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Preserving Low-Income Housing Assistance in Tight Budgetary Times

As I noted yesterday, any cuts to housing assistance for low-income families under the “sequestration” scheduled for January — or under a budget deal that would replace it — would come on top of large cuts that policymakers have already enacted.

Last year’s Budget Control Act (BCA) set tight spending caps that will cut $1.5 trillion from discretionary programs over the next decade, including some $900 billion from housing, community development, and other programs outside of defense.

That’s likely to put intense pressure on the Department of Housing and Urban Development (HUD) budget, even as the number of families struggling to afford their rent has risen sharply.

The caps would shrink HUD’s annual funding by $2.5 billion by 2021 — equivalent to eliminating housing vouchers for more than 300,000 low-income families or reducing funding for the Community Development Block Grant, HOME (a block grant to support affordable housing for low-income households), and the Native American Housing Block Grant by 55 percent — if the cuts are distributed proportionally.  (Our new report has state-by-state estimates of the potential impact on vouchers and other HUD programs.)

Moreover, these figures probably understate the potential impact on low-income families and communities.  For instance, no funds would be available to address the roughly $26 billion backlog in capital repairs needed to keep public housing in good condition.  If these repairs aren’t made, public housing residents will have to live in deteriorating conditions and hundreds of thousands of affordable apartments likely will eventually be lost to disrepair.

To preserve needed assistance for low-income families and communities, policymakers should:

1. Prioritize housing, community development, and other low-income programs in making discretionary funding decisions. For example, the fiscal year 2013 HUD funding bill that the Senate Appropriations Committee has approved adheres to the BCA caps while averting cuts in the number of families receiving rental assistance and boosting funding modestly for priorities such as assisting those who are homeless.

2. Enact comprehensive rental assistance reform. The Affordable Housing and Self-Sufficiency Act (AHSSIA) would streamline programs and enable HUD and housing agencies to stretch available funds further to assist vulnerable families.

3. Embrace public housing reforms that enable agencies to obtain more private capital. AHSSIA would expand a demonstration to make it easier for agencies to raise private capital to rehabilitate housing developments and preserve affordable rental housing for the long term.

4.  Prevent further cuts in funding for non-defense discretionary programs. Policymakers should adopt a balanced approach to deficit reduction that includes significant revenues.