The House Appropriations Subcommittee on Transportation, Housing and Urban Development (T-HUD) held an FY12 budget hearing on March 10. HUD Secretary Shaun Donovan was the sole witness. As in two prior hearings held the week of February 28, Secretary Donovan described HUD’s efforts to ensure the most vulnerable households will remain housed in FY12 (see Memo, 3/4). HUD’s priorities for FY12 are supporting the housing market by bringing back investments of private capital, and protecting and improving programs that serve current residents of public and assisted housing.
Eighty percent of HUD’s FY12 budget proposal will ensure that currently subsidized tenants remain in their housing, said the Secretary. Strengthening these programs, he said, left HUD with difficult choices about cutting other programs. The Community Development Fund and capital programs would be cut, choices that HUD would not have made in the absence of current pressure to reduce overall non-defense domestic discretionary spending. HUD also did not introduce any new programs, recognizing the need to scale back spending.
Subcommittee Chair Tom Latham (R-IA) stated his assumption that the Administration will only be able to allocate funding at FY08 levels in FY12 and asked the Secretary what changes HUD would make to accommodate such budget levels. The Secretary pointed to the portions of the Section Eight Voucher Reform Act (SEVRA) included in the FY12 budget proposal.
Enacting portions of SEVRA would save $150 million in FY12 and $1 billion over five years, said the Secretary. Other cost savings would come from funding the rural housing stability initiative as part of HEARTH. HUD’s proposal to draw on the reserves of public housing agencies (PHAs) would also utilize fewer new dollars in FY12. Exercising flexibility to recapture PHA reserves for tenant based rental assistance accounts would create additional cost savings for FY12, the Secretary said.
In response to Chair Latham’s assumption that HUD will be funded at FY08 levels, Subcommittee Ranking Democrat Representative John Olver (D-MA) said that this funding level would put many people out of their homes. Cuts to the tenant based and project-based rental assistance accounts in particular would cause damage to the housing stability of many households. Mr. Olver noted that, while the recession technically ended a year and a half ago, hundreds of thousands of families still struggle; and that HUD’s programs address these households’ housing needs, which stem from unemployment, while also creating jobs. Secretary Donovan said that if H.R. 1, the House FY11 funding proposal, was enacted, 120,000 jobs would be lost. A $1 billion cut to the public housing capital fund would cause 20,000 people to lose jobs, the Secretary said.
Representative David Price (D-NC) responded to subcommittee members’ assertion that HUD funding should be cut further. Mr. Price said that Congress’ actions fly in the face of the tax proposal from the co-chairs of the National Commission on Fiscal Responsibility and Reform. The proposal emphasized that the nation’s deficit reduction plan could not rely on reducing spending in a portion of the budget that represents only 12% of federal spending, and that significant cuts in the short run could stall the country’s long term economic recovery.
Both Mr. Olver and Mr. Latham expressed concerns that HUD’s budget relies on receipts from FHA and Ginnie Mae. The Secretary reported that HUD’s projections for FY11 receipts, which the Congressional Budget Office (CBO) projected at a lower amount, were in fact exceeding HUD’s own projections. Instead of $6 billion in receipts, HUD now anticipates $10 billion for FY11. HUD’s FY12 budget request relies upon $6 billion in receipts from four sources.
Several members commented on the omission of the Veterans Affairs Supported Housing (VASH) program from the President’s FY11 funding request. Secretary Donovan explained the administrative difficulties that HUD and Veterans Affairs (VA) were having at the time of the FY11 request and said that additional vouchers could now be utilized for FY11. The President’s FY12 request includes $75 million for an additional 10,000 vouchers. Mr. Latham said that the Secretary could expect total bipartisan cooperation on VASH from the subcommittee.
To move forward with the FY12 budget and appropriations process, the House and Senate must establish a budget resolution that provides the overall framework for discretionary spending. Then, the appropriations committees can then move forward with the work of their 12 subcommittees. House Budget Committee Chair Paul Ryan (R-WI) is expected to introduce an FY12 budget resolution in April.