Saturday, March 28, 2009

City Of Buffalo under Scrutiny for Misused Block Grant Funds, Lack of Organization

A few days ago Birmingham provided an effective counter to the argument that states and localities are better judges for directing and overseeing federal block grant funds than the federal government itself. This morning the City of Buffalo, NY constitutes the latest horror story supporting the moral that federal subsidies better come with strings and obligations lest states and localities misuse and abuse them.

The Office of Housing and Urban Development defies anyone to grasp exactly what is happening to block grants that disappear down Buffalo's black hole:
  • "[T]he city’s approach to running the CDBG program is determined by a jury-rigged collection of draft memos, informal procedures, and guides generated within numerous individual departments."
  • There are no standards to judge whether Buffalo is in compliance with federal regulations, which opens up a Pandora's Box of deficiencies and abuses.
  • City employees not working on federal block grant projects are paid from block grant funds
  • $392,000 is being demanded back from HUD because it went to pay for employee paid leave categories.
  • While HUD sets the ceiling of salary expenditures from block grant funds at 20%, Buffalo is spending 50% of its block grants on employees.
  • Buffalo uses block grant funds to demolish buildings indiscriminately.
  • There is no strategy communicated on the use of funds to acquire and hold properties.
  • $2.6 million went to pay down a loan on construction of high-end loft developments.
  • $608,000 is stranded in accounts of loan-servicing neighborhood agencies that refuse to cooperate with HUD.

1 comment:

  1. Mr. Mike,

    The fundamental question is whether America gets more value from these monies being directed by state and local officials or by federal officials.

    You are correct that greater local flexibility opens programs to abuse. However the more strict the guidelines drawn up at the federal level, the more rigid the program and the less likely it will meet local needs.

    I also note with some amusement that your position is shockingly elitist in its preference for control by the central bureaucracy over local elected governments.