Senate Appropriations Committee Approves FY 2024 THUD Bill Providing $70 Billion for HUD, Supplemented by More Than $10 Billion in Emergency Spending

The Senate Appropriations Committee approved July 20 the fiscal year (FY) 2024 Transportation, Housing and Urban Development (THUD) spending bill. According the committee summary, the FY 2024 THUD bill provides $98.9 billion in net appropriations, representing $100 million (0.1%) more than the FY 2024 request and $8.7 billion (9.6%) more than the House FY 2024 THUD bill. As expected, the Senate bill did not offset the funding with the more than $25 billion cut to IRS enforcement funding enacted in the Inflation Reduction Act. Instead, its overall FY 2024 THUD funding allocation was nearly $23 billion more than the House’s FY 2024 THUD funding allocation.

For the U.S. Department of Housing and Urban Development (HUD), the bill provides gross appropriations of $73.3 billion, a $2.76 billion (3.9%) increase from FY 2023 and $1.79 billion (2.5%) more than the House FY 2024 THUD bill, but almost level with the FY 2024 request (just $6 million or 0.01% less).

While HUD gross appropriations were a modest increase, the HUD net appropriations of $70.0 billion were a substantial $9.88 billion (16.4%) increase from FY 2023 and $1.84 billion (2.7%) more than the House FY 2024 bill, but $513 million (0.7%) less than the request. Much of the increase in net appropriations was driven by the dramatically cooled housing mortgage market over the past year, which led to receipts from the Federal Housing Administration and Ginnie Mae, along with various HUD collections, to be projected at $7.6 billion (73.7%) less than FY 2023, as this Notes from Novogradac blog noted for the House FY 2024 THUD bill. Those resources offset the need for new HUD appropriated funds, so Congress had much less funding available to allocate to HUD programs. Furthermore, the COVID-19 pandemic led to sharply increased rents, prompting a need for another $1.8 billion in HUD rental assistance renewal funding.

Like the FY 2023 enacted HUD appropriation (but unlike the House FY 2024 THUD bill or the request), the Senate bill designated a portion of the HUD spending as emergency spending, which enables some spending outside of the FY 2024 nondefense discretionary spending caps set by H.R. 3746, the Fiscal Responsibility Act, legislation that raised the debt limit June 1. The Senate bill designated $10.4 billion of the overall HUD spending as emergency spending, a $8.4 billion (420%) increase from FY 2023, and the largest emergency spending designation in an annual spending bill. While FY 2023 appropriations set the precedent of designating a portion of the spending as emergency to get around the discretionary spending allocation, House Republicans are not likely to agree to the emergency spending designation, leading to challenging negotiations ahead.

Highlights of the HUD program funding levels follow.

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Public and Assisted Rental Housing

Project-Based Rental Assistance

The Senate bill provides $15.8 billion for project-based rental assistance, which is $884 million (5.9%) more than FY 2023, but $113 million (0.7%) less than the request and $29 million (0.2%) less than the House bill. While the proposed increase is less than the request or the House bill, the Senate Appropriations Committee FY 2024 THUD report states that it will be sufficient to renew contracts with a full 12 months of funding.

Tenant-Based Rental Assistance

Tenant-based rental assistance is proposed to be funded at $31.7 billion, a $1.48 billion (4.9%) increase from FY 2023 and $605 million (2.7%) more than the House bill, but a $965 million (3.0%) decrease from the request. Of that amount, $27.8 billion is for Section 8 Housing Choice Voucher contract renewals, which is $1.36 billion (5.2%) more from FY 2023 and $390 million (1.9%) more than the House bill, but $74 million (0.3%) less than the request. The amount should be sufficient to renew funding for all households currently assisted with vouchers.

For the HUD-Veteran Affairs Supportive Housing program, the bill provides $57.5 million ($50 million of which is for renewal funding), which is equal to FY 2023 and $2 million more than the House bill and the request. Of the $57.5 million, $5 million is reserved for Native American veterans, the same amount as in FY 2023, the request and the House bill. The Senate bill also provides $445 million for Tenant Protection Vouchers, $108 million (32%) more than FY 2023 and the House bill, and $60 million (15.6%) more than the request.

