[Budget of the United States Government]
[VI. Investing in the Common Good: Program Performance in Federal Functions]
[20. Community and Regional Development]
[From the U.S. Government Publishing Office, www.gpo.gov]
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 1997 -----------------------------------------------------------
Actual 1998 1999 2000 2001 2002 2003
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Spending:
Discretionary Budget Authority.......... 13,034 8,660 9,204 8,011 7,805 7,675 7,816
Mandatory Outlays:
Existing law.......................... 312 -119 -418 -411 -52 -222 -455
Proposed legislation.................. ........ ........ 3 61 139 162 168
Credit Activity:
Direct loan disbursements............... 2,192 2,153 1,984 2,278 2,392 2,273 2,299
Guaranteed loans........................ 896 1,828 1,976 2,005 2,229 2,322 2,320
Tax Expenditures:
Existing law............................ 1,365 1,715 1,870 2,030 1,990 1,885 1,730
Proposed legislation.................... ........ ........ 44 19 133 205 196
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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 $10 billion a year, and offers about $1.7 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 have helped create stable, healthy communities
that offer greater economic opportunity. Communities 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.
As general goals:
the Government will help create viable communities and
economic empowerment through job creation, provide affordable
housing, and promote economic opportunity; and
the Government will help protect lives and prevent the loss
of property from disaster hazards; and minimize suffering and
hasten recovery when disasters occur.
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.
Community Development Block Grant (CDBG): CDBG, for which the budget
proposes $4.7 billion, provides 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. CDBG funds go to improving housing, public works and services,
economic develop
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ment, and acquiring or clearing land. Seventy percent of CDBG funds go
to over 950 central cities and urban counties, the remaining 30 percent
to States to award to smaller localities. CDBG's Section 108 Loan
Guarantee Program, along with Economic Development Initiative Grants,
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. The Indian CDBG program focuses mainly on
public infrastructure, community facilities, and economic development.
In 1997, 131 Tribes received a total of $67 million in CDBG grants
through competition.
HOME: The budget proposes $1.5 billion in flexible grants to States
and communities to address their most severe housing needs. Eligible
activities of this program (which is classified in the Income Security
function) include new construction, rehabilitation, acquisition of
standard housing, assistance to home buyers, and tenant-based rental
assistance. From its inception in 1992 through June 1997, the program's
recipients have committed or used HOME funds to build or rehabilitate
262,000 housing units and to help 37,000 families pay their rent.
The 1999 goals for the CDBG and HOME programs include:
Increasing the number of CDBG grantees who incorporate
milestones with timetables in Consolidated Plans that can help
demonstrate progress in improving locally defined conditions
in their neighborhoods and communities.
Developing a standardized HUD assessment of Consolidated
Plans.
Ensuring that communities keep HOME rental housing affordable
to low-income families during the affordability period that
the program requires.
Also by the end of 1999, HUD will establish baseline measures against
which to judge the contributions these programs make to community
development and affordable housing.
Empowerment Zones (EZs) and Empowerment Communities (ECs): The EZ
program provides tax incentives and grants to carry out 10-year,
community-wide strategic plans to revitalize designated areas. In
December 1994, six urban areas and three rural areas were designated as
EZs. Two supplemental urban Zones were designated to receive a
combination of Economic Development Initiative grants, grants, and new
tax-exempt bond financing. In addition, 65 urban and 30 rural
communities were designated as ECs. These EZs and ECs have begun to
leverage resources to attract private investment, generate job growth,
stimulate business openings and expansions, construct new housing,
expand homeownership opportunities, and stabilize neighborhoods.
In 1999, practically all EZs and ECs will show satisfactory
progress toward locally defined benchmarks consistent with
national policy goals (e.g., increasing employment, improving
safety, improving education levels).
Department of Agriculture
The Agriculture Department (USDA) gives financial assistance to rural
communities and businesses to boost employment and further diversify the
rural economy, and the budget proposes $1.5 billion in such assistance.
The Rural Community Advancement Program's grants, loans, and loan
guarantees help build rural community facilities, such as health clinics
and day care centers, and create or expand rural businesses. USDA also
provides loans through the Intermediary Relending Program (IRP), which
provides funds to an intermediary such as a State or local government
that, in turn, provides funds for economic and community development
projects in rural areas.
In 1999, USDA will provide 49,000 new jobs, compared to
37,000 in 1997, through the IRP and community facilities
programs.
Department of the Interior
The Interior Department's Bureau of Indian Affairs (BIA) helps Tribes
manage and generate significant revenues from mineral, agricultural and
forestry resources; a recent inde
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pendent study estimates that timber harvests, reforestation, pest
management, and fire control activities provided 49,000 jobs on or near
reservations. BIA also promotes Tribal and individual self-sufficiency
by developing Tribal resources and obtaining capital investments.
Finally, BIA maintains housing for needy Tribal members; over 7,000
other buildings, including 185 schools and 3,000 housing units for BIA
and Tribal staff; over 100 high-hazard dams, and (with the
Transportation Department and State and local governments) about 50,000
miles of roads and 745 bridges.
BIA will measure the success of its economic development
program by guaranteeing about $35 million in loans to
establish, expand, and refinance businesses and boosting their
success rate to 91 percent.
BIA will measure the success of its facilities programs by
providing a 60-percent increase in high-priority school
repairs and new school construction; its roads program by
implementing a maintenance management system and inspections
of at least half of all bridges and 80 percent of roads; and
its dam safety program by repairing or planning repairs on
seven dams and inspecting at least 25 dams.
