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March 7, 2018

FY19 budget proposal implications for housing, the environment, and economic development

Mar 7, 2018

FY19 budget proposal implications for housing, the environment, and economic development

On February 12, 2018, the White House released its federal Fiscal Year (FY) 2019 budget proposal. A recent CMAP Policy Update profiled transportation aspects of the proposal, as well as the White House infrastructure proposal that accompanied it. Many aspects of the FY19 budget proposal are similar to those in the president’s FY18 proposal, which a previous Policy Update found would have had a detrimental impact on the CMAP region. While FY18 spending has not yet been finalized by Congress, it appears that many of the proposed cuts are unlikely to be implemented in light of a February 9, 2018, budget deal that sets increased caps in FY18-19 for domestic discretionary spending.

The president’s FY19 budget again proposes significant cuts to housing, community development, environment, climate, economic development, and data collection programs that support communities throughout northeastern Illinois. Resources to support housing choice for low- and moderate-income residents would decrease, as would funds that communities use to improve disinvested areas. Decreased funding could limit regional efforts to address land conservation, water resource management, and climate resiliency goals. Cuts would also limit workforce development, economic innovation programs, and data collection employed for a wide range of planning purposes.

Note that this analysis provides comparisons of FY19 proposed spending to FY17, because full-year FY18 spending levels have not yet been enacted.

Housing and community development

The proposed budget for the Department of Housing and Urban Development would be reduced from FY17 levels by $8.8 billion, an 18.3 percent cut. The FY19 budget would eliminate the Choice Neighborhoods, Community Development Block Grant (CDBG), and Home Investment Partnerships (HOME) programs. Eliminating these programs would reduce spending relative to FY17 by more than $4 billion. In FY17, northeastern Illinois municipalities and counties received $105 million in CDBG funding and nearly $25 million in HOME funding.

The proposal also reduces funding for various rental assistance programs by 11 percent, or more than $4 billion, though a last-minute change to the proposal would restore $1.7 billion in funding. The budget eliminates other federal housing programs and funds, such as the Self-Help and Assisted Homeownership program and the Public Housing Capital Fund.

In the Department of the Treasury, the budget proposal eliminates Community Development Financial Institutions (CDFI) Fund loans and grants, a cut of $222 million, reorganizing the program to an oversight and administrative role. This program offers assistance in the form of tax credits, loans, and grants, which are accessible by CDFIs to economically distressed communities. Since 1996, more than $1.3 billion in CDFI loans have been issued in Illinois.

GO TO 2040 and subsequent CMAP work highlight the importance of providing housing options for low-income residents, particularly in areas with access to jobs, services, and transit; the reductions to HOME and CDBG would limit opportunities to provide affordable housing in communities with access to these amenities. Furthermore, the elimination of CDBG funds could hinder efforts to increase municipal capacity in the region, as the flexibility of CDBG funds allows municipalities to undertake a wide range of public service and infrastructure projects that they would otherwise forego. Finally, the reduction to the CDFI Fund could affect implementation of the region’s emerging ON TO 2050 recommendations to reinvest in disinvested areas and create a pipeline of municipalities that can leverage these resources.

Environment

Land. The Department of the Interior’s proposed budget is $2.2 billion less than FY17, a 16-percent reduction. Cuts include $20 million less relative to FY17 for the Heritage Partnership Program, which supports National Heritage Areas with technical and financial resources. National Heritage Areas are certified by Congress and include state- and locally owned land, as well as private land, outside of the national park system. The Illinois and Michigan Canal National Heritage Corridor is one of two National Heritage Areas in Illinois; both Calumet and Black Metropolis are seeking designations as National Heritage Areas.  

The proposal also cuts the $13 million National Wildlife Refuge Fund, which may affect the Hackmatack National Wildlife Refuge. When Hackmatack, located in McHenry County and parts of Wisconsin, was created in 2012, it was the only federally designated wildlife refuge in a 100-mile radius of Chicago.

Water. The Environmental Protection Agency’s (EPA) FY19 budget would be cut by $2.8 billion, 34 percent relative to FY17. The proposed budget reduces categorical grants for states by $469 million. These grants assist states in complying with the Safe Drinking Water Act and Clean Water Act. It also reduces funding for general EPA research and development by $229 million and for the Hazardous Substance Superfund Account by $327 million. The ENERGY STAR program – which provides consumers information about the energy efficiency of various products – would be converted from a federally funded program to a program funded by companies seeking efficiency designations. In addition, the EPA’s restoration efforts in the Great Lakes through the Great Lakes Restoration Initiative would be reduced by 90 percent, to $30 million from $300 million.

The budget does nearly double funding for the Water Infrastructure Finance and Innovation Act program, to $20 million. The program provides a source of financing for water and wastewater infrastructure projects in the form of low-interest loans, rather than funding them directly, and it has not yet been used in Illinois. The budget provides level funding for EPA’s support of Drinking Water and Clean Water State Revolving Funds, which provide grants for local governments to build wastewater and drinking water infrastructure, as well as wastewater treatment facilities. These funds can be used to improve the system-wide efficiency of water transmission.

