WASHINGTON — The Trump administration’s annual budget proposal for fiscal 2019 is scheduled to be released Feb. 12 even as Congress tries to approve a spending bill for this year that would continue to fund the government past the current short-term spending cutoff of Feb. 16.
The president’s 2018 budget proposal, which he sent to Congress last March, has not been approved because Congress instead passed a series of short-term spending bills. In that plan, the Department of Housing and Urban Development’s budget was set at $41 billion, a drop of about $6 billion from current spending levels.
It would have eliminated two major federal block grants: Community Development Block Grant Program and HOME Investment Partnerships Program. The former gives money to state and local governments to help community development efforts like affordable housing that benefit people with low or moderate incomes. The HOME program funds state and local government efforts to build or rehabilitating affordable housing for low-income people.
In 2017, Congress provided the same level of funding as the previous year to both Community Development Block Grant and HOME Investment Partnerships – about $3 billion and $950 million respectively, according to a National Association of Housing and Redevelopment Officials analysis last May.
A January report by the Urban Institute that analyzed President Donald Trump’s 2018 spending proposal said if HUD had been cut to $41 billion for the current fiscal year, it would fall “significantly short of the amount needed to continue serving existing assisted households, let alone to expand programs to meet the growing need for them.”
Susan Popkin, co-author of the report and a senior fellow at the liberal-leaning think-tank, said that the cut, if it is included in the fiscal 2019 proposal from Trump, would be “devastating.”
“My thought is that those particular budget cuts are not cost-effective, that we will end up with bigger costs in the future…But if we cut things like the Community Development Block Grant Program that means that we have less affordable housing built by nonprofits, we have less services in the cities, we’re going to have more problems down the road,” Popkin said.
Susan Popkin, a senior fellow at the Urban Institute, co-authored a report in January analyzing how the president’s proposed 2018 fiscal budget would affect federal housing assistance programs. (Caroline Vakil/MNS)
Susan Popkin reflects on how recent events in places like Puerto Rico and Texas have put more pressure on housing assistance programs.
The report claimed that only one in five eligible renter households actually received assistance. Popkin and her colleagues explained that federal housing assistance is particularly sensitive to funding cuts for two reasons: First, housing assistance is not an entitlement so not everyone who qualifies for housing assistance will receive it. Second, housing assistance programs are part of the nondefense-related discretionary portion of the budget so they’re more vulnerable to budget cuts.
Popkin said that given the current status of affordable housing, the president’s proposal, if included in his 2019 request, would make it even harder to meet residents’ need for finding affordable housing.
“Right now we’re in the middle of the worst affordable housing crisis in generations. Rental housing is extremely expensive. There is nowhere within the United States that a person earning the minimum wage can afford a basic two-bedroom apartment. In big cities, especially the crisis continues to get worse. We have only been building high-end housing, there’s very little incentive to build affordable housing. We have been losing a lot of our older housing stock to deterioration – it hasn’t been replaced,” Popkin said.
Popkin said cuts to affordable housing hurt people with low incomes beyond what they have to pay for a place to live.
“You get places like Washington D.C. that have enormous waiting lists and people are on them for years until their number comes up. And in the meantime they have to make due with this crazy expensive housing market. So they’re paying really unaffordable rents and we know that having a high rent burden means that people don’t eat enough, they don’t get health care, they don’t spend as much on their kids so they are real, very serious implications,” Popkin said.
But Ed Olsen, a professor of economics and public policy at the University of Virginia who has been a consultant to HUD for six administrations, argues that the government should shift from funding affordable housing to funding housing vouchers.
“The evidence on the performance of these programs argues that we should be getting housing assistance by using housing vouchers and we should be phasing out housing projects,” Olsen said. “… We should not be subsidizing the construction of new projects as we do in large numbers under the Low-Income Housing Tax Credit program. When public housing comes to the end of its useful life … you’re either going to have to do a major rehab or tear it down and build again. We should simply tear it down, sell the land and give the people in it vouchers.”
Ed Olsen, economics and public policy professor at University of Virigina, said the government should focus on increasing housing vouchers. (Ed Olsen)
Ed Olsen explains some of his concerns with HOME Investment Partnerships’ program performance
Other critics of HUD low-income housing policies say that federal block grants should be eliminated. Vanessa Brown Calder, policy analyst at the libertarian Cato Institute, said that HUD block grants provide too much discretion to local and state governments on how to use them so it’s hard to know if the actual policies are effective.
“The problem with [HUD block grants] is that states don’t have any opportunity costs at the local level. So it’s not as if they have to think carefully about how they’re spending that money that’s coming from the federal government because they don’t feel sort of the costs associated with that money. In general, we have a really hard time knowing if these programs are working and part of that is because they are block grant programs. Their objectives are very loose,” Calder said.
Vanessa Brown Calder, policy analyst at Cato Institute, said federal block grant programs like HOME Investment Partnerships Program and Community Development Block Grant should be eliminated. (Vanessa Brown Calder/Cato Institute)
Vanessa Brown Calder discusses how some of the Community Block Grant Program’s projects she’s researched
Instead, Calder said there state and local governments could change zoning laws to make it easier to build affordable housing, which often is capped or allowed only in certain areas.
Olsen predicted that Congress is unlikely to cut HUD’s budget as deeply as Trump has proposed.
“I was actually at a hearing [where Sen.] Susan Collins, who’s the chair of the Senate housing appropriations subcommittee, just immediately after this was announced [said], ‘There’s bipartisan support on my committee – we’re not going to be doing any of this stuff. We’re not cutting these programs.’ So my guess is little if any cuts,” Olsen said.
But the Trump administration’ views on the HUD housing programs are clear and the president may elaborate on Tuesday in his State of the Union address.
