March 6, 1973
Page 6599
THE BUDGET DEBATE: HOUSING
Mr. MUSKIE. Mr. President, the future of the Nation's housing and urban development programs is one of the most hotly debated and most critical issues in the administration's proposed budget.
The confusion and uncertainty surrounding projected funding levels in the next 15 months, as well as the fate of several major programs like Model Cities, was highlighted in two divergent arguments presented by Floyd H. Hyde, HUD's Assistant Secretary for Community Development, and Mayor Roman S. Gribbs of Detroit, president of the National League of Cities, in the Washington Post of March 3.
Secretary Hyde argues that–
The President's budget proposals provide an innovative financial plan for our nation's cities and that for most programs, considerably more money is actually available for this interim period than the present annual funding levels.
Mayor Gribbs is an eloquent spokesman for the cities. While supporting the concept of community development block grants, he takes sharp issue with Secretary Hyde's argument that the proposed fiscal year 1974 budget cuts, terminations, and impoundments do not create a crisis situation for the cities.
Mr. President, I ask unanimous consent that these two articles appear in the RECORD at this point.
There being no objection, the articles were ordered to be printed in the RECORD, as follows:
HUD OFFERS CITIES NEW URBAN PLAN
(By Floyd H. Hyde)
A newspaper headline – "HUD's Budget Cut – No Funds for Cities" – sums up the misconceptions of some persons concerning President Nixon's new budget proposals.
This is unfortunate as it indicates a basic lack of understanding of how federal grant programs work and their relationship to the budget process. Let me place the current budget funding proposals in their proper perspective.
The President's fiscal 1974 budget is an innovative financial plan for our nation's cities. For the first time, local officials have a three-year, long-range plan of federal commitment to community development efforts. Of special interest to mayors and other local community officials is the $2.3 billion appropriation for Urban Community Development Revenue Sharing (UCDRS) proposed to begin July 1, 1974.
Under this new program, a wide range of physical, economic, and social community development activities will be eligible for assistance including activities now carried out under current programs. In fact, the $2.3 billion exceeds the amounts actually appropriated this fiscal year for the programs to be replaced by UCDRS.
Since we know our current funding levels, and what is proposed for fiscal year 1975, which begins on July 1, 1974, the interim period of 18 months between now and the advent of UCDRS is, of course, of valid concern. To understand this issue, one needs to examine both the funding cycles and the nature of existing funding commitments for the programs which UCDRS would replace. For most programs, considerably more money is actually available for this interim period than the present annual funding levels.
The historical pattern for Community Development programs is for the major portion of new federal grant commitments to be made in the last three months of each fiscal year. The current fiscal year funding cycle ending this June is no different. As of December 31, 1972, we had approved only 12 per cent of our urban renewal funds, and 21 per cent of the monies available for Model Cities. Thus for the six-month period of January through June 1973, we have funds yet to approve totaling $1,274,000,000 for urban renewal, and $506.6 million for Model Cities.
Based on past performance, the bulk of our remaining funds will be approved during the upcoming three-month period, April through June. Therefore most cities will enter fiscal year 1974, starting July 1, 1973, with recently approved grant programs which should provide them with funding adequate to permit activities to be carried out until UCDRS goes into effect.
In addition, the full magnitude of the amount of funds available to communities during the interim period is made even more clear when we realize that on June 30, 1973, the total unspent money in Community Development programs already obligated will be $7.4 billion! This means that although the federal treasury has incurred this financial obligation, such funds have not been shown as spent by the localities.
Included in the $7.4 billion as of June 30, 1973, is $807 million for the Model Cities program. This is considerably more than the annual funding level of $620 million. An even larger portion of the $7.4 billion unexpended balance is $5.7 billion in Urban Renewal. This is substantially above this year's program level of $1.4 billion.
All other Community Development programs also have substantial unspent federal obligations: Neighborhood Facilities ($123,million), Open Space Land ($288 million), Water and Sewer Facility Grants ($391 million), Public Facility Loans ($94 million), and Rehabilitation Loans ($18 million). These amounts taken together exceed annual appropriations usually available. In the case of Neighborhood Facilities and Open Space, for example, the balances actually represent about three years of appropriated funds. These obligations are commitments which will be kept.
Thus, it is clear that we and the communities we serve will have considerable funds and plenty to do during the 16-month interim period. This is not to gloss over the problems of transition to UCDRS. In any change as far-reaching as the replacement of these categorical grant programs with UCDRS, there are bound to be squeaks and groans. In the Model Cities program for example, even though total dollars available will remain high through fiscal year 1974, the amount of new money available to the individual city for that period, as distinct from the carry- over funds, will average about 55 per cent of the former program level. This may necessitate reprogramming of activities in some communities.
On the other hand, there is a very significant offsetting feature in the President's Urban Community Development Revenue Sharing proposal. That is, that unlike the old categorical grant system wherein the applicant city often waited two or three or even as long as 10 years for federal review and approval of its application. The UCDRS grant would be an annual entitlement, and the simple application form would be processed within 90 days.
Therefore, in my opinion the potential long-term benefit of the UCDRS approach far outweighs the temporary problems of transition. This potential will be fully met only if the cities utilize the period before July 1, 1974 to get on top of the management of the existing programs and to plan and set priorities for the use of UCDRS funds. For our part, HUD is providing planning assistance funds and stands ready to work with communities to minimize local transition problems.
