The Trump Administration again is proposing to eliminate funding for the Community Development Financial Institution Fund's grant and direct loan programs.
In unveiling its FY19 budget, the administration renewed a proposal from last year's budget. However, that plan was not accepted by Congress, which has the ultimate responsibility to appropriate funds for programs like CDFIs. Congress is still working on finalizing FY18 funding for programs subject to the appropriations process.
The $4.4 trillion budget would add $7 trillion to the federal deficit. It includes large increases in defense spending, paid for by cuts in domestic spending. Congress is unlikely to accept many of those cuts.
The budget also calls for elimination of the NCUA's Community Development Revolving Loan Fund (CDRLF).
In developing its spending plan, the administration also projects that the credit union income tax exemption is likely to cost $35.79 billion between 2018 and 2027. Last year, the administration estimated that the ten-year cost of the tax exemption would reach $35.31. That figure shocked many in the credit union community, since it was a whopping 32.3% over the estimate made in the final year of the Obama Administration.
The budget also assumes a restructuring of the CFPB, making that agency subject to the appropriations process in the future.
In explaining its proposal to eliminate the CDFI program, the administration said it was created more than 20 years ago to jump-start a now mature industry.
"In addition, private institutions should have ready access to the capital needed to extend credit and provide financial services to underserved communities," the administration said, in its budget documents.
Under the administration's plan, funds for administrative expenses to support ongoing CDFI Fund activities would continue and the program's bond guarantee program also would continue.
CUNA President/CEO Jim Nussle said credit unions have their work cut out for them.
CUNA is fully engaged with the budget process, and while its troubling to see nothing allocated to these important funds, we're confident that as before, credit unions can amply demonstrate the value that these funds bring to their communities," said CUNA President/CEO Jim Nussle.
CUNA said that as of Dec. 31, credit unions make up 305 of the 1,110 certified CDFIs.
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