Public Housing Fund

The Senate bill provides $8.88 billion for the Public Housing Fund, $361 million (4.2%) more than FY 2023 and $561 million (6.1%) more than the House bill, but $18 million (0.2%) less than the request. It provides $3.2 billion for capital subsidies, which is equal to FY 2023, and $20 million (0.6%) more than the House bill, but $25 million (0.8%) less than the request. The Senate bill also provides $5.53 billion for the operating subsidies, which is $421 million (8.2%) more than FY 2023, $397 million (7.7%) more than the request and $427 million (8.4%) more than the House bill.

Choice Neighborhoods Initiative

The Senate bill does not agree to eliminate funding for the Choice Neighborhoods Initiative, which is designed to comprehensively revitalize high-poverty public and assisted housing communities, as proposed by the House bill. However, the bill provides $185 million for the Choice Neighborhoods Initiative, $200 million (57.1%) less than FY 2023 and $35 million (18.9%) less than the request.

Rental Assistance Demonstration

Like the House bill, the Senate bill does not eliminate the public housing unit cap on the Rental Assistance Demonstration program, nor does it authorize it as a permanent program, but it extends program authorization to 2030. The FY 2018 omnibus bill increased authorization from 225,000 public housing units to 455,000 public housing units. The Senate bill, the House bill, does not provide incremental funding to facilitate such conversions, as proposed by the request ($110 million).

Community Planning and Development Programs

Like the FY 2022, FY 2023 and House FY 2024 THUD bills, the Senate bill includes–under the Community Development Fund account from which Community Development Block Grants, or CDBG formula grants, are funded–more than $1.06 billion of economic development initiatives, otherwise known as housing and community development “earmarks,” a decrease of $1.92 billion (64.4%) from FY 2023 and $1.16 billion (52.3%) from the House bill. While earmarks were controversial in the past, congressional leadership brought them back in FY 2022 with reforms to help facilitate the passage of spending bills, and the House Republican leadership decided to keep them at the beginning of the 118th Congress earlier this year, although capped at lower overall amount. When members of Congress can cite funding for specific projects in their district they secured, it makes it easier for them to vote for the bill. For the overall Community Development Fund, the bill provides $4.49 billion, a decrease of $1.91 billion (29.8%) from FY 2023 and $1.06 billion (19.1%) from the House bill, but $1.08 billion (31.5%) more than the request. However, as mentioned above, $1.06 billion of this funding is specified via earmarks, and the amount available for CDBG formula funding is $3.3 billion, the same as FY 2022-23, the request and the House bill. The Senate bill, however, provides $100 million to assist state and local governments to reduce barriers to affordable housing development, a $15 million (17.1%) increase from FY 2023 and the request.  The House bill provided no funding for this program.

The Senate bill provides $1.5 billion for the HOME Investment Partnerships Program (HOME), equal to FY 2023, and $1 billion (200%) more than the House bill, but $350 million (16.7%) less than the request. While HOME avoided the substantial cut in the House bill, it remains much more vulnerable than rental assistance funding because its funding isn’t directly tied to assistance for specific families but represents funding for future housing and community development activities.

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are proposed to be funded at $3.91 billion, $275 million (7.6%) more than FY 2023, $159 million (4.2%) more than the request, and $179 million (4.8%) more than the House bill. This amount includes a $3.4 billion set-aside for the continuum of care and rural housing stability assistance programs, and $290 million for Emergency Solutions Grants. It also provides $107 million to continue implementation of comprehensive approaches to preventing and ending youth homelessness.

The bill would provide $1.08 billion for the Housing for the Elderly (Section 202) program, equal to FY 2023, but $52 million (5.1%) more than the request and $162 million (17.7%) more than the House bill. The bill also provides $152 million for new capital advances and $6 million to preserve properties with senior preservation rental assistance contracts originally financed with a capital advance grant. 

