By Eugene T. Lowe
July 25, 2005

The Senate Appropriations Committee July 21 passed the FY06 funding bill for Transportation, Treasury, Judiciary and HUD with a cut in Community Development Block Grant formula grants (direct allocations to localities) from last year’s spending level of $4.1 billion to $3.774 billion. The House passed its funding bill on June 30 with $3.877 billion for formula grants. Both the Senate Appropriations Committee and the House also cut the overall program, the Community Development Fund, from $4.7 billion to $4.2 billion.

During consideration of the spending measure, Chair of the Transportation, Treasury, Judiciary, and HUD Appropriations subcommittee, Senator Christopher Bond (MO), offered a Manager’s amendment, which provided an additional $125 million to his original mark of $3.649 billion for CDBG formula grants. With the additional funds, the Senate’s level of $3.774 billion still falls short of the House’s spending level. Following the full Senate markup, the CDBG Coalition began to pursue a strategy to get at least to the House’s funding level during floor consideration in the Senate or in the House/Senate conference, both of which will probably take place in September following the congressional August recess.

The Senate bill did not include a provision in response to the recent Supreme Court decision on eminent domain in Kelo v. City of New London. Several national organizations representing local governments feared that such a provision was included in the legislation that would have prohibited the use of federal funds for the use of eminent domain for economic development purposes. During deliberations on the spending bill, Bond said that he will offer an amendment on the issue during floor debate that will not be as restrictive in the use of federal funds for eminent domain purposes.

The Senate Appropriations Committee also approved $6 million in credit subsidy, which will support $275 million in Section 108 loan guarantees. The House did not include any funding for Section 108. Last year’s congressional funding supported $275 million for the program.