You know about the bridge to nowhere. The electric tugboat? Probably not.
In 2020, the San Diego County Air Pollution Control District received a unique grant from the U.S. Environmental Protection Agency. Awarded under the Diesel Emissions Reduction Act (DERA), the $2,017,660 subsidy paid for the eWolf, “America’s first all-electric ship assist harbor tugboat.”
How air quality at the Port of San Diego qualifies as a pressing national concern is anyone’s guess, but the aquatic largesse provided a memorable anecdote for the White House to cite in its fiscal 2027 budget submission. The document seeks to “constrain non-defense spending” via “a 10-percent cut compared to 2026.” Thus, DERA grants, which “distort the market by subsidizing select technologies,” must go.
The budget targets many other programs that shower funding on America’s cities. Reaction was predictable. If adopted, the cuts will force mayors to “walk away from critical street, water and sewer improvements and services for youth and seniors, undoing promises made to their constituents to keep their communities safe,” according to the Appropriations Committee Democrats. President Donald Trump’s proposal will “put stable and accessible housing further out of reach for many Americans and … increase homelessness,” claimed the Republican president of the United States Conference of Mayors. And a rollback of transportation pork “moves the nation in the wrong direction for affordability, mobility, and safety,” huffed the Rail Passengers Association.
Transit is a good place to begin our tour of the urban impacts of the federal budget. Subsidies to cities’ trains and buses represent one of the worst methods D.C. employs to destroy dollars. Earlier this year, transit expert Wendell Cox (and occasional Free Cities Center contributor) noted that in 2024, “federal spending on transit reached $20.5 billion, reflecting a nearly 50% increase from 2019.” Yet the death spiral continues. Transportation scholar Randal O’Toole (another occasional Free Cities Center contributor) recently observed that nationally, ridership has yet to regain its pre-lockdown figure. The recovery for some cities is particularly abysmal: Honolulu (72%), Portland (71%), Phoenix (62%), Charlotte (66%), Louisville (61%), St. Louis (58%), and Memphis (51%).
Trump’s budget clips $486 million from the Federal Transit Administration’s Capital Investment Grants Program, a revenue stream that flows to “new and expanded rapid rail, commuter rail, light rail, streetcars, bus rapid transit and ferries, as well as corridor-based bus rapid transit investments that emulate the features of rail.” Given Cox’s assessment that “transit systems have typically built major capital projects (especially rail) that were far more costly than other alternatives for which greater ridership was projected,” if anything, the administration is being too cautious. It should have pushed for total elimination of federal support to capital “investment.”
Next up: the Community Development Block Grant (CDBG) program. For decades, conservative and libertarian opponents have assailed the stuck-in-the-‘70s scheme for its rampant waste and corruption. The Manhattan Institute described it as “one of the last and least effective vestiges of the War on Poverty.” The Cato Institute averred that CDBG “supports crony spending and a variety of activities that cater to high income preferences rather than low-income needs, along with any activities that can reasonably be defended as beneficial to the poor.”
Examples of sleaze are pervasive. A 2017 audit of $11.7 million awarded to Albuquerque’s Department of Family and Community Services found that the city “did not always follow procurement and conflict-of-interest requirements and did not ensure that executed written agreements included the required language,” “did not ensure that expenditures were reasonable, eligible and adequately supported,” “did not reconcile … timesheet activities,” and “failed to follow federal travel regulations.”
The budget slams Denver’s use of CDBG funds to apply an “equity lens” to assess “unintended consequences for historically marginalized communities,” and dings Greenwich, Conn. — a tony enclave in the New York City MSA — for taking $4 million over “the last five years” to spend on “projects such as theater arts programming and swimming pool renovations.” Even Politico called CDBG the “federal program that can’t be killed — or fixed.” Here’s hoping Trump’s sixth attempt to end it succeeds.
The White House considers the HOME Investment Partnerships Program “yet another bloated federal slush fund that pours billions of dollars into systems rife with red tape without necessarily reaching the people it is intended to serve.” Like CDBG, it’s proven impossible to defund, despite a devastating investigation conducted by The Washington Post in 2011. The newspaper discovered that the program “squandered hundreds of millions of dollars on stalled or abandoned projects and routinely failed to crack down on derelict developers or the local housing agencies that funded them.”
The administration has added a fresh criticism: “projects with ideologically motivated energy efficiency requirements that drive up energy costs and devastate American consumers,” including “$4.3 million in HOME funds … for 42 rental units in Greenville, Miss., that were ‘energy sustainable with green design features’ and left almost half of the acres undeveloped to ‘preserve wetlands and attract native wildlife.’”
Finally, the Office of Management and Budget must have taken special delight that as the Biden administration left office, it admitted that “street homelessness increased 20% since 2020, hitting the highest level ever recorded despite an over 50% increase in funding for the Continuum of Care (CoC) during the same period,” in addition to congressional backing for “the highest levels of funding ever devoted to homelessness programs in 2024.” The 2027 budget singles out the Los Angeles Housing Services Authority as “an example of the need to overhaul the unaccountable CoC system,” given its “abysmal record of reducing what is the highest number of street homeless individuals in the United States” and a 2025 audit finding that “the authority failed to accurately track billions of Federal and local dollars.” CoC is marked for complete eradication.
Given cities’ formidable lobbying muscle, Trump’s potential cuts face long odds. But with the national debt at $39 trillion, wise elected officials in urban communities will start to prepare for the end of programs like CDBG and Continuum of Care. They’re going away — perhaps not in 2027, but soon enough.
D. Dowd Muska is a researcher and writer who studies public policy from the limited-government perspective. A veteran of several think tanks, he writes a column and publishes other content at No Dowd About It.