August 23, 1999
The House VA-HUD Appropriations Bill Would Reduce
Rather Than Increase Funds For HUD Programs
by Jeff Lubell
A few media reports regarding the House version of the VA-HUD appropriations bill state that the bill would increase funding for HUD programs by $2 billion relative to FY 1999 levels. These reports are misleading. The House bill actually contains reductions in funding available for appropriated HUD programs in FY 2000 of more than $900 million relative to FY 1999 levels.(1) The bill's proposed FY 2000 funding level for appropriated HUD programs also is nearly $2 billion below the Administration's request.
The confusion has arisen because of obscure rules that govern budget accounting and scorekeeping by the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). These rules required OMB and CBO to "score" the net new budget authority provided for appropriated HUD programs in FY 1999 at a level much lower than the actual amount Congress made available to support HUD programs in FY 1999. Focusing on actual funding levels, rather than the "score" used for budget accounting purposes, shows that the pending House appropriations bill proposes a reduction of more than $900 million for appropriated HUD programs in FY 2000 compared to FY 1999 levels.
- For FY 1999, Congress provided approximately $27 billion in total funding for appropriated HUD programs.
- For FY 2000, the House VA-HUD appropriation bill would provide approximately $26 billion in total funding for appropriated HUD programs. The bill contains at least $900 million less for HUD programs than was provided for FY 1999 (and is nearly $2 billion below what the Administration requested.(2))
Stated this way, the calculation is quite straightforward. The confusion arises when one considers the effect of budget accounting and scorekeeping rules. These rules require that the amount of net new budget authority reported for appropriated HUD programs in FY 1999 be reduced to reflect the effect of several one-time "offsets" that were included in the FY 1999 VA-HUD appropriations bill, despite the fact that these offsets did not affect or reduce the operations of appropriated HUD programs. As Figure 1 shows, the $27 billion in total budget authority provided for appropriated HUD programs in FY 1999 was reduced, for scorekeeping purposes, by subtracting:
- $2 billion for rescissions of unused Section 8 funds that were appropriated in previous years. Because Congress appropriated sufficient funds in FY 1999 to renew all expiring Section 8 contracts, these rescissions had no effect on the number of households served or on the amount of housing assistance these households received. The rescissions reduced the net new budget authority attributable to HUD programs by $2 billion because the budget accounting and scorekeeping rules require OMB and CBO to count such rescissions of unused funds as offsets to current funding levels.
- Nearly $1 billion to reflect one-time offsets in mandatory programs the Federal Housing Administration administers. OMB and CBO are required to count any savings in mandatory programs as offsets to appropriated spending if the legislative provisions achieving the savings are included in an appropriations bill. Although the provisions of last year's VA-HUD bill that secured these one-time savings had no effect on the total amount of funds available for appropriated HUD programs in FY 1999, they caused the amount of net new budget authority scored by CBO and OMB to be reduced by $1 billion.
Media accounts stating that the House bill provides $2 billion more for HUD programs in FY 2000 than was provided in FY 1999 reflect the mistaken assumption that HUD received only $24 billion to fund FY 1999 activities. But as just explained, it received $27 billion. The news reports that speak of a $2 billion increase looked only at the net new budget authority scored for FY 1999, rather than the total amount of funding Congress provided for appropriated HUD programs in FY 1999.
An important question to ask in assessing the adequacy of the funding that the FY 2000 VA-HUD appropriations bill provides for HUD programs is how this funding compares to the funding that Congress provided for HUD programs in FY 1999. The answer is that the bill provides at least $900 million less in FY 2000. As a result, the FY 2000 bill necessitates cuts in HUD programs.(3)
Accounting and Scorekeeping Adjustments to Funding for HUD Programs
FY 2000 House Bill
Total Funding for HUD Programs
Accounting and Scorekeeping Adjustments:
- rescission of old budget authority $2 billion
- mandatory program offsets $1 billion
Net New Budget Authority Required for Accounting and Scorekeeping Purposes $24 billion
This is borne out by a program-by-program examination of how much funding various HUD programs would receive. The following are several of the reductions in HUD programs that the House bill contains:
- The bill cuts public housing funds by $515 million relative to FY 1999 levels, an eight percent reduction. The bill also provides $185 million less in public housing operating funds than the Administration requested, choosing instead to fund this account at the FY 1999 level that is widely acknowledged to have been inadequate. Public housing funds are necessary to ensure that the elderly, the disabled and poor families with children can continue to live in decent, affordable public housing units. The funds also help to pay for programs to increase the safety of public housing and to replace severely distressed public housing developments with smaller mixed-income developments. HUD has noted that the reduced operating funding levels would lead public housing authorities to reduce their maintenance expenditures, which could result in thousands of public housing units becoming substandard.
