The House Financial Services Subcommittee on Insurance, Housing, and Community Opportunity held a hearing, “Oversight of the Department of HUD,” on February 28, with five HUD assistant secretaries testifying.
Representative Shelley Capito (R-WV), who chaired the hearing, said in her opening remarks that she believes many housing programs can benefit from reforms that generate cost savings. She also expressed concern that Tenant Based Rental Assistance (TBRA) (housing vouchers) will continue to grow as a percentage of HUD’s budget in coming fiscal years.
Ranking Member Luis Gutierrez (D-IL) took issues with some elements of HUD’s budget request, including HUD’s proposal to under-fund the Project Based Rental Assistance account and offer property owners short-term contracts. The proposal that concerns him most, however, is the one to increase to minimum rents of the poorest households by $25 or $50 per month or more. Mr. Gutierrez said that this amount may not seem burdensome to members of Congress who earn $174,000 per year, or $725 per day, but that the households served by HUD programs that would be subject to increased rents have incomes of $250 or less per month. “At the end of the day, I just don’t see the logic, arbitrarily closing budget holes on the backs of those most vulnerable in our society,” said Mr. Gutierrez.
Assistant Secretary for Housing and Acting Federal Housing Administration (FHA) Commissioner Carol Galante testified on the revenue that HUD anticipates FHA will provide to offset the HUD budget this year. She explained that while the HUD budget request would provide $44.8 billion to HUD programs, an increase of 3% the FY12 funding level for programs, the $9.4 billion in FHA receipts included in the budget request puts HUD’s net budget authority of $35.4 billion. This net authority is 7.3% lower than FY13. Further, HUD now anticipates an additional $1 billion in FHA revenue based upon new premium increases.
Sandra Henriquez, Assistant Secretary for Public and Indian Housing, testified that HUD’s budget request reflects the need for fiscal discipline, acknowledging the difficult financial circumstances the federal government faces. Ms. Henriquez stressed that ensuring households currently housed through HUD programs are able to keep their homes is a high priority for HUD. She said that HUD officials had to make difficult decisions when drafting the budget, including the decision to raise minimum rents for tenants. Ms. Henriquez also discussed the importance of funding new Veterans Affairs Supportive Housing (VASH) vouchers and providing funding to American Indian, and Native Alaskan and Hawaiian communities.
Mercedes Marquez, Assistant Secretary for Community Planning and Development (CPD), testified that HUD’s budget reflects difficult choices, including low funding levels for the Community Development Block Grant (CDBG) and HOME Investment Partnerships programs, only because of the Administration’s commitment to reduce spending. She cited the jobs created by these programs as critical reasons to continue funding those programs. Ms. Marquez discussed the successes of housing people experiencing homelessness through the Homeless Prevention and Rapid Re-Housing Program (HPRP) and said that HUD intends to continue those effective strategies with the increased funding requested for the Homeless Assistance Grants and the Emergency Solutions Grant (ESG) program.
Assistant Secretary for Policy Development and Research Raphael Bostic discussed HUD’s efforts to improve its programs using evidence-based policy and asserted that the FY13 budget request moves HUD closer to this goal. He also spoke about HUD’s efforts to consolidate technical assistance programs into a single program, the “One CPD” initiative.
John Trasviña, Assistant Secretary for Fair Housing and Equal Opportunity, testified on the importance of funding HUD’s fair housing programs as well as HUD’s success in increasing compliance with Section 3. HUD's Section 3 program requires recipients of HUD funding to provide job training, employment, and contract opportunities to low and very low income residents and businesses, to the greatest extent feasible. He shared that in the last reporting period, almost half of new jobs generated through HUD contracts went to residents who are intended to benefit from Section 3. He also discussed HUD’s work with cities to develop registries to promote Section 3 and HUD’s progress on developing a new Section 3 rule.
Representative Gary Miller (R-CA) said he believes it is not feasible for the federal government to continue funding TBRA (housing vouchers) without reforms. He congratulated HUD staff for including policies such as increasing minimum rents for tenants and merging the public housing capital and operating fund in the FY13 budget request. He also wants further policy changes, including expansion of the Moving to Work (MTW) program.
Representative Robert Hurt (R-VA) asked each of the assistant secretaries to answer the question: “Why can’t Washington spend 1% less than last year?” Ms. Galante responded that HUD has proposed cutting spending, including $400 to $500 million from the PBRA account, and savings through policy provisions that would reduce costs. She also explained how HUD’s programs act as a safety net for households that experience decreases in their incomes. Consequentially, as household incomes decrease, HUD’s costs for providing housing increase.
Ms. Henriquez said that HUD’s funding for Homeless Assistance Grants reduce the number of homeless individuals and homeless veterans living on the street, which generates significant costs for the government. Ms. Marquez pointed out that HUD’s budget is 7.3% below the FY12 level. She said that in preparing its budget, HUD decreased program funding, streamlined and made sacrifices. Mr. Trasviña said that HUD funds are not just going to program infrastructure but are in fact going to the people of this country through contract dollars and jobs.
Representative Maxine Waters (D-CA) criticized HUD’s proposal to under-fund the Project Based Rental Assistance (PBRA) account and issue short-term contracts to property owners. She reminded the witnesses that short funding contracts was tried by the last Presidential administration and didn’t end well. Ms. Galante responded that this was a very difficult decision for HUD but that HUD is confident that it can manage payments to owners. Ms. Galante asserted that HUD didn’t have the flexibility or space in the budget to provide full year funding.
The House will continue its FY13 appropriations work the week March 5. The House Committee on Financial Services will hold a hearing on its “Budget Views and Estimates” on March 6 at 2 pm in room 2128 of the House Rayburn office building. The “Budget Views and Estimates” is a document that provides a detailed response from the Committee to the President’s proposed budget and policies.
The House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (THUD) will hold a hearing on March 21 at 10 am in room 2358 of the Rayburn House office building. HUD Secretary Shaun Donovan will testify at the Subcommittee hearing.
View the assistant secretaries’ testimony: http://financialservices.house.gov/Calendar/EventSingle.aspx?EventID=281188