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Serving Northern St. Louis County, Minnesota

Trump budget plan would ripple across region

Marshall Helmberger
Posted 3/23/17

REGIONAL— Cancelled air service at the Hibbing and International Falls airports. The elimination of heating assistance for the poor and elderly in northeastern Minnesota. The closure of the …

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Trump budget plan would ripple across region

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REGIONAL— Cancelled air service at the Hibbing and International Falls airports. The elimination of heating assistance for the poor and elderly in northeastern Minnesota. The closure of the homeless shelter serving the Iron Range.

These are just some of the potential effects of the dramatic funding cuts being proposed by President Donald Trump, based on his budget released to Congress last week. The budget proposes sharp cuts to a wide range of programs serving low and moderate income populations and small towns to make way for a significant buildup in the U.S. military and planned tax cuts for high income Americans.

Ironically, many of the programs slated for significant reductions or elimination are especially important in rural parts of the country— where political support for Trump was key to his victory in November.

Take the Water and Wastewater Program funded through Rural Development, an agency within the U.S. Department of Agriculture, which President Trump has proposed to eliminate. The $500 million a year program provides long-term, low-interest loans and grant funding to communities with a population under 10,000 to help them provide quality drinking water for residents and to properly treat wastewater. In Minnesota, the program provided just over $29 million to rural communities last year.

Those loans are often critical in enabling small communities to pay for upgrades that would otherwise be unaffordable to residents.

In northern St. Louis County, the cities of Ely, Cook, and Orr, along with Crane Lake, and the Bois Forte Band, have all utilized the program for their own water and wastewater treatment projects, according to Tyler Ray, a Rural Development area specialist based in Baxter.

While Ely Clerk-Treasurer Harold Langowski is concerned about the Rural Development cut, he says Trump’s proposal to zero out the Community Development Block Grant, or CDBG, would likely prove an even bigger loss to communities in St. Louis County. And a more immediate one, in the case of Ely, which is slated to receive $155,000 in CDBG funds as part of its $650,000 water service upgrade project in Chandler. But the city recently received a letter from St. Louis County Planning, which oversees the program, telling them that the money is contingent on future budget decisions in Washington. “The whole thing might be in jeopardy,” he said, which could force the city to scale back the project.

Langowski said the loss of the CDBG funding stream could “be devastating to communities like Ely, Tower, and Soudan,” he said.

Meanwhile, President Trump’s proposal to end the Essential Air Service program would also impact rural travelers and cut jobs at the nearly 200 small airports around the U.S. that benefit from the program, including the Range Regional Airport in Hibbing, and the Falls International Airport, up at the border.

The program dates back to 1978, as part of the effort to deregulate the airline industry. Congress worried that the elimination of service requirements for smaller communities would consolidate flights at bigger hubs, so they authorized funds to help encourage airlines to continue to serve smaller markets.

The program currently provides Sky West airlines, which operates under an agreement with Delta, a $2.8 million annual subsidy to continue to serve the Hibbing Airport. Without that assistance, “there’s a high probability that the airline will end or reduce its service,” said airport manager Shaun Germolus.

Scheduled flights are not only important for economic development in a region in general, said Germolus— they also provide direct and indirect employment. In the case of the Hibbing airport, about 30 jobs depend on the services provided there, he said.

The EAS program, which cost $288 million last year, generated about $1.7 billion in added economic impact in the communities served by the program. “It’s a very good return on investment,” said Germolus, who added that elimination of the program “would have a very detrimental effect on rural economies.”

President Trump’s proposed cuts would fall even harder on low-income Americans who rely on programs like heating assistance. According to Paul Carlson, executive director of the Arrowhead Economic Opportunity Agency, about 8,400 households in St. Louis, Lake, and Cook counties have a portion of their winter heating bill paid each year by what’s known as the Low Income Heating and Energy Assistance Program, or LIHEAP.

The program, which Trump proposes to eliminate, serves a mostly elderly or disabled population, although it also benefits local energy distributors, who often struggle financially when customers can’t pay their bills.

And the cuts don’t end with LIHEAP. “Several programs administered by AEOA were chosen for double digit percentage cuts or zeroed out completely,” notes Carlson. “The Community Development Block Grant not only provides essential funding for the homeless shelter in Virginia, but is a core funding stream for Meals on Wheels. Meals on Wheels is also funded under the Older Americans Act which is slated for cuts as well.”

In 2016, AEOA served 212,014 meals for 1,643 seniors through Meals on Wheels, according to the agency. A number of studies have shown that money spent providing meals to seniors actually saves money, because it allows many seniors to remain in their homes longer, avoiding the need for far more costly nursing home care, most often paid for through state Medicaid dollars.

The homeless shelter serves over 300 people a year, but turns away one and half times that many. “Eliminating the CDBG funding could mean moms and kids may have no safe place to turn to when fleeing a battering relationship,” notes Carlson.

President Trump’s proposed cuts also include the elimination of the Senior Community Services employment program, which provides seniors with the opportunity to earn a few extra dollars by providing a community service, such as staffing a welcome center or cleaning at the local food shelf.

Political prospects

Most local agency and government officials say they’re worried about the cuts proposed by President Trump, but remain somewhat optimistic that Congress won’t follow through on most of them. “Many of the programs slated for cuts have enjoyed decades of bipartisan support, making President Trump’s budget all the harder to comprehend,” said Carlson.

The president’s budget is likely to face fierce opposition from Democrats in Congress, and his priorities are even drawing fire from many rural Republicans, who recognize the impact the cuts would have on communities they serve.

Minnesota Eighth District Congressman Rick Nolan, a Democrat, blasted Trump’s budget for both its priorities and its lack of specifics. “I’m gravely concerned by President Trump’s drastic proposed cuts to vital programs that Minnesotans value and depend on,” Nolan said in a statement issued after release of the budget.

Nolan took issue with a number of cuts, including Trump’s proposal to eliminate the Great Lakes Restoration Initiative, a program that Nolan helped sponsor that focuses on clean-up efforts in the Great Lakes watershed.