Federal taxpayers helping foot the tab for renovations to a local wine bar? It sounds crazy, but that’s par for the course with HUD’s Community Development Block Grant program.
A Connecticut newspaper recently ran an article on CDBG money being used to spruce up storefronts in the town of Putnam:
The Small Cities Community Development Block Grant money slated for Cohen’s building comes shortly after a similar grant project finished across the street, said Economic Development Director Delpha Very.Facade improvements to the Glimpse of Gaia florist, Pangaea Wine Bar and Panache consignment shop finished last month, said building owner Sean Marchionte, of Providence-based Blue Dog Investments.
“It’s very encouraging when you get help from the town. That’s what helps developers like myself make improvements to our buildings, attract tenants and keep the economic ball rolling in the right direction,” he said.
There just isn’t much difference between the activities funded via earmarking and the activities funded by standard bureaucratic processes. The means are different, but the ends are typically the same: federal taxpayers paying for parochial benefits that are properly the domain of state and local governments, or preferably, the private sector. As a federal taxpayer, I’m no better off if the U.S. Dept. of Transportation decides to fund a bridge in Alaska or if Alaska’s congressional delegation instructs the DOT to fund the bridge.
Just as earmarks have achieved notoriety for wasteful and ineffective spending, community development programs funded through traditional means have had the same problem...
Even if CDBG funds went entirely to "worthy" projects, federal funding is still an inefficient way to foster local economic development because of the excessive bureaucracy that results from funneling money through multiple levels of government.
Federal administration costs are about 5 percent of the value of CDBG grants, with local and state governments taking a 17 percent and 8 percent cut, respectively. A large share of the CDBG budget disappears before any actual work is done.