Earlier this month, the White House released the President's FY13 budget request, which outlines the Obama Administration's housing policy priorities for the coming year. This budget has largely underwhelmed affordable housing advocates, who see the budget request as a mix of basic maintenance of some programs and troublesome policy changes for others. Several areas in particular have given housing advocates, include MHP, cause for concern.
Click here for a chart for selected items from the proposed housing budget.
Budget Environment for FY13
Unfortunately, the new budget was crafted in an environment that stacks the deck against housing. First, the previous budget, FY12, enacted deep cuts to a number of core housing programs. As a result, even an increase in spending on housing programs for 2013 would only be making up lost dollars from the previous year.
Second, in 2011 Congress passed the Budget Control Act of 2011 (BCA), which caps discretionary spending in FY13 and requires across the board cuts even after the budget is finalized. As a result, additional cuts to housing programs (around 9%) will kick in starting in January 2013. The looming BCA cuts could spark efforts to modify where cuts are placed. One effort could seek to preserve military spending and shift cuts onto domestic spending, such as affordable housing.
Mandatory Minimum Rents Would Hurt the Poorest
The FY13 budget proposal contains a number of provisions to lower the cost of housing programs. The most concerning is mandatory minimum rents for Public Housing, Project Based Rental Assistance (formerly known as project based Section 8) and Tennant Based Rental Assistance (tenant based Section 8). Currently, public housing agencies have the option of mandating minimum rents up to $50. The FY13 budget would set a mandatory $75 per month minimum rent and expand mandatory minimum rents to Section 811, Section 202, and Section 236 programs, which currently do not have mandatory minimums.
National advocates believe this move will have a profoundly negative effect on the lowest income households. Mandatory minimums, or a $25 increase in the minimum, could result in significant hardship for the poorest households. This is because the only households affected by mandatory minimums are those with no or exceedingly low incomes. This increase in hardship is not justified by the $150 million this measure is estimated to take in.
Significant Cuts to Project Based Rental Assistance
One of the more significant funding cuts in FY13 is a $600 million (roughly 7%) decrease in funds for Project Based Rental Assistance (formerly project-based Section 8). In response, HUD is expected to fund only one third of its renewable portfolio with full year contracts. The remaining two-thirds would be given short term contracts, set to run through November 2013. This means that the cost would be passed onto the FY14 budget, requiring either a significant increase in funding, or deep cuts elsewhere. Property owners, managers and advocates are also very concerned that investors will question the stability of the project-based program, which could lead to affordable properties being lost to the unsubsidized market.
Changes in Funding for Public Housing May Delay Needed Repairs
Currently, public housing agencies (PHAs) are funded out of two funds, the operating fund which is meant to cover the day to day expenses of running public housing, and the capital fund, used for fund large repairs and needed renovations. The proposed budget would merge these two funds into a single fund. Some are concerned that cash-strapped public housing agencies might use capital dollars to supplement operating dollars, further adding to the immense backlog of capital expenses that PHAs already have.
What Advocates Can Do
While the President's budget request is a strong indicator of the administration's priorities, the process that will yield the final FY13 budget is far from over. Advocates have several opportunities to exert influence. Throughout the budgeting process, advocates should weigh in with HUD in order to make their concerns known about the mandatory minimum rent provision and the insufficient Project-Based Rental Assistance funding in FY13.
In May, the House and Senate will adopt budget resolutions indicating how much they intend to allocate. The Appropriations Committee will then divide that funding among its 12 sub committees. In order to adequately fund HUD programs in FY13, additional money is needed to make up for markdowns last year. Advocates should weigh in with the Appropriations Committee and urge them to increase allocations for the subcommittee on Transportation/Housing and Urban Development (THUD), which funds HUD. In addition, advocates can put in a word for funding for Rural Housing Service, which is funded through USDA in the Agriculture subcommittee.
New Listserve for Minnesota Federal Housing Policy