HUD Budget Contains Major Funding Shortfalls
Congress Needs to Add $6.5 Billion to Administration’s Request to Avoid Cuts In Assistance for Low-Income Families
End Notes
[i] CBPP calculations based on Congressional Budget Office analysis of the HUD provisions of the omnibus appropriations act for fiscal year 2008. Total is adjusted to include advance appropriations for Housing Choice vouchers for fiscal year 2009. The CBO analysis deducts rescissions, certain receipts, and other offsets from the new budget authority that the appropriations act provides.
[ii] The 2008 HUD appropriations law included a one-time rescission of $723 million in housing voucher funds advanced in the 2007 law for the 4th quarter of calendar year 2007. (The voucher program is funded on a calendar-year, rather than fiscal-year, basis.) A similar rescission cannot be instituted in 2009 without harming the voucher program. In addition, the 2008 law rescinded $1.25 billion in recaptured funds from the Housing Certificate Fund. According to the President’s budget, there are no such funds available for rescission in 2009. Thus, a total of $1.973 billion in Section 8 balances was rescinded in the 2008 law, with this amount counted as a budget offset.
[iii] OMB public database. Figure adjusted to treat Section 8 advances on calendar-year basis. The figure therefore is slightly higher than the $38.5 billion cited in Administration budget documents. The President’s budget includes no proposed rescissions of recaptured Section 8 balances, and budget documents make clear that large recaptures will not be available in FY 2009.
[iv] According to the Center’s estimates, $15.5 billion will be required to renew vouchers in use in 2009, some $1.3 billion above the President’s request and $868 million above the 2008 level. This estimate is explained in more detail in the section of this paper on housing vouchers, especially the text box on page 5.
[v] The Center estimates that $5.12 billion is required to fully fund the Public Housing Operating Fund. This figure is based on a Center estimate of the amount of operating subsidies for which agencies will be eligible to cover utility costs and HUD estimates from the 2009 Congressional Budget Justifications of non-utility components of operating subsidy eligibility. The $5.12 billion is $190 million lower than HUD's estimate that a $5.31 billion appropriation would be required to provide agencies with the full amount of operating subsidies they are due, because the Center estimate of utility eligibility is lower than the estimate HUD uses. Utility eligibility in 2009 will be calculated based on utility rates during the period from July 2007 through June 2008, inflated based on the rate of utility inflation from May 2007 through May 2008. The Center estimate replicates this formula using available information on actual public housing utility costs in previous years, CPI data on utility inflation through January 2008, Department of Energy projections of energy prices in later months, and projections of non-energy utility prices that assume prices will continue to grow at the same rate in recent years.
[vi] $3.4 billion is the estimated amount needed above the FY 2008 level (or $2.4 billion above the budget request) to provide 12 months of funding for every Section 8 contract up for renewal in FY 2009. The Center estimate is based on HUD and Treasury data. Congress could meet a portion of the need for the project-based Section 8 program by appropriating supplemental funds in 2008 or including an advance appropriation of budget authority for 2010 in the budget resolution and the appropriations bill for 2009. These options could alleviate some of the pressure that the shortfalls in the Section 8 program will place on the HUD budget for 2009.
[vii] This amount is the difference between the CBO FY 2009 baseline for discretionary HUD programs and the actual FY 2008 funding level, excluding from both totals the Section 8 rescissions and amounts for housing voucher renewals, the Public Housing Operating Fund, and the renewal of Section 8 project-based rental assistance. Also excluded from the FY 2008 total was an additional offset of $509 million related to a one-year change in a statutory limitation on the FHA’s insurance of home equity conversion mortgages.
[viii] Based on Administration’s FY 2008 request of $35.571 billion as scored by CBO and adjusted to treat Section 8 advances on a calendar-year basis.