Though it is a small part of the federal budget, at $4 billion annually, the Community Development Block Grant (CDBG) is a favorite federal program in many local governments. This year cities can expect to receive a bit less CDBG funding as Congress reduces the grant by one billion dollars. City officials are unhappy, claiming without these funds many essential programs will be compromised or cut entirely.
CDBG was created in 1974 by merging together several smaller urban revitalization grants. Intended as stop-gap funding to help cities cope with insufficient local revenues, CDBG has become an established part of thousands of municipal budgets. While popular with mayors, over the years, many problems have emerged with the program. The formula used to target funds was found to be erroneously awarding grants to “college towns.” Many CDBG projects appear to be of dubious worth, and lastly, if CDBG is meant to revitalize distressed cities and stimulate economic development then how do we know if it has worked? The last question is the subject of a 2007 study I undertook of the program.
The U.S. Conference of Mayors continues to lobby Congress to keep CDBG in place even as both Republicans and Democrats look for things to cut. With a debt of $15 trillion, $2.9 billion is trivial by comparison. But CDBG begs another question, after 38 years of subsidies to foster urban recovery why haven’t cities and local revenues rebounded?