There is a tendency to view local problems in isolated terms. However, a concept of New Federalism calls for the inclusion of all resources – federal, state, local, and private – at the community level to meet priorities established by local officials to meet priority needs.
Community Development programs funded by HUD are significant, but constitute only a small part of the entire picture.
Having served as a mayor, I can say with certainty that local officials have a full-time task in the next 16 months to develop organization structures and processes to do an adequate planning and administrative job in preparing for UCDRS. It is a big job and time is short. I am confident that progressive local officials welcome the challenge and opportunity now presented to them by this administration.
BUT BUDGET CUTS STALL CITY HOUSING
(By Roman S. Gibbs)
President Nixon has proposed that the Urban Community Development Revenue Sharing program begin in July, 1974. I believe that most U.S. mayors applaud this move toward greater local initiative and control.
However, at the same time, the President has also announced severe cuts in federal expenditures for on-going community development programs. These cuts, if they are allowed to occur, will exact a terrible price in terms of the urgent need for decent housing and environment in our cities.
First, let me present my views regarding special revenue sharing.
Both city and federal officials have long been aware of the need to streamline the federal grant- in-aid system by creating efficient and manageable funding packages.
The first such "package" under consideration includes the various physical development programs administered by the Department of Housing and Urban Development. Those programs cover a wide range of federally funded activities, including urban renewal, neighborhood facilities, open space land, and housing rehabilitation loans.
Early in 1971, the National League of Cities and the United States Conference of Mayors helped to draft and gave their strong support to congressional legislation which would have consolidated the HUD programs into a single community development block grant. Additional impetus was given to the passage of such legislation when President Nixon recommended a similar approach called Community Development Special Revenue Sharing.
By September of last year, the Senate had passed (by a vote of 80-1) a bill establishing a block grant for community development. The House Banking and Currency Committee had reported similar legislation to the House Rules Committee. Unfortunately, that committee chose not to send the bill to the House floor for reasons that had nothing to do with the merits of the block grant proposal.
The cities remain committed to the concept of a community development block grant which is distinct from the "special revenue sharing" approach. Central to this block grant concept are several key elements which were common to both of last year's Congressional bills: (1) the provision of stable, annual funding directly to units of general purpose local government; (2) the requirement of a simplified application for funding; (3) the requirement of a minimum funding guarantee to cities with ongoing programs under the categoricals to be consolidated; (4) the requirement that cities address certain broadly-stated national objectives in their locally designed community development programs.
The cities also are prepared to support the consolidation of the Model Cities program into the block grant.
I am pleased to note that President Nixon has announced his intention again to support creation of a consolidated community development program. We welcome the President's help in getting Congress to move quickly on this important measure so that the block grant may begin on July 1, 1974.
Now let me turn to the subject of the proposed cuts in the ongoing federally funded community development programs.
Regrettably, the President has created a fiscal crisis in the current programs in an attempt to force the Congress to pass the community development package quickly. This has been done by terminating or short-funding each one of the existing categorical programs which is proposed for consolidation during the fiscal year 1974 transition period.
For example, he has already frozen all new commitments for the HUD open space land and for the HUD water and sewer programs as of January 5, and he has impounded the unused money.
And on February 1, each of the 147 communities, which are participating in the Model Cities program was told to absorb immediate cuts, averaging about 45 per cent of the current annual program level.
No new funds have been requested by the administration for any categorical programs, except for a token amount for urban renewal where substantial short-fundings have also been projected.
Worse still, HUD has already announced a new set of restrictions on how urban renewal funds may be used during the next 16 months – restrictions which will grind the program to a virtual halt in most cities.
The President is seeking only $138 million in new funding for these community development programs as compared to the more than $2 billion he proposed at this time last year.
In defense of its actions, the administration has attempted to argue that no new funds are needed for the six programs involved.
According to administration figures, on July 1, 1973, there will still be some $7.4 billion in congressionally appropriated and HUD obligated funds which have never been "used" by the cities. Some $5.7 billion of this impressive figure is reported to be in the urban renewal program alone.
The President advises us not to worry ... that there are sufficient funds in the community development "pipeline" to carry us through the next months.
I submit that this is a phantom pipeline.
The weakness of the administration position on these drastic program cuts is that the major portion of the $5.7 billion which is said to be in the urban renewal program is committed to the cities for programs that are already well underway.
The only reason these funds have not yet been drawn down from the Treasury is that, as permitted by law and as administered by HUD, most urban renewal projects have been temporarily financed using local bonding authority with notes guaranteed by the federal government.
The cities would be more than willing to call in the federal funds which are obligated for those projects since the present temporary local financing procedure is more expensive to them.
However, if the cities were to immediately retrieve these funds from the Treasury, it would add billions of dollars to the budget deficit for the current fiscal year. I am quite certain that the President does not desire that result.
Behind the smokescreen of these rationalizations, therefore, is the fact that the cities are faced with immediate program cuts. As every city official knows, such cuts will have a drastic effect on our citizens not only in terms of the availability of decent housing but also in the whole spectrum of urban environment.
In our most recent meetings with Congressional leaders, we mayors sought to explain how wrong it would be to allow this to happen, particularly in a program area such as community development where we are all agreed upon the major components of a new departure whose beginning may be only 16 months away.
We continue to insist that the cuts should not occur.