How Would the President’s Proposed Budget Impact Local Governments?

If enacted by Congress, budget would significantly cut funding and/or eliminate grant and loan programs that both urban and rural communities have come to depend upon.

BLOG POST | May 31, 2017

by Amber Snowden, communications and project manager, Center for State & Local Government Excellence

On May 23, the Trump Administration released its proposed FY2018 budget for the federal government. If enacted by Congress, this budget would have a significant impact on the nation’s local governments, significantly cutting funding and/or eliminating grant and loan programs that both urban and rural communities have come to depend upon. Among the cuts:

  • Elimination of the Community Development Block Grants (CDBG) program (funded at $2.6 billion in FY2017), which provides funding to rehabilitate affordable housing and supports related services.
  • Elimination of the HOME investment partnership program (funded at $950 million in FY2017), which develops and preserves affordable housing.

The CDBG program has provided a flexible source of funding that local governments have used for projects and activities such as sewer line upgrades, park improvements, and assistance to the homeless.

The proposal also saves $4.2 billion by eliminating both the Low Income Home Energy Assistance Program, which helps low-income households, including many poor seniors, pay for heat; and the Community Services Block Grant, which provides anti-poverty services through states, localities, and nonprofits.

The administration also proposes cutting all funding for the popular competitive TIGER (Transportation Investment Generating Economic Recovery) grant program, funded in the current budget cycle at $500 million. Since 2009, TIGER grants have enabled both urban and rural areas to undertake road and transit projects.

The proposed budget would also significantly cut funding for the Federal Transit Administration’s capital investment program, also called New Starts, which provides funding for local transit projects. Under Trump’s plan, this program would be cut from over $2 billion in FY2017 to $1.2 billion in FY2018.

The proposal would eliminate funding for the USDA program that issues loans and grants to rural communities for water and wastewater utility projects, a critical tool for helping small utility fund and finance upgrades, such as replacing failing water storage tanks and old pipes. The budget proposal would also cut FEMA grants to state and local governments by $767 million.

Congress will review the President’s budget and decide which of the proposals to accept, modify, or reject as they set federal spending levels for the FY 2018 budget, starting October 1, 2017. Many of the proposed cuts are expected to meet with great resistance in the Capitol. 


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