How to Change Mayor Gray’s Plans for DC’s $140 Million Surplus

As I wrote a couple of weeks ago, the Chief Financial Officer for the District of Columbia expects that revenues for the just-ended fiscal year will be about $140 million higher than he earlier projected.

Mayor Gray has said that the whole $140 million should go into a reserve account. That’s what the law requires, but perhaps only if he sits on his hands.

As things stand now, he may because he’s put a top priority on building up savings — already totaling $1.1 billion — so that the District’s got a big stash it could use for some future emergency.

We’ve got emergencies staring us in the face. And if the CFO had projected the surplus earlier, the extra funds would have been used to address those that the Mayor and DC Council agreed were most urgent.

That’s also the law — specifically, the Fiscal Year 2013 Budget Support Act, which includes a list of programs that would get more funding (and the amounts they’d get) if revenue projections before the tail end of the fiscal year indicated that the needed revenues were available.

Top of the list is $7 million to make up for federal funds that the District had used for homeless services, but didn’t expect to have in this new fiscal year.

Next on the list are funds for the Temporary Assistance for Needy Families program.

Some would provide more money for job training, counseling and other services participating parents need. Another portion would delay until next October the cuts in benefits for families who’ve been in the program for more than five years.

These families surely ought to have a chance to benefit from the improved training, counseling, etc. before they’re penalized for not finding work that pays enough to lift them above the TANF income eligibility ceiling.

Also near the top of the list are funds to partly restore those that the Mayor, with the Council’s approval, shifted out of the Housing Production Trust Fund — the main source of local funding for creating and preserving affordable housing here.

So the (relative) well-being of thousands of District residents hinges on a legal technicality. The Mayor could easily resolve it by asking the Council for a one-time, partial exception to the use of end-of-year surplus revenues.

Or the Mayor and Council might find funds for the top-of-list priorities elsewhere. Councilmember Jim Graham, after all, found $14 million in unspent child welfare funds. The audits that are always done at the end of a fiscal year may well turn up more unspent funds.

The source doesn’t matter. A firm commitment to fund these priorities does — and a commitment not to have funding for basic human needs like shelter, housing and cash for kids’ clothes on some extra revenue “wish list” in the future.

Or, for that matter, adequate funding for other anti-poverty programs like relevant job training and supportive services, e.g., affordable, high-quality child care, mental health counseling.

Which is why we need to exert some grassroots pressure on the Mayor and Council.

The Fair Budget Coalition has an editable e-mail we can send to let them know that we want some portion of the surplus spent on the top priorities — and longer-term commitments that ensure we don’t keep having these preventable emergencies.

As I remarked before, the Mayor and Council could fund the priorities and still have plenty of surplus revenues to put in the bank. Their choice, but we can help them make it.

New DC Rental Cost Figures Show Need for More Affordable Housing Investment

“How expensive is D.C. for renters?” a recent headline on DCentric asks.

The short answer from the latest report by the National Low Income Housing Coalition is “very” — more expensive, in fact, than only a year ago.

As the DC Council decides what to do with Mayor Gray’s proposed budget, it should ask whether a $19.9 million cut to the Housing Production Trust Fund will get us to that One City the Mayor is so fond of talking about.

Or will it instead drive up the already-high family homelessness rate — and leave even more families choosing between rent and other basic needs? A rhetorical question I know.

So let’s turn to the report.

How NLIHC Calculates Affordability

NLIHC uses several sets of figures to assess rental housing (un)affordability nationwide and for states, counties and major metropolitan areas.

The first set is the U.S. Department of Housing and Urban Development’s fair market rents for two-bedroom apartment units — those in either the 40th or 50th percentile of all reasonably well-maintained units in the area, basic utilities included.

The second figure is the standard 30% of income that both government agencies and analysts use to determine whether housing is affordable for a particular household or group of households.

NLIHC also uses figures from other federal sources to estimate the average local wage for renters — obviously important when the issue is whether rents are affordable.

What We Learn About Rental Housing Affordability in the District

No surprise to learn that rental costs in the District are rising, but so is average income. Not enough for renters, however.

• The 2012 FMR for a two-bedroom apartment in the District was $1,506 per month — $90 more than in 2011.
• A household would have had to earn $60,240 a year for the apartment to be affordable — $1,800 more than the year before.
• This translates into an hourly wage of $28.96, assuming full-time, year round work — $3.79 more than the estimated average for D.C. renters.
• Renters earning the average — $25.17 an hour — would thus have paid $2,364 more per year for the apartment than they could afford.

Things get worse, of course, for poor and near-poor residents.