Climate. In the Department of Commerce, the budget proposal cuts National Oceanic and Atmospheric Administration (NOAA) grants and other education initiatives by $273 million. Currently, NOAA funding supports CMAP and the American Planning Association development of a methodology for integrating climate change and vulnerability into local planning efforts and the work of the CMAP LTA program.

GO TO 2040 identifies the importance of the region’s natural areas and resources, recommending that land use planning integrate water resources, water conservation be pursued, and natural areas be preserved. Water conservation is closely tied to infrastructure investment, as significant amounts of water are lost in transmission due to deficient infrastructure. While certain water infrastructure programs are maintained in the budget, other reductions would inhibit the region’s ability to reach its targets for natural land acquisition and to use research to improve our underlying understanding of water resources.

Economic development

The budget proposal eliminates the Economic Development Administration (EDA) and the Manufacturing Extension Partnership (MEP), and restructures the Minority Business Development Agency. The elimination of the EDA and MEP represents a $376 million reduction relative to FY17.

The EDA promotes economic growth by harnessing federal resources to support regional coordination and innovation, reflecting priorities in GO TO 2040. The Chicago Metro Metals Consortium was identified as an Investing in Manufacturing Communities Partnership by the EDA in 2014, and the Voorhees Center at the University of Illinois at Chicago was designated an EDA University Center in 2016 to promote green economic development in South Suburban Cook County. Similarly, MEP provides resources to manufacturers through state-level facilities. MEP has identified six local manufacturers in the region as “success stories,” achieved primarily through partnership with the Illinois Manufacturing Excellence Center.

The proposed budget significantly reduces funding for innovation efforts. This includes the EDA’s Regional Innovation Strategies and the Small Business Administration’s Regional Innovation Clusters and Growth Accelerator program. Such programs support metropolitan Chicago’s Smart Grid Cluster, a collaboration between energy organizations that “supports economic growth for companies building the future of energy and the grid.”

The budget proposal allocates $200 million in the Department of Labor for apprenticeship programs, more than double the FY17 level. Such programs draw on coordination between employers and training providers to offer workers the flexibility to intersperse learning and earning as they pursue long-term employability. A late addendum to the budget proposal also funded implementation of the Workforce Innovation and Opportunity Act (WIOA) at FY17 levels, an increase from the original proposal.

The budget proposal could impede implementation of two of GO TO 2040’s key recommendations: to improve education and workforce development, and to support economic innovation. Though the addendum reinstates FY17 levels for WIOA, adequate investments in human capital should be an ongoing priority. Furthermore, innovation directly affects major economic outcomes, such as increased global competitiveness and good jobs.

Data

Flood Hazard Mapping. The Federal Emergency Management Agency’s proposed budget reduces the Flood Hazard Mapping and Risk Analysis Program by nearly half, or $78 million relative to FY17. Past CMAP research shows that a significant amount of National Flood Insurance Program claims occur outside of the existing 100-year floodplain, so accurate, up-to-date maps of flood hazards are critical for the region.

2020 Census. The budget proposal increases funding for the U.S. Census Bureau by $2.3 billion in preparation for the 2020 Decennial Census. Although spending levels tend to increase as the census date approaches, the cost of conducting the census has increased while budget allocations have diminished. Technology improvements may contribute to cost savings, but the importance of the census cannot be understated: It defines legislative boundaries, determines the allocation of public funds, and informs most planning efforts at a variety of scales.

Two key sources of data for the region – flood hazard mapping and the census – are deprioritized under this proposal. The census is critical for CMAP’s work, and it informs countless decisions made by federal, state, and local governments. The Flood Hazard Mapping and Risk Analysis Program enables the region to properly understand its areas of vulnerability. Cuts to this program and to climate programs discussed above would limit the region’s knowledge of water resources and precipitation levels, jeopardizing climate resilience efforts and the region’s goal of integrating water resource management into planning efforts.

Moving forward

Together, the updates in this series evaluate the potential effect of the proposed budget on the transportation network as well as economic, environmental, housing, and data initiatives in northeastern Illinois. If implemented as proposed, budget cuts would eliminate or limit a variety of initiatives in the region.

Building on GO TO 2040 recommendations, the ON TO 2050 planning process has identified resilience, inclusive growth, and prioritized investment as key principles for the region. Investments in climate research, water infrastructure, and flood mapping are essential to ensuring a resilient region. Housing and workforce development programs are necessary for achieving inclusive growth, and an accurate census will be crucial in our efforts to prioritize investments. Achieving our region’s goals for 2050 will require strong federal investment in our infrastructure, our economy, and our quality of life.

The release of the Administration’s budget proposal is the first step in the development of the FY19 budget. Over the summer and fall, Congress will develop appropriations bills to define funding levels for the next fiscal year. Using the priorities outlined in our 2018 Federal Agenda, CMAP will continue to monitor this process closely, articulate the agency’s policy positions to our Congressional delegation and other stakeholders, and outline potential effects on the region’s transportation, land use, housing, environment, and economic development goals.

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