BIA will measure the success of its trust programs by
implementing or maintaining about 150 Tribal resource
management plans, projects, co-management programs, and
fishing access sites; supporting 15 irrigation projects;
developing 46 million acres for farming and grazing;
completing the first phase of a comprehensive environmental
audit; funding 20 water rights negotiation teams; and reducing
probate and land title backlogs by at least 20 percent.
Tennessee Valley Authority (TVA)
TVA operates an important set of integrated navigation, flood control,
water supply, and recreation programs that, with TVA's electric power
program, contributes to the prosperity of the seven-State region it
serves. The budget provides $77 million for the agency's non-power
programs, ensuring that they retain funding as the Administration and
Congress consider alternatives for the agency in both the power and non-
power areas.
TVA will maximize the number of days the Tennessee River is
open to commercial navigation from Knoxville, Tennessee to
Paducah, Kentucky, with a 1999 performance target of full
availability 93 percent of the time.
TVA will minimize flood damage by operating the river system
with flood control as a priority, maintaining a 1999 target of
79 percent of flood storage availability.
Commerce Department's Economic Development Administration (EDA)
EDA creates jobs and stimulates commercial and industrial growth in
economically distressed areas--rural and urban areas with high
unemployment, high poverty rates, or sudden and severe distress. EDA's
public works grants help build or expand public facilities to stimulate
and foster industrial and commercial growth, such as industrial parks,
business incubators, access roads, water and sewer lines, and port and
terminal developments. EDA, working with State and local governments and
the private sector, has completed over 40,000 projects, creating or
retaining over three million private sector jobs. EDA has invested over
$16 billion in grants and generated over $36 billion in private
investment. From 1992 to 1997, EDA awarded 1,006 public works grants,
totaling $975 million, to economically distressed communities to build
these types of infrastructure projects.
EDA works with State and local governments, businesses, economic
development districts, and non-profit organizations to identify and fund
high-priority projects in the neediest communities. The grants also
provide technical assistance to communities and firms on 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 provided almost $500 million in
disaster recovery grants to help speed the recovery of disaster-impacted
communities Nation-wide.
In 1999, EDA projects that it will create or retain 22,500
jobs directly and 7,500 jobs indirectly, for a total of 30,000
jobs.
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Disaster Relief and Insurance
The Federal Government provides financial help to cover a large share
of the Nation's losses from natural hazards. In recent 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, largely because demographic and economic growth has been
great in hurricane- and earthquake-prone areas. 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 the commercial
market does not offer. To mitigate future losses, and in exchange for
flood insurance, communities must adopt and enforce floodplain
management measures that protect lives and new construction from
flooding.
In 1997, FEMA began Project Impact, a national effort to shift the
focus of emergency management from post-disaster response to pre-
disaster activities that reduce potential future damage. FEMA is
expanding the program in 1998, and will strive for at least one
``disaster resistant community'' in each State by the end of 1999. In
1999, SBA proposes to support FEMA's mitigation project by making
available disaster loans for small businesses in the targeted
communities to finance mitigation improvements for permanent or fixed
business properties.
FEMA's 1999 goals include:
Decreasing, by 10 percent, the average time from disaster
declaration to Hazard Mitigation Grant Program grant
obligation, using the average grant delivery time through 1997
as a baseline;
Completing 12 hurricane evacuation studies and achieving 60
percent of the mandated review of community flood map needs;
and
Answering 95 percent of claimant questions on the first call
and cutting, in half, disaster claimant transcription time and
costs billable to the disaster relief fund.
SBA's 1999 goals include:
Increasing the number of disaster loans processed within 21
days from 85 percent to 90 percent of applications.
Increasing the percentage of disasters in which effective
field presence is established within three days of a
declaration from 85 percent to 90 percent.
Appalachian Regional Commission (ARC)
Established in 1965, ARC targets its resources to highly distressed
areas, focusing on critical development issues on a regional scale, and
making strategic investments that encourage other Federal, State, local
and private participation and dollars. When compared with ``twin
counties'' outside the 13-State region, ARC counties have grown 17 times
faster in private sector employment, seven times faster in population,
and 34 times faster in per capita income. From 1950 to 1960, before the
ARC was in place, employment fell 1.5 percent in Appalachia but grew 15
percent Nation-wide. During the most recent reporting period, 1988 to
1996, Appalachian employment grew at the national rate of 10.6 percent.
In 1999:
As a result of ARC training, 7,500 people will retain or get
jobs; and
ARC will place 100 physicians in the region's health
professional shortage areas, to serve another 50,000 patients
a year.
The Administration proposes to apply the proven ARC model to the
Mississippi Delta Region, an adjoining section with tremendous and wide-
ranging needs, in order to: (1) target the Nation's truly poor; (2)
provide economic development opportunities in a regional, multi-State
context; (3) provide flexible assistance to address local economic
development decision-making; (4) create a partnership that links
communities, States, and the Federal Government in a coordinated
response to economic distress; and (5) leverage other resources to
foster self-sustaining economies. The budget proposes a Delta Region
Development Program, under the auspices of the
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ARC that would establish the Delta Regional Commission to assist in the
Region's economic development.
Tax Expenditures
The Federal Government provides several tax incentives to encourage
community and regional development activities: (1) tax-exempt bonds for
airports, docks, high-speed rail facilities, and sports and convention
facilities (costing $5.6 billion from 1999 to 2003); (2) 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--as well as capital gains preferences for
certain investments in the District of Columbia and incentives for
first-time buyers of a principal residence in D.C. (costing $3 billion
over the five years); (3) a 10-percent investment tax credit for
rehabilitating buildings that were built before 1936 for non-residential
purposes (costing $335 million over the five years); (4) tax exemptions
for qualifying mutual and cooperative telephone and electric companies
(costing $335 million over the five years); and (5) up-front deductions
of environmental remediation costs at qualified sites (costing $305
million over the five years).