U.S. cities and local governments will lose funds for community redevelopment projects, public transportation and police and fire departments as part of the budget agreement that averted a federal government shutdown.
The agreement struck between President Barack Obama and Congressional leaders will cut funding for the Department of Housing and Urban Development’s community development fund by $942 million to $3.5 billion, according to a list released today. It also eliminates $680 million from public transportation grants, more than $700 million from low-income housing, and $786 million from grants for local agencies that respond to emergencies.
“It’s definitely going to have an impact at the local level,” said Greg Minchak, a spokesman for the National League of Cities in Washington. “This is going to mean projects aren’t going to go forward, cities are going to have to reprioritize what they’ve been working, and we’re going to see layoffs because of this.”
The cuts affecting cities are among those needed to produce the $38 billion that Obama and congressional leaders agreed to for the remainder of the 2011 budget year. The cuts resolved a standoff between the White House and Republican leaders that last week threatened to force the first federal government shutdown in 15 years.
The $1.049 trillion legislation is set for a House vote later this week, with a Senate vote to follow, as lawmakers push to bring the budget fight to a close.
City leaders had urged Congress not to cut the community development program, saying doing so threatened to deal a blow to their already struggling economies. The Housing and Urban Development program provides federal grants to states and localities for affordable housing, infrastructure improvements, economic development and other projects.
Cities have little room to make up for lost funds. Local governments have eliminated 416,000 jobs since their payrolls peaked in September 2008, before the financial crisis worsened, and state and local tax collections have yet to recover to the peak hit more than two years ago.
The budget agreement also eliminates new funding for high- speed rail projects and rescinds $400 million of funds in previous budgets. The moves save $2.9 billion, according to the list.
Robert Healy, a lobbyist for the American Public Transportation Association, said the cutbacks come at a time when rising gasoline prices are illustrating the need for investments in public transportation.
“We’re very concerned about the impact of the deal on public transit and high-speed rail,” he said. “It’s short-sighted.”
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