Trump budget includes cuts to CDFI Fund

• Key insight: The Trump administration’s budget proposes a $204.5 million cut to the Treasury Department’s Community Development Financial Institution Fund, and would redirect remaining awards to rural areas. 
• What’s at stake: The proposal reflects months of conflict between the Office and Management and Budget and Treasury over the fund’s future, with OMB withholding congressionally appropriated funds even after Treasury determined all CDFI programs are required by statute. 
• Forward look: Congress is not bound to fund programs at the president’s requested level, and the legislature frequently diverges from the president’s budget request. Even so, the request serves as a starting point for congressional Republicans and indicates the White House’s continued opposition to the program. 

WASHINGTON — The White House’s 2027 budget request continues the administration’s efforts to defund federal programs aimed at promoting diversity, including cuts to the Community Development Financial Institution Fund. 

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President Donald Trump’s budget proposal cuts all domestic spending programs by 10%, taking particular exception to programs that Trump has decried as “woke.” The president’s budget also proposed a dramatic increase in military spending, which the domestic spending cuts would not entirely offset. 

Trump’s budget request reflects the White House’s priorities and will be used as a blueprint for Republicans in Congress, but is unlikely to be passed in its entirety. The CDFI program in particular has strong support among congressional Republicans, despite being targeted by the Trump administration early in his second term. 

The CDFI Fund would see a $204.5 million cut, according to White House budget documents, and the program going forward would be concentrated in rural areas. 

“The Budget continues to redirect CDFI Fund awards, which were abused to advance a partisan agenda under prior administrations, to the rural communities where the awards are most beneficial,” according to the White House budget documents. “Past awards enabled lender practices in which race was a key determinant in access to loans, and provided funds for products and services that advanced immigration, gender, and climate radicalism.” 

The Trump administration has been at odds with Congress over the CDFI Fund since early in the president’s second term. Trump signed an executive order last March ordering that the fund be dissolved to the extent permitted by law. The Treasury Department later told the Office of Management and Budget that all CDFI Fund programs are statutorily mandated.

Despite that determination, OMB has continued to withhold funds from the Treasury to disburse through the program. In October, amid the last government spending fight, Treasury issued notices to lay off CDFI staff, saying such reductions in force were necessary to eliminate the program. Sen. Mark Warner, D-Va., said at the time that he believed the order for the layoffs came from OMB. 

“We think this directive came from OMB,” Warner said. “The idea that an OMB director can just unilaterally lay off its entire staff seems to me to go completely against the law and the purpose of the law.”

Congress has in the last year rejected the administration’s proposed cuts. The last spending package maintained level funding of $324 million for the CDFI Fund, the same amount it received the year prior, despite the president’s budget request proposing a cut to $134 million.