HUD Budget Contains Major Funding Shortfalls
Congress Needs to Add $6.5 Billion to Administration’s Request to Avoid Cuts In Assistance for Low-Income Families
Last year, Congress rejected deep cuts the Administration proposed in affordable housing and community development programs and funded the Department of Housing and Urban Development at $2.1 billion above the Administration’s budget request for 2008. For 2009, Congress will have to provide a substantially larger increase — totaling $6.5 billion above the Administration’s request — to avoid cuts in core programs that help millions of low-income families secure decent housing at affordable rents. There are two primary reasons why.
First, Congress can no longer rely on large recaptures of unspent funds from the “Section 8” programs to finance HUD programs. For most of the past decade, Congress and the Administration have used roughly $2 billion per year in unspent balances in Section 8 program accounts to help finance the current costs of HUD programs, thereby reducing the amount of new funding required. Such large recaptures will not be available in 2009 (and probably not in subsequent years, either). As a result, Congress will have to provide an increase of $2 billion in budget authority in 2009 simply to maintain funding for HUD programs at the nominal (pre-inflation) 2008 levels.
Second, the President’s budget fails to provide funding increases in HUD’s three main rental assistance programs needed to prevent cuts in assistance to low-income families now being served. More specifically:
- The renewal of Housing Choice vouchers for 2 million low-income families will cost $15.5 billion in 2009, according to Center estimates, which is $868 million above the 2008 funding level and $1.3 billion above the President’s 2009 request. Under the President’s budget, at least 100,000 housing vouchers being used by low-income families this year would not be renewed. (For data showing the state-by-state impact of these cuts, see the Appendix.)
- The Public Housing Operating Fund will require $5.120 billion in 2009, $920 million above the 2008 level and $820 million above the President's request, to provide state and local housing agencies with the operating subsidies they are due under HUD's own formula. Deep underfunding of operating subsidies in recent years has resulted in the deterioration — and ultimately, the sale or demolition — of many public housing units. The loss of units can be expected to accelerate in 2009 unless progress is made in restoring funding to a sustainable level. (The Appendix includes a state-by-state breakdown of shortfalls in funding for public housing.)
- The President’s budget fails to address satisfactorily a one-time, multi-billion-dollar shortfall in the project-based rental assistance program, which risks the loss of thousands of affordable apartments. Last year the Administration belatedly revealed a substantial shortfall in funding for Section 8 project-based rental assistance. (This program provides affordable housing to nearly 1.3 million low-income households, most of which contain someone who is elderly or has a disability.) Congress narrowed but did not eliminate the gap in its 2008 appropriations legislation. To close the gap and fully fund the program in 2009 — and thereby restore confidence in the program’s financial reliability among the property owners with whom HUD partners — Congress needs to provide an estimated $3.4 billion more for the renewal of Section 8 contracts than it provided in 2008 (or $2.4 billion more than the President requested for 2009).
