Out of Control Policy Blog

Sen. Coburn Cites Reason in CDBG Bill Amendment

Congress may be on recess for the rest of August, but come September an interesting bill worth keeping an eye on will be House bill S.1243, the annual Transportation, Housing and Urban Development, and Related Agencies Appropriations bill.

Before congress went out of session, Senator Tom Coburn (R-OK) cited Reason Foundation's recent policy brief "Crony Capitalism and Community Development Subsidies" in two amendments (viewable here and here) added to the original bill.  Theamendments would require the Department of Housing and Urban Development to report on potential ways to update or replace the current Community Development Block Grant (CDBG) funding formula-which has remained in its current form since 1978-as well as require the funding level of the CDBG program to match the President's FY2014 budget request of $2.798 billion for the program

In both amendments, Sen. Coburn, cited Reason's analysis of CDBG allocations in which 8 out of the 10 highest-income counties in the U.S. were found to have received millions in grants while the 10 lowest-income counties didn't receive any funds.

The bill has become quite controversial because of its substantial cuts to the CDBG program. Those cuts while welcomed, won't end the cronyism and corruption inherent in the program. As we wrote in the Reason brief, HUD hasn't updated its CDBG formula, which factors in things like population, poverty, and pre-1940s housing, in over 30 years. That has led to questionable grants in the past few years, such as $200,000 for a Mark Twain museum in Connecticut, $588,000 for a marina in Louisiana, and $220,000 for a Brewery in Michigan to expand its facilities. Not only are these projects considered non-essential by HUD guidelines for CDBGs, but they are examples of private organizations collecting government subsidies to gain a competitive advantage. Even with funding cuts, wasteful projects like these are still bound to be funded as they have been in the past.  

Still, the Coburn amendment to change the formula on the other hand, might alleviate some of the cronyism which has allowed millions of dollars (for supposedly needy communities) to go towards funding political pet projects that only benefit narrow private interests in some of the richest counties in America at taxpayer expense.

It will be worth watching the progress of S. 1243 when Congress returns. Right before the recess, the legislation was pulled from voting consideration in the House because of the controversial cuts. House Appropriations Committee Chairman Hal Rogers (R-KY) has called the prospects for passing this bill in September "bleak at best", as a result of the vote count on passage before it was pulled.

 

Victor Nava is Research Assistant


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