Saying Goodbye to Mainstay Programs in the President’s FY2012 Budget Proposal

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February 12, 2011; Source: Office of Management and Budget | With a new Tea Party-ish Republican majority in the House of Representatives, one might think that President Obama’s FY2012 budget proposals are dead on arrival. But Obama worked magic in selling bipartisan legislation at the end of 2010, combining an extension of Bush-era tax cuts with a temporary cut in Social Security taxes and a renewal of long-term unemployment benefits, so he might well convince his Republican opposition to buy into his FY2012 budget proposals.

For nonprofits, tucked into one of the supplemental volumes of the budget is a list of program terminations and reductions, many of which will be felt by nonprofits:

  • The Self-Help Homeowner Opportunity Program (SHOP) at HUD would be terminated. SHOP’s $21 million appropriation helps low-income and very low-income families become homeowners by using sweat equity to make the housing more affordable. The administration suggests that the HOME Investment Partners program can provide what SHOP’s small appropriation does.
  • The budget proposal slices 7.5 percent or roughly $300 million from the Community Development Block Grant program, still leaving $3.684 billion to be distributed to states and municipalities. The budget’s explanation of the weaknesses in the CDBG program (failure to target funds to the most economically distressed communities, outcomes difficult to measure and evaluate, etc.) doesn’t seem to correlate much with the 7.5 percent excision. Some sources suggest that the president cut CDBG “reluctantly” out of a sense of “shared sacrifice.” The justification that “CDBG funding is scalable” is difficult to grasp.
  • The Community Services Block Grant program gets sliced from $700 million to $350 million, with complaints about how impossible it is to defund poor performing community action agencies and lack of real reporting requirements in the CSBG statute. Particularly confusing is the notion that the $350 million will be made available to “the highest performing Community Action Agencies,” as though the program is still a CAP-focused program, in contrast to White House Chief of Staff Bill Daley’s statement that the funds would competitively available to other organizations as well.
  • The HOME Investment Partnerships program gets cut from $1.825 billion to $1.65 billion, due to “fiscal constraints and the program’s scalability” – again scalability as an undefined explanation. In addition, the budget says that the administration is focused on capitalizing the Affordable Housing Trust Fund at $1 billion, ostensibly more targeted to lower-income populations than HOME. The explanation includes a paragraph referencing the $7 billion appropriated in the stimulus and earlier to the Neighborhood Stabilization Program to deal with foreclosed homes, suddenly transforming an emergency anti-recessionary action on massive numbers of foreclosures into a program that diminishes the need for appropriations to ongoing programs.
  • One of the biggest rescissions is the cut of the Low Income Home Energy Assistance Program by half, roughly eliminating $2.53 billion. The analysis relies on predictions of only moderate energy price increases, perhaps not anticipating fluctuations that might result from the overwhelming political and economic changes enveloping the Middle East, but the budget document pledges the Administration’s willingness to revisit LIHEAP if these projections don’t turn out to be correct for the winter of 2011-2012.

President Obama promises nothing nearly as punishing as the House Republican majority’s proposed budget cuts, not to mention the even more draconian slashes pitched by the even more conservative Republican Study Group. It could well be that taking a middle-of-the-road position on some painful cuts, the President’s strategy might be part of the reality that nonprofits have to address when – or if – the FY2012 budget is adopted.—Rick Cohen

  • Derek Gatlin

    I would appreciate a more balanced view of the Presidents proposal… for all of the cuts described, you didn’t bother to mention any of the increases – why? Here are a few that some nonprofits will find really exciting: an increase of $70 million to Federal Trio programs, $350 million to establish a new Early Learning Challenge Fund, and $150 million to launch a new “First in the World” competition.