With the current continuing resolution (CR) set to expire on December 16, negotiations over a fiscal year (FY) 2023 spending bill have come to a standstill, and the window for lawmakers to reach a deal on an FY23 budget is quickly closing. Congress will need to enact another CR before Friday to keep the federal government funded or risk a partial government shutdown. Lawmakers also hope to enact a tax extenders package before the end of the year, which may include an expansion of and reforms to the Low-Income Housing Tax Credit (LIHTC).
Despite the impending deadline, and despite members of Congress recently reaching an agreement on an overall spending level (see Memo, 12/5), appropriations negotiations came to a standstill last week, though there are reports of new progress over the weekend. Negotiators are feuding over how much to provide non-defense programs in the new fiscal year, with Democrats insisting on approximately $25 billion more in non-defense spending than Republicans.
With no movement on a final deal, Senate Appropriations Committee Chair Patrick Leahy (D-VT) and House Appropriations Committee Chair Rosa DeLauro (D-CT) had planned to introduce today (December 12) an omnibus proposal that they hoped would bring Republicans back to the negotiating table while also attracting bipartisan support from the 10 Senate Republicans needed to pass the proposal through the chamber. However, yesterday evening Senator Leahy announced there had been enough progress over the weekend that they would hold off on this move for now. If an agreement between the Democrats and Republicans is not made soon, Democratic appropriators are threatening to enact a year-long CR, which would maintain FY22 funding levels through September 2023.
Democrats hope the threat of a long-term CR – and the impact it would have on defense and domestic programs – will be enough to motivate Republicans to reach a deal. Long-term CRs have devastating consequences for affordable housing and homelessness programs. Because the costs for housing and services rise every year, flat funding acts as a cut, reducing the number of people served by these vital programs. Flat funding would be particularly harmful this year, given the drastic increases in the cost of rent across the country.
“At a time of inflation, a continuing resolution undermines national security and the ability of American families to cope with the increased costs of heating and cooling, food, and housing,” said Chair Leahy in a statement. “HUD rental assistance programs would be $4.7 billion below what is needed to continue to assist all families currently participating in the program, leading families to losing assistance. These housing resources are critical to preventing homelessness for low-income families across the country, especially at a time when rents are skyrocketing and vacancy rates across the country are near historic lows.”
The White House also released a list of anomalies that would be needed in the event of a full-year CR. “Anomalies” are adjustments in spending levels for specific programs that would be needed to avoid administrative or technical problems associated with a long-term CR. The anomalies list calls for increased funding for HUD’s Tenant Based Rental Assistance (TBRA), Project-Based Rental Assistance (PBRA), and Homeless Assistance Grants programs in order to maintain services for those currently utilizing these programs. While vitally important, the anomalies would not come close to meeting the level of funding for HUD programs that could be provided in an FY23 budget.
In addition to finalizing an FY23 budget, Congress may enact a tax extenders package by the end of the year. NLIHC is urging policymakers to use the tax legislation to expand and reform the Low-Income Housing Tax Credit (LIHTC) to better serve extremely low-income (ELI) households, who have the most acute and urgent affordable housing needs. Congress regularly extends expiring tax provisions that are only authorized for a set number of years.
With a number of tax provisions up for extension at the end of this year, a tax extenders package represents the best opportunity currently available to expand and make needed legislative changes to the LIHTC program. NLIHC has released a fact sheet and call-to-action tool (see Memo, 10/31) focused on LIHTC reforms and is urging advocates to ask their members of Congress to include these reforms in an end-of-year tax extenders package.
Use NLIHC’s Take Action page to call or send an email to your members of Congress and urge them to pass an FY23 spending package with the highest possible level of funding for HUD’s and USDA’s affordable housing and homelessness programs, including significant funding for NLIHC’s top priorities:
- Full funding for the Tenant-Based Rental Assistance (TBRA) program to renew all existing contracts and expand housing vouchers to an additional 140,000 households.
- $5 billion for the Public Housing Capital Fund to preserve public housing, and $5.04 billion for the Public Housing Operating Fund.
- $3.6 billion for HUD’s Homeless Assistance Grants program to address the needs of people experiencing homelessness.
- $100 million for legal assistance to prevent evictions.
- $300 million for the competitive tribal housing program, targeted to tribes with the greatest needs.
Advocates should also contact their members of Congress and urge them to use the end-of-year tax extenders legislation to expand and reform the Low-Income Housing Tax Credit (LIHTC) to better serve extremely low-income (ELI) households.
LIHTC is the primary funding source for financing the construction and preservation of affordable housing. While an important resource, LIHTC on its own is generally insufficient to support the construction and preservation of homes affordable to households with the lowest incomes. NLIHC is urging Congress to include the following LIHTC reforms in any tax extenders package:
- Expand the ELI basis boost to 50% for housing developments when at least 20% of units are set aside for households with extremely low incomes or people experiencing homelessness. This provision is included in the bipartisan “Affordable Housing Credit Improvement Act.”
- Set aside 8% of tax credits to help offset the cost to build ELI developments where at least 20% of units are reserved for households with extremely low incomes or those experiencing homelessness.
- Designate tribal and rural communities as “Difficult to Develop Areas (DDAs)” to make them automatically eligible for a 30% basis boost and make it more financially feasible for developers to build affordable homes in these communities. These provisions are also included in the bipartisan “Affordable Housing Credit Improvement Act.”
Learn more about the range of needed changes to LIHTC at: bit.ly/3fto1R1
Read the fact sheet on reforms needed for ELI households at: bit.ly/3gDnV9o
Contact your members of Congress about LIHTC reforms at: p2a.co/4qstqc5