Budget Caps Too Tight for Adequate Rental Assistance

The House Appropriations Committee is expected tomorrow to allocate 2016 funding among its 12 subcommittees, one of which oversees the Departments of Transportation and Housing and Urban Development (HUD).  The so-called “THUD” subcommittee is apparently one of the few that will receive a significant increase over 2015 funding.  The committee is right to prioritize THUD funding, most of which goes for rental assistance for low-income seniors, people with disabilities, and other vulnerable families.  Yet the allocation will fall far short of what’s needed to maintain rental assistance for the current number of recipients unless the subcommittee sharply cuts other HUD or transportation programs to free up more money for rental assistance.

The bottom line is that unless policymakers raise the harsh budget caps on annual appropriations funding under the 2011 Budget Control Act and under sequestration, they will find it very hard to avoid cutting housing programs for needy families. 

The Appropriations Committee will allocate $55.27 billion for THUD, $1.5 billion above the 2015 level, documents show.  But we estimate that HUD will require a roughly $3 billion increase just to sustain current rental assistance for the nearly 5 million low-income families that receive it — and that’s without making any progress to restore sequestration cuts or further reduce homelessness.  There are three main reasons why:

• The Section 8 Project-Based Rental Assistance program, which helps 1.2 million low-income households — two-thirds of them seniors and people with disabilities — will require an additional $1 billion in 2016 to sustain assistance to these families.  HUD’s switch from a fiscal-year to a calendar-year funding cycle for the program, which Congress endorsed, yielded one-time savings in 2015, but Congress must return to funding full program costs in 2016 to prevent families from losing rental assistance.
• The Housing Choice Voucher program will also require a sizeable funding increase to prevent families from losing rental assistance.  Following sequestration in 2013, state and local housing agencies sharply reduced the number of families using vouchers.  Using the funds provided in 2014 and 2015, however, agencies will likely restore vouchers for some 30,000 families.  To renew these vouchers along with the other vouchers that Congress funded this year will require an additional $848 million in 2016, HUD estimates.
• The estimated decline in receipts from Federal Housing Administration mortgage insurance programs, which help finance HUD programs, created a hole of more than $1 billion in HUD’s 2016 budget. 

Transportation Department programs comprise close to a third of THUD funding, but Congress won’t likely find significant savings there.  More than half of discretionary transportation funding goes to operate airports, for example, an area that Congress has been loath to cut.  (When sequestration took effect in 2013, strong congressional opposition derailed a Federal Aviation Administration plan to cut costs by reducing service at small airports.)  While the House may cut funding for rail or other programs, the possible savings wouldn’t come close to what’s needed to sustain rental assistance programs.