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HUD Bill Avoids Deep Cuts in 2008

President’s Veto Threat Risks Loss of Housing Assistance for Low-Income Families

November 16, 2007

Executive Summary

Congress is expected to approve soon an appropriations bill (H.R. 3074) to fund programs administered by the Departments of Housing and Urban Development (HUD), Transportation, and a few smaller agencies. The President has threatened to veto this and other domestic appropriations bills that do not contain the level of funding cuts requested in his budget.[1] To reduce the Transportation-HUD bill down to the President's proposed level, $3 billion would have to be cut from Congress' bill.

The President's budget and the Transportation-HUD appropriations bill differ primarily with respect to funding levels for key low-income housing and related programs. The President's budget would cut funding for HUD programs by $2.3 billion, or 6.1 percent, below the 2007 level, adjusted for inflation. Congress' bill would increase funding by $576 million (or 1.5 percent) above the inflation-adjusted 2007 level.[2] Nearly all of the difference in HUD funding consists of funding increases needed to prevent substantial cuts in housing assistance for large numbers of low-income families and people who are elderly or have serious disabilities and in community development funding for states and localities. If the President succeeds in forcing Congress to enact the cuts he has proposed, the following consequences will ensue.

  • Section 8 housing vouchers used by 25,000 low-income families in 2007 will receive no renewal funding in 2008. In addition, more than 15,000 new vouchers for homeless veterans and other vulnerable families will not be funded.
  • Public housing will face the deepest funding shortfalls the program has ever experienced, exacerbating the deterioration in living conditions and security that has occurred in recent years.
  • Private owners of nearly 1 million apartments assisted under the project-based Section 8 program will be required to accept renewal contracts that guarantee only a few months of assistance payments, leading to doubts about whether HUD will be able to meet its contractual obligations. As a result, a large number of apartment-building owners could decide to terminate their partnership with HUD and raise rents on thousands of apartments that are now affordable to the low-income seniors, people with disabilities, and others who occupy them.
  • Funding provided under the Section 202 and 811 supportive housing programs for low-income seniors and people with disabilities will fall by 22 and 47 percent, respectively, compared to the 2007 level (before adjustment for inflation), reducing the construction of new units by nearly half. This would result in the loss of approximately 2,800 new affordable housing units.
  • State and local governments will lose $1.2 billion in Community Development Block Grant funding in 2008.
  • $200 million approved by Congress to mitigate the growing rates of mortgage defaults and foreclosures will be eliminated. This funding would provide counseling services to help borrowers preserve their homes by modifying or restructuring their mortgages. Without assistance, tens of thousands of additional families are likely to lose their homes to foreclosure.[3]

(The table in the appendix shows state-by-state impacts of the cuts in Section 8 housing vouchers, public housing, project-based Section 8 rental assistance, and CDBG grants that will occur if the President prevails and forces funding levels down to the amounts he has proposed.)

Table 1:
What's at Stake in the HUD Bill for 2008?[1]

Program Area

Funding Cuts that Would Result from Reducing Funding to the President's Proposed Levels

v. Congress' Bill

v. 2007 Level, adj. for inflation

Housing Vouchers (total)

-$436 million

-$354 million

Public Housing Operating/Capital

-$615 million

-$451 million

Project-Based Section 8 renewals

-$616 million

-$465 million

Elderly/Disabled Housing

-$272 million

-$298 million

CDBG formula grants

-$1.1 billion

-$1.1 billion

[1] Inflation adjustments made by CBPP using the Consumer Price Index. CDBG figures are based on the level of new program funding requested by the President,. See the note 30 and the state-by-state table in the appendix for a more complete explanation.

Click here to read the full-text PDF of this report (21pp.)

View the appendix tables: State Impacts of President's Cuts in Key Programs (3pp.)

End Notes:

[1] See Jim Horney and Martha Coven, "The Labor-HHS-Education Bill - What's At Stake: The President's Funding Levels Would Weaken Education, Medical Research, and Other Critical Needs," Center on Budget and Policy Priorities, November 8, 2007.

[2] Comparisons between the aggregate level of HUD funding in the President's budget, Congress' bill, and the 2007 level adjusted for inflation are based on CBO's March baseline. To facilitate longer-term historical comparisons, program-level comparisons use the Consumer Price Index. Using a different deflator would not affect the qualitative conclusions of this paper.

[3] While included in the Transportation-HUD bill, the additional funding to mitigate mortgage foreclosures would be administered by the Neighborhood Reinvestment Corporation, which is not managed by HUD. Accordingly, the HUD funding comparison figures presented above do not include this funding.