Neighborhood advocates are alarmed by a proposed axing of Main Street and Elm Street funding in the coming state budget.

As lawmakers hash out a budget that could be $3 billion leaner, the shears are pruning what's considered to be nonessential and outside the protection of entitlement and federal mandate.

The National Trust for Historic Preservation created the Main Street program in 1977. It became a national model for resuscitating business districts in 1980. In 2004, Pennsylvania created an Elm Street component to include adjacent residential streets.

For neighborhoods that have benefitted from the state Department of Community and Economic Development (DCED) programs, including Main Street and Elm Street, the potential cuts' effect "could be devastating," said Jim Richter, director of the Hazelwood Initiative and treasurer of the Pittsburgh Community Reinvestment Group.

"It's not just Pittsburgh but all the cities and towns that have struggled to cobble together investment" to revitalize, he said. "For communities in, say, the third year of Main Street funding [which can be up to six years], it's like pulling the rug out from under them."

"They've gone after DCED with a vengeance," said Rick Swartz, director of the Bloomfield-Garfield Corp. The department's $617 million budget in 2008-09 was cut to $565 last year; Gov. Ed Rendell has proposed a $358 million DCED budget for the coming fiscal year.

Main and Elm Street funding helps neighborhoods invest in business districts and adjacent residential streets. Recipients are expected to find sources of money to sustain the program after the funding ends. Karla Owens of the Bloomfield Business Association said Bloomfield, in its fourth year, has attracted other funders. "We plan every year to sustain ourselves. We have some solid back-up. The Pittsburgh Partnership for Neighborhood Development is our big one."

Kyra Straussman, director of real estate for the Urban Redevelopment Authority, said the URA and other advocates hope to make a case for Main and Elm Street funding in Harrisburg. "It's an incredibly powerful program, with lots of bang for the buck."

Main Street districts in Pittsburgh are in the West End, Mount Washington, South Side, Strip District, Lawrenceville, Garfield, Friendship, Bloomfield, East Liberty, Deutschtown, Allegheny West and Downtown.

Deep cuts are also expected at agencies that depend on state money for homeless services and to help people keep their homes.

Elizabeth Hersh, director of the Housing Alliance of Pennsylvania, characterized a proposed $9.9 million cut to the $16 million budget for the Homeowners Emergency Mortgage Assistance Program as "crazy, with all the foreclosures we're seeing. Most of those are job-loss related," she said, adding that the proposed budget cuts will lead to more job loss and more foreclosures.

"Public money [in these programs] is an investment," she said. Money for housing and redevelopment assistance that comes through DCED -- $34 million in the current budget; $17 million in the proposed Senate bill -- has produced 7,000 homes and 4,000 jobs, she said.

The Housing Alliance, an advocacy agency that does not get or seek state money, supports an increase in state revenue without taking a stand on how it is increased, she said.

"If you want to live in a great state with a high quality of life, you have to pay for it. This is a battle for what we value: home, neighborhood and community."

In "Making the Case for Main Street," the Urban Redevelopment Authority's Josette Fitzgibbons writes that $76 million in private investments followed $2.4 million in Main Street funding to 10 neighborhoods between 2002 and 2008. The impact included 631 new businesses and 3,686 new jobs.

In "Making the Case for Elm Street," she cites the example of Deutschtown on the North Side, where $200,000 in Elm Street money has attracted $1.3 million in private investment.

Mr. Swartz said the ripple effect of the budget cuts will be more devastating than raising taxes would.

"If you follow the yardstick of one job for every $100,000 in cuts, you've eliminated about 15,000 jobs across the commonwealth just from DCED," he said. "That's sobering. The more people you eliminate from paying taxes through thousands of lost jobs, the deeper the recession will be.

"You never cut your way our of a recession," he said. "You have to prime the pump to do it. I'm a fiscal conservative, but I can see the locomotive that's headed for us."