House Holds FY14 Appropriations Hearings

The House THUD Subcommittee held a hearing on the President’s FY14 budget request to Congress on April 17. Subcommittee Chair Tom Latham (R-IA) welcomed HUD Secretary Shaun Donovan, the sole witness, to the hearing and thanked him for his for continued service, which the Chair said “is very much appreciated.”In his opening statement, Chair Latham commented that it is challenging to compare HUD’s FY14 request to spending in prior fiscal years because of the HUD funding anomalies included in the FY13 Continuing Resolution and the Federal Housing Administration (FHA) receipts in HUD’s budget request. HUD’s gross spending, said the Chairman, is higher in this request than the FY13 enacted levels and these increases are not fully explained by HUD. The Chair specifically pointed to the additional funding for the Neighborhood Stabilization Initiative and the quadrupled request for the Choice Neighborhoods Initiative. Chair Latham contrasted the President’s request to increase funding in these accounts while cutting the Community Development Block Grant program and the HOME Investment Partnerships program. The Chair also expressed concern about the number of authorizing provisions included in the HUD budget request and suggested that these are “no substitute for genuine leadership on reform” in the form of authorizing legislation. Ranking Member Ed Pastor (D-AZ) thanked the Secretary for his leadership in helping communities recover from Hurricane Sandy. Mr. Pastor expressed concern that the FY13 funding level is insufficient to “keep every person fully housed… this year.” The Ranking Member said he was pleased that the President’s request included an increase for Section 8 funding and a modest increase for public housing; however, he was concerned that the growth of these programs comes at the expense of the rest of HUD’s programs. Representative Nita Lowey (D-NY), Ranking Member of the Committee on Appropriations, said that she is concerned about the long-term health of HUD. Ms. Lowey noted that HUD’s programs serve several million low income seniors and people with disabilities and that these housing programs are not protected from sequestration. Ms. Lowey said that 125,000 families will lose assistance because of sequestration. Secretary Donovan provided the subcommittee with an overview of HUD’s contribution to the President’s budget: growing the economy from the middle class out, assisting in the recovery of the housing market, and creating ladders of opportunity. The FY14 HUD budget would create or retain 620,000 jobs, said the Secretary. HUD would also dedicated 84% of the budget to the rental programs and homeless assistance, serving people with an average annual income of $12,000. The Secretary said that offsetting receipts from FHA allow HUD to request increased funding for critical programs. The receipts also allow HUD to participate in the Promise Zones initiative, contributing funds through the Neighborhood Stabilization Initiative to the three successful rounds of Neighborhood Stabilization Program funding to address foreclosures. The Secretary also noted that HUD’s budget will fund the Office of Economic Resilience and increase efficiency of HUD’s rental programs through reforms that would save $2.8 billion over the coming years. These changes to HUD’s structure and practice will “better serve residents and save taxpayers money,” said the Secretary. Secretary Donovan also touted the department’s successful progress on ending homelessness through, in large part, Veterans Affairs Supportive Housing (VASH) vouchers. These successes, said the Secretary are in danger of being reversed, however, unless Congress decides to reverse the harmful cuts of sequestration. Ranking Member Pastor asked the Secretary about HUD’s decision to request funding for CDBG that is the lowest funding level since 1976. In his district, Mr. Pastor said, he has seen “families getting keys to homes that had been rehabbed” through CDBG funds. Secretary Donovan mirrored Mr. Pastor’s support for the programs, saying that 100,000 properties have been renovated or rebuilt through CDBG and that the program has created 85,000 jobs. This has contributed to vacancy rates declining in 75% of neighborhoods where these dollars are invested. However, the Secretary said that “if we’re going to prioritize keeping people in their homes, this puts pressure on other parts of the budget.” Secretary Donovan said that he believes that funding for the CDBG and HOME Investment Partnerships programs should be increased from current levels. Representatives Pastor, Tom Cole (R-OK), and Latham raised concerns about Indian housing loans and credit commitments. The Secretary said that he shared the concern over credit commitments for both the Indian housing and multifamily