Three Takeaways from the President’s 2016 HUD Budget

Posted by Douglas Rice on February 11, 2015

Here are three key facts to understand the President’s 2016 budget request for the Department of Housing and Urban Development (HUD) in its broader budget, policy, and political contexts:

1. The proposed funding increase is much more modest than it may initially appear.

The President’s $41.0 billion HUD request for 2016 is $6.2 billion, or 18 percent, higher than 2015 funding. But $2.3 billion of that $6.2 billion reflects the expected decline in income from HUD’s mortgage insurance programs as the mortgage credit market continues to recover and HUD reduces its fees for insuring Federal Housing Administration mortgages. Income from the mortgage insurance programs helps fund other HUD programs.

Apart from those changes in net receipts, the budget would raise HUD’s 2016 program and operations budget by $4 billion or 8.7 percent, relative to 2015. And even with this increase ...

... total funding for HUD’s core housing assistance and community development programs in 2016 would remain 6.1 percent below the 2010 level, adjusted for inflation (see below graph).

 

 

 

 

 

 

 

 

 

 

 

 

2. The lion’s share of added resources would go to sustaining rental assistance for the 4.6 million low-income families that now receive it, fully restoring Housing Choice Vouchers lost due to sequestration, and doing more to reduce homelessness.

The cost of sustaining assistance for families assisted by the two Section 8 rental assistance programs—Housing Choice Vouchers and Project-based Rental Assistance (PBRA)—will rise more in 2016 than in recent years. Congress provided much less funding for PBRA for 2015 than the program’s actual 12-month cost because it relied in part on substantial one-time savings from converting funding renewals from a fiscal year to a calendar year. In 2016, funding must revert to the full annual cost of contract renewals, which will require an additional $1 billion. Failure to provide this increase would place at risk rental assistance for thousands of low-income households, about two-thirds of which include seniors or people with disabilities.

In addition, after sequestration forced state and local housing agencies to reduce by some 100,000 the number of families using Housing Choice Vouchers, Congress provided sufficient funds in 2014 and 2015 to enable agencies to restore roughly a third of those vouchers. In anticipation of this, the President has requested an $850 million increase in funding to renew assistance for 2.2 million families using vouchers, which should be sufficient to cover inflation in rent and utility costs as well as the costs of vouchers that agencies restore this year (and the additional vouchers for homeless veterans and families shifted from other rental assistance programs—so-called “tenant protection” vouchers—that Congress funded in 2015).

The President’s budget also provides $512 million to restore an additional 67,000 housing vouchers, which—together with the requested increase in renewal funding—would fully reverse the sequestration-related cuts in 2016. Building on a strategy that has sharply reduced homelessness among veterans, the budget targets 30,000 of the restored vouchers to families, veterans, and tribal families who are homeless, victims of domestic and dating violence, and families with children who are engaged with child welfare agencies. This proposal directs a modest pool of resources to where they are most needed. It also encourages housing agencies to strengthen their productive partnerships with local Continuums of Care and social service agencies, which could lead to more effective use of other resources.

Finally, the President requests a $345 million increase for McKinney homeless assistance grants. Most of these funds would support the creation of 25,500 new units of permanent supportive housing for chronically homeless people. Overall, the voucher and homelessness assistance proposals (in addition to smaller requests for other programs) would support rental assistance for an additional 100,000 families in 2016, with most of the assistance targeted to address homelessness.

3. The President’s budget isn’t necessarily “dead on arrival” in the Republican Congress.

The President’s budget assumes that Congress will eliminate the sequestration-level spending caps enacted under the Budget Control Act for the 2016 budget cycle, freeing up some $37 billion in additional spending for non-defense discretionary programs (including HUD). Clearly, the House and Senate will reject this plan in drafting a budget resolution this spring. 

But while Republicans may initially reject the President’s overall spending proposal, the appropriations committees will certainly consider the individual spending requests spelled out in his budget. In addition, Congress and the President will likely engage in budget negotiations at some point this year, in which case the President is expected to argue forcefully that raising the sequestration-level spending cap in 2016 should be part of any agreement.

(Photo credit: Flickr user 401(K)2012, CC BY-SA 2.0)

About the author more »

Douglas Rice is senior policy analyst at the Center on Budget and Policy Priorities.

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