Monday, March 01, 2010

Why the census matters eh?

It may seem a passing story on the allocation of Community Development Block Grant (CDBG) money arising from city council today.

But it actually gets to the core of an issue in public finance economics over the impact of what is called the “flypaper effect”. In this case the question is whether federally provided CDBG funds targeted at poorer communities actually increases spending in those communities. One argument at the heart of the story is that such funding merely displaces other funding and results in no additional expenditures where targeted. To the degree money 'sticks' to where it lands you get the term. 

That’s a big issue in itself, but there is a much bigger issue not mentioned in that. We believe pretty strongly that when new data is plugged into the calculation of CDBG areas there are parts of the city that will be dropped from qualifying altogether. It is a good story unto itself.  Places like the South Side flats have been designated CDBG areas for decades and will most likely lose that designation in the future. What other areas are potential CDBG losses is debatable. The issue is that it will mean less money coming in.  It's not just the division of those resources within the city, but if we lose enough areas it could be a net loss for the city overall.

And it might not be just a city issue. Other areas in the county qualify for CDBG money.

6 Comments:

Anonymous MH said...

We believe pretty strongly that when new data is plugged into the calculation of CDBG areas there are parts of the city that will be dropped from qualifying altogether.

That kind of means it worked, right? Wouldn't it be better to trumpet that than complain about not getting as much money? Of course, Luke could create new pockets of suckiness if he applied himself.

Monday, March 01, 2010 7:29:00 PM  
Blogger C. Briem said...

I said it's a good story unto itself. But like many good things, still bad for the city's budget ironically.

Monday, March 01, 2010 7:31:00 PM  
Anonymous MH said...

Yes, I kid. But, if we want block grants, we should merge with Wilkinsburg.

Monday, March 01, 2010 10:09:00 PM  
Anonymous Anonymous said...

Have you done a calculation on the net effect of income gains vs. CDBG allocations?

Of course, from the City's perspective, there is a big difference between CDBG, which is in the City budget, and household income. Perhaps the comparison is local tax revenues vs. federal block grant transfers?

Tuesday, March 02, 2010 7:51:00 AM  
Blogger C. Briem said...

have I done it? No. It would be a good homework assignment for a public finance class. Realize that in terms of the practical, the income gains, such as they are, have already accrued to the city budget whereas any CDBG loss would be a new loss. So they counter each other in the long run of course, but still for the city's budget if/when it happens the CDBG loss will be felt whereas the income gains that precipitated that have already happened.

Tuesday, March 02, 2010 7:55:00 AM  
Anonymous MH said...

Speaking of community development, Sen. Spector is offering support for the Mon-Fay Express and, almost parenthetically, the mag lev to Greensburg. I wonder if that doesn't mean they are both equally unlikely now.

Tuesday, March 02, 2010 8:53:00 AM  

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