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Analysis of President Trump’s FY 2021 Budget Request

Overview

President Donald Trump’s and HUD secretary Ben Carson’s Fiscal Year (FY) 2021 budget request – released today – proposes to drastically cut housing benefits that help millions of low-income seniors, people with disabilities, families with children, and other individuals afford their homes. Overall, the administration proposes to cut HUD by an astounding $8.6 billion or 15% below 2020 enacted levels, not including those cuts offset by increased FHA receipts. Like his other budget requests as HUD Secretary, the proposal would slash federal investments in affordable homes, increase rents for some of the lowest-income people in our country, and impose harmful and ineffective work requirements on America’s struggling families. If enacted, the budget would leave even more low-income people without affordable, accessible homes. For more information, see NLIHC’s updated budget chart.

At a time when the affordable housing crisis has worsened and homelessness is increasing in some communities, Secretary Carson’s proposal would eliminate vital housing programs, including the national Housing Trust Fund and all funding for public housing capital repairs. He would eliminate the HOME Investments Partnership program and Community Development Block Grants (CDBG), starving communities of needed resources for affordable housing and community development. Secretary Carson proposes cutting public housing operating funds by 21% ($3.57 billion) and Housing for Persons with AIDS by 20% ($330 million).

Secretary Carson cuts funding for the Housing Choice Voucher program by $5 billion (not including inflationary adjustments) and repurposes some of these funds in block grants for Moving to Work public housing agencies. With these changes, over 160,000 families who currently receive rental assistance could be at risk of losing their assistance and their ability to afford their home. As he has in previous years, Secretary Carson claims that the budget would continue rental assistance for all existing households. This is misleading and untrue: the proposed budget does not provide enough funding to cover the full cost of housing assistance without first imposing harmful rent increases and work requirements, none of which Congress is likely to pass.

The only programs with funding increases in the proposed budget are Healthy Homes and Lead Hazard Control (an increase of $70 million), Family Self-Sufficiency (an increase of $10 million) and Jobs-Plus (an increase of $85 million), Housing for the Elderly (an increase of $60 million), and Section 811 Housing for People with Disabilities (an increase of $50 million), and Project-Based Rental Assistance (an increase of $72 million); it is unclear if this amount will be sufficient to renew all existing contracts.

Secretary Carson again proposes punitive measures that would jeopardize family stability, increasing the financial burdens they face through higher rents and harmful work requirements that often push families deeper into poverty. Learn more about Secretary Carson’s proposed legislation to cut housing benefits, how cutting housing benefits would increase homelessness and housing poverty, and why this approach is has nothing to do with “increasing family self-sufficiency.”

In this budget proposal, the White House hints at a new initiative to reduce “street homelessness”, but it offers no details. Robert Marbut, the new director of the U.S. Interagency Council on Homelessness (USICH) came to his new position ignoring decades of learning, research, and bipartisan agreement by rejecting “Housing First,” a proven model for addressing homelessness that prioritizes access to permanent, stable housing with supportive services, if needed. The Trump administration’s approach to date blames homelessness on homeless individuals, rather than focusing on the structural issues that lead to homelessness – the severe shortage of affordable and accessible homes for America’s poorest families.

The proposals to slash investments in housing are part of a larger effort by President Trump to gut America’s safety net for low-income people. His budget also calls for deep cuts to programs that help low-income families put food on the table and heat their homes, as well as policy changes to reduce the number of low-income households eligible for healthcare and disability benefits.

Congress must not only to reject Mr. Trump’s budget, but expand the investments in affordable homes. The House and Senate will now begin working on their draft FY20 spending bills, and NLIHC will work with congressional champions and advocates to ensure the highest level of funding possible for affordable housing investments.

Detailed Analysis

Rejecting Evidence-Based Approaches to Ending Homelessness

The White House announced it will launch a new initiative to reduce “street homelessness,” but details are unclear at this time. The administration calls for changing current policy to allow federal Medicaid dollars to support the institutionalization of people with serious mental illnesses, including people experiencing homelessness, while making other Medicaid cuts that could destabilize funding for community-based care.

Mr. Trump would essentially flat fund homeless assistance programs at $2.77 billion, or $4 million less than FY20 enacted levels. The budget does not include additional funds for the Veterans Affairs Supportive Housing Vouchers (HUD-VASH) program, but it does include $4 million for the tribal HUD-VASH program.

