The Small Cities Block Grant Program: An Assessment of Programmatic Change under State Control

Abstract

In response to President Reagan's Program for Economic Recovery, on August 13, 1981, Congress passed the Omnibus Budget Reconciliation Act. This act consolidated over 50 categorical programs into nine block grants: four in health services, three in social services, one in education, and one in community development. While the act fell short of Reagan's initial proposal of consolidating over 90 categorical programs into four block grants, the act did facilitate the president's long-term goal of moving toward a state-oriented federalism. That is, under the block grant approach many programs will now be under the administrative control of state governments rather than the federal government. For example, state governments may now assume administrative responsibility for the small cities portion of the Community Development Block Grant program (CDBG). By mid-1982, 36 states had accepted jurisdiction of the Small Cities program.' Created under the Housing and Community Development Act of 1974, the small cities CDBG program is limited to cities of less than 50,000 population and now receives 30 percent of total CDBG funds. Prior to the passage of the Omnibus Budget Reconciliation Act, small cities CDBG grants were allocated by HUD on the basis of applications from nonentitlement communities (i.e., discretionary funding). As part of the overall thrust toward greater decentralization, the legislation authorizing state assumption of this program imposes few restrictions on what states may do. The law requires states to give maximum feasible priority to meeting the two basic objectives of the 1974 Community Development Act-benefitting low and moderate income families and preventing slums and blight.2 Regardless of this provision, such a change provides significant latitude for the small cities block grant program to reflect the preferences and priorities of state and local officials.