Shutdown + Sequestration Double Whammy

Federal budget debates have dominated 2013, particularly since the sequestration cuts went into effect in March. The conversation was elevated to a new level with the federal government shutdown on October 1. How does the shutdown – due to stalled budget negotiations and politicking – affect housing, both nationally and in Minnesota? And what about organizations and people already impacted by sequestration?

Many of the programs not receiving funds because of the shutdown have already been affected in the past year by sequestration cuts, programs including public housing, housing choice vouchers, homeless assistance, and Community Development Block Grants. The estimated cuts in Minnesota on housing and community development programs in 2013 due to sequestration total $9.1 million. Cash reserves at housing authorities, which otherwise could serve as a financial buffer during the shutdown, have already been used in many cases to offset the sequester. As President Obama said in his October 8 press conference on the shutdown, “We have already used many of our emergency powers… and now the clock is ticking.” The same is true for housing and other social support organizations in Minnesota and around the country.


HUD Programs Limp Along, but USDA Rural Development Situation is Urgent

Due to the shutdown, the U.S. Department of Housing and Urban Development (HUD) is now paying only 400 out of HUD’s 9,000 employees to address issues that may “result in a threat to safety of life and protection of property”, and that number is dwindling as the shutdown continues. These employees are attending to homeless assistance programs, the distribution of HUD block grants, and FHA insurance programs. Yet the shutdown is poised to impact housing related activities from stalling development and maintenance of affordable housing, putting housing assistance at risk, and delaying home buying.

HUD’s largest rental assistance programs (tenant-based rental assistance, public housing, and project-based rental assistance) appear to have enough funding to continue normal operations through the end of the calendar year, according to the National Low Income Housing Coalition. HUD also says that it will continue to renew project-based contracts during the shutdown while funding is available, also through the calendar year.

But the USDA Rural Development Program has very few staff remaining in rural housing program administration. This program was already short on funds earlier this year due to sequestration and other factors, and was counting on the October 1 budget replenishment to make annual budgets work. It does not appear that the USDA has a plan to, or is able to, address the lack of payments for rental housing property owners (payments for these properties had already been suspended due to sequestration funding shortfalls). We hope to have more details on this aspect of the crisis soon. MHP is in regular contact with partners at the National Low Income Housing Coalition in Washington, DC and will share details with you as we learn them.


Share Your Stories with MHP and Your Congresspeople

Let us know of any immediate or impending housing-related impacts of the shutdown on your organization or people who you work with.

  • Please comment directly within the blog below, or email MHP Policy Director ThaoMee Xiong at This will enable us to know what’s happening and be able to share it with our national partners and elected officials.
  • Contact your Senators and Congressperson daily during the shutdown and express your concern for Minnesotans who depend on federal benefits for stability in their lives. Look up your elected officials at

We will continue to keep you posted on the shutdown and opportunities to take action.