House Appropriations THUD Subcommittee Rejects Trump’s Drastic FY 2019 Request, Mostly Level Funds HUD

Published by Peter Lawrence on Tuesday, May 22, 2018 - 12:00am

The House Appropriations Transportation-HUD (THUD) Subcommittee approved its $71.8 billion fiscal year (FY) 2018 spending bill May 15, which is expected to be approved by the full House Appropriations Committee May 23. According to the committee release, that funding level for the full bill represents $1.5 billion (2.1 percent) more than FY 2018 and $23.8 billion (nearly 50 percent) more than the FY 2019 request by President Donald Trump’s administration. For the U.S. Department of Housing and Urban Development (HUD), the bill provides gross appropriations of $53.1 billion, a $440 million (0.8 percent) increase from FY 2018, but nearly $12 billion (29 percent) more than the FY 2019 request. Receipts from the Federal Housing Administration and Ginnie Mae declined by about $500 million, so Congress had less funding available to allocate to HUD programs.  In general, the bill’s funding level sustains the major increases enacted in FY 2018, but some programs are proposed to receive less than what’s needed to renew HUD rental assistance contracts during FY 2019.

This overall funding allocation was made possible by the Bipartisan Budget Act of 2018, which set a cap of $597 billion for FY 2019 nondefense spending, which is $18 billion (3.1 percent) more than the FY 2018 cap, but $57 billion (10.6 percent) more than the FY 2019 request.

Highlights of the HUD program funding levels follow.

Blog Chart Key Programs of the HUD Budget
Click to Enlarge

 

 

Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The request provides $11.7 billion for Project-Based Rental Assistance, which is $232 million (2 percent) more than FY 2018 and $600 million (5.4 percent) more than the FY 2019 request. While the proposed increase is certainly welcome, the funding level is about $500 million less than needed to renew contracts, according to the National Housing Trust (based on HUD data), and thus could result in funding for less than a full 12 months for expiring contracts. The bill rejects the budget request’s proposals to establish $150 minimum rents, require increased tenant contributions toward rent–from 30 percent of adjusted family income to 35 percent of gross family income–and institute other proposals to achieve savings from HUD’s rental assistance programs.

Tenant-Based Rental Assistance (TBRA)

Tenant-Based Rental Assistance is proposed to be funded at $22.5 billion, a $462 million (2.6 percent) increase from FY 2018 and a $1.93 billion (9.4 percent) increase from the FY 2019 request. Of that amount, $20.1 billion is for Section 8 Housing Choice Voucher contract renewals, which is $507 million (2.6 percent) more from FY 2018 and $1.36 billion (7.2 percent) more than the request. The Center on Budget and Policy Priorities claims such a funding level will result in a loss of funding for 50,000 vouchers.  However, the bill authorizes a housing voucher mobility demonstration for up to 2,000 families with children to move into neighborhoods with quality schools and other opportunities.

As noted for project-based rental assistance, the bill does not adopt the rental assistance reforms from the budget request. For the HUD-Veteran Affairs Supportive Housing (HUD-VASH) program, the bill provides $45 million, which equal to FY 2018 and the request, and $5 million of such funding is reserved for Native American veterans, the same amount as in FY 2018. The request also provides $85 million for Tenant Protection Vouchers, equal to FY 2018 but $55 million (39.3 percent) less than the request.

Public Housing Capital and Operating Funds

The bill rejects the fairly dramatic cuts to public housing proposed in the request, but offers less than FY 2018. It provides $2.75 billion for the Public Housing Capital Fund, which is equal to FY 2018, but importantly ignores the request for no funding, which would have imperiled many Rental Assistance Demonstration conversions. It also provides $4.55 billion for the Public Housing Operating Fund, which equal to FY 2018 and $1.27 billion (38.8 percent) more than the request.