The bill also fails to fund any of the 100,000 new Section 8 housing vouchers that Congress authorized as part of last year's public housing reform act. Housing vouchers help low- and moderate-income families, including elderly, disabled and working families, afford apartments that they locate in the private market.
The Administration has proposed providing 25,000 new vouchers to families seeking to move from welfare to work, 18,000 new vouchers to homeless households, 15,000 new vouchers to elderly households, and 42,000 new vouchers to help meet other local housing needs. These housing vouchers are needed. HUD's most recent report to Congress on housing needs found that, in 1995, some 5.3 million very low-income renter households spent more than half of their incomes on housing or lived in severely substandard housing. On average, families newly admitted to the Section 8 housing voucher program must wait approximately two years to receive assistance. Waiting times in large cities are even longer. The wait for a voucher in Chicago is about five years. In Miami, the average wait is eight years. In Los Angeles, the wait can be as long as 10 years.(4)
In addition to the reductions in low-income housing and community development programs, the House VA-HUD Appropriations bill eliminates funding for the Corporation for National and Community Service, which funds community service work through the AmeriCorps program, and cuts NASA space and science programs by about $1 billion relative to this year's levels. The bill also makes significant reductions in a number of environmental programs.
1. This paper addresses funding levels for "appropriated" (i.e., discretionary) HUD programs, by which we mean programs whose spending levels are determined by annual appropriations acts. We do not address funding levels for "mandatory" HUD programs whose spending levels are determined by underlying law rather than annual appropriations acts.
2. The Administration's FY 2000 budget seeks $28 billion for HUD programs, including more than $10 billion to renew expiring Section 8 contracts. Because the Administration assumes that $4.2 billion of the funds needed to renew expiring Section 8 contracts would not actually be obligated until FY 2001, it is proposing that the appropriations bill for FY 2000 provide $23.8 billion in funds for FY 2000 and a $4.2 billion advance appropriation for FY 2001.
3. For similar reasons, reports of substantial increases in Section 8 funding (reports range from a $1 billion increase to a $2.2 billion increase) also are mistaken. In FY 1999, Congress provided $10.33 billion in total funding for the Section 8 account. The net new budget authority attributed to this account was less, however, because of the rescissions of some $2 billion in unused budget authority from prior years. The FY 2000 bill would provide the Section 8 account with $10.54 billion in total budget authority. This is an increase of $214 million relative to actual FY 1999 funding levels, not an increase of $2.2 billion.
Moreover, this $214 million does not constitute a program increase or expansion. For historical reasons, increased budget authority is needed each year simply to renew existing Section 8 contracts as the old contracts expire. While the House bill would provide the Section 8 account with $214 million more than it received in FY 1999, these funds would not result in an increase in the number of assisted households. Nor would this increased budget authority substantially change the amount of actual expenditures (or outlays) for this program. In fact, members of the VA-HUD Appropriations Subcommittee have acknowledged that the amount of budget authority the bill provides for Section 8 renewals would be insufficient even to renew all expiring contracts. Acknowledging the shortfall, Subcommittee members have stated they hope sufficient additional budget authority will be found prior to the signing of the bill to make up the difference.
4. Office of Policy Development and Research. U.S. Department of Housing and Urban Development. A Picture of Subsidized Households in 1998: United States Summaries (1998) and Waiting in Vain: an Update on America's Rental Housing Crisis (1999).