Trump Budget Calls for Deep Cuts to Affordable Housing Programs

On May 23, the Trump administration released its “Taxpayer First” fiscal year 2018 budget request. The request includes the 2018 proposed budget for HUD. HUD’s request includes $40.68 billion in gross discretionary funding for the Department. This amounts to a decrease of 13.2 percent under the proposed budget. The proposed reductions would be implemented primarily through rental assistance reforms and eliminating funding for programs. Additional savings are associated with streamlining HUD’s own internal operations. Meanwhile, the budget seeks $2.25 billion to help local communities house and serve persons and families who are experiencing homelessness.

“This Budget reflects this Administration’s commitment to fiscal responsibility while continuing HUD’s core support of our most vulnerable households,” said HUD Secretary Ben Carson. “We will work very closely with Congress to support the critical work of our agency as we vigorously pursue new approaches to help work-eligible households achieve self-sufficiency.” 

Rent reform. Changes to rental assistance programs included in the 2018 President’s Budget include:

An increase in the tenant contribution toward rent from 30 percent of adjusted income to up to 35 percent of gross income (that is, income adjusted by exclusions but not deductions). Hardship exemptions, as defined by the Secretary, will be available for tenants. Note: The Department will implement this provision as a pilot in PBRA, 202, and 811 in 2018; it does not plan to implement this in the Public Housing or HCV programs in 2018;

• Establishing minimum tenant rental payments of $50 per month, with hardship exemptions;
• Elimination of utility reimbursement payments to tenants, sometimes referred to as “negative rents.” These payments have occurred when tenant-paid utility costs exceeded the minimum rent due. Hardship exemptions, as defined by the Secretary, will be available for tenants;
• For Project-Based rental assistance/202/811: A one-year freeze on annual rent adjustment increases, which may include those made using an annual operating cost adjustment factor, annual adjustment factor, budget-based rent increase, or updated market rent study;
• For tenant-based rental assistance (TBRA) and Public Housing: Expanded waiver authority for statutory or regulatory provisions related to PHA administrative, planning, and reporting requirements, energy audits, income recertification, and program assessments.

Housing Trust Fund. The budget calls for eliminating the national Housing Trust Fund (HTF). The HTF is one of the only new social safety net programs in a generation. It was launched by the bill President George W. Bush signed into law in 2008 to try to rescue Fannie Mae and Freddie Mac from the subprime mortgage crisis. The fund was designed to create and preserve affordable housing for families with worst-case needs, but it only recently came online. When the financial crisis threatened to become a global catastrophe in 2008, the HTF was shelved.

The national HTF is funded through a small fee on Fannie Mae and Freddie Mac. The proposed budget allows the HUD Secretary to direct these resources to offset the cost of salaries, contract expenses, and technology improvements at the Federal Housing Administration (FHA).

Tenant-Based Rental Assistance. The budget would cut funding for TBRA by nearly 5 percent compared to FY17 funding levels. The request provides $19.318 billion for TBRA, $17.584 billion of which is to renew previous contracts.

The administration would also cut funding for new Section 811 mainstream vouchers for people with disabilities by $13 million. The budget does provide $7 million for HUD-VASH vouchers targeted to Native Americans. But the budget would reduce the amount of funds PHAs receive to administer the voucher program by 6 percent compared to FY17 funding levels.

Project-Based Rental Housing. The budget proposal would provide $10.351 billion to renew project-based rental assistance contracts for calendar year 2018, a decrease of $465 million from the FY17 funding level.

Public Housing. The Public Housing capital fund would be reduced from $1.942 billion in FY17 to $628 million. This represents a 68 percent cut. The allocation for the operating fund would fall from $4.4 billion in FY17 to $3.9 billion. Section 230 of the budget gives the HUD Secretary the authority to waive or set alternative statutory and regulatory requirements for PHAs, including administrative, planning, and reporting requirements, energy audits, income recertifications, and program assessments, if the HUD Secretary finds these would reduce costs or improve effectiveness.

Section 233 would allow PHAs to commingle funding from the Public Housing operating and capital funds. Such authorization would allow PHAs to direct operating funds, which are used to provide tenants with homes, to cover the cost of repairs and rehabilitation. And Section 219 eliminates the sunset date for the Rental Assistance Demonstration (RAD).

Other HUD programs. The budget would eliminate the Community Development Block Grant program, the HOME Investment Partnerships program, Choice Neighborhoods grants, the Section 4 Capacity Building program, and the Self-Help Homeownership Opportunity Program.

The budget provides $510 million to the Section 202 Housing for the Elderly program, an $8 million increase from last year’s funding level, and it reduces funding for the Section 811 Housing for People with Disabilities program to $121 million, $25 million less than the FY17 level. The budget would allow Section 202 Project Rental Assistance Contract (PRAC) properties to convert under RAD.

Funding for the Housing Opportunities for People with AIDS (HOPWA) program would decrease to $330 million, down from $356 million in FY17.