2018 Fiscal Year State Budget, NC Budget and Tax Center

Budget could make it harder for communities to revitalize

Buried in the minutiae of the budget, is language that could cut some communities off from the funds they need to revitalize. The provision in question would force some struggling communities to come up with their own funds if they hope to secure federal grants for community redevelopment. Many of the communities are already on the economic knife-edge, and would likely lose out on needed funds if the provision passes.

In North Carolina, the Community Development Block Grant (CDBG) program has been considered one of the most effective and flexible economic development tools for local communities, addressing a host of needs ranging from affordable housing to business creation and retention. The program’s focus on citizen participation and goal of explicitly benefiting low to moderate-income households have helped boost communities statewide.

However, changes proposed to G.S. 143B-437.0 concerning (CDBG)  would drop language that currently include 16 counties (Jones, Clay, Perquimans, Chowan, Swain, Mitchell, Yancey, Montgomery, Ashe, Cherokee, Macon, Yadkin, Pasquotank, Person, Jackson, and McDowell) amongst the most distressed counties (as defined by G.S. 143B-437.08) not requiring a 25% percent local funding match. While not the 25 most distressed counties in North Carolina, these 16 counties were exempted from the funding match to encourage revitalization in areas that feature populations less than 50,000 and poverty levels more than 19%. There is no question that these 16 communities, mostly isolated from urban centers, face struggles similar to the 25 most distressed in North Carolina, struggles that unmatched CDBG funding could help address. In fact, seven of the sixteen counties (Jones, Clay, Mitchell, Yancey, Montgomery, Ashe, and Cherokee) received CDBG funds between July of 2016 and June of 2017, totaling $4,495,027 for projects ranging from sewer and water infrastructure improvements in Murphy to building uplift in Hayesville. According to this proposed change, similar awards in the future would require 25% percent or $1.1 million to be contributed from those counties.  This is an unnecessary burden that could force local governments to pass on opportunities for revitalization.

 

 

 

Moreover, this provision could come back to haunt local communities during the next recession. The existing statue recognizes that many rural communities need help when economic downturns occur, which is why the existing language would allow small rural counties with elevated levels of poverty to access CDBG funds without a local match regardless of whether they rank in as one of the 25 most distressed. If the current proposal goes through, many more rural communities could be scrambling to find local matching funds precisely when their coffers are being drained by the next recession.

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