The President’s Budget Delivers a Devastating Blow to Economic Development
President Trump released his Fiscal Year (FY) 2018 budget today entitled, “America First: A Budget Blueprint to Make America Great Again.” The plan, as was reported a few weeks ago, makes deep cuts or eliminates many programs serving economically distressed rural communities and urban neighborhoods. The proposal would all but eliminate Treasury’s Community Development Financial Institutions (CDFI) Fund, cutting $210 million and eliminating support for CDFIs, leaving our country’s most distressed communities without the tools needed to grow businesses, create jobs and sustain a thriving local economy.
“The communities that receive financial assistance through the CDFI Fund are precisely the communities the Administration seeks to help, including hollowed out inner-city neighborhoods and economically distressed rural communities,” said James R. Klein, President of the CDFI Coalition.
In 1994, the CDFI Fund was created to promote community and economic development in distressed urban and rural communities by investing in and growing Community Development Financial Institutions (CDFIs) across the country. The CDFI Fund administers a range of innovative and effective programs that enable CDFIs to address the needs of their target markets.
CDFIs are mission-driven financial institutions specialized in delivering affordable credit, development services, capital, and financial services to residents and businesses in capital-starved communities. CDFIs fill a vital niche in the nation’s financial services delivery system by serving communities and market sectors that conventional lenders cannot – with the ultimate goal of bringing CDFI customers into the mainstream economy as bank customers, home owners and/or entrepreneurs. A testament to the CDFI’s effectiveness is the strong bipartisan support from Congress. In fact, the House passed the highest ever appropriation level for FY 2017 in July 2016 with H.R. 5485, surpassing the President’s request.
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In FY 2016, CDFI Fund awards supported the creation of tens of thousands of jobs, financed more than 11,000 businesses, supported the creation of 33,000 affordable housing units. Elimination of the CDFI Fund would deprive low-income communities of billions in financial services that help communities and businesses grow and thrive. From the Louisville, KY barber who dreamed of owning his own business to the Arkansas town that wanted to save its largest private employer, CDFIs are filling making a difference for communities left behind.
“Disinvesting in CDFIs serving hard-hit communities—this is not a move that delivers on the Administration’s promise to make America great again,” notes Bob Rapoza, spokesman for the CDFI Coalition. “This is more than a $210 million cut. CDFIs generate $12 in capital for every dollar in CDFI grants, which are deployed in communities and with people left out of the economic mainstream. While it is true that CDFIs have succeeded in building up businesses, creating jobs in communities dealing with downturned economies and a lack of investment, it is plainly obvious that the job is not done.”
Media Contact: Ayrianne Parks