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May 19, 2009

President Obama Releases FY 2010 Budget

BUDGET OVERALL GOOD FOR SMART GROWTH PROGRAMS

President Obama recently released his proposed budget for FY 2010. The budget includes an overall spending increase, as well as cuts or eliminations to 121 programs that were funded in FY 2009. President Obama's proposal reflects a 9.7% increase over President Bush's FY 2009 request. The $3.7 trillion plan is overall very favorable to smart growth programs.

The HUD budget increased by $7.4 billion and included funding increases for existing programs like the Community Development Block Grants and the creation of new programs like the Sustainable Communities Initiative and the Energy Innovation Fund. The Department of Transportation budget request of $73.3 billion is 4% more than authorized in FY 2009. The most significant inclusion in the DOT budget is $1 billion for high-speed rail, which is the first segment of the Administration's plan to authorize $5 billion over five years. Funding trends for the Environmental Protection Agency have also dramatically reversed in this budget. Several new programs have been added and both State Revolving Loan Funds for water have received large funding increases.

FY 2010 Budget Includes Funding for Joint HUD-DOT Initiative
SUSTAINABLE COMMUNITIES INITIATIVE TO RECEIVE $150 MILLION IN FUNDING

In March, the Department of Housing and Urban Development and the Department of Transportation announced a partnership program that would help American families gain better access to affordable housing, transportation options, and lower transportation costs. The Sustainable Communities Initiative was added as one of several new programs funded through CDBG set asides. This new program allocates its $150 million budget in three ways: Regional Planning Grants, Metropolitan Challenge Grants, and research.

Regional planning grants receive $100 million, focusing on creating a collaborative effort between HUD and DOT to establish long-term, cross-jurisdictional partnerships with both the public and private sectors. The grant money will be distributed largely to metropolitan planning organizations and HUD block grant recipients. Metropolitan Challenge Grants receive $40 million, giving local governments additional funding for broader regional plans, and to facilitate zoning changes and land use policies to establish sustainable growth patterns. Finally, there is a $10 million budget for joint HUD-DOT research to advance transportation and housing linkages.

FY 2010 Budget Includes 7% Increase in Funding for HUD
SEVERAL NEW PROGRAMS CREATED; CHANGES TO CDBG FUNDING FORMULA

The Department of Housing and Urban Development (HUD) received $43.7 billion in funding in the proposed budget, which is a 7% increase from the enacted FY 2009 level. The Community Development Block Grant (CDBG) budget increased from $3.9 billion in 2009 to $4.5 billion for FY 2010. The Administration is proposing changes to the CDBG formula, focusing on modernization to better target those with the greatest economic need. The formula will contain a "hold harmless" provision to ensure that communities do not receive less than FY09 allocations this year. Specifics on the formula will be addressed in future legislation.

Several new programs were added as CDBG set asides: the Sustainable Communities Initiative, Rural Innovation, and the University Community Fund. The Rural Innovation program awards $25 million in competitive grants to promote innovative and cost effective improvements in housing conditions in rural communities. The University Community Fund allots $25 million to promote revitalization in communities adjacent to universities.

This budget creates a significant expansion and evolution of the HOPE VI program though creation of a new program, the Choice Neighborhoods Initiative, which will receive $250 million. This program builds on the HOPE VI by expanding eligibility to non-public housing and promotes greater linkage to schools, early childhood programs, other public assets and access to jobs. For the first time local governments and non-profits are eligible recipients.

In a combined effort with the Department of Energy, an Energy Innovation Fund was proposed to drive the creation of an energy-efficient housing market, which would include retrofitting older, inefficient housing to spur private lending for this purpose in the residential sector. The fund provides $25 million for existing single and multi-family house energy consumption through FHA mortgage products with its Multifamily Energy Pilot. It also establishes $50 million to promote local initiatives.

Transportation Budget Acknowledges Solvency Issue for Highway Trust Fund
GENERAL FUND SUPPORT REQUIRED TO MAINTAIN BASELINE SPENDING

The FY 2010 budget for the Department of Transportation includes $73.2 billion in funding. With SAFETEA-LU set to expire September 30, 2009, the transportation budget request is not designed to represent a budget approach or recommended funding levels for the upcoming surface transportation authorization. The budget reflects the condition and OMB estimates for the Highway Trust Fund. The budget assumes that in order to maintain baseline spending this year the trust fund will require support from the General Fund.

Overall funding levels increased slightly from amounts authorized in the 2009 omnibus appropriations bill. Highways and bridges will receive an 8% increase in funding, transit receives a 2% increase, and Amtrak is allocated an additional 15%. High speed rail, a priority as designated by the Obama Administration will receive $1 billion this year, with a total of $5 billion over 5 years authorized.

EPA Receives a 45% Increase in Funding in FY 2010
BUDGET CALLS FOR MAJOR INVESTMENT IN WATER INFRASTRUCTURE

The President's budget proposes a significant increase in funding for the Environmental Protection Agency (EPA). The Administration proposed $10.5 billion in discretionary funding for EPA in FY 2010. This is a 45% increase from the level enacted for FY09. The proposed EPA budget reflects the Administration's priorities including their efforts to address climate change. The proposal includes $19 million in investments in a new Greenhouse Gas (GHG) emissions inventory and other analytic products and partnerships. This funding aims to help prepare the Administration for the passage of climate change legislation.

As in years past, it remains unclear how much funding has been included in the Environmental Program & Management budget for the EPA's Smart Growth program. We have submitted a request for further clarification from the Administration.

Department of Energy Receives Slight Boost in Funding for FY2010
NO FUNDING FOR ENERGY EFFICIENCY & CONSERVATION BLOCK GRANT PROGRAM

The President's Fiscal Year 2010 budget provides nearly $26.4 billion for the Department of Energy. This is a 2% increase in funding above the FY 2009 enacted level. The budget for the Department of Energy continues to reflect the Administration's commitment to long-term investment in energy efficiency and the development of renewable technologies, and the development of an improved transmission system. While the budget does not reflect the generation of revenue from a cap and trade system, it does create a Clean Energy Fund as a receptacle for those funds once they are produced. The newly-created Energy Efficiency and Conservation Block Grant program was omitted from the proposal under the rationale that it had already received adequate funding in the ARRA.

*Programs listed in italics are sub-programs of the program listed above