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Small city programs hit hard by budget.

Small cities and rural communities will have to make due with $1.8 billion less this year than they did last year. While spending for many programs administered by the Department of Agriculture (USDA) will remain at FY 1992 budget levels, cuts in housing and rural development grants--including a $770 million proposed cut for rural housing programs --will leave small cities and rural communities scrambling to do more with less.

The FY 1993 budget includes $8.5 billion in loans and grants for small community and rural development. This compares to $10.3 billion in 1992. Rural development programs previously administered by the Farmers Home Administration (FmHA) have been transferred to a new USDA agency, the Rural Development Administration (RDA), in accordance with the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (FACT).

The FACT Act mandated the shift of the Water and Waste Disposal Loan an d Grant Programs, Rural Development Grants, the Community Facilities Loan Program, the Business and Industry Loan Guarantee program, and the Rural Development Loan Fund to the RDA. Farmers Home Administration will continue to administer farm programs and the rural housing programs.

According to the Department of Agriculture budget summary, RDA will also be responsible for, "Administering the President's Rural Development Initiative. This entails working with the President's Council on Rural America to complete an assessment of rural economic development problems and private sector initiatives needed to help resolve the structural economic problems in rural areas. This assessment is due in July 1992."

Rural Housing

The most devastating proposed cuts are for rural housing programs. Program levels for rural housing are proposed to be reduced by $770 million for FY 1993. The total number of housing units constructed with Agriculture Department funding is expected to decrease from 78,500 in FY 1992 to 66,000 in FY 1993.

The Administration is proposing $845 million in cuts for direct loans for single-family housing and an additional $30 million in cuts for single-family guaranteed unsubsidized housing loans. However, $400 million has been proposed for guaranteed subsidized housing loans. These spending cuts result in a proposed $475 million decrease in total spending for single-family rural housing in FY 1993.

In addition to the loan programs, $202 million will be available for rural rental assistance grants and $140 million for housing vouchers. According to the budget summary, the voucher program will help 5,895 rural, very low-income households to obtain adequate housing for a 5-year period. With vouchers, families will be able to choose from any apartment or house that is suitable to their needs. This program will be targeted to those areas in which there is an adequate supply of housing.

Small Community Development

Total funding for direct loans and grants for water and waste disposal systems has decreased by $50 million. While funding for direct loans remained unchanged at $600 million, grant funding was decreased from $350 million to $300 million for FY 93. These loans and grants finance and waste disposal systems in rural areas and in towns of up to 10,000 population.

Community facility loans are funded that $200 million for FY 93--$100 million in direct loans and $100 million in guaranteed loans. Guaranteed loan funding increased by $75 million. Direct loans remained at FY 1992 levels. Community facility loans are targeted for essential services to rural residents such as fire protection, hospitals, nursing homes, medical clinics, and schools. Facilities may be in rural areas or in towns of up to 20,000 population.

Funding for business and industry loan guarantees designed to encourage business and industrial development in rural areas and to create or preserve employment opportunities remained at $100 million for FY 93. The programs are targeted to communities under 50,000 population, with emphasis on communities of less than 25,000.

Loan authority for the Rural Development Loan Fund increased by $3 million to $35 million for 1993. Rural development grants were also increased--up $14 million for a total of $35 million for FY 93. Loans from the Rural Development Loan Fund are made to intermediary borrowers (small investors) who in turn re-lend the funds to small rural businesses, community development corporations, or other organizations for the purpose of improving economic opportunities in rural areas.

Although assistance for waste management and fire protection is still available through the direct and guaranteed loans, grant funding has been completely eliminated for fire protection, solid waste management and emergency community water assistance. These programs are currently funded at $17 million.
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Title Annotation:FY 1993 proposed budget
Author:Yamane, Sandra
Publication:Nation's Cities Weekly
Date:Feb 3, 1992
Previous Article:Tax cuts will come at expense of cities.
Next Article:DOT budget falls short of funding for new law.

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