The Housing for Persons with Disabilities (Section 811) program is proposed to be funded at $360 million, equal to FY 2023, but $4 million (1.1%) more than the request and $152 million (73.1%) more than the House bill.

The bill would provide $505 million for the Housing Opportunities for Persons with AIDS program to provide housing and supportive services, equal to the request and the House bill, but $6 million (1.2%) more than FY 2023.

Housing and Community Development Mandatory Spending Proposals

As expected, and like the House bill, the Senate bill does not include the $60 billion proposed in mandatory spending in the request for one-time housing and community development investments.

Timeline and Factors that May Affect Spending Negotiations

On July 27, the Senate Appropriations Committee is scheduled to consider the final four FY 2024 spending bills–Defense; Interior and Environment; Labor, Health and Human Services; and Homeland Security. Assuming those bills are reported to the full Senate, Senate leadership has not suggested when any of the 12 annual spending bills may be considered by the full Senate, but it is unlikely any of them may get Senate floor time before its August recess, which is currently scheduled to begin July 28, but could be delayed. The full House is scheduled July 28 to consider its FY 2024 Military Construction-Veterans Affairs and Agriculture spending bills, but it is not likely other annual spending bills will get a floor vote the House is scheduled to begin its August recess, also on July 28.

When Congress is scheduled to return after Labor Day (Senate is expected to return Sept. 5 and the House Sept. 12), it is possible the House and Senate will try to advance their respective 12 annual spending bills prior to the end of the fiscal year on Sept. 30, but a vote on a final FY 2024 THUD spending bill–not to mention final versions of any of the other 11 annual spending bills–is extremely unlikely.

Not only must the nearly $120 billion difference between House and Senate nondefense spending allocations be reconciliated, but House fiscal conservatives are pressing leadership to not to count rescissions toward meeting that difference. According to Roll Call, the House Appropriations Committee has approved $115 billion in various rescissions to offset spending in the bills. As mentioned above, the House FY 2024 THUD bill reported by the Committee has offset spending by cutting more than $25 billion from IRS enforcement funding. If those $115 billion in rescissions don’t count, reconciling the gap between the House and Senate nondefense spending becomes an even greater challenge. Furthermore, the Senate Appropriations Committee has approved designating some of the spending in its annual spending bills as emergency, essentially allowing spending higher than the caps. The House is not likely to accept designating any spending in the annual spending bills as emergency, further exacerbating the divide.

Given that a continuing resolution to keep the federal government operating after a fiscal year ends is usually predicated on maintaining funding at the previous fiscal year levels, which is higher than what House Republicans want, many Congressional insiders predict there will be a federal government shutdown after Sept. 30. It is unclear how long such a shutdown will last. It could be about a week or much longer depending on how entrenched the positions of the House and Senate are. The longest federal government shutdown lasted from December 22, 2018, to January 25, 2019 (35 days).

Whenever the shutdown ends, Congress will likely pass a short-term continuing resolution at some funding level to provide time to rewrite the annual spending bills at whatever spending levels the House and Senate leadership can negotiate. It should be noted that the debt limit legislation enacted in June provided an incentive for Congress to finalize FY 2024 spending before Jan. 1, 2025. If Congress does not, any continuing resolution in effect on or after that date must reduce both defense and nondefense spending below FY 2023 levels, which according to the Congressional Budget Office, would reduce defense spending by $34.2 billion and nondefense spending by $79.3 billion (for a total of $113.5 billion) as compared to FY 2023 annualized amounts.

Before the end of the 2023 calendar year, Congress may consider several FY 2024 “minibus” spending bills containing clusters of the 12 annual spending bills. A single “omnibus” spending bill containing all 12 annual spending bills appears unlikely, given the House leadership’s desire to avoid such a bill. One of the “minibus” bills could also serve as a vehicle for year-end tax legislation, including proposals to restore the 12.5% increase in 9% low income housing tax credit (LIHTC) allocations originally enacted in 2018 and further increase 9% LIHTC allocations, lower the private activity bond financing threshold, create the neighborhood homes tax credit, make new markets tax credit permanent and possibly others. Stay tuned.