Save America's Communities Coalition

Chairman Shuster Supports Goals Of Administration’s Economic Development Initiative, But Wants To Retain Successful Program Models; “Strengthening America’s Communities Initiative” Would Consolidate 18 Federal Grant Programs

Washington, D.C. – Federal and local officials and economic development experts appeared before a Congressional panel today to outline an Administration proposal to consolidate a number of existing community and economic development grant programs - and to highlight their concerns with that proposal.

Earlier this year, the Administration announced its new “Strengthening America’s Communities Initiative,” which would consolidate 18 community and economic development grant programs into one new grant program housed at the Department of Commerce. The new grant program, which has yet to be named, would provide funds to state and local governments for a variety of eligible activities. The Administration has released some information about the proposal, but few specific details.

EDA Has Been A Programmatic And Organizational Success

“For this new program to succeed, it is going to have to be built on the basis of a successful model,” said U.S. Rep. Bill Shuster (R-PA), Chairman of the Economic Development, Public Buildings and Emergency Management Subcommittee.

“If we are interested in finding out exactly what it takes to ensure a successful economic development program, we need go no further than the Economic Development Administration, which has achieved success both programmatically and organizationally.

“In fiscal year 2003 alone, EDA’s projects leveraged an average of 22 dollars per federal dollar invested and created over 88,000 jobs. This is programmatic success.

“But EDA should also be the basis model for the administration of the new program. After all, according to the Office of Management and Budget’s own performance ratings, EDA was one of only two agencies to receive a ‘Moderately Effective’ rating, the second highest score; and the only thing that kept it from receiving the highest rating was the duplicative activities of other agencies’ programs.

“I know that as a Committee, there has been a lot of interest expressed about this very significant programmatic change, and as a Committee with a significant role in economic development, we plan to remain actively involved as this proposal moves forward. I look forward to working with the Administration and all interested members in drafting legislation on this groundbreaking initiative,” Shuster said.

Shuster compared the creation of a new economic development agency that encompasses 18 existing programs to the creation of the Department of Homeland Security. He suggested that in order to avoid the pitfalls typical of establishing a new bureaucracy, the programs could come under the existing structure of the already proven EDA.

In general, Shuster supported the initiative’s goals of increasing efficiency and eliminating duplicative programs in order to provide the most help to distressed communities.

Assistant Secretary of Commerce for Economic Development David Sampson provided some information about the Administration’s initiative and outlined its intent.

“States and communities must have the flexibility to apply development funds where they are most needed and they should not have to go through the current laborious process to access federal funds,” Sampson said. “At the same time, they must be accountable and be able to show tangible results for the federal funding they receive.

“The federal government must also be more accountable to American taxpayers. For too long, programs have been administered without requiring measurable results – and have been allowed to duplicate each other. This duplication is at the expense of our communities that most lack the resources to navigate the federal maze that currently exists,” Sampson said.

The 18 programs to be consolidated come from the U.S. Departments of Housing and Urban Development, Agriculture, the Treasury, Health and Human Services, and Commerce. The 18 programs involved in the consolidation received approximately $5.1 billion in FY 2005, but the Administration has proposed cutting this to $3.71 billion for FY 2006, the first year of the new program.

Other witnesses representing local governments and economic development entities from around the country testified to the benefits of the various programs under consideration for consolidation. They expressed concern that the benefits of the individual programs could be lost when programs are merged.

Ken Jones, Executive Director of the Lower Rio Grande Valley Development Council, and speaking on behalf of the National Association of Development Organizations (NADO), highlighted the successes of the EDA.

“The Economic Development Administration and its local partners have a proven and documented record of exceptional performance and accountability,” Jones said. “As the only federal agency focused solely on private sector job growth and sustainability, EDA is a vital resource within the federal portfolio for distressed communities striving to improve their local economies.

“Since its inception, the agency has created more than four million private sector jobs and leveraged in excess of $130 billion in private sector investments in distressed communities.

“These are impressive accomplishments considering the agency has an annual budget below $350 million and that agency projects must be targeted to the nation’s most distressed areas.

“By eliminating EDA, the members of NADO believe the Administration’s proposal would severely weaken the federal capacity to help distressed communities over the long term. EDA has accumulated an inspiring record over the years in assisting areas that were struggling to overcome both long-term economic poverty and sudden and severe hardships,” Jones said.