Proposed federal budget includes money for tackling urban issues

President Barack Obama released his blueprint for the federal 2011 fiscal year budget earlier this week.

Congress will take this budget outline and create its own spending plans from it over the next several months. While the budget plan includes a freeze on a number of domestic programs, there is increased funding for certain domestic initiatives, particularly in community development and education.

What follows is a summary of what the White House plan includes that may be of interest to local governments. It was prepared by Frank Shafroth, the author of a newsletter that analyzes federal legislative matters.

Fully fund the Community Development Block Grant (CBDG) program. The President’s plan provides $4.5 billion for communities. The administration will revamp the CDBG program to better target funds to distressed communities and promote sustainable and economically viable communities. 

Create a new Choice Neighborhoods Initiative. The budget includes $250 million for the U.S. Department of Housing and Urban Development (HUD) to support a range of transformative interventions in neighborhoods with concentrated poverty. The goal is to transform neighborhoods of extreme poverty into functioning, sustainable mixed-income neighborhoods with well-functioning schools, public services, transportation, and access to jobs. Choice Neighborhoods grants will primarily fund the preservation, rehabilitation and transformation of public and HUD-assisted housing, but will also engage local governments, nonprofits and for-profit developers in partnerships to improve neighborhoods.

An additional 50,000 cops on the beat.  The budget includes $298 million, on top of Recovery Act funding, to advance the goal of hiring 50,000 additional police officers to help communities prevent the growth of crime during the economic downturn.

Fight urban violence. The budget includes an increase of $25 million within the Department of Justice to fund Community-based Violence Prevention Initiatives.  Building on the experience of the last several years with successful initiatives such as Chicago’s Operation Ceasefire and the Boston Gun Project, the initiatives funded would adopt public health approaches to curbing urban violence. Working with former gang members, faith-based and community organizations, and law enforcement, the initiatives funded will employ strategies focusing on street-level outreach, conflict mediation, and changing community norms to reduce serious violence, especially shootings.

Support for sustainable communities. The budget proposes $150 million for HUD’s Sustainable Communities Initiative. The goal of the initiative is the integration of transportation and housing investments that result in more regional and local sustainable development patterns, reduced greenhouse gas emissions, and more transit-accessible housing choices for residents. There are three components to this initiative: (1) $100 million for Regional Planning Grants to encourage integrated regional planning across jurisdictions; (2) $40 million for Metropolitan Challenge Grants to encourage sustainable growth and reverse counterproductive growth patterns that have evolved in many areas; and (3) $10 million for a joint HUD-U.S. Department of Transportation (DOT) research effort designed to advance transportation and housing linkages.

Create a new Energy Innovation Fund.  The budget includes funds to drive the creation of an energy-efficient housing market – including the retrofitting of older, inefficient housing – and catalyze private lending for this purpose in the residential sector.  Partnering with the Department of Energy on this initiative, the Department of Housing and Urban Development would contribute to the administration’s broader effort to combat global warming, jumpstart the creation of a clean-technology economy, and reduce utility bills. 

Provide funding for an affordable housing trust fund for the first time and increase funding for rental assistance. While given the green light by Congress in 2008, the Housing Trust Fund has fallen short because it has not been given the resources to help families.  This budget restores funding for the Trust Fund, requesting $1 billion to finance the development, rehabilitation, and preservation of affordable housing for very low income residents. The budget preserves about 1.3 million affordable rental units through increased funding for contracts with owners of multifamily properties. In addition, a robust Housing Choice Voucher program would help more than two million extremely low- to low-income families with rental assistance to live in decent housing in neighborhoods of their choice.

Broaden assistance for the homeless. The budget provides a 7 percent increase in Homeless Assistance Grants over 2009, which would fund $140 million in new competitive projects that would serve homeless individuals and families. The budget would also renew existing, eligible grants that currently receive federal funds to assist the homeless. The president’s budget also provides an $8 million increase for community-based services for individuals suffering from severe mental illness who are facing homelessness. This higher funding level would reach an additional 11,000 individuals facing homelessness.

Sustain a new federal commitment to high-speed rail. The budget proposes a $1 billion a year high-speed rail state grant program, in addition to the $8 billion provided in the Recovery Act.  This proposal marks a new federal commitment to give the traveling public a practical and environmentally sustainable alternative to flying or driving.  Directed by the states, this investment would lead to the creation of several high-speed rail corridors across the country linking regional population centers.

Help small businesses and entrepreneurs.  The budget helps to strengthen small businesses with strong support for financial, technical, and contracting assistance.  The president’s budget supports $28 billion in guaranteed loans, an important source of capital for the nation’s entrepreneurs, women-owned and minority-owned small businesses.  The president’s proposal  provides $20 million to incorporate new strategies to enhance coordination among existing Small Business Administration grant partners, such as Small Business Development Centers, Women’s Business Centers, SCORE, and others, as well as targeting assistance to industries and populations in need.  The budget also provides a $1 million increase over 2009 enacted levels for the 7(j) management and technical assistance grant program, which provides technical assistance to small disadvantaged businesses.  Finally, the budget invests $2 million to improve certification processes for the HUBzone program, which provides contract preferences for firms located in economically distressed communities.

