By Larry Jones and Legislative Staff
February 17, 2003

In submitting his budget to Congress February 3, the President requested level funding or slight increases for most local programs in 2004. However, a number of key city priorities would be cut or eliminated as part of the Administration's ongoing effort to restrain federal spending while focusing on three national priorities: "winning the war against terrorism, securing the homeland, and generating long-term economic growth."

Deficits

To achieve these goals, the President is proposing to spend $2.24 trillion next year, which is $307 billion more than the federal government is expected to take in. Not only are record high deficits projected for this year and next year, but deficits in the $200 billion range are projected for the four years that follow.

Spending Restraints

Last year the President pushed hard to get members of Congress to stay within the $750 billion spending limit set on discretionary programs in his 2003 budget. But in the end he agreed to increase that amount to $762 billion in order to win final approval of the 2003 budget. However, the President made it clear in his budget message that he will once again "insist on spending discipline..." in 2004.

Programs Funded at or Near Current Levels

Under the President's budget, Community Development Block Grants, which provides direct assistance to local governments would remain at its current level of $4.429 billion. The Homeland Security First Responder program which provides assistance to state and local law enforcement officers and firefighters to fight terrorism would also be level funded at $3.5 billion. The Environmental Protection Agency's Brownfield initiative, which provides funds for brownfields assessment and clean up would be slightly increased from $200 million to $211 million. And the Low-Income Energy Assistance program would be funded at $1.7 billion, the same level as 2003, while Head Start would be funded at $6.8 billion, a slight increase over current levels.

Programs Reduced or Eliminated

On the other hand, the budget calls for the elimination of the HOPE VI program, which provides assistance to revitalize severely distressed public housing units. Funds provided through the Department of Housing and Urban Development for developing brownfield sites would also be eliminated. And Youth Opportunity Grants would be eliminated. The budget also calls for a drastic reduction in the COPS program (from $738 million in FY 2002 to $164 million in 2004, a 77 percent reduction), which has proven to be an effective tool for fighting and reducing crime in local communities. Further, the proposal calls for the consolidation of the Local Law Enforcement Block Grant and the Byrne Grant into a new Justice Assistance program but total funding for the two programs would be reduced from $1 billion to $586 million. Highway funding would suffer from a $2.5 billion shortfall in 2004. The proposed cuts and eliminations will make selling the President's budget more difficult, as many members of Congress are expected to oppose those that support their constituents.

cuts and eliminations will make selling the President's budget more difficult, as many members of Congress are expected to oppose those that support their constituents.

Programs Significantly Increased

On the positive side, the Title I education program which provides assistance to disadvantaged students would be increased from $11.75 billion in 2003 to $12.3 billion in 2004. Pell Grants would also be increased to $12.7 billion. And the transit program would be increased to $7.2 billion. The budget also calls for a $100 million increase for the Ryan White AIDS drug Assistance program to expand access to medication for those living with AIDS. Further, it calls for a significant investment, $15 billion over the next five years, to fight HIV/AIDS in Africa and the Caribbean.

Tax Cuts and Economic Stimulus

The President's budget also calls for $1.49 trillion in new tax cuts over the next ten years. This includes a $695 billion economic growth package announced by President Bush earlier this year to create jobs and strengthen the economy by providing a number of tax cuts to individuals and businesses. No funds were included in the President's economic growth package to assist state and local governments, many of which are facing a budget crisis. A controversial provision in the growth package, which calls for the elimination of taxes on stock dividends (a move that many critics believe could cause municipal bonds to be less attractive), has received strong opposition from members of both parties in Congress.

Commenting on the budget, Conference President Boston Mayor Thomas M. Menino said "Unfortunately, the Administration's proposed budget for fiscal year 2004 fails to address many of our cities' key priorities. At a time when city budgets are severely pinched by the weak economy and significant local homeland security investments, the President's budget contains no general economic assistance for states and cites. Rather than boosting strategic investments in transportation, housing, job training, and brownfields redevelopment, the budget instead recommends very small increases and some large cuts in these and other programs."

For a more detail analysis of the budget, visit our website at www.usmayors.org and click on USCM budget analysis.