$6 billion in cuts to HUD proposed in a leaked draft of President Trump’s FY18 budget
On Wednesday, the
Washington Post and
other news sources published internal Trump Administration budget documents. Although the numbers are not yet part of the President’s official budget request to Congress, the early documents show that the administration is considering a 14% reduction to HUD’s overall budget, which would eliminate some programs, such as the Community Development Block Grant (CDBG) program, and make significant cuts to others, such as Section 8 Rental Assistance, Section 202, and Section 811 programs.
The President’s formal budget request is expected to reach Congress in May, and the Senate will have until the end of September to enact their own fiscal appropriations for FY18. In the meantime, the President is expected to release a “skinny budget,” or high level funding blueprint, as early as next week.
NAHMA received a preliminary impact analysis of the cuts to HUD programs from the Senate Appropriations Committee Staff. The following negative impacts were highlighted by Senate staff, based on the Washington Post article:
- Overall HUD Budget – The Trump administration is considering cuts to HUD’s overall funding by 14% to $40.5 billion in FY18. Nearly 84 percent of HUD’s overall budget is required to simply renew rental assistance for the more than 5 million low-income, HUD-assisted households each year. This funding provides rental assistance for residents and ensures that administering agencies have the resources necessary to assist families in securing and maintaining housing that is safe and affordable. The remaining portion of HUD’s programmatic budget, roughly 13 percent or $6.2 billion of the Department’s overall budget, funds other critical housing, supportive services, and economic development programs. All of these programs are at-risk of being eliminated entirely should a 14 percent cut, or greater, take place and Congress prioritizes the renewal of existing rental assistance programs:
- Community Development Block Grant (CDBG) program – Draft Budget proposal calls for the complete elimination of this vital economic development program, a total cut of $3 billion in federal resources from FY 2016.
- HOME program – Draft Budget proposal calls for completely eliminating the sole federal resource for affordable housing production, a total cut of $950 million from FY 2016.
- Choice Neighborhoods program – Draft Budget proposal calls for considering completely eliminating this program. As a result, 29 states that have developed 60 neighborhood transformation plans – that were previously awarded more than $23 million in Choice Planning Grants – will not be considered for Choice Implementation grants in FY 2018.
- Public Housing Operating Fund – Draft Budget is proposing to nearly eliminate this program, reducing its funding to $600 million, a $1.3 billion cut from FY 2016. The Trump Administration’s proposed cut would provide less than 1 percent of the funding needed to address the annual physical disrepair of the more than 1.1 million public housing units in FY 2018. By significantly reducing capital funding for the nation’s public housing stock, the capital backlog will continue to grow, and hundreds of thousands of families will be faced with living conditions that are neither safe, decent, nor affordable.
- Housing for the Elderly (Section 202 Program) – Draft Budget proposal calls for cutting the Section 202 program by 10%, or $42 million, for a total of $390.7 million in FY 2018. This level of funding would cause over 10,300 very low-income elderly households to lose subsidies that they need in order to remain in their homes, and HUD would also be unable to renew any existing Service Coordinator grants. Service coordinators ensure that residents are linked to supportive services that help them with living independently and aging in place. Ensuring that seniors remain in their homes is important because the costs to Medicaid of supporting three older adults with home and community-based services are roughly the same as those for nursing home care for one individual.
- Housing for Persons with Disabilities (Section 811 Program) – Draft Budget proposal calls for cutting the Section 811 program by 19%, or $29 million, for a total of $121.6 million in FY 2018. This level of funding would cause over 6,800 very low- and extremely low-income persons with disabilities to lose subsidies that they need to remain in their homes and their communities.
HUD spokesman Jereon Brown said the budget document “is still a work in progress.” NAHMA will keep members updated as more budget details are released next week.
Senators Cantwell, Hatch, and Wyden re-introduce LIHTC reform with bi-partisan support
This week, Senator Maria Cantwell (D-WA), Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member, Senator Ron Wyden (D-OR), reintroduced the Affordable Housing Credit Improvement Act (
S. 548), which would expand and reform the Low Income Housing Tax Credit (LIHTC). The bill has been referred to the Senate Committee on Finance and currently has 12 bipartisan co-sponsors, although more are expected to be added in the coming weeks.
The following are some of the provisions included in the legislation:
- Expand the Housing Credit
- Permit income averaging in Housing Credit properties
- Standardize income eligibility for rural properties
- Provide flexibility for existing tenants’ income eligibility
- Simplify the Housing Credit Student Rule
- Limit voucher payments in certain Housing Credit developments
- Establish a permanent minimum 4 percent Housing Credit rate
- Repeal the Qualified Census Tract (QCT) population cap
- Prohibit local approval and contribution requirements
- Increase the amount of Housing Credits that developments serving extremely low-income tenants can receive
- Make the Housing Credit compatible with energy efficiency tax incentives
In addition, the following five additions have been made to this version of the bill:
- Restriction of planned foreclosures
- Increase of population cap for Difficult Development Areas
- Create a selection criteria for housing that serves the needs of Native Americans
- Qualify Indian areas as Difficult Development Areas
- Change the official name of the Low Income Housing Tax Credit to the Affordable Housing Tax Credit
NAHMA will continue to work with industry partners to support and advance this bill through Congress. For more information on each provision, please click
here.
