President Donald Trump unveiled a budget proposal, or so-called “skinny budget,” on March 16th that calls for heavy cuts in many areas of government, including the U.S. Department of Housing and Urban Development, Environmental Protection Agency, the National Institutes of Health, and the U.S. Department of Transportation, while boosting military spending by 10 percent ($54 billion) and allocating more than $4 billion for a U.S.-Mexico border wall. As noted by the Los Angeles Times, “The president’s blueprint would disrupt almost everything California does, in some cases quite brutally.”
In releasing his state spending plan for the 2017-2018 fiscal year in January, Governor Brown projected a $1.6 billion deficit by mid-summer. The state budget anticipates facing a multi-billion gap in federal funding with deep cuts across numerous agencies. A revised budget will be released by the Governor in May.
In California, about 12 percent of CalEPA’s budget comes from the federal government. The State Water Resources Control Board gets the largest share – about $300 million. Those funds are used to clean up polluted streams, make sure toxic substances aren’t leaking into groundwater, and ensure drinking water is safe. If EPA funding is reduced or eliminated, the state will have to make up the deficit. The pending cuts to the U.S. EPA’s funding for brownfields reuse and revitalization will also reduce a key source of leveraging for assessment and cleanup of older sites that could be used for housing, commercial/retail and mixed use development throughout the state.
Trump’s budget cuts $9.2 billion (13.5%) from the U.S. Department of Education. Betsy DeVos, Trump’s Secretary of Education, has long been a staunch proponent for voucher programs and private schools. The budget boosts charter school funding by $168 million and adds $250 million for a new private school choice program. It also adds $1 billion for Title I, a federal program that distributes funding to schools with a high percentage of students from low-income families, but eliminates $1.2 billion for before- and after-school programs as well as summer programs. These cuts to education come as many school districts face funding challenges. The San Diego Unified School District, for example, has to slash $124.4 million from next year’s budget, due in part to long-term “structural defects.” Teacher lay-offs are more likely to hurt schools in lower-income neighborhoods which have a higher percentage of more recently hired staff.
In addition, the budget cuts $2.5 billion from the Department of Labor. It decreases federal support for employment services programs for unemployed seniors and disadvantaged youth, shifting the responsibility to state and local agencies.
Especially significant for local housing development are proposed cuts of $4.3 billion to the Department of Housing and Urban Development, including:
• Eliminating funding for the Community Development Block Grants (CDBG) program, cutting $3 billion. The League of California Cities is lobbying fiercely to stop the CDBG elimination proposal at HUD, on which its members depend to fund services such as building housing for the homeless and revitalizing decaying neighborhoods.
• In addition to zeroing out funding for community development groups that create affordable housing (Section 4), Trump’s budget would eliminate the HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity Program, cutting more than $1.1 billion.
For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.
With more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.