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President's Budget Calls for Drastic Cuts to Affordable Housing

President Donald Trump’s FY19 budget request released on February 12 proposes drastic cuts to housing benefits that help millions of low income seniors, people with disabilities, families with children, veterans, and other vulnerable people afford their homes. The proposal — unveiled less than two months after the president signed into law $1.5 trillion in tax cuts for wealthy individuals and corporations — would take away housing benefits from the lowest income people by slashing federal investments in affordable homes, increasing rents, and imposing harmful work requirements on America’s struggling families. If enacted, it would leave even more low income people without an affordable home, undermining family stability, increasing evictions, and leading to more homelessness.

NLIHC strongly urges Congress to not only reject Mr. Trump’s budget, but to significantly expand the investments in affordable homes that America’s families and communities need to thrive. For more detailed information on the proposed budget cuts, see NLIHC’s updated budget chart.

Overall, the administration proposes to cut HUD by an astounding $8.8 billion or 18.3% compared to the 2017 enacted levels. In an addendum stemming from the bipartisan budget agreement, the president suggests that $2 billion above his request could be added back in for a final proposed cut of $6.8 billion, or 14%.

At a time when the affordable housing crisis has reached new heights and homelessness is increasing in some communities, the president proposes to eliminate essential housing and community development programs, like the national Housing Trust Fund, Community Development Block Grants, the HOME Investments Partnership Program, and the U.S. Interagency Council on Homelessness. The backlog of public housing capital repair needs is upwards of $40 billion, but the Administration proposes to entirely eliminate federal funding for capital repairs and slash funding to operate public housing.

The president would underfund rental assistance through the Housing Choice Voucher program by nearly $3 billion. While the administration suggests that $700 million provided in an addendum would reverse some of this cut, NLIHC estimates that this proposed cut would lead to at least 200,000 housing vouchers being lost – a move that would increase homelessness and housing poverty.

The budget would also impose 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. HUD suggests that it will send its proposal to cut housing benefits through rent increases and work requirements to Congress in March, but NLIHC expects it will be substantially similar to draft legislation that was leaked in recent weeks. Learn more about President Trump’s draft legislation to cut housing benefits, how cutting housing benefits would increase homelessness and housing poverty, and how it impacts your state.

“The breadth and depth of cruelty reflected in this budget proposal is breathtaking,” said Diane Yentel, NLIHC president and CEO. “President Trump is making clear, in no uncertain terms, his willingness to increase evictions and homelessness - for the families who could lose their rental assistance through severe funding cuts and for the low income and vulnerable seniors, people with disabilities and families with kids who will be unable to manage having to spend more of their very limited income to cover rent hikes.

“The administration callously disregards its responsibility to the millions of households living in deteriorating public housing and to low income people and communities working to recover and rebuild after disasters by eliminating critical resources for public housing, rental housing construction, and community development. It’s a cruel and unconscionable budget proposal and it should be soundly rejected by Congress.”

HUD Programs

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. While HUD plans to send its proposal to cut housing benefits to Congress in March, we expect it will be substantially similar to draft legislation that was leaked in recent weeks.

The 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 proposes to increase rents on most non-elderly, non-disabled families by requiring that they pay 35% of their gross income, compared to 30% of their adjusted income. The very poorest elderly and disabled families would also see their rent increase up to 30% of their gross income or $50, whichever is higher. His proposal would eliminate income deductions for medical or childcare expenses for all households, primarily impacting seniors, people with disabilities, and families with children. It sets a new mandatory minimum rent for households assumed to be able to work at more than $150 – or three times more than its current rate. And the proposal allows housing providers to broadly impose work requirements, without any resources to help people gain the skills they need for well-paying jobs.

In an addendum, the White House suggests providing an additional $1 billion stemming from the recent budget agreement, to avoid rent increases on elderly and disabled families in FY19. There is no assurance that funding will be allocated this way or that such protections will be afforded to these households in future years.

Taking away housing benefits from poor families will only force them to make impossible tradeoffs between paying rent or paying for medicine, groceries, and other necessities. Learn more about President Trump’s draft legislation to cut housing benefits, how cutting housing benefits would increase homelessness and housing poverty, and how it impacts your state.

