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February 9, 2010

RE: Federal Update for period ending February 5

Dear Mayor:

The intergovernmental relations staff at the National League of Cities (NLC) has provided us with the following update.

President's 2011 Budget Includes NLC Priorities, But No Funds for the Energy Block Grant Program

On Monday, February 1, President Obama introduced his $3.8 trillion fiscal year 2011 budget proposal. While the proposal reflects the discretionary budget spending freeze the President announced during his State of the Union address and does not include funding for the Energy Efficiency and Conservation Block Grant program, an NLC priority, it calls for level funding and in some cases increases in several programs important to fostering a climate of economic vitality in cities and towns. 

As part of the proposal, the President also continued his call for Congress to pass a jobs bill.  The House completed action on a $154 billion jobs package, The Jobs for Main Street Act, in December of last year.  The bill included funding for infrastructure, public sector jobs, and emergency relief to families hit by recession, and extended initiatives in the Recovery Act to help small businesses create jobs. The Senate may take action on a jobs package next week.    

Highlights of the President’s FY 2011 Budget Proposal

Energy 

The President’s proposal calls for $28.4 billion for the Department of Energy, stressing investment in technologies such as nuclear power, solar, wind and low-carbon emission coal to make the transition to a low-carbon economy but no funding for the Energy Efficiency and Conservation Block Grant program funded through the American Recovery and Reinvestment Act (Recovery Act). Much of the funding is directed toward commercial energy innovation and efforts to modernize the electric grid. 

Environment

The President’s proposal recommends $10 billion for the Environmental Protection Agency, targeting investment to community Superfund site cleanup, improving air quality, clean air and water programs, and efforts to reduce green house gases. 

The two funds for water quality — Clean Water and Drinking Water State Revolving Funds — would receive $3.3 billion, slightly below last year’s level, which was a major increase from years of disinvestment in the two programs that are essential to helping municipalities meet the requirements of the Clean Water Act. 

The Superfund program would be funded at $1.29 billion, a $13.4 million decrease from 2010. Brownfields rehabilitation funds would be increased by $41.5 million to $215 million to focus on area-wide planning and mediation and redevelopment of brownfields properties. 

The proposal also includes $10.9 million, an increase of $5.2 million in funding, for the new Sustainable Communities initiative, which is being carried out in partnership with the Departments of Transportation (DOT) and Housing and Urban Development (HUD), for technical assistance with smart growth initiatives including waste reduction efforts.

Transportation

The President’s proposal requests $75.3 billion for federal transportation programs, a 2 percent increase from last year. Funding for Amtrak, transit, highways and local airports grants would be kept at 2010 levels with a slight increase for Amtrak. 

In a continuation of the emphasis on high speed rail investment, the proposal calls for an additional $1 billion for high speed rail.  Last week, the White House announced awards for the $8 billion in high speed rail funds under the Recovery Act.  This comes on top of the $2.5 billion for high speed rail programs that was included in the FY 2010 budget. 

Federal highway programs would be funded at $42.1 billion, a slight increase over this year’s level of $41.8 billion.  Under the proposal, federal investment in transit would remain level at $10.3 billion, as it has since 2009. 

Airport improvement grants were funded at $3.5 billion, level since 2009.  Amtrak funding slightly increased from $1.6 billion to $1.637 billion. 

The proposal also calls for the creation of a new National Infrastructure Innovation and Finance Fund, a national infrastructure bank modeled on the competitive Transportation Investments Generating Economic Recovery (TIGER) grants created in the Recovery Act. The proposed $4 billion program would provide resources for major infrastructure projects through a combination of grants, loans or a blend of both and would allow projects to use private capital. 

The proposal also includes $527 million in the DOT budget for the Sustainable Communities initiative to support state and local government investments in transportation infrastructure that advance sustainable development aimed at reducing greenhouse gases and improving mobility and transportation access. 

Housing and Community Revitalization 

The President’s proposal calls for an overall increase of funding from $43.6 billion to $48.5 billion for HUD.  For the second year in a row, the President requested full funding for the Community Development Block Grant program at $4 billion. It also includes $150 million for the Sustainable Communities cross-agency initiative. 

The President also proposed a new program, the Catalytic Investment Competition Grants program, to be funded at $150 million.  Grants awarded under this program would help municipalities create or improve economic development opportunities in neighborhoods suffering economic decline. 

In response to ongoing high levels of  home foreclosure rates, the President calls for increased funding for Section 8 housing vouchers, which provide home rental assistance for low-income families, from $18.2 billion to $19.6 billion.  Funding for the HOPE VI program’s successor, the Choice Neighborhoods Initiatives program, would be increased to $250 million to support the development and maintenance of affordable public housing.  The proposal also increases funding for Homeless Assistance Grants from $1.86 billion to $2.1 billion. 

