A massive budget bill would open up even more state and local funding

The approximately $ 2,000 billion Domestic spending package Democrats pushed through the US House Friday includes billions of dollars for programs important to state and local governments, including funds for priority areas such as housing, workforce training, early childhood education and economic development.

If the bill made it to the Senate in the coming weeks, it would close a huge year for legislation funneling federal money to states and towns. The first milestone came with the American Rescue Plan Act, which provided $ 350 billion in direct pandemic recovery assistance to state and local governments. Then, last week, President Biden enacted a $ 1.2 trillion infrastructure package.

“This is the winning trifecta,” said Nan Whaley, mayor of Dayton, Ohio and current president of the United States Conference of Mayors, in an interview, referring to ARPA, infrastructure and the bill. budgetary. She said the housing and pre-K programs in the National Spending Package are what she is most excited to see enacted.

The Democrats’ current “Build Better” legislation includes a $ 109 billion plan that the federal government work with the states to provide preschool for all 3 and 4 year olds. This program would gradually transfer around 40% of the costs to participating States. The bill would also pump approximately $ 175 billion towards affordable housing programs, according to estimates by the Committee for a Responsible Federal Budget.

For many progressives and supporters, the spending legislation is seen as a chance to shore up long-delayed federal investments in crucial areas, involving issues such as housing, homelessness, and community development, where state governments and locals are often at the forefront of defining policies and dealing with day-to-day challenges.

“We recognize that these safety nets have been so underfunded for so long that it takes something like this to get us to a place where we can really invest in our people and our communities,” added Whaley, who is fights for the Democratic nomination in the race for the governor of Ohio in 2022. “That’s a lot, a lot, a lot of delay in my opinion.”

Housing and economic development

Michael Wallace, who lobbies federally for the National League of Cities on housing and economic development issues, described the bill as “really the last piece of the puzzle when city leaders sort of think about what to do next. what their community will look like. post-Covid and what people need to live and thrive there. “

He also stressed the importance of investments in housing and argued that these programs will complement improvements in areas such as transport and water networks funded by the infrastructure legislation just adopted. Wallace also noted the “Unlocking Possibilities” grant program, which would unlock funding for local government efforts to update housing, zoning and land use policies.

“It really makes sense to also think about how to meet the need for hundreds of thousands if not more units of housing for working class Americans, low income Americans,” Wallace added.

Jennifer Vasiloff is the external affairs manager for Opportunity Finance Network, an association of community development financial institutions, or CDFI, which may include banks, credit unions, and loan and venture capital funds that operate in areas who tend to lack widespread access to capital and traditional banking services.

She highlighted a proposal for a new $ 750 million housing investment fund set as part of a existing federal program for CDFIs. With this fund, she explained, CDFIs and nonprofit housing developers would be able to compete for grants that they could allocate to affordable housing projects. “It’s pretty exciting,” she said.

Vasiloff’s group is also following a new $ 3 billion competitive grant initiative under the Department of Housing and Urban Development, dubbed the “Community Restoration and Revitalization Fund.” The grants could support housing, as well as other types of projects.

“If you’re talking about community development,” Vasiloff said, “it’s great to build the apartment building, but it’s also great to have the improved playground that is right next to it or the street. shopping area. “

The bill also includes a $ 970 million economic development program targeting rural areas. The National Association of Counties says The legislation globally provides for around $ 10.9 billion in rural investment, including financing for loans for power co-operatives, money for water and wastewater subsidies, and replacement of water pipes. lead water.

Labor investments

Stephanie Martinez-Ruckman, the NLC’s legislative director for human development, pointed to workforce provisions in the package.

Examples here include a combined $ 4.5 billion to support three different Ministry of Labor initiatives under the Workforce Innovation and Opportunity Act and another $ billion available for apprenticeship-related programs.

Billions of dollars would also go to programs focused on strengthening the ranks of workers in specific areas, such as public health and jobs focused on responding to climate change and improving the country’s resilience to extreme weather conditions.

Workforce programs are a priority for cities, Martinez-Ruckman said, especially given labor shortages in infrastructure-related fields, as billions in new federal funding are on the way. the point of pouring into this area.

“Investing in workforce development has been a critical component for us,” added Martinez-Ruckman. “The federal workforce system has been significantly underfunded over the past two decades.”

Many other programs

A large part of the bill is devoted to programs aimed at combating climate change and improving the natural environment. The Committee for a Responsible Federal Budget estimates that the amount allocated to climate and infrastructure is $ 570 billion, with around $ 235 billion for programs focused on clean energy and climate resilience

Here too, states would see funding. For example, a $ 2 billion grant program open to states for forest restoration and resilience projects, $ 3 billion for global “environmental and climate justice” grants, and $ 100 million in competitive grants open to governments. local governments to improve access to urban parks and outdoor spaces.

In addition, there are a series of changes affecting tax policy, particularly for state and local governments, provisions that would sharply increase the current $ 10,000 cap on the federal deduction for state and local taxes to $ 80,000 in coming years.

Local government advocacy groups fought but failed to keep the $ 10,000 “SALT” cap outside of the 2017 Republicans’ tax overhaul, warning that it would be harder for them to set policy fiscal. With Build Back Better, they’ve been quieter on the issue. But a group of congressional lawmakers from states with higher taxes, like New York and New Jersey, have aggressively pushed to lift the cork.

Other notable elements of the bill include a $ 205 billion proposal to provide four weeks of paid family and medical leave for American workers, about $ 270 billion child care subsidy program with spending for many households limited to 7% of income and around $ 190 billion to extend a expanded child tax credit until 2022.

Different points of view

The bill is subject to change in the Senate. Democrats will need their entire caucus to support the legislation to get it through the House, and leading lawmakers have raised concerns about areas such as changes to the SALT deduction and the total cost of the measure.

Republicans remain staunchly opposed, viewing the bill as a frenzy of unnecessary government spending that will fuel already rising inflation, while worsening federal budget deficits. Although the GOP’s deficit concerns arise as a result of their signature tax bill, which included significant corporate tax cuts, and based on different estimates, could add $ 1,000 to $ 2,000 billion to the nation’s deficits over a decade.

“All of Washington’s new spending on this bill is just the beginning of a disaster,” House Minority Leader Kevin McCarthy of Calif. a one hour speech upstairs in the House that delayed consideration of the Build Back Better bill. “Spending your money that we don’t have on programs you don’t want is not the answer.”

The Congress Budget Office say that the legislation would cause the federal deficit to increase by about $ 160 billion between 2022 and 2031, after factoring in tighter tax enforcement that is part of the Democrats’ plan. Before the pandemic, the federal government was spend around $ 4 trillion one year.

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Joan Ferguson

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