The Flow of Federal Dollars to Maine

(from Maine Townsman, March 2007)
Liz Chapman, Freelance Writer

That smoke on the horizon is the federal funding train chugging into Maine once a year hauling $2.6 billion to help mostly low-income individuals pay for some of the most crucial living costs: health and nursing home care, safe food and water, direct rental assistance, disaster relief, education and transportation. That train also brings millions of dollars to help Maine municipalities provide critical local government services to their residents in the areas of economic and community development, housing, transportation and agriculture.

Although the vast majority of the federal money that comes to Maine, or nearly $1.7 billion a year, pays for health and other services for the poor, young and elderly, an impressive federal investment is being made year in and year out by unglamourous and un-controversial agencies such as the U.S. Department of Housing and Urban Development (HUD) and USDA Rural Development (at one time called the Farmers Home Administration).

In fiscal 2004, the latest Federal Aid to States reportavailable through the Census Bureau, HUD spent $205.7 million in Maine on emergency shelters for the homeless ($6.6 million) capital program aid ($7 million), home ownership assistance ($8.3 million) and Community Development Block grants ($22.9 million), among other programs and services. Much of this money goes to municipalities which provide the services; some of the funding is to non-profits; and sometimes the money goes directly to needy individuals.

The largest federal housing program through HUD is the Section 8 voucher program that provides direct rental assistance, totaling $139 million in 2004, to thousands of Maine households.

HUD remains the primary underwriter of housing for low- and very low-incomeAmericans. In February, Maine won more than $9 million in HUD grants for homeless programs, with 50 awards distributed ranging from $15,000 to nearly $1 million.

Last year, HUD helped build a 26-unit elderly apartment building in Bucksport with a $3.5 million grant and a 28-unit building in Topsham costing nearly $4 million. Other projects in 2006 included a group home in Belfast ($644,000) and a six-unit independent living facility in Lewiston ($773,000).

HUD has made it easy for communities to apply for grants and other program benefits. Its detailed Web site,, includes online brochures to register with the agency and begin searching for grant and loan opportunities. (click on “Working with HUD”)

Because it is a relatively poor state (ranked 36 th in income) and has a large elderly population, Mainers receive more federal aid from Washington than they pay in federal taxes. In 2004, the Feds gave Maine back $1.40 for every $1 it sent to Washington, ranking it 16 th highest in taxes returned for the year. A generation ago, when Maine received $1.30 for every $1 in federal taxes, it ranked sixth highest in the nation.

Were it not for this federal funding, Maine’s state and local government leaders would be faced with the choice of paying for these services with state and local tax dollars or forgoing the services and benefits that Maine residents receive from these important programs.

In addition to health services and HUD, Maine got most of its 2004 federal funding for agriculture at $108 million; education at $186 million; and transportation at $215.8 million.

And it also got the most out of the money. USDA Rural Development, for example, a division of the U.S. Department of Agriculture, was granted $9 million in funding in 2004 as its annual allowance, but then received an additional $130 million through hardship clauses in federal law, and from states that could not use up all of their own allowances, according to Dale Holmes, USDA Rural Development housing director for Maine.

By 2006, Rural Development had snagged $206.6 million in loans and grants for Maine for housing, business and community programs.

Maine has been so successful at getting extra federal funding, Holmes said, because of the state’s recognized affordable housing shortage.

Rural Development, headquartered in Bangor, helps families obtain safe housing they can afford, invests in businesses, preservation and conservation, joins with local and state groups to retain and create jobs, and provides crucial loan and grant money for essential municipal facilities such as fire stations and infrastructure such as new sewer lines.

The agency’s work has been impressive. In 2006 alone, Rural Development:

– Assisted more than 800 Maine families become homeowners;

– Helped finance the rehabilitation of 22 multi-family housing properties;

– Preserved almost 800 jobs through the agency’s business programs and created another 700 by investing $1.4 million in Aroostook County and Lewiston “Empowerment Zones,” and $1.4 million in the state’s so-called creative economy;

– Granted or loaned money for 37 community facilities throughout Maine, as well as crucial first responder equipment and vehicles;

– Helped finance 20 water/sewer projects, bringing quality municipal water to more than 30,000 Mainers.

Some of the specific 2006 Rural Development projects completed in Maine include a new library in New Portland, addition of an ambulance for Fryeburg Rescue Service, new sound and light systems for the Center Theatre in Dover-Foxcroft and business grants for renewal energy for companies in Hallowell, York and Camden.

Larger projects included helping to finance the new Calais Regional Hospital and an 8-unit apartment building on Penobscot Nation land.

Just last month, the town of St. Agatha was awarded a $136,000 state economic development grant to help low-income residents connect their homes to the town’s new sewer line, a project expected to cost about $2.5 million. The project is being funded by a $1.7 million grant from Rural Development and a low-interest loan of $575,000. The new grant will allow 30 or more homes to be connected to the sewer line, which should be operational by late 2007 or spring of 2008.

Detailed information on all of Rural Development’s major programs is available on its Web site,

In the Rural Development housing programs, virtually all of Maine qualifies for assistance, Holmes said, except for portions of the downtowns of Auburn, Bangor, Biddeford, Lewiston and Westbrook; and all of the cities of Portland and South Portland.

Holmes said any of the agency’s four offices in Maine (Presque Isle, Bangor, Lewiston and Scarborough) can help municipal officials tap into myriad grants and loans available for housing, economic development or infrastructure.

“I would encourage anyone to please call any of those offices and they will have someone from that office come out and spend time with them, answer questions, and offer assistance and information on anything they would like to have,” Holmes said. “We are always searching for ways to reach out and connect with communities and non-profits and organizations that might not know about our agency and the assistance we can provide to rural Maine.

Meanwhile, vital nutrition programs that help keep poverty in check in Maine cities and towns come from the Department of Agriculture, which sent $63.2 million of its total $108 million for Maine for food and nutrition programs for children and the poor.

Also under the agriculture department, the Maine Forest Service received $25 million for fiscal 2004.

Most of the $186 million federal education spending Maine received in 2004 paid for special education and rehabilitation services of $63.6 million, nearly $90 million for K-12 education, including $27 million to help finance the “No Child Left Behind Act” and $50.1 million for the Title 1 reading program; and about $20 million for higher education, including $11 million in student loans.

Rounding out the top annual federal funding in Maine is the Department of Transportation, which financed $21.1 million in airport improvements in fiscal 2004, according to the Census report, and another $182 million in highway funding.

The federal labor department sent Maine $60 million in 2004, while the state got $35 million from EPA, followed by Homeland Security at $32.7 million, Interior at $20.9 million, and Justice at $19.6 million.

Federal funding for Maine has increased rapidly since 2001, when the state received $1.51 billion compared to the $2.6 billion received last year. By far, the biggest increase in federal aid has been for medical and other basic living services for the elderly, poor and disabled.