National Housing Trust Fund

Mr. Trump’s budget calls for eliminating the national Housing Trust Fund (HTF), the first new housing resource 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 HTF, which is funded through a small fee on Fannie Mae and Freddie Mac, through housing finance reform and other legislative opportunities. The president’s proposal to eliminate the HTF could make it more difficult for housing finance reform legislation to attract the bipartisan support needed for passage.

Tenant-Based Rental Assistance

Mr. Trump would slash funding for tenant-based rental assistance (TBRA). The request provides $19.315 billion for TBRA. This includes $17.514 billion to renew previous contracts, or more than $3 billion less than what is needed to ensure that all contracts are fully renewed. As a result, NLIHC and others estimate that more than 330,000 vouchers would be lost. While the administration suggests that $700 million provided in an addendum would reverse some of this cut, NLIHC estimates that this proposed remaining cut would still lead to at least 200,000 housing vouchers being lost – a move that would increase homelessness and housing poverty.

The administration would also cut funding for new Section 811 mainstream vouchers for people with disabilities by $13 million and would zero out funding for new Family Unification and HUD-Veterans Affairs Supportive Housing (VASH) vouchers. The proposal does provide $4 million for HUD-VASH vouchers targeted to Native Americans, $3 million below the FY17 enacted level. The budget would reduce the amount of funds public housing authorities (PHAs) receive to administer the voucher program by 6% compared to FY17 funding levels.

The budget provides the HUD secretary with the authority to waive or specify alternative statutory and regulatory requirements under the voucher program, including those related to setting and adjusting allowable rents, payment standards, tenant rent contributions, occupancy standards, PHA program assessments, and PHA administrative, planning, and reporting requirements, if the HUD secretary finds that these would reduce costs or improve effectiveness.

Project-Based Rental Housing

The budget proposal would provide $10.866 billion to renew project-based rental assistance (PBRA) contracts for calendar year 2019, an increase of $50 million from the FY17 funding level. This amount would be insufficient to cover all existing contracts, considering both the House and Senate provide over $11 billion to renew PBRA contracts in their FY18 THUD spending bills.

Public Housing

Public housing takes a huge hit under the Trump budget proposal. The public housing capital fund, which received $1.942 billion in FY17, would be eliminated in FY19. The allocation for the operating fund would fall significantly from $4.4 billion in FY17 to $2.84 billion.

Instead, the administration requests $100 million for the Rental Assistance Demonstration (RAD) to convert more public housing into housing vouchers and PBRA, despite the fact that the ability to successfully convert public housing through RAD requires fully funding vouchers and PBRA. The request eliminates the sunset date for the RAD and removes the 225,000-unit cap on public housing conversions. It also expands RAD to Section 202 Housing for the Elderly Project Rental Assistance Contracts (PRAC).

The president proposes two new set-asides, including $30 million for competitive grants to facilitate the demolition of physically obsolete public housing properties and $300 million to support those PHAs that become finally insolvent due to the budget cuts. An additional $300 million – stemming from the recent budget agreement and provided through an addendum – could push the total set aside for insolvent PHAs to $600 million.

The administration also proposes “releasing certain housing assets to local control” and “a strategic reduction of the Public Housing portfolio.”  The budget claims that current tenants will continue to receive assistance, but it is unclear how the federal government could ensure this given the changes it is proposing.

The president proposes allowing the HUD secretary to not require or enforce the Physical Needs Assessment for public housing units.

The budget provides the HUD secretary with the authority to waive or set alternative statutory and regulatory requirements for PHAs, including administrative, planning, and reporting requirements, energy audits, income re-certifications, and program assessments, if the HUD secretary finds these would reduce costs or improve effectiveness.

Moreover, PHAs would be given the authority to comingle funding from the public housing operating and capital funds. Such authorization would allow PHAs to direct operating funds, which are used to provide tenants with homes, to cover the cost of repairs and rehabilitation.

Homelessness

Mr. Trump would maintain funding for homeless assistance programs at $2.38 billion, the same level as 2017 enacted levels. However, this amount is $73 million less than the amount the Senate would provide in its FY18 THUD spending bill.

Healthy Homes

The administration would provide flat funding for the Office of Lead Hazard Control and Healthy Homes grants compared to FY17.

