Federal budget cuts won’t touch Sterling demolition

The long-planned demolition of the former Hotel Sterling appears safe from federal budget cuts, but other programs and projects could suffer.

As part of the across-the-board spending reductions at the federal level, also known as sequestration, Wilkes-Barre will receive less money to fund social services and infrastructure improvements. Complicating that problem is the fact no one knows how severe the cuts will be.

"The headline is just the uncertainty and really the havoc that uncertainty plays at the municipal level," said Michael Wallace, program director for the National League of Cities.

Wallace said Community Development Block Grants from the U.S. Department of Housing and Urban Development, which cities use to fund a variety of social services and improvement projects, could be cut by 8.2 percent. However, Wallace said HUD has not decided how to distribute the budget cuts, and block grant funds could be decreased by an even higher amount.

This year, the city will rely heavily on HUD funding to tear down the former Hotel Sterling. Luzerne County originally pledged $232,000 toward the demolition, but Mayor Tom Leighton decided to proceed alone after the county failed to reach an agreement with CityVest, the now bankrupt owner of the property.

The city, which has a $260,000 state grant for the project, had planned to use HUD money in place of the county's share. McLaughlin said that plan will not be hindered by the sequestration, but the city might not have any grant money left to tear down other blighted properties or to improve roads. Last year, the city tore down six properties.

The city received $1.5 million in block grant money last year, McLaughlin said. An 8.2 percent cut would reduce funding by $126,665. In addition to funding public works projects, they also support the Osterhout Public Library and social programs through the city's Community Development Office.

McLaughlin said HUD funding is already at historically low levels since it was slashed 16 percent in 2011. With the federal government investing less in cities, McLaughlin said Wilkes-Barre faces a tough decision. Cut back on community development, or fund it with money from its already struggling general fund budget.

"Houses do need to be demolished, streets do need to be paved," McLaughlin said. "You're talking about a greater and greater strain on the general fund budget. It's all part of the greater debate of how to appropriate tax dollars, but it generally seems to circle down to us and increase our burden."

The sequestration will cut $8.3 million in block grant funding and $2.1 million in housing vouchers in Pennsylvania, according to estimates from the Center on Budget and Policy Priorities, an organization that researches federal budget issues. Officials from HUD have not told the city how much funding it will receive this year.

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Federal budget cuts won't touch Sterling demolition