While agreement has not yet been reached on FY11 funding, discussions of next year’s budget are under way with hearings on the President’s FY12 HUD budget request in both the House and Senate. HUD Secretary Shaun Donovan was the sole witness at each hearing.
The House Committee on Financial Services’ FY12 budget hearing was one in a series of hearings that House authorizing committees are holding on the budget areas pertaining to each committee’s jurisdiction. Committee Chair Spencer Bachus (R-AL) opened the hearing by sharing support for HUD’s rental housing initiatives. He said many households cannot afford homeownership and that, for them, rental housing is a good option. Chair Bachus cited the housing hardships that many households face, saying that 25% of households spend more than half their income on rent. For this reason, Chair Bachus expressed his support for prioritizing multifamily housing in HUD’s budget.
Representative Judy Biggert (R-IL), Chair of the Subcommittee on Insurance, Housing and Community Opportunity, offered a less positive assessment of the President’s HUD budget request, saying that it increases spending and does not leverage capital for affordable housing programs. Chair Biggert expressed concern that the cost of the Tenant Based Rental Assistance program will continue to grow and called on HUD to empower tenants sufficiently so that they will not need rental assistance.
Secretary Donovan testified on the importance of HUD programs in supporting the recovery of the housing market and in serving low income households. He cited HUD’s recent report to Congress on that demonstrated a 20% increase in households that experience worst case housing needs, those earning below 50% of area median income and paying more than 50% of their income towards housing or living in substandard housing.
The Secretary said that the FY12 budget would keep 4.5 million households safely housed through HUD’s core rental assistance programs, and serve more than 86,000 additional households. Including portions of the Section Eight Voucher Reform Act (SEVRA) in the bill enables cost savings measures that will allow HUD to serve additional households through the Tenant Based Rental Assistance program, said Secretary Donovan. He also described the difficult choices HUD made to cut between 5 and10% of its capital programs, including the Section 202 housing for the elderly and Section 811 housing for persons with disabilities programs.
Several Members spoke against the House’s proposed cuts for FY11 that would harm poor households in relation to the FY12 budget request (see related article elsewhere in Memo). Representative Joe Baca (D-CA) criticized the spending reduction approach used by House Republicans, saying that his colleagues are “blindly cutting critical programs without consideration of who they help.”
Representative David Scott (D-CA) said that it is “not fair to balance the budget disproportionately on the backs of the people who can least afford it.” He called on HUD to fight and to bring to the House the consequences of cuts to HUD programs. Representative Barney Frank (D-MA) said that he understands his Republican colleagues’ concerns that the government is spending too much to support cities, but that those cities are Baghdad, Kandahar, and other non-U.S. cities where the U.S. has a significant military presence and is spending amounts far beyond the amount invested in the HUD budget.
Many Republican Representatives questioned the Secretary on the effectiveness of the Home Affordable Modification Program (HAMP) and the stability of the Federal Housing Administration (FHA). Representative Jeb Hensarling (R-TX) said that Congress should stop spending money the government does not have on HUD programs.
The Senate Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies (T-HUD) also held an FY12 HUD budget request hearing with Secretary Donovan testifying. Subcommittee Chair Patty Murray (D-WA) praised the Secretary’s decisions to fund Tenant Based Rental Assistance, Project Based Rental Assistance, Public Housing and Homeless Assistance Grants, as these programs serve the most vulnerable households. She pointed out, however, that because these programs utilize 75% of HUD’s budget, cuts to HUD’s overall budget would be felt by other programs, including the Community Development Block Grant.
Senator Susan Collins (R-ME), in her first Subcommittee hearing as Ranking Member, said she looked forward to accomplishing great things and advancing investment in the nation’s housing needs. The Senator said she shares HUD’s commitment to combating homelessness, particularly for veterans. She also cited the effectiveness of Housing First models used in Maine and the cost savings that numerous public services realize from providing housing to persons experiencing homelessness. These cost savings should be attributed to housing programs, said the Senator.
As in his House testimony, Secretary Donovan described how HUD’s budget proposal would protect the most vulnerable households served by Tenant Based Rental Assistance, Project Based Rental Assistance, Public Housing and Homeless Assistance Grants. The Secretary highlighted other areas of important investment for FY12 including $800 million for rural housing need, enacting portions of SEVRA, and preventing further loss of public housing. He emphasized that funding HUD’s programs is key in reaching the President’s education goals, as these programs serve poor communities.
Senators commented on the recent report by the Government Accountability Office (GAO) that characterizes homelessness services and economic development programs provided by numerous federal agencies as duplicative (see article elsewhere in Memo). The Secretary described HUD’s recent efforts to increase coordination with other federal departments including Veterans Affairs (VA) on the Veterans Affairs Supported Housing (HUD-VASH) program.
Senators also questioned the Secretary about HUD’s lack of oversight of the Philadelphia Housing Authority (PHA), which has experienced significant mismanagement. Secretary Donovan detailed HUD’s intervention at PHA and described new financial management measures that HUD is taking to detect any future mismanagement of public housing authorities.
Congress will continue its work on FY12 HUD appropriations the week of March 7 when the House Committee on Appropriations will hold a hearing on the President’s FY12 budget request. The hearing is scheduled for March 10 at 10am in Room 2358 of the Rayburn House office building. Secretary Donovan will again be the sole witness.