Expand access to capital in disadvantaged communities. The budget expands lending in underserved neighborhoods with a 128 percent funding increase for the Community Development Financial Institutions Fund (CDFI). Through merit-based grant programs, the CDFI Fund helps locally-based financial institutions to offer small business, consumer, and home loans in communities and populations that lack access to affordable credit. The $80 million in the president’s budget for a new Capital Magnet Fund would assist Community Development Financial Institutions (CDFIs) and other non-profits expand financing for the development and rehabilitation of affordable housing and economic development projects in distressed communities.

Create capacity for community organizations helping the disadvantaged. The president’s budget requests $50 million to build the capacity of non-profits serving low income and disadvantaged population through the Strengthening Communities Fund. The fund and its sponsored efforts serve as a center piece of President’s Faith-based and Neighborhood Partnerships agenda.  Grants would be used to expand service delivery including employment assistance and improved access to public benefits.

Support innovative and effective strategies to improve student achievement. The budget invests in school systems and non-profit organizations with demonstrated track records of success in raising student achievement to expand their work or implement new innovative approaches through the Innovation Fund.  The president’s plan supports “Promise Neighborhoods,” a new effort to test innovative strategies to improve academic achievement and life outcomes in high-poverty areas modeled after the Harlem Children’s Zone. The budget provides $10 million for competitive grants to nonprofit, community-based organizations for the development of comprehensive neighborhood programs designed to combat the effects of poverty and improve educational and life outcomes for children.

Increase support for effective charter schools. The president’s budget promotes successful models of school reform by taking the first major step to fulfilling its commitment to double support for charter schools.  The Department of Education would help create new, high-quality charter schools, ensure that states properly monitor and support these schools, and, in the case of chronic underperformance, close existing charter schools. contents

Staunton manager: Budget cuts have consequences

Staunton City Manager Steve Owen appeared before the Senate Finance Education Subcommittee on Jan. 28 and painted a grim picture of what will ensue if the state continues to reduce funding for schools.

Speaking on behalf of VML and the Virginia Association of Counties, Owen described what could unfold in his city of about 24,000 residents.

“… Our school system will realize a total reduction of $1.7 million in state funds, not counting added VRS costs,” Owen said. “That is the equivalent of 33 teaching positions – out of 292. Or a 10-cent real estate tax increase. We might be able to deal with that, but it gets worse. We think total state cuts to the city may be north of $3 million. Or 60 some positions. Or an 18 cent tax rate increase. With local revenues falling it may be even worse that that.”

Owen described his city’s possible future this way:

“None of our options in response to reductions in funding are good. They include larger classes, fewer instructional materials, elimination of electives, cut-backs in sports and reductions in student health services.

“But our children need smaller classes in order to learn. Our teachers already buy instructional materials out of their own pockets. Access to electives makes our students competitive in college admissions. For some students, sports are the only thing that motivates them to learn. And some of our students have multiple health needs that leave them medically fragile and require professional care.”

Though describing Staunton, Owen could have been speaking about any number of other local governments in Virginia that fund school divisions when he said:

“Consolidating school and city departments such as finance and human resources is certainly being explored. But this will be more window dressing and a public relations gimmick than real. Such consolidation savings of a few thousand dollars in a small system like ours will barely make a dent in a multi-million dollar budget hole. Let’s not kid ourselves or lead our citizens to believe that’s the answer.

“We can cut pre-school programs, but we have kids entering kindergarten that don’t know shapes, colors, letters and numbers. It takes years to catch up when you start out behind. Remediation is far more expensive and brings down the quality of education for everyone.”

In light of the continued rollback in state funding for education, Owen implored the legislators to grant local governments and school districts a reprieve from omnipresent education mandates.

“Flexibility should center on a reduction in state testing mandates, a delay in the implementation of new state regulations, and allowing local schools to use state funding based on our needs rather than state mandates,” Owen said.

Owen used his appearance before the senators to talks about more than just the bleak prospects for cobbling together an effective education program for Staunton’s children.

“Beyond our schools we see state funding for law enforcement, jails, libraries and constitutional officers being slashed. Our police department is already down six officers. Our constitutional officers are by definition constitutionally mandates, yet seem to have become an endangered species. Health insurance and VRS costs are rising. The city already has more than 30 frozen vacancies. At least that many layoffs now seem unavoidable, putting more people out of work.

“If we have to cut our economic development and tourism budgets, we will be shooting ourselves in the foot. Governor McDonnell certainly recognizes the need to invest in these to grow the state’s economy. We should be doing the same at the local level.

