Lawmakers are continuing negotiations over a fiscal year (FY) 2023 spending deal, as December 16 – the current deadline for enacting a federal FY23 budget – draws nearer. Congress already passed a short-term continuing resolution (CR) to maintain government funding until December 16 and will likely need to pass another CR lasting until December 23 in order to finalize and enact an FY23 spending package. In addition to finalizing an FY23 omnibus bill, members of Congress are hoping to pass an end-of-the-year tax extenders package that may include an expansion of and reforms to the Low-Income Housing Tax Credit (LIHTC).
Use NLIHC’s Take Action page to call or send an email to your members of Congress and urge them to support the highest possible level of funding for HUD’s and USDA’s affordable housing and homelessness programs in FY23, 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.”
Budget negotiations are being led largely by party and appropriations leaders, including Senate Majority Leader Chuck Schumer (D-NY), Senate Appropriations Committee Chair Patrick Leahy (D-VT), Senate Minority Leader Mitch McConnell (R-KY), Senate Appropriations Committee Ranking Member Richard Shelby (R-AL), House Speaker Nancy Pelosi (D-CA), and House Appropriations Committee Chair Rosa DeLauro (D-CT). House Minority Leader Kevin McCarthy (R-CA) has already pledged not to support an omnibus spending package.
Last week, lead negotiators announced they had reached a deal on overall funding levels, agreeing that the FY23 budget would provide approximately $1.65 trillion in federal spending – a 9% increase from FY22 that more or less aligns with the President’s FY23 budget request. With a topline number agreed to, lawmakers will now need to decide how to split the funding up between defense and non-defense programs, known as “302(a)” allocations. Republicans are pushing for a greater increase for defense spending than was proposed in the President’s budget request, which would leave fewer funds for non-defense programs.
Lower overall spending for non-defense programs means that less money would be available for domestic programs, including HUD’s vital affordable housing and homelessness assistance programs. Some far-right Republicans in the House are also calling on leadership to delay passing an FY23 budget into the new year, when the new Congressional session begins and Republicans will take control of the House, giving them more leverage in FY23 negotiations and the opportunity to slash funding for social spending programs. Some conservative members are even pushing for a year-long CR, which would bypass the FY23 bill altogether and extend the previous year’s federal funding levels.
It is crucial that Congress enact an FY23 spending bill with significant funding increases for HUD’s affordable housing and homelessness programs before the end of the year. Long-term CRs have serious consequences for affordable housing and homelessness programs. Because the cost of housing rises every year, increased appropriations are needed from year to year just to maintain the number of households being served by HUD’s and USDA’s housing and homelessness programs. Flat funding acts as a cut, reducing the number of people served, and would be particularly damaging this year, given the dramatic increases in the cost of rent around the country.
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.
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