Bush to propose cutting grants

WASHINGTON – President Bush’s budget will propose cuts of up to 40 percent in a $4.7 billion program that disburses development grants to communities across the United States, congressional aides said Wednesday.

The proposed cuts in community development block grants – and their possible consolidation with other economic development programs – were to be announced today, said the aides, who spoke on condition of anonymity.

The program provides money to more than 1,000 communities each year and is a favorite with state and local officials, who are expected to battle any attempt to pare it back. It also is a treasured source of home-district largesse for members of Congress, who each year win hundreds of millions of dollars worth of so-called “earmarks” to funnel grants to communities in their districts.

The development grants have been a perennial – but usually unsuccessful – target for potential budget savings for Republican administrations back to President Reagan’s day. They were created in 1974.

Last year, Bush’s budget applauded the flexibility the program gives local officials for using the money. But it also criticized the grants for spreading the money so broadly that it fails to achieve its primary objective – revitalizing distressed neighborhoods.

Bush’s proposal will be one of many in his 2006 budget aimed at holding overall domestic spending to virtually no growth next year. The reductions are part of his effort to battle mushrooming federal deficits, projected to set a third consecutive record this year of $427 billion.

One administration official, speaking on condition of anonymity, said Bush has “proposed in the past and will continue to support the notion of consolidation to better centralize our resources” and measure a program’s progress.

Two congressional aides said they had been told Bush would seek to cut the development grants by 40 percent, but a third said it would be a 21 percent reduction to about $3.7 billion.

They also said the program would be moved from the Department of Housing and Urban Development to the Commerce Department. There, it might be combined with other programs under the wing of the Economic Development Administration, they said.