OMB Baseline Assumptions Lead to Understatement of Cuts to Housing Assistance

February 15, 2005

Related Areas of Research

Backup documents provided to Congress indicate that, under the Administration's plan, in 2010 programs within the housing assistance budget category Subfunction 604 would be cut by 10.1 percent below the Office of Management and Budget (OMB) “baseline.”[1]  This category includes housing vouchers, public housing assistance, the HOME block grant, programs to serve homeless persons as well as to provide new housing to seniors and persons with disabilities, and several programs administered by the Rural Housing Service in the Department of Agriculture.

But OMB makes three assumptions that cause the baseline for Subfunction 604 to be artificially low.  Because the administration’s proposed funding levels for housing programs are compared with this artificially low baseline level, the resulting cuts are understated.  If the baseline were adjusted to remove these assumptions, then the proposed cut in housing assistance programs would be 19.3 percent in 2010.  The three OMB assumptions are as follows:

  • First, OMB estimates that leftover funds from prior years will be available in the Section 8 program, and counts these funds against the program.  The baseline counts $1.7 billion of these anticipated additional funds against the Section 8 program in 2010 (effectively canceling, or “rescinding” $1.7 billion in funding for housing assistance in that year).  But last year, OMB indicated that it did not expect to have any excess funds in the Section 8 programs after 2008.  It is unlikely that this situation has changed.
  • Second, the OMB baseline omits additional funding for multi-year Section 8 contracts that expire for the first time.  The Congressional Budget Office (CBO) baseline includes $915 million in 2010 for such contract expirations.  This approach reflects requirements of the Budget Enforcement Act.
  • Third, the baseline builds on the artificially low level of funding provided for the public housing operating subsidy program in 2005, when Congress achieved an estimated $994 million in one-time savings by shifting funding from agency fiscal years to calendar years.

Housing Assistance (Subfunction 604) Funding Path in President’s  Budget Compared with Adjusted and Unadjusted Baselines, 2010
(billions of dollars)

 
OMB proposed funding levels $29.6
   
OMB discretionary baseline:  
  Unadjusted baseline (from OMB) $33.0
  Adjusted baseline (from CBPP) $36.7
Total Adjustment $3.7
   
Reductions from unadjusted baseline:  
  Dollar reductions -$3.3
  Percent reductions -10.1%
   
Reductions from adjusted baseline:  
  Dollar reductions -$7.1
  Percent reductions -19.3%
   

In order to correct for these assumptions, in the following table we adjust the OMB baseline by assuming that no prior-year funds will be counted against Section 8 in 2010, by including the CBO level of funding for the first-time renewal of multi-year contracts, and by removing the one-time anomaly in public housing funding.  These adjustments add $3.7 billion to the Subfunction 604 baseline in 2010.

End Notes

[1] See Ruth Carlitz, “Domestic Discretionary Funding Levels for 2006-2010, Detailed Data,” Center on Budget and Policy Priorities, February 15, 2005,  http://www.cbpp.org/2-15-05bud.htm, for explanation of how projected cuts were calculated.

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