• For what HUD defines as extremely low-income renters, i.e. those earning 30% of the median for the area, the two-bedroom apartment cost $700 more than they could afford.
• The hourly wage that would have made it affordable is three and a half times what a full-time, year round minimum wage worker earns.
• Looked at another way, the minimum wage worker would have had to put in 140 hours every week or live with another full-time minimum wage worker and a third who worked half-time.
• Because the minimum wage remained flat while the two-bedroom FMR rose, the apartment was over $1,000 further out of reach than it was only the year before.
• What would be affordable for the minimum wage worker is an apartment costing no more than $429 a month — about 37% of the current FMR for an efficiency in the D.C. area.
• For residents dependent on Supplemental Security Income, any FMR unit is even more absurdly out of reach because the most they could afford is $209 a month.

Rent’s Too Damn High. But Why?

What’s happening here is basically what’s happening nationwide — less supply and more demand. And, as always, growing demand for a shrinking supply drives prices up.

On the supply side, affordable rental units are disappearing. This is a long-term trend, as the Harvard Joint Center for Housing Studies has shown.

Many low-cost units are being converted to upscale rentals or condos. Others stand empty — or have already been razed — because their owners didn’t maintain them.

Meanwhile, for various reasons, publicly-subsidized low-cost units are going-going-gone — 150,000 lost in the last 15 years, says HUD Secretary Shaun Donovan.

At the same time, more households are seeking rental housing.

The recession and related foreclosure crisis are partly responsible for this. They’ve driven more households into the rental market. Other households are staying there because they’re leery of buying — or unable to get credit because lenders have become leery too.

Needless to say, the recession has also pushed many more households into the low-income category. They’re now more than a quarter of all renter households.

What Now?

Public policies have helped create the affordable housing crisis for low-income — and even not-so-low-income — renters. Public policies will have to help solve it.

Growing the economy — even if combined with policies and programs that get more workers into so-called living wage jobs — won’t be enough.

Policymakers, including our own Mayor and DC Council, have to invest in creating and preserving housing that’s affordable for low-income people.

The Mayor doesn’t have to wait for a report from his Comprehensive Housing Task Force to know that. Nor does the Council.

Fair Budget Coalition to Host Its Own One City Summit, Says DC in Crisis

Monday morning, March 12, the Fair Budget Coalition will host its own One City Summit. One City (In Crisis) they call it.

No Convention Center space for this one. No slick participants’ guides. No digital keypads to vote on preferences. FBC doesn’t have half a million to blow on such things.

What it does have are some pretty alarming figures to justify its claim that the District is in crisis. For example:

• One out of every three D.C. children is living in poverty.
• One out of every five residents is on the waiting list for public housing or a voucher to help pay the rent.
• One out of every ten residents is unemployed — and that’s just those who are actively looking for work.

The crisis doesn’t directly affect high-income residents, of course. Councilmember Jack Evans’s Georgetown constituents, for example, aren’t likely to be on that waiting list for subsidized housing.

It does, however, affect all of us who want to live in a city that’s not so radically divided between the haves and the have-nots. And all of us who want a secure, sustaining safety net for the latter.

Prospects for that don’t look so good — hence the FBC Summit.

At a recent briefing, Eric Goulet, Mayor Gray’s budget director, explained to us why the District couldn’t tap its reserve fund accounts — even the excess revenue surplus the Mayor chose to put there.

Also why the District couldn’t possibly cut funding for education or public safety.

And why it couldn’t, as the DC Fiscal Policy Institute suggested, borrow for some capital projects, at current very low interest rates, rather than immediately pay for them out of operating revenues.

Capped all this by saying that the Mayor wouldn’t propose any significant revenue raisers to help close the budget gap — now reportedly $115 million. Last year’s flap over the modest income tax increase for high earners was enough for him.

So notwithstanding the usual claim that everything’s on the table, it seems that the only big thing left there is spending for human services programs.

These and other programs for low-income residents have been hit hard by successive budget-balancing feats.

Cuts to them last year accounted for 61% of the total — even after the DC Council restored about $23 million. Chalk this up, in large part, to the raid on affordable housing.

Taking the programs off the table would restore some balance to the budget, but still leave them far short of the resources they need.

We’re told that the DC Housing Authority needs an additional $6 million just to pay its share of the rent for people who have locally-funded housing vouchers.

Homeless services is running up hotel bills — and running through its budget — because it doesn’t have shelter space or other housing for nearly all the families who’ve become homeless.

This isn’t a shelter problem, Department of Human Services Director David Berns rightly says. It’s “inadequate affordable housing.” Closing the gap in the Local Rent Supplement Program won’t do a thing about this, though it could keep some now-housed families from becoming homeless.

The Mayor apparently wants to go at the housing problem from “the demand side,” i.e., to get more people into good-paying jobs so they can afford to pay market-rate rents. Well, that’s going to require some additional spending too.

The Fair Budget Coalition flags the need to increase funding for adult education and literacy programs — an obvious priority given the high functional illiteracy rate and the demands of our local job market.