Fair Housing

The budget would decrease funding for HUD’s Office of Fair Housing and Equal Opportunity. Specifically, the Fair Housing Initiatives Program (FHIP) would be cut by $3 million.

Other HUD Programs

The budget would eliminate the Community Development Block Grant program, the HOME Investment Partnerships program, Choice Neighborhoods grants, the Section 4 Capacity Building program, and the Self-Help Homeownership Opportunity Program. There is no discussion of how eliminating CDBG would impact future disaster relief efforts, which heavily rely on CDBG-Disaster Recovery funds to address unmet housing and infrastructure needs.

The budget provides $563 million to the Section 202 Housing for the Elderly program, a $61 million increase from last year’s funding level, but $10 million below the amount included in the House and Senate THUD spending bills. It also reduces funding for the Section 811 Housing for People with Disabilities program to $132 million, $14 million less than the FY17 level. The president proposes giving the HUD secretary the authority not to provide rent adjustments for properties under Section 202 and 811. This could make it more financially difficult to operate these properties. The budget would also allow Section 202 Project Rental Assistance Contract (PRAC) properties to convert under RAD.

Funding for the Housing Opportunities for People with AIDS (HOPWA) program would decrease to $330 million, down from $356 million in FY17.

The budget cuts funding for the Native American Housing Block Grant program by $54 million, or a little more than 8%, when compared to FY17. The Native Hawaiian Housing Block Grant program would receive no funds.

The administration is also requesting money to evaluate EnVision Centers, HUD Secretary Ben Carson’s new initiative to establish privately funded community centers that offer supportive services focusing on economic empowerment, educational advancement, health and wellness, and character and leadership.

USDA Rural Housing

President Trump proposes to essentially eliminate all rural housing grants and direct loan programs at the Department of Agriculture (USDA). The budget would fund Section 521 Rural Rental Assistance at $1.37 billion, including $20 million for vouchers for residents in properties subject to prepayment. 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 Section 514 or Section 515 properties to $50.

The budget also eliminates funding for the Multifamily Preservation and Revitalization demonstration, 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.

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 Agencies

Mr. Trump would also:

  • Cut health and nutrition benefits by imposing work requirements on Medicaid recipients and new restrictions on the Supplemental Nutrition Assistance Program.
  • Eliminate funding for the U.S. Interagency Council on Homelessness, the Neighborhood Reinvestment Corporation (NeighborWorks America), and the Legal Services Corporation (Legal Aid), which is often the only resource available to help deeply low income people avoid unwarranted evictions.
  • Eliminate funding to the Treasury Department for Community Development Financial Institutions (CDFI) Fund grants and direct loans.
  • Eliminate the Low Income Home Energy Assistance Program (LIHEAP) and Community Services Block Grants (CSBG) at the Department of Health and Human Services.
  • Eliminate the Weatherization Assistance Program (WAP) at the Department of Energy.

Infrastructure Spending

President Trump’s FY19 spending bill calls for a $200 billion infrastructure package that fails to include any new resources to address the nation’s shortage of affordable rental homes and could divert existing resources to other purposes. Moreover, this one-time spending proposal would be paid for with cuts to existing programs that are funded annually through the appropriation process, putting America’s long-term investments in infrastructure at risk.

The plan includes increasing state volume caps on tax-exempt private activity bonds, which are used to finance the 4% Low Income Housing Tax Credit. Because the plan also expands the allowable use of bonds to all governmental infrastructure projects, however, this could ultimately reduce the availability of housing bonds to build and preserve affordable rental homes.

Overall, the infrastructure plan includes $100 billion as gap-financing in state-funded projects, $50 billion in block grants to rural state governors, and $50 billion in “transformative” projects, expanded federal loans for transportation, rail, and drinking water and wastewater projects, and a capital financing fund for federal buildings. In addition to the spending components, the proposal calls for streamlining federal permitting decisions to be handled by a single federal agency.

NLIHC believes that housing is infrastructure and that affordable housing investments must be expanded – not reduced – in any infrastructure package.

It is unclear whether there is enough support to enact a broad infrastructure package in Congress. Some conservative Republicans disapprove of the price tag, while Democrats have voiced concern that the direct federal investment does not provide enough resources to address America’s crumbling infrastructure.