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On Thursday, the U.S. Department of Commerce released its plans for a complete overhaul of the Community Development Block Grant and other federal economic development programs. The “Strengthening Communities Initiative,” part of the administration’s FY 2006 budget, to be released this week, would consolidate 18 existing federal economic and community development programs into a single new program, with an annual budget of $3.7 billion. The new initiative moves CDBG away from the U.S. Department of Housing and Urban Development, the agency that has housed the program since its inception in the late 1960s, and severely cuts federal spending. Currently, CDBG alone is budgeted at $4.7 billion. Talking points released by the White House Office of Management and Budget state that “the new $3.71 billion unified grant-making program will better target assistance and achieve greater results for low-income persons and economically distressed areas.” The program would establish entirely new eligibility criteria, based on a community’s “job loss, unemployment levels and poverty.” Last year, OMB declared CDBG “ineffective,” in part because, evaluators determined, fewer and fewer of the dollars were going to the communities that needed them most. In addition, the Department of Commerce proposes to offer special bonus grants to “development-ready communit[ies]…already taking steps to improve conditions in ways that have been proven to attract business.” Those include meeting No Child Left Behind school progress goals; “reducing regulatory barriers to business creation and housing development,” and reducing rates of violent crime. [02/07/05]

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