Rental Assistance Demonstration

As have previous House THUD annual spending bills, the bill does not include the request to eliminate the cap on the Rental Assistance Demonstration (RAD) program, nor does it authorize it as a permanent program. The FY 2018 omnibus bill increased authorization from 225,000 public housing units to 455,000 public housing units and extended program authorization for public housing conversions to 2020. The bill does not provide incremental funding to facilitate such conversions, as proposed by the request ($100 million) or the Senate ($4 million) in its FY 2018 HUD spending bill.

Community Planning and Development (CPD) Programs

The bill does not eliminate Community Development Block Grant (CDBG) formula grants and the HOME Investment Partnerships Program (HOME), as proposed by the request. However, it cuts HOME by $162 million (11.9 percent), providing $3.3 billion for CDBG and $1.2 billion for HOME. Because funding for these programs isn’t directly tied to specific families, but rather represents funding for future housing and community development activities, it is much more vulnerable than rental assistance funding.

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are proposed to be funded at $2.55 billion, $33 million (1.3 percent) more than FY 2018 and $163 million (6.8 percent) more than the request. This amount includes a $2.204 billion set-aside for the continuum of care and rural housing stability assistance programs, and $270 million for Emergency Solutions Grants.

The bill provides $632 million for the Housing for the Elderly (Section 202) program, a $46 million (6.8 percent) cut from FY 2018 and $31 million (5.2 percent) more than the request. Unlike FY 2018, which provided $105 million for new capital advances or senior preservation rental assistance contracts (SPRACs), the House bill does not provide any funding for new capital advances or SPRACs.  All funding would go to renewing existing assistance and service coordinators.  The Housing for Persons with Disabilities (Section 811) program is funded at $154 million, a $75.6 million (32.9 percent) cut from FY 2018. The budget would provide $393 million for the Housing Opportunities for Persons with AIDS (HOPWA) program to provide housing and supportive services, $18 million more than FY 2018 and $63 million (19.1 percent) more than the request.

Choice Neighborhoods Initiative

The bill does not agree to eliminate the Choice Neighborhoods Initiative, which is designed to comprehensively revitalize high-poverty public and assisted housing communities, as proposed by the administration’s request, which also called for rescinding $137 million in FY 2017 funding.  Instead, the bill provides $150 million, equal to FY 2018.

Housing Trust and the Capital Magnet Funds

The bill does not include the budget’s proposal to eliminate the Housing Trust and Capital Magnet Funds, and the Fannie Mae and Freddie Mac assessments that fund them. HUD announced May 1 $266.8 million for the 2018 Housing Trust Fund allocations. The U.S. Treasury’s Community Development Financial Institutions (CDFI) Fund has not released a notice of funding authority (NOFA) for the 2018 round of the Capital Magnet Fund, and indeed, the administration has proposed to rescind the $142 million expected to be available. Housing government sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—assessments to fund both programs are not discretionary appropriations, and housing finance reform legislation is expected to address whether Congress wants to continue them. Given the strong support of Senate Democrats for both funds, it is unlikely Congress will eliminate them.  However, the term of the Federal Housing Finance Agency (FHFA) Director, Mel Watt, ends in January, and a new director could choose to suspend the GSE assessments.

Next Steps

The full House is expected to consider the FY 2019 THUD bill before the August recess, but it has not yet scheduled such consideration. Senate Appropriations Committee Chairman Richard Shelby, R-Ala., announced that he expects the Senate Transportation-HUD Subcommittee to markup its FY 2019 bill the week of June 4, followed shortly thereafter by the full Appropriations Committee.  Some senators have suggested meeting in August to consider FY 2019 spending bills and confirm administration appointees/judicial nominations, but Senate Majority Leader Mitch McConnell has not yet confirmed such a plan.

Given the limited legislative calendar and looming midterm election in November, it is highly unlikely Congress will pass a final FY 2019 THUD spending bill—not to mention the other 11 annual spending bills—before the end of the fiscal year on Sept. 30.

Most policy insiders expect Congress to consider a continuing resolution to fund the government in October and early November. Presumably before the end of the 2018 calendar year, Congress would pass a FY 2019 omnibus spending bill. Such a bill could serve as a vehicle for tax corrections and/or tax extender legislation.