Also advocates more money for child care subsidies so that parents who find jobs can go to work — and, I’d add, to pay for rent, food, clothing and other basic needs. Hard for low-income parents without subsidies to do when child care costs in the District can eat up two-thirds of full-time minimum wage.

The District’s redesigned Temporary Assistance for Needy Families program would fit in well with the demand-side focus — if DHS has the funds to do what it plans.

DCFPI rather doubts it does.

And, as the Institute notes, parents who’ve had no opportunity to benefit from the improvements will nevertheless lose more and more of the meager cash assistance that’s keeping some, though not all of them from homelessness.

Well, I could go on this way, but I think the point is clear. A Fiscal Year 2013 budget that’s balanced by spending cuts alone will not only cause greater hardships. It will undermine what the Mayor himself says he wants to achieve.

He couldn’t learn this at his One City Summit. Maybe FBC’s will get the message through.

Thousands More DC Residents Could Become Homeless

The state of homelessness in the District, as reported by the National Alliance to End Homelessness, has two parts. I’ve already reviewed the recent trends in homelessness. Here, as promised, are some key trends that indicate near-term risks of future homeless.

NAEH deals with eight risk factors in all — four that it classifies as economic and four as demographic. As with homelessness rates, it reports both nationwide and state-level figures. These indicate increases and decreases in risk between 2009 and 2010.

For the nation as a whole, all but one of the economic indicators spell more trouble ahead, as do two of the demographic indicators.

What’s surprising — at least to me — is that some key District indicators trend down. The magnitude of some of the changes is also surprising.

But, of course, the level of risk matters more than any one-year change. And for some risks, the District’s levels are very high indeed.

Here are examples.

Severe Housing Cost Burdens

As with other analyses, a “severe housing cost burden” means that rent or mortgage payments consume at least 50% of a household’s income.

Such a burden is obviously a high risk for homelessness because any adverse impact on income — job loss, injury, spike in utility costs, etc. — can mean not enough left for rent.

NAEH focuses solely on “poor renter households,” i.e., those with incomes at or below the federal poverty line. In 2010, 14.28% fewer District households in this group reportedly struggled with severe housing cost burdens.

But that left 76.8% of them — somewhat over 17,000 poor households — with half or less of their income for anything but rent.

Unemployment

The unemployment rate in the District rose to an annual average of 9.9% in 2010 — 3.13% higher than in 2009. It’s ticked up now to 10.4%.

But the unemployment rate is just the tip of the risk iceberg because it reflects only jobless people who reported they’d actively looked for work in the last four weeks.

What we know then is that there were 32,963 jobless job seekers in the District in 2010.

No way of knowing how many had given up looking or decided it was futile from the get-go. But we need to bear them in mind when we think about the level of risk.

Average Income of the Working Poor

Here again, NAEH focuses on people in households at or below the federal poverty line. They’re counted as workers if they were employed at least 27 weeks — the usual Bureau of Labor Statistics standard.

Adjusting for inflation, poor working people in the U.S. earned, on average, slightly more in 2010 than in 2009. But those who lived in the District, earned 13.2% less — an average of just $6,937 for the year.

This is less than the average for the working poor in any state — and less than half the 2010 fair market rent for a one-bedroom unit in the D.C. area.

Living Doubled Up

People are at extraordinary risk of homelessness when they’re doubled up, i.e., living with friends or family because they can’t afford a place of their own.

NAEH focuses on those at the bottom of the income scale — in this case at or below 135% of the federal poverty line. It calculates the risk that they’ll become homeless within a year at 1 in 12.

In 2010, it reports, the number of low-income people in the District who were living doubled up dropped by 21.37% — from 19,950 to 15,686.

Percentages went up in all but 10 states, making for a nationwide increase of 12.64%.

Why is the District an outlier here?

One answer, if only partial, could be that the risk became a reality for a fair number of those who’d been doubled up in 2009. Recall that most homelessness rates rose significantly in the District, far more than nationwide.

What the Risk Factors Mean

All the risk factors boil down to one simple thing: Too many people can’t afford a place to live.

They could if the District offered more housing in a price range low-income people can afford — and more vouchers to make higher-cost housing affordable for them.

The Coalition for Nonprofit Housing and Economic Development has an agenda to get the District back on track in this area.

On the other hand, more people could afford to pay more for housing if they had full-time living wage jobs with essential benefits, e.g., health insurance, paid leave.

So there’s a role here for targeted job creation and long-overdue improvements in workforce development. Needless to say, education too.

And what about more funding for child care subsidies so that low-income parents can afford to work?

And what about reforms in our child welfare system, which is still turning out youth with no place to go and no one to turn to? And what about …

Well, you get the point. What the risk factors show is that homelessness is actually a symptom of diverse systemic problems.

This, to me, is the most important message NAEH delivers. For the District it’s an urgent one.

For the federal government too, but our neighbors up on Capitol Hill seem not to be listening.