The Trump administration recently released additional details on its Fiscal Year 2026 budget request. These new materials include an appendix from the Office of Management and Budget and “Congressional Justifications” for individual agencies such as HUD. The materials expand on the limited information provided earlier in the so-called “skinny” budget. However, what has been released doesn't include descriptions of tax proposals and potential housing finance reform ideas. 

With HUD’s overall budget proposed to drop from $89.1 billion in FY25 to $43.5 billion in FY26, the plan would represent a nearly 51 percent reduction in funding. HUD-assisted housing programs such as Housing Choice Vouchers, Public Housing, Section 8 Project-Based Rental Assistance, and supportive housing programs like Section 202 and Section 811 face not just significant cuts but structural reorganization. The administration justifies these cuts by arguing for reduced federal intervention and increased state flexibility. However, housing advocates and industry professionals warn that these cuts would significantly reduce critical supports that keep affordable housing viable.

Consolidated State Rental Assistance Block Grant

The administration’s signature proposal is a new State Rental Assistance Block Grant, which would consolidate HUD’s five largest rental housing programs into a single funding stream administered by states. While marketed as a measure to increase state flexibility, the block grant would carry roughly 42 percent less funding than what these programs collectively received in FY25. In practical terms, this means an estimated $31.8 billion in block grant funding would replace more than $63 billion in direct federal assistance, with no guarantee that states would maintain the current level of support to households.

The administration’s plan would also eliminate the Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME), two cornerstone federal programs that support housing production, infrastructure upgrades, and preservation of aging stock. These eliminations, alongside a proposed two-year cap on rental assistance for able-bodied adults, point to a major shift in the federal government’s role of programming for seniors, people with disabilities, and low-income families.

HUD’s Shifting Philosophy

In testimony to the Senate Appropriations Committees this June, HUD Secretary Scott Turner defended the administration’s proposed cuts and restructuring. He repeatedly described the plan as a “paradigm shift” and emphasized that the focus should be on outcomes and stewardship and not on maintaining past funding levels. “It’s not about the money,” Turner told lawmakers. “It’s about what we do with the money that we have to best serve effectively and efficiently the people of our country.”

Turner insisted that HUD is looking to empower states to tailor housing responses to local needs, especially when it comes to serving older adults and people with disabilities. But when pressed by lawmakers for details such as what programs would replace Section 202 or what protections would ensure continuity of housing assistance for vulnerable residents, Secretary Turner offered few specifics. His responses leaned heavily on general commitments to “working with states” and “identifying local solutions,” without naming any replacement mechanisms or assigning programmatic funding levels.

Congressional response to the budget has been overwhelmingly skeptical. In the hearing, members of Congress repeatedly challenged Secretary Turner on whether states could absorb the roles that these federal programs have historically played. Both Democratic and Republican lawmakers expressed concern that turning over federal housing responsibilities to the states without clear funding benchmarks or accountability mechanisms could heighten housing instability, especially for the elderly and disabled. Senator Cindy Hyde-Smith (R-MS), chair of the Senate THUD subcommittee, warned that the proposed block grant “risks undermining HUD’s existence.”

Representative Mike Quigley (D-IL) was even more blunt, stating: “We cannot cut HUD by 50 percent and not have people on the street. These people will die.” Critics have warned that such abrupt withdrawal of federal investment would disrupt development pipelines, reduce the stock of deeply affordable housing, and undercut efforts to stabilize the housing situations of low-income families, seniors, and people with disabilities.

Turner’s answers focused on efficiency and faith in state government, and a general desire to “run a new play.” The hearings highlighted what many see as a significant gap between the administration’s rhetoric around innovation and the real-world impacts of eliminating specific programs that serve millions of households. 

The budget proposal and Turner’s testimony outline an administration determined to shrink HUD’s role and place responsibility for housing assistance in state hands. What remains uncertain is how such a shift would preserve protections for deeply vulnerable residents or maintain the housing gains made through decades of targeted federal investment.