House Funding Bill Cuts 140,000 Housing Vouchers

The 2018 funding bill for the Department of Housing and Urban Development (HUD) that the House Appropriations Committee approved this week fails to renew 140,000 Housing Choice Vouchers that low-income seniors, people with disabilities, and families with children are now using to afford a decent home. 

These voucher losses would come at a time when the number of low-income families struggling to pay rent far exceeds the available aid.  Because housing vouchers are also critical for addressing homelessness, cuts would stall community efforts across the country to reduce such hardship.

The House bill provides $18.7 billion to renew housing vouchers in 2018.  While that’s $355 million more than Congress provided in 2017 (and $1.1 billion more than President Trump proposed in his budget), it’s $1.2 billion or 6 percent less than the $19.9 billion we estimate is needed to renew all vouchers in 2018.  The bill also cuts funding for voucher program administration by $100 million below the already inadequate 2017 level. (In 2017, state and local housing agencies will receive at least 20 percent less funding than what they’re eligible for under the HUD administrative fee formula.)

As we’ve explained, the reasons for the higher renewal cost in 2018 are straightforward.  Voucher subsidies must rise by an estimated 3.5 percent in 2018 to keep pace with the growing gap between tenant incomes and rising rent and utility costs.  (By comparison, per-voucher costs rose 3.8 percent from the first quarter of 2016 to the first quarter of 2017, the latest quarter for which we have data.)  In addition, the number of vouchers that families are using and must be renewed next year will grow modestly because HUD recently issued new vouchers — including some aimed at helping homeless veterans or preserving former public housing units under the successful Rental Assistance Demonstration — that will need renewal funding for the first time in 2018.  Overall, the cost of renewing housing vouchers will thus rise to $19.9 billion, we estimate.

The consequences of a 6 percent shortfall in renewal funding are well known, as the program faced a 6 percent shortfall after the sequestration budget cuts took effect in 2013.  Housing agencies across the country stopped reissuing vouchers to needy families when others left the program, thereby cutting the number of families they assisted and lengthening families’ stays in homeless shelters.  By mid-2014, agencies were assisting 80,000 fewer households than before sequestration.  Moreover, the cuts likely would have worsened if policymakers hadn’t significantly boosted funding in 2014 and 2015, enabling agencies to stem the losses and begin restoring vouchers to families.

To avoid repeating such losses in 2018, Congress must improve on the House bill as funding legislation moves through Congress.