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Bad news for empowerment zone?

Monies for the Huntington-Ironton Empowerment Zone could be in jeopardy if a plan proposed by President Bush makes it to next year’s budget.

Friday, February 08, 2002

Monies for the Huntington-Ironton Empowerment Zone could be in jeopardy if a plan proposed by President Bush makes it to next year’s budget.

The empowerment zone was designed to inject $100 million in federal funding over the next 10 years. The monies were then to be used to compliment seven areas of regional progress – Human resource development, infrastructure systems, workforce development, job creation, developing industrial sites -including the South Point industrial park, The Point, regional tourism projects, and transportation of people and goods.

Bush’s plan calls for the elimination of 15 empowerment zones in urban areas, stating that tax breaks and other incentives are a more effective way to promote economic revival.

A year ago, however, Bush’s administration requested $150 million in grants for empowerment zones. Congress approved $45 million of the request.

In addition to the Huntington-Ironton Empowerment Zone, Bush’s request would affect 14 other zones, including those in Cincinnati, and Columbus.

Administration budget writers, in text accompanying the proposal to eliminate the grants, said tax incentives are available to the communities and there is no convincing evidence that adding grants makes the program more effective.

The Department of Housing and Urban Development plans to market available tax incentives to the affected communities, some of which have not spent all their grant money.

Congressman Ted Strickland called the plans to cut empowerment zone funding, "a terrible decision that is not justified."

"It is another example of the federal government breaking the faith of local communities," Strickland said from his Washington D.C. office this morning.

Strickland said he and West Virginia Congressman Nick Rahal are planning to send a letter to the administration asking the President to repeal the decision to cut funding.

Strickland said he would "do everything to hold the administration responsible for their irresponsible decision."

Strickland said the administration’s decision to cut monies promised to communities "borders on the shameful."

Strickland said this year’s budget includes massive tax cuts that "mostly goes to the rich." Cutting empowerment zone money, Strickland said, is a way for the administration to save money.

Strickland said he also wants to emphasize that he and most of his colleagues support funding for the war on terrorism and the military. But these issues are now being used as "an excuse" to cut funding from other, needy programs.

Strickland said that in addition to monies for the empowerment zone, the President’s budget proposal cuts funding for heating vouchers for the poor, disproportionate shares for hospitals that care for a disproportionate number of people who cannot afford healthcare, about $280 million in highway money for Ohio, and is spending Medicare surplus dollars and spending "trillions of Social Security" monies.

Democrat senator Paul Wellstone, from Minnesota, has also promised to fight the Bush plan.

”There is no way in the world I’m going to let this happen,” he said. ”The Senate will spend many, many, many, many hours on this if they try to do this. I’m absolutely determined to stop them.”

In 1994, the Clinton administration began the first round of urban empowerment zones. That culminated an idea long pursued by Jack Kemp, first as a New York congressman during the Reagan years and then as HUD secretary under former President George Bush.

Bush’s budget represents a return to Kemp’s original approach of offering tax incentives and regulatory relief, but not grants.

The half-dozen cities in the first round under Clinton received their $100 million, 10-year grants up front, so they will not be affected by the budget cuts.

But Bush proposes eliminating money for 15 cities in the second round – from Boston to Minneapolis to Santa Ana, Calif. Now in the fourth year of the planned 10-year grants, each of those cities has gotten $22 million so far.

Minneapolis is using its grant money for projects ranging from mixed-income housing to technology parks. City officials have been able to leverage the money to attract state, federal and private investments, said Chuck Lutz, interim executive director of the Minneapolis Community Development Agency.

”The grants have been very, very helpful in terms of urban revitalization objectives,” Lutz said. ”It will be a huge hit.”

Deborah Hamlyn, community development director for El Paso, Texas, agreed.

”We feel the empowerment zone is a major tool for this community to pull itself up form its bootstraps,” she said. ”We’re an extremely poor community, and we can use all the tools we can get our hands on.”

But Hamlyn conceded that the city’s experience with the program has been mixed.

”We had a really tough time getting started,” she said. Because the program has been funded at lower levels than expected, Hamlyn said, it’s been harder to target the money effectively.

”Has it made a difference? It’s hard to gauge,” she said. ”But we’re very much on our way now, and moving in a really strong direction.”

Ralph Kline of the Lawrence County Community Action Organization said Bush’s decision reflects the differences between Republican and Democratic philosophy. Kline said there needs to be a "happy medium" between funding from the government and development funding from the private sector. Kline said public sector monies is needed to help private companies develop an industrial base.

The other affected empowerment zones throughout the nation are: New Haven, Conn.; Miami/Dade County; Gary/East Chicago, Ind.; St. Louis/East St. Louis, Ill.; Cumberland County, N.J.; Columbia/Sumter, S.C.; Knoxville, Tenn., and Norfolk/Portsmouth, Va.