AGENDA #3a

BUDGET WORKING PAPER

TO:                  W. Calvin Horton, Town Manager

FROM:            Kay Johnson, Finance Director

SUBJECT:       Report on Recent and Possible Future Reductions in Federal Grant Funding

DATE:             April 27, 2005

BACKGROUND AND DISCUSSION

The purpose of this budget working paper is to discuss the recent and possible future reductions in federal funding in support of the public housing operations, the public housing capital maintenance fund, the community development program, law enforcement and fire service grants, and transportation grants.

To obtain a better understanding of the recent history of the federal grants received, we have included a table for each major grant listing three-year actuals and next year’s projections.   In addition, we have included a short written summary explaining what is expected in future years.

PUBLIC HOUSING GRANTS

The Town has not received official notification from the U.S. Department of Housing and Urban Development regarding the 2005-06 funding level for the public housing operating subsidy or the public housing capital maintenance fund grant.

Based on preliminary information received, the Town believes that the 2005-06 funding for the public housing operations subsidy will be lower than in 2004-05.  Because overall federal funding will decrease, the housing department has developed a proposed budget based on receiving about 93% of the difference between estimated revenues and costs.  In 2004-05, we received 98% of the difference between revenues and costs.

We do not believe that there will be much change in the 2005-06 funding for the public housing capital maintenance grant.  Therefore, the housing department has developed a proposed budget based on the amount received in 2004-05. 

COMMUNITY DEVELOPMENT GRANT

The President’s proposed budget for 2006-07 eliminates the Community Development program, and includes a new program, “Strengthening America’s Communities Initiative.”  The new program would combine eighteen federal grant programs into one program within the Department of Commerce.  The proposed budget for the new program beginning in 2006-07 is $3.71 billion, nearly $1 billion less than the current federal budget for the Community Development Program alone.

LAW ENFORCEMENT GRANTS

The Community Oriented Policing Services More Grant and the Local Law Enforcement Block Grant programs have expired.  These grants were related to getting additional police officers out on the streets.  The bulletproof vest partnership program provides 50% of the cost of vests for the year and is expected to be an on-going grant.  The Federal Mediation & Conciliation Service Grant and the Byrne Justice Assistance Grant are one-time grants to provide homeland security assistance.

FIRE SERVICE GRANTS

The fire department has historically received a scattering of federal grants for specific capital programs.  The 2003-04 funding was used to repair the live burn training building.  The 2004-05 funding was used to purchase mobile radios.  The 2005-06 funding will be used to purchase a back-up set of turnout gear for personnel.

There is a new federal funding program called the SAFER Act that fire departments can use to fund the hiring of additional personnel.  The application period opens in May 2005 and the fire department plans to apply for funds at that time.  The Town is applying for a technology grant that, if successful, will be used for the purchase of a computer server for the fire department.  In the fall, the fire department will apply for a fire prevention grant to purchase hardware and software for fire code inspections.

As for future predictions for these grant programs, confidence is low that any of the federal grant programs for assistance to fire departments will be available beyond one or two more years. 

TRANSPORTATION GRANTS

The Federal Transit Authority provides funds for the support of operations and capital purchases for transit agencies.  The Town has not received official notification from the Federal Transit Authority of the amount of the 2005-06 grant and it is not expected until after the federal fiscal year at October 1, 2005. 

The Bus Rehabilitation and Real Time Passenger System grants were one-time grants related to the purchase and operation of the Town’s bus system.  The Town Operations Center is a one time grant that is divided into several stages over a three-year period for the construction of a new transportation facility.

SUMMARY

Overall, the Town expects to see decreases in federal grant funding over the next several years.  However, we cannot accurately project actual amounts for programs in future years.