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What Will Happen to Housing Funding in the Next 2 Years?

On Friday, February 25, 2011 NHC hosted its annual Budget Forum in Washington, DC. With over 160 congressional staff, housing advocates and  thought-leaders in attendance this year’s forum resulted in a fruitful discussion on the housing-related requests in the President’s FY 2012 Budget Proposal, critical affordable housing research and the outlook for housing programs in both the FY2011 and FY2012 budgets and beyond.

Barbara Sard,Center on Budget and Policy Priorities, gave the keynote address at the Budget Forum and is the guest blogger for today’s post.

With a focus on spending cuts coming both from Congress and the Administration, many are wondering what this means for low-income housing programs for the next two years. This past Friday, at the National Housing Conference’s 2011 Budget Forum, I explained the broader budget context for this question. My presentation (slides here) focused on what’s likely to happen to funding for federal housing programs this year as well as in the next few years. Unfortunately, I don’t have a crystal ball and can’t predict exactly how negotiations will play out. I can, however, provide some parameters of what’s likely to happen by going over housing funding levels under two competing budget proposals: the House-passed budget plan for 2011 and the President’s budget plan for 2012.

For some context, here’s a chart from my presentation that shows how much of the federal budget goes to community development and housing assistance: 

The House-passed budget proposal (which isn’t likely to pass in the Senate and the President has threatened to veto), is a mixed bag from the perspective of low-income housing assistance. It cuts Department of Housing and Urban Development (HUD) funding by $5.4 billion below the 2010 level, a 12 percent cut, and by $7 billion, or 15 percent, below the President’s 2011 request. Block grants are cut the most sharply (see this slide for specifics). And, despite record increases in severe housing needs, there is no new funding for programs helping the most vulnerable populations, like veterans and the elderly (see this slide for specifics). On the flip side, renewal of ongoing rental assistance is largely protected under the House plan, except for a $1 billion cut in public housing capital funds. Project-based Section 8 (PBRA) and the Housing Choice Voucher program saw funding increases (more here).

Under the President’s 2012 budget proposal, there are modest gross funding increases that continue to prioritize the renewal of existing rental assistance. It makes some progress against homelessness (a $632 million increase, including new vouchers) – but not enough to reverse the substantial increase in homelessness in the last several years — and funds the Sustainable Communities, Choice Neighborhoods and TRA initiatives. However, to fund these priorities, the proposal trims some of the HUD block grants.

The bottom line is that under both of these proposals, there is a commitment to renewing existing rental assistance and reduce spending due to budget constraints. The Obama proposal would make at least some small steps forward to reduce homelessness and leverage other public and private investments to improve housing and communities. The final budgets for this year and next should put a greater focus on meeting housing needs, both to boost the economic recovery and to assist vulnerable populations.

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