State and Local Leaders Should Sustain and Expand Investments in Housing Affordability and Stability in Their Budgets

Housing is a basic need for all people — yet across the country, over 22.6 million renter households are spending more than 30 percent of their income on housing — the widely considered threshold of what is affordable. Roughly 771,000 people experience homelessness on any given night. Despite the wide and increasing reach of the housing affordability crisis, the Trump Administration and some in Congress have proposed to strip housing assistance from millions of families. Even if the worst of these cuts are stopped, it is clear the federal government alone will not solve the problem of housing affordability, and it’s more critical than ever for states and localities to invest in housing and services.

At least 34 states and the District of Columbia made new or expanded investments to make housing more affordable or address homelessness in their most recently enacted state budgets. Most commonly, state investments focused on increasing the supply of affordable housing, with at least 27 states using funding for capital grants, reduced cost loans, development-focused tax credits and incentives, and deposits into state Affordable Housing Trust Funds.

Additionally, several states made new or expanded existing investments in rental assistance programs, a critical intervention proven to reduce homelessness and housing instability among people with extremely low incomes. Rental assistance can both help people afford housing in the community and pair with new affordable housing development to ensure it is accessible to those with extremely low incomes. Notably, New York established a new rental assistance pilot program, while several others, including Connecticut, Massachusetts, the District of Columbia, and Maryland increased funding for existing rental assistance programs to support more families.

Sixteen states and the District of Columbia invested in helping people experiencing homelessness access permanent, affordable, and supportive housing as well as keeping them safe as they transition out of homelessness. For example, Oregon provided over $200 million to expand access to emergency shelters, and over $50 million to support homeless households in moving to permanent housing. New Mexico invested over $120 million to expand a combination of new affordable housing alongside shelter, services to help people find suitable housing, transitional housing, and homelessness prevention. Michigan established a fund specifically to expand wraparound services in permanent supportive housing developments.

Several states also took action to make homeownership more affordable. Some states, such as Connecticut and Utah, established or expanded grant or incentive programs for first-time or low- and moderate-income homebuyers. However, some other states pursued overly broad property tax cuts, threatening important state and local revenue and failing to reach those who are most harmed by unaffordability. Moving forward, states should instead consider well-targeted policies to reduce property tax burdens on low- and moderate-income households, including both homeowners and renters.

State funding for these kinds of housing-related investments came not just from general funds, but also from dedicated sources of revenue. Both Maine and Rhode Island used targeted, progressive increases in their real estate transfer taxes and will dedicate a portion of the revenue to new affordable housing and homelessness programs.

States should continue to establish and expand their investment in affordable housing and homelessness solutions, especially given the potential for widespread loss of housing assistance and other basic supports due to Trump Administration and congressional policy choices.

The Trump Administration is advancing policies to significantly cut how much funding is available to support permanent housing for people exiting homelessness, which could leave as many as 170,000 currently housed people back on the streets and in shelter systems and cause thousands of permanent supportive housing developments to close.

The Administration is also poised to release proposed rules that could strip rental assistance away from millions of households, leaving them unable to afford their current rent and vulnerable to eviction and homelessness. Overall, changes to homelessness Continuum of Care funding that reduce permanent supportive housing, congressional proposed cuts to the number of households who will receive Housing Choice Vouchers, and a funding cliff for Emergency Housing Vouchers, threaten to reduce the number of households getting rental assistance by more than 635,000.

These potential cuts to federal housing assistance come on top of cuts in the July megabill (known as H.R. 1) that is projected to take away health care and food assistance from millions of people. The loss of these forms of critical assistance will further increase the risk of housing insecurity and homelessness. Those impacted will struggle to afford rent as they have to use more of their incomes for food and health care.

Maintaining and expanding state investments in housing and services will be difficult given the strain on state budgets from cost-shifts in H.R. 1 and tax cuts many states have enacted that have eroded their revenue base in recent years. As such, states will need to explore revenue-raising options to finance housing investment along with their other state budget priorities. 

The federal government should take immediate action to protect and expand access to affordable housing instead of stripping it from millions of families. However, states and localities can and should play a vital role in investing in housing solutions as well.