“When we have to cut parks and recreation, the library, social and mental health services and our office on youth, the quality of life in Staunton will be lowered significantly and some of the direct consequences and negative impacts will likely be more costly than what we will save. Penny wise and pound foolish. There simply is no way the city can sustain these cuts without serious repercussions.”

At the conclusion of the remarks made before the subcommittee by representatives from VML-VACo, the Alliance for Virginia’s Students, the Virginia Parent Teacher Association, the Virginia Association of School Superintendents, the Virginia Education Association, the Virginia School Boards Association and the Virginia Association of School Business Officials, Sen. Edd Houck asked each speaker if their remarks reflected the fact that the General Assembly could cut state spending by another $2 billion. In each instance, the speaker replied that their comments were based on former Gov. Tim Kaine’s proposed budget, and did not take into consideration the possibility of even steeper reductions.

In a moment of introspection, Houck and Sen. Charles Colgan said that the public may not understand the severity of the education cuts until next fall when the new school year begins. At that time the effect of the reductions will be felt by children, their parents, and the education community.

Houck also questioned the school boards representative about his statement that the state’s actions this legislative session may force localities to file suit against the state. The school boards attorney pointed out that an argument could be made that the state is failing to meet its constitutional responsibility under Article VIII “to ensure that an educational program of high quality is established and continually maintained.” contents

House panel deals blow to local law enforcement program

The House Commerce and Labor Committee tabled by voice vote HB 1173 (Phillips), which would impose an assessment on property and casualty insurance companies in the amount of one-half percent of the total direct gross premium income for such insurance. The bill also requires the proceeds from the assessment to be credited to the Virginia Public Safety Fund. An identical measure -- SB 466 (Howell) -- was referred from the Senate Commerce and Labor Committee to the Senate Finance Committee. The Department of Taxation projected $22.9 million in FY11 and $45.8 million every fiscal year thereafter from the license tax.

So why is this important to localities with police departments?

In his “swansong” budget proposals, Gov. Tim Kaine proposed to reduce funding for local police departments (‘599’ Program) from $197.3 million to $180.8 million in FY10 and then again to $160.6 million in each year of the 2010-2012 biennium. Of the amounts proposed in FY11 and FY12, $4.2 million and $10.8 million would come from the Virginia Public Safety Fund, respectively. If the General Assembly fails to either pass HB 1173 and SB 466 or to “find” general fund dollars elsewhere in the state budget, state financial support for ‘599’ drops to $156.4 million in FY11 and $149.7 million in FY12. This represents a nosedive of 24 percent from the $197.3 million the General Assembly appropriated for FY10 just one year ago!

State law (§9.1-169) ties the increases or decreases in state aid for the ‘599’ program to the projected increase or decrease in general fund revenue included in the budget bill. Gov. Kaine’s budget assumes revenue growth of 3.8 percent in FY11 and 5.1 percent in FY12. In other words, the former governor’s budget proposal overrides state law to achieve next biennium’s ‘599’ reductions.

In addition to state aid for local police departments, Virginia Public Safety Fund proceeds would pay for State Police programs and for law enforcement and court security provided by sheriffs. contents

Tax rates ’09 publication available from UVA

The most recent edition of the Virginia Local Tax Rates reference book is available for sale from the Center for Economic and Policy Studies at UVA’s Weldon Cooper Center for Public Service.

The 28th edition -- Virginia Local Tax Rates 09 -- includes detailed information on tax rates and fees in all of Virginia’s 95 counties and 39 cities. Also, there is information for all of the state’s 36 large towns and for 113 of the remaining 154 smaller towns.  The study is based on a comprehensive survey conducted by the Cooper Center.

As local governments endure the most fiscal stress since the Great Depression, now is the time to to review state statutory restrictions and to examine local sources of revenue in comparison to what other localities are doing. Such analysis is made easy by this 380-page publication that contains explanatory text for each source, 40 text tables, and 64 detailed tables.

Order Virginia Local Tax Rates 2009. contents

Elected officials offered discount to attend stormwater workshop

The Center for Watershed Protection, the Chesapeake Stormwater Network, and the

James River Association are sponsoring a workshop for local officials on stormwater management March 9-11 in Staunton. The first day of the workshop will include a separate curriculum tailored for local elected officials. Local officials can attend for a discounted rate of $50. The deadline to register is Feb. 5.

The three-day workshop is designed to help public and private sector stormwater professionals:

• strengthen design, construction, and maintenance skills for innovative stormwater practices;

• understand and apply a new generation of stormwater regulations in the Chesapeake Bay;

• improve municipal NPDES stormwater programs; and

• exchange ideas with stormwater professionals.

Registration includes: Instruction, training materials, Continuing Education Units (if requested), continental breakfast, lunches, and snacks.

Registration and payment information. contents

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