Robert Marbut, Trump’s pick to lead the U.S. Interagency Council on Homelessness, ignores decades of learning, research, and bipartisan agreement by rejecting “Housing First.” In response, NLIHC and the National Alliance to End Homelessness recently released two factsheets on the research and evidence on the successes of Housing First and on Dr. Marbut’s misleading statements. Additionally, NLIHC released a fact sheet on the causes and solutions to homelessness.

We will continue to monitor the administration’s actions on homelessness and will push back on harmful proposals.

Rent Increases and Work Requirements Will Increase Homelessness and Housing Poverty

The budget supports cutting housing benefits for some of America’s lowest-income people by increasing rents and imposing work requirements on current and future tenants. The budget incorporates changes included in the draft legislation known as the “Making Affordable Housing Work Act,” proposed by the administration in 2018. NLIHC and our partners defeated multiple previous efforts by the administration to advance these proposals.

If enacted, these proposed changes would hurt tenants already scraping to get by and would make it more difficult for them to achieve financial stability and live with dignity. The draft legislation proposed to increase rents on most non-elderly, non-disabled families by requiring that they pay 35% of their gross incomes on rent, instead of the current standard of 30% of their adjusted incomes. The very poorest elderly and disabled families would also see their rents triple – rising to up to 30% of their gross incomes or $50, whichever is higher. The president’s proposal would eliminate income deductions for medical or childcare expenses for all households, primarily impacting seniors, people with disabilities, and families with children. It also would triple rents for the lowest-income residents in subsidized housing by increasing mandatory minimum rents. Additionally, the proposal would allow housing providers to broadly impose work requirements without providing any resources to help people gain the skills they need for well-paying jobs.

Congress has rejected the president’s proposal to impose rent increases and work requirements for the past three years. Congress must again reject these harmful proposals.

Reforms to Disaster Recovery

The administration suggests it will propose changes to the Community Development Block Grant–Disaster Recovery (CDBG-DR) program, the federal government’s primary tool for long-term disaster housing and infrastructure recovery. The budget request, however, is silent on specific policy changes, and there is no discussion of how eliminating the overall CDBG program would impact future disaster relief efforts.

National Housing Trust Fund

The president’s budget calls for eliminating the national Housing Trust Fund, the first new housing resource in a generation exclusively targeted to help build and preserve housing affordable to people with the lowest incomes, including those experiencing homelessness.

NLIHC and a broad coalition of national, state, and local organizations are working to expand the Housing Trust Fund through housing finance reform, an infrastructure investment package, and other legislative opportunities.

Tenant-Based Rental Assistance

President Trump would cut funding for tenant-based rental assistance (TBRA) by $5 billion, not including funds needed to cover inflationary adjustments. The request provides $18.833 billion for TBRA, which is insufficient funding to ensure all contracts are fully renewed. As a result, NLIHC and others expect such a cut could result in nearly 160,000 families being at risk of losing their voucher assistance.

Project-Based Rental Housing

The budget proposal would provide $12.642 billion to renew project-based rental assistance (PBRA) contracts, an increase of $72 million from the FY20 funding level. It is unclear if this amount is sufficient to renew all contracts.

Public Housing

Public housing takes a huge hit under the Trump budget proposal. The public housing capital fund, which received $2.869 billion in FY20 and is required for desperately needed capital repairs, would be eliminated in FY21. The allocation for the operating fund would fall significantly, from $4.55 billion in FY20 to $3.57 billion, or 21%. The administration states that public housing agencies (PHAs) may use operating fund dollars for modernization and other capital needs.

Instead, the administration requests $100 million for the Rental Assistance Demonstration (RAD) to convert more public housing to a Section 8 funding stream, despite the fact that the ability to successfully convert public housing requires full funding for public housing operating and capital funds which the administration proposes to underfund. The budget eliminates the cap on no-cost public housing conversions and expands authority for RAD conversions to Section 811 Project Rental Assistance, Senior Preservation Rental Assistance, and Tenant Protection Vouchers (in limited circumstances).

The budget also acknowledges the expansion of the Moving to Work (MTW) demonstration in 2020, creating a separate account with $5.2 billion in reallocated reduced funding from public housing and tenant-based rental assistance, essentially block granting these funds to MTW-Public Housing Agencies (PHAs). The MTW demonstration is a deregulation initiative that gives PHAs very broad flexibility in how they administer public housing and housing choice voucher programs. This deregulation allows PHAs to shift funds out of the voucher program in a manner that may result in fewer families receiving housing assistance. We will continue to analyze and monitor this proposal and its impacts on low-income residents.

