Senate Subcommittee Holds Hearing on FY17 HUD Budget Request

On March 10, the Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (THUD) held a hearing on HUD’s FY17 budget request. HUD Secretary Julián Castro and HUD Inspector General David Montoya testified.

In her opening remarks, Subcommittee Chair Susan Collins (R-ME) said that HUD’s request is nearly $2 billion more than its FY16 funding level, a request that “does not exist in a vacuum and must be considered in the broader context of an unstable $19 trillion debt.” Senator Collins added, “In an environment when the top line remains flat, the increase of four percent over current levels proposed in the president’s budget would be extremely challenging. Yet rather than submit a budget request that seeks to bend the cost curve of rental assistance without doing so on the backs of low-income families and seniors, the Administration proposes new spending of $750 million above what is needed to maintain existing rental assistance, plus an additional $11.3 billion in new mandatory spending that lacks an offset and is simply a gimmick intended to evade the current budget agreement.”

Senator Collins noted that while the Office of Management and Budget (OMB) expects FHA receipts, which are used to offset HUD appropriations, to be $2.8 billion above FY16 levels, the Congressional Budget Office’s (CBO) “baseline score for fiscal year 2017 is more than $400 million below current levels and $2.7 billion below the OMB’s assumption, an enormous discrepancy.” She said the subcommittee should assume lower receipt levels as a precaution until CBO finishes scoring the president’s budget request.

Senator Collins also discussed the benefits of the Community Development Block Grant (CDBG) program and of homeless assistance, particularly for youth, and she emphasized the need for more oversight and management of federally subsidized housing. She was “troubled” to learn of egregious examples of poor housing conditions in several states but was “even more troubled to learn that some of these properties initially received passing inspections scores from HUD before public outcry compelled a second look.”

In explaining the Administration’s request for increased HUD funding, Secretary Castro said, “Today, a quarter of American renters spend more than half of their incomes on housing. And too many families are forced to cut back on food, on health care, and other basic necessities just to put a roof over their head. That’s why the President’s Budget proposes to increase HUD’s funding to $48.9 billion, $1.9 billion over the enacted level for Fiscal Year 2016.”

Both Chair Collins and Ranking Member Jack Reed (D-RI) questioned why the Administration failed to request funds for the Veterans Affairs Supportive Housing (VASH) program now for the second year in a row. Secretary Castro responded that HUD did not request funds for new VASH vouchers because there were already enough vouchers available for the population served by the program, and that other mainstream resources at HUD were available to continue the progress in ending veteran homelessness. He also pointed out that the VASH program failed to serve certain veterans because of their discharge status, including those who were discharged under the former “don’t ask, don’t tell” policy.

Senator Reed discussed the problem of lead paint in federally assisted housing, an issue that particularly affects cities in his home state of Rhode Island, and asked when HUD was going to update blood lead intervention regulations. Secretary Castro reported that HUD, on March 8, submitted a proposed new rule to OMB that would bring HUD standards up to those used by the Centers for Disease Control and Prevention (CDC). (See separate article in this week’s Memo.)  He noted that HUD has recommended grantees conform to the CDC standard since 2013, but said he understood that “strongly encouraging” is not the same as requiring. The proposed rule will also include more robust notification requirements for certain individuals who learn of elevated blood levels in children. Secretary Castro said he looked forward to working with Congress on improving HUD’s lead standards through the proposed rule and newly introduced legislation.

Senator Steve Daines (D-MT) raised concerns about over-income tenants living in public housing, an issue that was recently the subject of a HUD Office of Inspector General report.  Secretary Castro responded to the senator that HUD shared his concern, particularly with regard to several egregious cases, and was working to address it through rulemaking. He cautioned, however, that any change in policy must be nuanced to account for families whose incomes increase to just above the income limits. HUD Inspector General Montoya later testified that since 2004, public housing authorities have had the ability to remove extremely over-income families but have failed to do so. Mr. Montoya also raised the issue of what will be defined as “extremely over-income” under any new policy.

The hearing webcast and documents are at: