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March 21, 2003

Budget Resolutions

Consideration of the 2004 budget resolutions continued in both chambers of Congress. Please recall that the budget resolution is a broad blueprint which sets out revenue expectations and broadly establishes limits for taxes and spending. Budget resolutions are not public laws, and are not signed by the President. A few minutes before 3:00 this morning, the House approved its budget resolution, H.Con.Res. 95, by a mere 3 votes. The final vote was 215-212. AP Press accounts indicate key administration officials, including Vice President Cheney, secured votes of wavering Republican members. H.Con.Res. allows for $726 billion in new tax cuts. This figure will accommodate the President’s tax cut proposal. The budget resolution DOES NOT change the tax law itself. Media reports also indicate spending levels were raised, and some cuts were restored in order to secure passage. At press time, the Senate was still considering its budget resolution, S.Con.Res. 23. It is worth noting, however, that after much anticipation, a bipartisan amendment offered by Senate moderates to limit the tax cut package to $350 billion failed. More information will be provided as it becomes available.

Bankruptcy Reform

By a vote of 315-113, the House overwhelmingly approved the Bankruptcy Abuse Prevention and Consumer Protection Act of 2003 (HR 975). This bill closely follows last year’s conference report, which NAHMA supported. The major difference is that HR 975 does not include a controversial “abortion protestor” rider intended to prohibit abortion protestors from avoiding paying legal judgments for filing for bankruptcy. The abortion protestor issue derailed bankruptcy reform in the last Congress. NAHMA recently endorsed HR 975. Of particular importance to NAHMA is Section 311, which reforms application of the automatic stay provisions of bankruptcy laws to tenants facing eviction. Generally, HR 975 allows evictions to proceed if the judgment was obtained before the tenant filed for bankruptcy. Such judgments can be based on non-payment, illegal drug use or property endangerment. In the cases of illegal drug abuse and property endangerment, the bill also allows for commencement of eviction actions after the tenant has filed for bankruptcy. NAHMA signed an industry coalition letter which urged members of the House to vote in support of HR 975. The letter explained, “Without this legislation, renters who threaten other residents or use illegal drugs will be able to continue to hide behind the Bankruptcy code’s automatic stay as the now do and avoid timely eviction.” NAHMA will continue to advocate in support of this bill as it moves through the Senate.

Hearings

House VA – HUD Appropriations Subcommittee: Secretary Martinez testified before the subcommittee on the President’s 2004 budget request. Among the noteworthy aspects of his testimony were his announcements of HUD’s intention to:
  • propose legislation creating a new FHA mortgage product for “families that, due to poor credit, would either be served by the private market at a higher cost or not at all”;
  • obtain legislation to block grant Section 8 tenant-based vouchers to states (a NAHMAnalysis on this proposal is being written);
  • “examine possible policy changes or reforms to strengthen performance [of the Section 202 program]” due to the “low performance scores” the program received on the OMB’s Program Assessment Rating Tool (PART) scorecard [editorial note: the PART score was “results not demonstrated”];
  • “to reform the [Section 811] program to allow faith-based and other nonprofit sponsors more flexibility in using grant funds to better respond to local needs. . . . [And] recognize the unique needs of people with disabilities at risk of homelessness, and give priority to serving this group as part of the Administration’s Samaritan Initiative to end chronic homelessness.” Again, the “low performance scores” of Section 811 on OMB PART scorecard was indirectly cited as the impetus for these reforms [editorial note: the OMB score was “results not demonstrated”];
  • reduce the FHA 221(d)(4) mortgage insurance premiums from 57 basis points to 50 basis points in FY 2004.
House Financial Services Subcommittee on Oversight and Investigations: The subcommittee held a hearing entitled “Paying Dividends: How the President’s Tax Plan Will benefit Individual Investors and Strengthen the Capital Markets.” Among those who testified were: the Honorable Peter R. Fisher, Under Secretary for Domestic Finance, Department of the Treasury; former members of Congress who now work in the financial services industry; and representatives from The Business Roundtable, think tank organizations, and the National Association of Homebuilders. Mr. Bobby Rayburn, the witness for NAHB, discussed their organization’s analysis of the potential effect of the dividend tax repeal on the Low Income Housing Tax Credit (LIHTC). Basically, the NAHB believes the repeal could reduce the value of the credits by 10 to 15 percent. (The recent Ernst & Young study commissioned by NCHSA estimated the value would be reduced by 21 percent.) NAHB supports the overall growth package proposed by the President, and suggested some solutions to protecting the LIHTC from potential unintended consequences. To read Mr. Rayburn’s testimony please see: https://financialservices.house.gov/media/pdf/031803br.pdf At the 2003 NAHMA Winter meeting, the issue of repealing taxes on corporate dividends was considered. Since the Administration sent its 2004 budget proposal to Congress, considerable discussion has focused on whether the dividend tax repeal would hurt the LIHTC, and if so, in what ways, and to what extent. NAHMA members considered the issue during the Tax Credit Committee, Executive Council, and the Board of Directors meetings.

NAHMA’s position on the proposed dividend tax repeal is as follows:

NAHMA is concerned about potential unintended consequences which may result from the repeal of taxes on corporate dividends. Industry experts have documented that such repeal may have a negative impact on the LIHTC. The LIHTC is an important program for production of affordable housing. In considering this and any other proposed federal tax legislation, Congress and the Administration should protect the overall effectiveness of the LIHTC program.

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