This story was originally published in Affordable Housing Finance.
The Trump administration calls for the elimination of several key housing programs in its fiscal 2019 budget proposal released Monday.
The plan seeks to reduce funding for the Department of Housing and Urban Development by more than $8 billion, or 18 percent. Once again, the administration calls for terminating the popular Community Development Block Grant (CDBG) and HOME programs. The proposal also seeks to end the Choice Neighborhoods program as well as the National Housing Trust Fund.
The White House called for many of the same cuts last year, but the programs were ultimately funded by Congress.
“The best thing one can say about this budget is that it is dead on arrival,” says David M. Dworkin, president and CEO of the National Housing Conference, a nonpartisan affordable housing advocacy organization. “This budget is bad policy and bad politics. It undermines years of public-private investments in housing and community development that have had broad bipartisan support, like the CDFI Fund and block grant funding for neighborhood redevelopment. It even cuts the Capital Magnet Fund and National Housing Trust Fund, which aren’t even paid for by taxpayers.”
Jonathan Reckford, CEO of Habitat for Humanity International, warned that the proposed cuts will worsen the affordable housing crisis.
“We urge Congress to rise to this moment by rejecting these cuts and investing now before another generation of struggling families are forced to pick between housing and food," he says.
Public Housing Takes a Hit
The administration’s budget seeks no funding for the public housing capital fund, which has had nearly $2 billion in funding in recent years. Instead, the proposal seeks to merge the public housing capital fund into the public housing operating fund, reducing funding overall.
At the same time, the White House calls on local jurisdictions to do more.
“Public Housing has an estimated capital needs backlog of $26 billion that grows at a rate of $3.4 billion per year, and Capital Modernization grants alone are not sufficient to address the significant needs in the portfolio,” says the proposal. “Given fiscal constraints, the budget recognizes a greater role for state and local governments to more fully share in the provision of affordable housing.”
Instead, the budget proposal pushes the Rental Assistance Demonstration (RAD) program and calls for eliminating the cap on the number of public housing units that can participate through RAD. It also calls for expanding the second component of RAD to include the conversion of Sec. 202 PRAC (project rental assistance contracts) properties to long-term Sec. 8 contracts. The budget seeks $100 million for the RAD program.
The RAD program relies on the ability to convert public housing to housing vouchers. Advocates point out that rental assistance will take a hit under the proposal.
The request provides about $19.3 billion for tenant-based rental assistance. “This includes $17.514 billion to renew previous contracts, or more than $3 billion less than what is needed to ensure that all contracts are fully renewed,” reports the National Low Income Housing Coalition (NLIHC). “As a result, NLIHC and others estimate that more than 330,000 vouchers would be lost.”
The proposal includes nearly $10.9 billion to renew project-based rental assistance (PBRA) contracts for calendar year 2019, an increase of $50 million from the fiscal 2017 funding level. This amount would be insufficient to cover all existing contracts, considering both the House and Senate provide over $11 billion to renew PBRA contracts in their fiscal 2018 spending bills, says NLIHC.
Overall, the cuts are drastic, reducing the safety net for the poor and threatening the stability of low-income families, according to advocates.
“The breadth and depth of cruelty reflected in this budget proposal is breathtaking,” says Diane Yentel, NLIHC president and CEO. “President Trump is making clear, in no uncertain terms, his willingness to increase evictions and homelessness—for the families who could lose their rental assistance through severe funding cuts and for the low-income and vulnerable seniors, people with disabilities, and families with kids who will be unable to manage having to spend more of their very limited income to cover rent hikes.
“The administration callously disregards its responsibility to the millions of households living in deteriorating public housing and to low-income people and communities working to recover and rebuild after disasters by eliminating critical resources for public housing, rental housing construction, and community development. It’s a cruel and unconscionable budget proposal, and it should be soundly rejected by Congress,” Yentel says.
An Eye on Other Changes
Housing advocates are also very concerned that the administration is moving to increase rents and impose work requirements on some recipients of housing assistance. HUD plans to submit a “rental reform legislative proposal” to Congress in March.
Advocates and researchers will be keeping a close watch on these potential changes.
If the administration proceeds with implementing work requirements, “it would be heading down that road without much research or evidence to guide what it looks like or help anticipate what the outcomes may be,” says Diane K. Levy, principal research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute.
To date, there’s limited information about how housing agencies have used work requirements and the outcomes of different models for the households as well as agencies, explains Levy.
Based on early reports, the administration is also looking to change the way rents are calculated.
Currently, most families receiving federal housing assistance pay 30 percent of their adjusted income as rent. Housing advocates say recent draft legislation requires most non-elderly and nondisabled families to pay 35 percent of their gross income. The very poorest elderly and disabled families would also see their rent increase up to 30 percent of their gross income or $50, whichever is higher.
Adrianne Todman, CEO of the National Association of Housing and Redevelopment Officials, also voices concerns about the White House's direction.
“This winter, we have seen the result of years of underinvestment in our housing infrastructure, with heating systems underperforming in several cities and towns,” she says. “The federal government is responsible for this lack of investment and this proposed budget, sadly, continues that trend.”
Todman adds that she is “intrigued by the administration's recognition that local communities are best positioned to make key decisions about their housing investments and look forward to working with HUD in defining this further.”
“We also acknowledge the administration's emphasis on self-sufficiency and work, but we also know from decades of job/work-inspired initiatives that without the appropriate level of resources and partners to support families, these efforts fall short of success,” she says.
Note: This story was updated on Feb. 13, 2018.
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