programs in HUD’s portfolio. In the case of multifamily properties, HUD makes money by extending the credit commitment, said the Secretary. Leaving this unchanged would mean a $200 million loss to the taxpayers and a loss of 22,000 jobs. Representative Michael Quigley (D-IL) asked the Secretary about plans to consolidate the Housing Opportunities for Persons with AIDS (HOPWA) program with HUD’s homeless systems. Mr. Quigley expressed concerns that the agency will lose focus on HOPWA issues if the programs are merged. Secretary Donovan assured Mr. Quigley that HUD does not intend to merge the HOPWA program funds with Homeless Assistance Grants but instead is considering merging the staffing and oversight functions within HUD. The Secretary described this step as one of many HUD must take due to the fiscal challenges the department faces under sequestration. We have to “look for efficiencies where we can,” said the Secretary. The Secretary explained that there are also programmatic reasons to merge these functions, saying that “more and more people struggling with AIDS are already or are imminently” facing homelessness. Representative Jamie Herrera-Beutler (R-WA) questioned the Secretary about the $10.2 billion budget request for the Project-Based Rental Assistance (PBRA) program and whether this would fully fund contracts for 12 months. Secretary Donovan said that the request “is sufficient to fully fund the project based contracts,” assuming that sequestration is reversed. If sequestration is not reversed, HUD will be short on funding for contracts in FY13 and will be forced to short-fund contracts in FY14. The account will be $1.2 billion short if sequestration is not reversed. Ms. Herrera-Beutler asked the Secretary for assurances that HUD will fund PBRA contracts, regardless of the result of sequestration debates. The Secretary said that “if Congress doesn’t appropriate the funding, we will short-fund [the contracts].” He said that Congress can remedy this by providing an advanced appropriation later in the fiscal year. If Congress does not take these actions, owners will start to opt out of the program and HUD will lose affordable housing. The Secretary also said that delaying funding makes it “more expensive to run projects…. Reserves and rates will go up and this will actually raise costs for the programs.”Chair Latham questioned Secretary Donovan about why legislation reforming the Section 8 program has not moved forward. The Secretary noted barriers in past legislative sessions, including “poison pills like immigration, issues like expansion of the Moving to Work program.” These reforms, if authorized, could result in $383 million in saving next year alone, said the Secretary. The Chair asked what HUD could accomplish without these statutory changes. The Secretary said HUD has already taken steps to streamline administration, change the cost increase factor for programs, take back reserve funding to reinvest in other areas of the budget, and reduce utility costs. Mr. Pastor questioned the Secretary about leasing of Section 8 vouchers and whether FY14 funding will be affected by the FY13 baseline. The Secretary said that the Administration estimates that 125,000 families who would have received vouchers by mid-year instead will remain on waiting lists for these vouchers. He said that HUD has identified 750 public housing agencies (PHAs) that will not be able to deal with sequestration by making other program cuts, even if they stop leasing now. These PHAs will have to take back vouchers from households that are currently looking for units and evict households currently housed. Representative Charlie Dent (R-PA) requested that the Secretary provide PHAs with the flexibility to change rent payment standards without a lengthy waiting period as a way to mitigate sequestration and serve additional families. Secretary Donovan said that changing payment standards is a practice HUD will use when it is the “right alternative, but we have to make sure it isn’t going to hurt lots of families to help others.” The Secretary pointed to other proposals in the budget meant to allow PHAs flexibility to help mitigate impacts from cuts that would be preferential to changing payment standards, which could harm residents. USDA Secretary Tom Vilsack also testified before the House Appropriations subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies on April 16. The Secretary twice responded to questions from subcommittee members about the potential impacts of sequestration. If sequestration is not reversed, said Secretary Vilsack, 15,000 households will lose their rental assistance as early as August. In addition to this loss of subsidy and housing, the Secretary said that many of the properties that currently have families with rental assistance as tenants will face foreclosures.