WASHINGTON - The Clinton Administration plans no cuts in funding for the HOME and Community Development Block Grant programs in fiscal 1996 and wants to maintain both at their fiscal 1995 levels, preliminary budget documents show.

While holding funding steady, however, the administration is also planning to propose holding back portions of the money that state and local governments receive under both programs until it can determine that allocations are being used properly.

The proposals for giving HOME $1.4 billion and the block grant program $4.6 billion in fiscal 1996 are contained in Office of Management and Budget documents obtained by The Bond Buyer.

The documents also show the Department of Housing and Urban Development had suggested a slight increase for the HOME program, which would have brought the administration budget request up to $1.5 billion for fiscal 1996. but that idea was rejected by the OMB.

The budget office is now meeting with HUD and other federal agencies to make final decision out what President Clinton will propose in his fiscal 1996 budget plan, scheduled for release in February. Thus the final proposals for the two housing programs will be completed in the next several weeks.

In past years allocations for both programs have grown steadily. But with lawmakers and administration officials more intent than ever on cutting domestic spending, a proposal to hold the two programs at last year's allocation level "is a victory" for proponents of HOME and the block grants, said a housing lobbyist.

The planned budget request for HOME also represents a sharp change from the administration's approach last year. In Clinton's fiscal 1995 budget plan, the administration proposed giving HOME only $1 billion, a drop from the $1.275 billion it had received in fiscal 1994. But Congress rejected that idea, and in the end passed a housing appropriations bill that gave the program $1.4 billion.

Last Year the administration had proposed giving the block grant program $4.4 billion, the same as in fiscal 1994. But the White House also made a controversial proposal for siphoning off $200 million of the $4.4 billion to finance Leveraged Investments for Tomorrow, a new program designed to aid neighborhood-based economic development through federal grants and loans.

After sharp criticism from housing industry officials and members of Congress, HUD backed away from that plan it was never implemented. The preliminary fiscal 1996 budget documents show the administration is making no further attempt to shift money away from Community Development Block Grants to another program.

But the documents do show that the administration wants to more closely monitor whether the programs are operating properly. For the HOME program, the budget office proposes giving each grant recipient only 90% of its annual allocation up front.

Under the OMB's plan, "the other 10% is only allocated after HUD has reviewed the community's performance information for that year and has determined that usage is consistent with performance objectives and local needs," the budget document states. "The 10% allocation hold-back should be taken from poor performers and redistributed to superior performers."

Identical language is included in the preliminary budget plan for the block grant program.

The budget office is also proposing to link allocation under both programs "to performance based on Fair Housing, enforcement." Under such a proposal, local governments would have to make sure federal antidiscrimination laws not being violated in their housing programs in order to receive their full allocations.

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