Sequester Hits NHTF, NLIHC Update State Allocation

NLIHC has learned that an unfortunate provision in the Budget Control Act of 2011, the law that created the sequester, will take a 6.9% cut out of the National Housing Trust Fund (NHTF) and the Capital Magnet Fund (CMF) along with numerous other mandatory programs in FY17. Based on Fannie Mae and Freddie Mac’s 2015 finance reports to the SEC, NLIHC estimated that the NHTF would receive $186.6 million in 2016 (see Memo, 2/22); the revised amount is $173.7 million. The initial NLIHC estimate for the CMF of $100.4 million is revised to $93.5 million.

The good news is that cuts to both programs is not lost, but will be added back to the 2017 totals.

In a letter to the Speaker of the House Paul Ryan (R-WI), OMB Director Shaun Donovan reports that almost $19 million is not exempt from sequestration, including 2% to non-exempt Medicare spending, 6.9% to other non-exempt nondefense mandatory programs, and 9.1% to non-exempt defense mandatory programs. These programs were not protected from the sequester by the Bipartisan Budget Act of 2015 (see Memo, 11/2/15).

NLIHC’s recalculation of the NHTF allocation per state based on $173.7 million is posted at The new state allocations also are based on new estimates of construction costs in each state, one the five formula factors for distribution of NHTF funds among the states. The first state allocation estimates from NLIHC use an earlier report on construction costs as the new report was not yet available. NLIHC also has updated its calculations based on new information about how the formula is to be applied to the five territories. Because the NHTF statute requires a state minimum of $3 million, most of the sequester cut will fall on the states with larger allocations, especially California.

To read the letter from OMB Director Donovan to Speaker Ryan, go to