified in the Income Security function) generates an
estimated $1.80 in private and other investment for every Federal dollar
spent. Eligible activities include new construction, rehabilitation,
acquisition of standard housing, assistance to home buyers, and tenant-
based rental assistance. From the program's inception in 1992 to June
1996, recipients have committed or used HOME funds to build or
rehabilitate 201,000 housing units and to help 26,500 families pay their
rent.
Department of Agriculture
The Agriculture Department (USDA) gives financial assistance to rural
communities and businesses to provide safe drinking water and adequate
wastewater treatment facilities; boost employment; and further diversify
the rural economy. The budget proposes $2.5 billion in such assistance.
Grants, loans, and loan guarantees go for constructing rural community
facilities, such as health clinics and day care centers; constructing
water and wastewater systems; and creating or expanding rural
businesses. USDA offers loan assistance for building community
facilities and water and wastewater facilities at interest rates tied to
the community's income--the lowest-income communities receive
significantly subsidized interest rates. These programs are designed to
help rural communities with fewer than 10,000 residents. Since 1993,
over 4,500 communities have received financial assistance to build or
upgrade drinking water or wastewater systems, and the rural business and
industry loan guarantee program has created or saved over 110,00 rural
jobs.
Department of the Treasury
Treasury's Community Development Financial Institutions (CDFI) Fund,
for which the budget proposes $125 million, provides grants, loans,
equity investments, and technical assistance to qualified CDFIs--
including community development banks, low-income credit unions,
microenterprise funds, and many multi-bank community development
corporations. The assistance, which must be matched by comparable non-
Federal money, is designed to promote economic revitalization and
community development. Federal funds may be used for small business,
low-income housing, community facilities, the provision of basic
financial services, and other community development activities. In 1996,
the CDFI Fund approved $37 million for 32 CDFIs, serving 46 states and
the District of Columbia. The fund also awarded $13 million to 38
traditional banks and thrifts for increasing their activities in
economically distressed communities and investing in CDFIs.
Department of the Interior
The Interior Department's Bureau of Indian Affairs (BIA), for which
the budget proposes $1.7 billion in 1998, helps Tribes, Native American
organizations, and individuals develop resources to improve their
economies through financial assistance programs, various loans and
grants, assistance in getting financing from other sources, and
technical assistance in using agricultural and rangeland resources.
BIA's guaranteed business loans in 1996 generated about $40 million in
total financing, creating or sustaining over 1,700 jobs.
Each year, BIA helps Tribes manage 16 million acres of forest land and
conduct timber sales of $250 million that sustain over 10,000 forest and
timber-related jobs, and helps Tribes manage mineral resources
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and generate mineral income. BIA funds housing improvement and maintains
over 4,500 single family housing units for BIA teachers and other
reservation-based staff. Finally, BIA (with the Transportation
Department) maintains and improves over 40,000 miles of public and BIA
roads and 745 bridges, and addresses deficiencies at over 100 high-
hazard dams on reservations.
The Tennessee Valley Authority (TVA)
The TVA adds to the prosperity of seven States by: (1) providing
reliable supplies of electricity at rates that are among the Nation's
lowest, (2) paying over $250 million a year to State and local
governments in lieu of taxes, and (3) operating economic and regional
development programs that provide flood protection, recreational
facilities, navigation, and various other services. The budget proposes
$106 million for these purposes, but TVA will develop a plan to
eliminate Federal funding for these programs for 1999 and beyond. In
1997 and 1998, TVA will work with Congress, State and local governments,
and other interested parties and undertake a major effort to find
alternate ways to fund, organize, and manage these programs. The
proposal reflects TVA's efforts over several years to decrease its
reliance on Federal funds to finance its activities.
The Economic Development Administration (EDA)
The EDA creates jobs and stimulates commercial and industrial growth
in economically distressed areas--rural and urban areas with high
unemployment, a large share of poor people, or sudden and severe
distress. EDA's public works grants help build or expand public
facilities to stimulate and foster industrial and commercial growth.
Typical projects include industrial parks, business incubators, access
roads, water and sewer lines, and port and terminal developments. From
1992 to 1996, EDA awarded 821 public works grants, totaling $810
million, to help economically distressed communities build these types
of infrastructure projects.
EDA's capacity building grants help communities pay for expertise to
plan, implement, and coordinate comprehensive economic development
projects. The grants also provide technical assistance to communities
and firms to find solutions to problems that stifle economic growth. In
addition, EDA's economic adjustment assistance grants help communities
solve severe adjustment problems, such as those resulting from natural
disasters and industry relocations or major downsizings. To date, EDA
has approved 479 disaster recovery grants, totaling $403 million, to
help impacted communities recover from natural disasters that include
hurricanes, flooding, earthquakes, and tropical storms.
Disaster Relief
The Federal Government provides financial help to cover a large share
of the Nation's losses from natural hazards. Over the past several
years, spending from the two major Federal disaster assistance
programs--the Federal Emergency Management Agency's (FEMA) Disaster
Relief Fund and the Small Business Administration's (SBA) Disaster Loan
program--has risen significantly, and private casualty insurers
experienced their five most costly natural disasters. Why? Because the
natural hurricane cycle seems to be entering a phase in which more
hurricanes strike our shores; demographic and economic growth has been
great in hurricane- and earthquake-prone areas; and global climate
changes or cyclical weather trends seem to be increasing the number and
severity of events.
The Federal Government shares the costs with States for infrastructure
rebuilding; makes disaster loans to individuals and businesses; and
provides grants for emergency needs and housing assistance, unemployment
assistance, and crisis counseling. In addition, the National Flood
Insurance Program enables property owners to purchase flood insurance
that's unavailable in the commercial market. To mitigate losses and in
exchange for flood insurance, communities must adopt and enforce
floodplain management measures to protect lives and new construction
from future flooding. FEMA also encourages and supports mitigation
measures before disasters strike by providing hazard mitigation grants,
and sponsoring training, preparedness, and other planning events.
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Tax Expenditures
The Federal Government provides several tax incentives to encourage
community and regional development activities: (1) A 10 percent
investment tax credit for rehabilitating buildings that were built
before 1936 for non-residential purposes (costing $340 million from 1998
to 2002); (2) tax-exempt bonds for airports, docks, and wharves, as well
as high-speed rail facilities which need not be government-owned
(costing $9.3 billion over the same five years); (3) tax-exemptions for
qualifying mutual and cooperative telephone and electric companies
(costing $325 million over the five years); and, (4) tax incentives for
qualifying businesses in economically distressed areas that qualify as
Empowerment Zones--including an employer wage credit, higher up-front
deductions for investments in equipment, tax-exempt financing, and
accelerated depreciation (costing $3.2 billion over the five years). In
addition, the law provides tax credits for contributions to certain
community development banks.