Healthy Homes

The administration would fund the Office of Lead Hazard Control and Healthy Homes grants at $360 million, an increase of $70 million compared to FY20.

Fair Housing

The budget would decrease funding by $5 million for HUD’s Office of Fair Housing and Equal Opportunity. Specifically, the Fair Housing Initiatives Program (FHIP) would be cut by $5.4 million.

Other HUD Programs

The budget would eliminate the Community Development Block Grant (CDBG) program, the HOME Investment Partnerships program, Choice Neighborhoods grants, and the Self-Help Homeownership Opportunity Program.

The budget provides $853 million to the Section 202 Housing for the Elderly program, a $60 million increase from this current funding level. The proposal also increases funding for the Section 811 Housing for People with Disabilities program to $252 million, $50 million more than the FY20 level. These increases could allow for the construction of new homes under both programs.

Funding for the Housing Opportunities for People with AIDS (HOPWA) program would decrease to $330 million, down from $410 million in FY20.

The administration provides increased funding for both the Family Self-Sufficiency (FSS) program at $90 million and Jobs-Plus at $100 million. The budget would allow families living in project-based rental assistance homes in addition to those in public housing to participate in FSS.

The budget cuts funding for the Native American Housing Block Grant program by $46 million, or a little more than 7%, when compared to FY20. The Native Hawaiian Housing Block Grant program would receive no funds.

Rural Rental Housing

President Trump proposes to essentially eliminate all rural housing grants and direct-loan programs at the U.S. Department of Agriculture (USDA). The budget would combine funding for Section 521 Rural Rental Assistance and Section 542 vouchers at $1.450 billion. It is unclear whether this is sufficient to cover all existing contracts. In addition, the budget proposes increasing the minimum monthly rent for tenants living in rural housing properties to $50.

The budget also includes $40 million for the Multifamily Housing Preservation and Revitalization demonstration program, although it is included in the Rural Housing Insurance Fund account.

The budget also eliminates funding for the Section 502 Direct Homeownership Loans, Section 514/516 Farm Worker Housing Loans and Grants, Section 523 Mutual and Self-Help Housing, and Section 504 Rural Housing Assistance grants and loans.

The only housing programs that would remain – other than rental assistance – are guaranteed loan programs that use fees to offset any federal costs and tend to serve relatively higher-income households.

Other Programs

President Trump’s budget proposes to:

  • Fund the U.S. Interagency Council on Homelessness at $3.8 million. In past years, the White House has proposed to eliminate the agency;
  • Eliminate funding for NeighborWorks;
  • Eliminate the Low Income Home Energy Assistance (LIHEAP) program that helps low-income families heat their homes;
  • Eliminate funding for Community Services Block Grants;
  • Eliminate the Legal Services Corporation (legal aid), which is often the only resource available to help deeply low-income people avoid unwarranted evictions; and
  • Eliminate Community Development Financial Institution (CDFI) program funding for discretionary programs, including the Bank Enterprise Award (BEA) Program, CDFI Program, the Native American CDFI Assistance Program, the Healthy Food Financing Initiative, and the Small Dollar Loan Program.

Take Action

Take action to support affordable housing funding

In response to these budget threats, NLIHC and other national leaders of the Campaign for Housing and Community Development Funding (CHCDF) are urging advocates to take action to oppose the president’s budget.

Congress needs to hear from you about the importance of increased investments in affordable housing. Below are three ways to learn more and make your voice heard:

  1. Join a national webinar on February 18 at 3:30 p.m. ET, hosted by NLIHC and other members of CHCDF, to learn more about the president’s budget and the funding outlook for affordable housing and community development programs in FY21.
  2. Sign a national letter urging Congress to ensure transportation and housing programs receive the highest amount of funding possible for FY21. Because the FY21 letter is substantially similar to the funding letter sent last year, we are asking organizations already signed on to let us know if you would like to opt-out of the letter by emailing [email protected]. See if your organization signed onto last year’s letter here.
  3. Join advocates across the country in support of affordable homes by participating in the 4th annual Our Homes, Our Voices National Housing Week of Action, May 2–12. Week of Action events can range from rallies and film screenings to panel discussions, letter-writing campaigns, tours of housing developments, voter registration activities, and more. Start planning now to engage with your members of Congress during the Week of Action and unite with communities throughout the country in calling on Congress and 2020 presidential candidates for increased investments in affordable housing.

For more information, contact Sarah Saadian, NLIHC’s Vice President of Public Policy, at [email protected].