Access to Credit

In his proposal, the President proposes making Build America Bonds (BABs) permanent, which NLC has called for, and expands allowed uses but also lowers the level of rebate the federal government pays to issuers to 28 percent. The bonds, created by the Recovery Act last year, currently give issuers a subsidy equal to 35 percent of their interest costs.  The lower subsidy rate is proposed so the cost to Treasury is roughly the same as tax-exempt bonds. 

The bonds “were successful in helping to repair a severely damaged municipal finance market, making much needed credit available at lower borrowing costs for infrastructure projects that create jobs,” Treasury Secretary Timothy Geithner said.  To date, more than $70 billion in BABs have been sold. 

The President proposes to expand the use of the bonds to refinance debt, to cover short-term governmental operating costs, and to finance non-profit hospitals and universities.  The expanded permanent program would begin January 1, 2011.  As originally authorized in the Recovery Act, BABs could only be sold for two years, until December 31, 2010. 

Workforce Development 

While the President’s overall Department of Labor budget proposal is slightly less than fiscal year 2010, he calls for an increase in spending on workforce development programs. 

Under the President’s proposal, Workforce Investment Act (WIA) programs for disadvantaged adults would receive $862 million for formula grants (the same as last year) and $45.3 million for the Workforce Innovation Fund (WIF), a new program administered at the national level through competitive grants to states and local governments to support innovations in workforce development. 

WIA programs for dislocated workers would receive $1.18 billion for formula grants (the same as last year) and $62.3 million for WIF and youth programs would be increased overall by $100 million to $1.03 billion, including $871 million for formula grants (about $70 million less than last year) and $154 million for WIF. In addition, funding for YouthBuild programs would increase from $102 million to $120 million and “Green Jobs” funding would nearly triple from $23 million to $65 million. 

Education 

The President is seeking a $3.5 billion increase in discretionary funding for the Department of Education. 

Much of the proposed increase would go toward competitive funding for the Elementary and Secondary Education Act (commonly known as No Child Left Behind), including $1.35 billion for Race to the Top and $500 million for Investing in Innovation, two programs created by the Recovery Act.  However, funding for these programs would come at the expense of cuts in Title I direct grants to local education agencies.  Under the President’s proposal, funding for Title I would be decreased from this year’s $15.9 billion to $14.5 billion in FY 2011.  Funding for the Individuals with Disabilities Education Act program would be increased by $250 million to $12.8 billion.  

Health Care and Family Services 

The President’s budget for the Department of Health and Human Services provides for a six-month, $25.5 billion extension of the temporary increase in the Federal Medicaid Assistance Program to enable state and local governments to maintain health care for low- income children and families. The proposal also includes $290 million for the expansion of community health centers, including the creation of 25 new access points in communities currently without access so that community health centers could serve more than 20 million patients. 

The proposal also includes $302 million for ongoing pandemic virus detection, communications and research and $715 million to bolster state and local response capabilities through the Public Health and Emergency Preparedness Program, the same as last year. 

The proposal includes $8.2 billion for Head Start, an increase of nearly $1 billion, and $1.7 billion for the Social Services Block Grant, the same as last year.  The Low Income Home Energy Assistance Program would receive $5.3 billion in funding, including $2 billion in mandatory funding and $3.3 billion in discretionary funding. 
Public Safety 

The proposal requests a $722.5 million increase for state, local and tribal law enforcement assistance, bringing total program funding to $3.4 billion, which represents 12 percent of the Department of Justice’s budget authority.  Specifically, the President calls for doubling funding for the COPS hiring grant program to $600 million to be used to hire and retain police officers; near level funding for the Byrne Justice Assistance Grant Programs at $512 million; and level funding for the Second Chance Act grant program, which provides funds to create reentry programs for ex-offenders, at $100 million.

The President’s proposal seeks almost $4.2 billion in homeland security grants for state and local governments, a slight increase of $165 million over the current fiscal year. The State Homeland Security Grant Program, 80 percent of which is passed through states to local units of government, receives a slight increase to $1 billion. Funding for the Urban Area Security Initiative increases from $887 million this year to $1.1 billion under the proposal. The proposal also includes $610 million for firefighter hiring and equipment, as well as more than $650 million for transportation and infrastructure protection grants; both amounts are decreases from this year’s budget. 

We will keep you posted on further developments in our Nation’s Capital.

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

 

 

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