Senate Appropriations Committee Rejects Trump’s Drastic FY 2019 Request, Mostly Provides HUD Slight Increases

Published by Peter Lawrence on Monday, June 11, 2018 - 12:00am

The Senate Appropriations Transportation-HUD (THUD) Subcommittee approved its $71.4 billion fiscal year (FY) 2018 spending bill June 7. According to the committee release, the full bill’s funding level represents $1.1 billion (1.5 percent) more than FY 2018 and $23.4 billion (nearly 50 percent) more than the Trump administration’s FY 2019 request . For the U.S. Department of Housing and Urban Development (HUD), the bill provides gross appropriations of slightly more than $54 billion, a $1.3 billion (1.6 percent) increase from FY 2018, but a $12.8 billion (31.1 percent) more than the FY 2019 request and $860 million (1.6 percent) more than the FY 2019 House THUD bill. In general, the Senate bill’s funding level sustains the major increases enacted in FY 2018, and provides a few with additional increases.

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 U.S. Department of Housing and Urban Development Budget June 2018
Click to Enlarge

 

Public and Assisted Rental Housing

Project-Based Rental Assistance (PBRA)

The Senate bill provides $11.7 billion for Project-Based Rental Assistance, which is $232 million (2 percent) more than FY 2018, $600 million (5.4 percent) more than the FY 2019 request and the same as the House bill. 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 $22.8 billion, a $766 million (3.5 percent) increase from FY 2018, a $2.2 billion (10.9 percent) increase from the FY 2019 request and.$304 million (1.4 percent) more than the House bill. Of that amount, $20.5 billion is for Section 8 Housing Choice Voucher contract renewals, which is $920 million (4.7 percent) more from FY 2018, $1.77 billion (9.4 percent) more than the request and $413 million (2.1 percent) more than the House bill.

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 House bill, and $5 million of such funding is reserved for Native American veterans, the same amount as in FY 2018 and the House bill. The Senate bill also provides $85 million for Tenant Protection Vouchers, equal to FY 2018 and the House bill, but $55 million (39.3 percent) less than the request.

Public Housing Capital and Operating Funds

The Senate bill rejects the fairly dramatic cuts to public housing proposed in the request, and provides slightly more than FY 2018. It provides $2.78 billion for the Public Housing Capital Fund, which is $25 million (0.9 percent) more than FY 2018 and the House bill, but importantly ignores the request for no funding, which would have imperiled many Rental Assistance Demonstration conversions. The Senate bill also provides $4.76 billion for the Public Housing Operating Fund, which is $206 million (4.5 percent) more than FY 2018 and the House bill, and $1.48 billion (45 percent) more than the request.

Rental Assistance Demonstration

Like the House bill, the Senate 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 Senate bill does not provide incremental funding to facilitate such conversions, as proposed by the request ($100 million) or the Senate’s  FY 2018 HUD spending bill ($4 million).

Community Planning and Development (CPD) Programs

The Senate bill does not eliminate Community Development Block Grant (CDBG) formula grants and the HOME Investment Partnerships Program (HOME), as proposed by the request. Furthermore, it provides $3.3 billion for CDBG (which is $65 million or 2 percent more than FY 2018 and equal to the House bill) and $1.362 billion for HOME (which is equal to FY 2018 and $162 million or 13.5 percent more than the House bill).

Homeless and Supportive Housing Programs

McKinney-Vento Homeless Assistance Grants are proposed to be funded at $2.61 billion, $99 million (3.9 percent) more than FY 2018, $229 million (9.6 percent) more than the request, and $66 million (2.6 percent) more than the House bill. This amount includes a $2.205 billion set-aside for the continuum of care and rural housing stability assistance programs, and $270 million for Emergency Solutions Grants.  It also provides $80 million to continue implementation of comprehensive approaches to preventing and ending youth homelessness.

The bill provides $678 million for the Housing for the Elderly (Section 202) program, equal to FY 2018 and the House bill, but $77 million (12.8 percent) more than the request. The bill also provides $51 million for new capital advances or senior preservation rental assistance contracts (SPRACs), which is $54 million less than FY 2018, but still only the second time Congress has provided such funding since 2011.  The Housing for Persons with Disabilities (Section 811) program is funded at $154 million, equal to the House bill and $14 million (10 percent) more than the request, but a $75.6 million (32.9 percent) cut from FY 2018. The budget would provide $375 million for the Housing Opportunities for Persons with AIDS (HOPWA) program to provide housing and supportive services, equal to FY 2018 $45 million (13.6 percent) more than the request, but $18 million (4.6 percent) less than the House bill.

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 $100 million, $50 million less than FY 2018 and the House bill.

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

Senate leadership has not suggested when any of the 12 FY 2019 spending bills may be considered by the full Senate, but given that Senate Majority Leader Mitch McConnell has shortened the August recess to just one week (August 6-10), it’s possible some of those spending bills may get floor time.  The full House is expected to consider its FY 2019 THUD bill before the August recess, but it has not yet scheduled such consideration.

However, given the looming midterm election in November, it still will be difficult for Congress to 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.