What the $15 Billion Rescission Proposal Could Mean for Housing and Community Development

Published by Peter Lawrence on Tuesday, May 8, 2018 - 12:00am

Released today, the White House’s proposed rescissions package calls for $15.4 billion in appropriated funds to be voided. Much of the proposed rescinded funding was approved in prior year spending bills, but some of the appropriations were approved in March as part of the fiscal year 2018 omnibus spending bill. In all, the proposal calls for 38 rescissions of budget authority, affecting numerous programs and agencies.

Prior to the Congressional Budget and Impoundment Control Act (ICA) of 1974, presidents were allowed to impound or prevent funds already appropriated to an agency from being released or spent. Since passage of the ICA, the president must now provide a proposal to Congress to permanently rescind previous appropriated funds. Congress also has the ability to initiate rescissions, and often does so in appropriations bills to offset their cost. This recent release represents the first time since fiscal year 2000 that a presidential rescission package has been proposed outside of annual budget requests.

Housing and Community Development Cuts
Affected programs of note to housing and community development stakeholders and advocates include:

U.S. Department of Agriculture, Rural Housing Service
The proposal seeks to rescind $40 million of the prior years’ budget authority for the Section 521 Rural Rental Assistance program. The administration claims the rescission should not affect the rental assistance of currently assisted residents.

For the Rural Community Facilities program $2 million of prior years’ budget authority would be rescinded.

U.S. Department of Housing & Urban Development
A total rescission of $41,068,630 of prior years’ budget authority for the Public Housing Capital Fund is proposed. This raises concerns that the RAD program would be affected - conversions using that budget authority that are in the pipeline, but not yet closed, could be in jeopardy.  

U.S. Department of the Treasury
The proposal would rescind the $151 million that the Capital Magnet Fund received for its 2018 round from 2017 Fannie Mae and Freddie Mac contributions. Last week, HUD released the 2018 Housing Trust Fund allocations to the states.

Treasury’s Community Development Financial Institutions Fund (CDFI Fund) Bank Enterprise Award program would see $23 million of its prior years’ budget authority rescinded.

Next Steps
By law, Congress has 45 calendar days to act on the set of proposals.  However, if the relevant committees have not acted within 25 days, a member of either the House or Senate that supports the rescissions measure may seek to discharge the package from committee with the support of at least one-fifth of their chamber.  During the 45 calendar days, the funding in programs with proposed rescissions is impounded, and federal agencies cannot commit, obligate or spend it.

It appears there is enough support for the package to pass in the House, though its fate in the Senate is less clear. Only 50 votes plus the vice president would be required for Senate passage.