Changes proposed in grant program

One Ohio lawmaker isn't happy with the plan's effect on rural housing.
WASHINGTON (AP) -- The Bush administration proposed Thursday requiring cities to meet development and blight-elimination goals to continue receiving federal block grants that mayors and local officials use to pay for needs ranging from low-income housing to new firetrucks.
The new accountability standards were part of a series of changes the Housing and Urban Development Department wants Congress to make to the Community Development Block Grant program.
The nation's mayors and their allies in Congress have repeatedly blocked Bush's attempts to cut funding for the grants, a funding stream upon which cities rely heavily. Local governments have great flexibility on how they spend the money, which has been disbursed under the same formula since 1978.
Rep. Michael Turner, R-Ohio, former mayor of Dayton and a staunch defender of the grants, said it may not be possible under the proposed changes to measure worthy uses of the aid.
For example, Butler County's use of the grants to save southwest Ohio residents a total of $5 million on their prescription drugs, hailed by HUD as a leading example just two years ago, would likely not meet the proposed standards, said county Commissioner Michael A. Fox.
In addition to penalizing communities for not meeting stated goals and changing funding formulas, HUD's proposal would remove about 300 smaller communities from direct grant funding and put them in a pool that must get its money through the state.
Rep. Bob Ney, R-Ohio, chairman of a House subcommittee that oversees HUD and housing issues, said he would take a close look at the proposal, but initially didn't like how it would affect rural housing.
"I would oppose any proposal that hurts the ability of my local officials to secure CDBG funding," Ney said.
In his 2007 budget proposal, President Bush recommended cutting the total grants from $3.7 billion to less than $3 billion a year.
"The decades-old formula increasingly distributes funding in a distorted way," HUD Assistant Secretary Darlene Williams said Thursday. "Yes, the current formula, on average, still targets funds to the neediest communities, but much less so than it did in the 1970s."
2005 analysis
Some of the neediest communities are underfunded, some of the least needy recipients are overfunded and cities with similar needs get different amounts of aid, a 2005 HUD analysis showed.
There are two funding formulas, and a community can use the one that gets it the most aid. HUD proposes eliminating one formula that measures the age of housing stock without considering the level of poverty, a measurement that has rewarded some affluent towns because they have older houses.
Butler County, with its affluent southeast sections and aging housing stock, is listed by HUD as "overfunded" and stands to lose 30 percent of its aid if Congress adopts the proposed formula changes. That upset Fox, a Republican who accused the Bush administration of looking for new ways to undercut a good program.
Fox said the grants have helped bring sewer and water service to some deeply impoverished rural areas and removed blight in poorer industrial towns like New Miami.
"A poor person in Butler County, who's in need of good housing and the basic things of life, is just as poor as the poor person in downtown Detroit or Cleveland or Washington or New York," Fox said.
High-need cities like New York or Compton, Calif., now get fewer dollars per resident than areas such as Tonawanda Township, N.Y., which HUD scores in its second-lowest need category. HUD's proposed changes would reverse that, while bringing per-capita funding for similar cities like Detroit and St. Louis in line. Currently, St. Louis gets 37 percent more per resident than Detroit.