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CDBG: New Tricks for an Old Dog?

Last week at a forum on local government’s fiscal straits, Mayor Elaine Walker of Bowling Green, KY, supplied her top desired federal recession response: “For us,” she said, “the biggest thing is… the Community Development Block Grant….In Bowling Green, we use it for everything.” Said Walker: CDBG could be a critical anti-recession measure because it allows local governments “not to balance [their] budgets but to… get money into the local economy.”

CDBG—a flexible program that provides communities with resources to address development needs particularly in urban or struggling locales--hasn’t come up much in White House and congressional discussions about the need for further economic stimulus and neither was it mentioned in the framing paper at the forum. In fact, CDBG is in many respects a program federal bureaucrats and auditors love to hate. Such arbiters have a difficult time holding the program accountable since there is so much flexibility and such local variation in how funds are spent. Consequently, Team Obama has also been cool to the program, with many observers suspecting that CDBG was a target of “Sheriff Joe” Biden’s March memo to federal agency heads warning against the funding of “imprudent” projects with stimulus money.

Yet here was Mayor Walker--an astute, fiscally conservative mayor from a community reeling with auto job losses--raising the possibility that the federal government’s little respected CDBG might well be the single most valuable job creation tools and fiscal props for the short-term.

And so we did a little digging on the accountability pages and used them to see what is happening on the ground with the hundreds of stimulus programs included in the American Recovery and Reinvestment Act (ARRA), aka the stimulus package. ARRA, as it happens, provides $1 billion to fund CDBG awards, and so we could use the data posted on to get a rough sense of how the program is performing as far as job-production in comparison to others.  

A quick drill-down using the value of various CDBG awards, the number of recipients, and the job results reported to federal authorities finds that, sure enough, CDBG is performing admirably--or more than admirably. According to the government’s information, CDBG is being used to build a community building in Tucson; renovate a library in Elizabeth, NJ; install storm drains and update streetlights to LED lighting in San Jose; and fund improvements to a microbusiness enterprise center in Albany, GA. Going deeper into the government’s giant spreadsheets, we find that some 820 CDBG grants traceable in the database are delivering a job for every $7,000 of federal outlay while for the rest of ARRA’s programs jobs are resulting at the rate of one for every $56,000 spent. Which is a pretty massive differential. So it seems Mayor Walker might be right: If the government’s own recovery data is at all accurate CDBG might very well function as a potentially super-efficient way to deliver jobs in hard times.

Which opens up an intriguing irony that ought to be considered by administration and congressional designers of further economic stimulus. Quite simply, it could be that the very characteristics that make CDBG a reviled program in good times (longstanding existence, great flexibility, direct local allocation, very broad but small-bore reach) make it a perfect relief channel in hard times.

To be sure, Team Obama’s concerns are justified to an extent, because in many cities, the long-standing warhorse that is CDBG is the closest thing left to unfocused revenue sharing in the federal government, as it runs directly to a network of hundreds of small local recipients.

And yet it could be that many of these characteristics (longstanding existence, great flexibility, very broad but small-bore reach) and the fact that 70 percent of the funds are allocated directly to entitled cities and counties may be virtues during the current crisis. That CDBG is an existing formula program that has been around for a while means it is well understood by federal, state, and local governments and staff and can work smoothly and fast. That it’s flexible means it may allow local ingenuity to get money into job-creation quickly. And its breadth and orientation to urban and struggling communities means it can expedite resources to many of the local places where stimulus is most needed. For all of these reasons, then, it may well be that CDBG funding might well be as good a bet for near-term job creation as any of the other emergency measures being bandied about this month, whether it be direct temporary aid to cities, a public service employment program, or a fast-track transportation bill.