Sequestration, automatic across-the-board cuts to federal defense and non-defense discretionary spending, was meant to be a disincentive for political gridlock.  However, it apparently did not serve its intended purpose as federal lawmakers were not able to agree on a deficit reduction package by the March 1st deadline.

Though advocates hoped Congress would craft an alternative deficit reduction package when it recently took up the 2013 budget bill, on March 21, 2013, Congress passed a 2013 budget bill that reaffirms sequestration. Needless to say, this is bad news for housing and the impacts of sequestration are already being felt in Minnesota. A federal and state summary follows, along with a call for advocates to make their voices heard in light of the devastating cuts.

National Impacts

HUD and USDA Rural Housing programs will both be cut by 5.1%.  Since there are only seven months left of the 2013 fiscal year; it actually amounts to a 9% cut until October 1, 2013.

HUD estimates that nationwide 125,000 households will lose their Section 8 vouchers and become homeless; 100,000 people will lose homeless assistance and be back on the streets; and 7,300 households served by the Housing Opportunities for Persons with AIDS Program (HOPWA) will lose assistance and be at risk of homelessness. Public housing agencies, already experiencing a severe need for housing repairs and maintenance, will be forced to continue housing tenants in substandard, or even risky, conditions.

Other affected programs include HOME, which will stifle development of new affordable rental and homeownership units and cause many to lose their jobs; and the Community Development Block Grant (CDGB), which will eliminate funding for many community development activities.

Minnesota impacts

Based on estimates provided by the Center of Budget and Policy Priorities, in Minnesota alone, $2,344,999 will be cut from CDBG; $671,532 will be cut from the HOME program; $895,894 will be cut from Native American Housing Grants; $3,685,610 will be cut from public housing; $1,395,964 will be cut in homeless assistance; $59,508 will be cut in HOPWA; and 1,584 households will lose their Section 8 vouchers. 

These estimates may not be far off, as local sequestration impacts are already being felt across Minnesota:

• Duluth HRA anticipates a 6% reduction to their administration fee to run the Section 8 program; this means that they will be receiving about 69% of their cost to administer the program. They will have to use their local property tax levy to make up the difference.
• St. Paul PHA says that they have stopped reissuing vouchers to families on the Section 8 waiting list. If a current voucher holder leaves the program, the PHA will retain the voucher to conserve cash. They still will issue vouchers to tenants moving out of rental housing where there are project based vouchers, as required by law.

What does the 2013 budget bill mean for these HUD programs?

In the final 2013 budget bill passed on March 21, funding for some important housing and homeless programs was increased above the 2012 level, including Homeless Assistance Grants, which received an additional $132 million and the Public Housing Operating Fund, which received an additional $300 million. This additional funding will somewhat alleviate the impacts of sequestration in the 2013 fiscal year for a couple of HUD programs.  The Public Housing Operating Fund, however, is still severely underfunded, even with the additional $300 million.   

What next

Important housing and homeless programs will continually be cut indiscriminately each year until Congress can replace sequestration with an alternative deficit reduction package.  The House passed a 2014 budget resolution on March 21st that would have been even more devastating than sequestration, but it was squarely rejected by the Senate.  This means that there is still time to craft a fair 2014 budget resolution.

Contact your Members of Congress today and ask them to cancel sequestration and support legislation that contains fair, targeted spending cuts and revenue increases. The message shared by housing advocates across the country should be: protect our housing and homeless programs; balancing our budget should not be done on the backs of the middle and low-income families in our nation.

Be sure to share stories of people who will be affected, whether yourself or people you work with.

Contact Brandon Gil to share your story with MHP.