What Do Our Federal Income Taxes Pay For?

April 24, 2017

We who didn’t request an extension (gloat) have filed our federal income tax returns. There’s a lot of chatter about where our taxpayer dollars go — even a Congressman who tells his constituents that they don’t pay his salary.

We do, of course. But more generally, what do we pay for? The National Priorities Project answers again this year. So I put what I owed into its online tool and converted the dollars into shares, since these would be the same for everyone.

Here’s what I learned.

The same shares would be true for everyone who owed income taxes. Only the actual dollars would differ.

The single largest share of my income taxes went for healthcare programs29%. About 80% of this helped pay for Medicaid and Medicare (one of its three funding streams).

Next largest share to the military — roughly 24%. Only about 20% of this went for personnel costs of any sort.

NPP also itemizes, for the interested, what the Pentagon pays for nuclear weapons and to Lockheed Martin, whose trouble-plagued F-35 fighter plane has cost us nearly $4 billion. An email from NPP tells me that we pay over six times more to Lockheed than what we spend on all foreign aid.

Third share went for interest on the debt — 13%. You may recall that Congressional Republicans used the government’s urgent need to borrow more so it could pay what it owed as a lever to force down spending through sequestration and the budget caps. And that they later actually shut down the government in hopes of defunding Obamacare.

Doubtful they’ll access their tax receipts. But the bill that simply suspended the debt ceiling expired a little over a month ago. And some are warning of another skirmish.

My fourth largest share paid for unemployment and labor programs — 7.5%, presumably everything federal agencies spend to get people into — or back into—the workforce.

This same share supports what the Labor Department contributes to unemployment insurance benefits when times are especially hard and the rules it issues and enforces to protect workers from workplace health hazards and wage theft. The latter now include updated overtime pay requirements, but may no longer, coming sometime next year.

Then veterans benefits — about 6%. This includes, among other things, payments veterans receive when they’re disabled while serving, the GI bill, home loans and pensions for low-income surviving spouses. Most of the rest of this share goes to the problem-riddled Veterans Health Administration.

Next come food and agriculture — nearly 5%. Here’s where we find, among other things, SNAP (the food stamp program) and the Agriculture Department’s other nutrition aid programs.

Also, in an altogether different mode, the subsidies Congress gives to farmers — mostly big agribusinesses — to cushion them against price drops, insure them against other business risks and more.

Government next — 4.2%. NPP breaks out only three pieces, all enforcement — and two clearly aimed at ramped-up actions against undocumented immigrants and would-be’s.

But we’ve got to assume, I think, that this line item includes spending for all non-military personnel and activities, including Congress members’ salaries — $174,000 this year, plus benefits.

Transportation gets a 3.2% share. Everything the Transportation Department does gets some share of this share. including controlling air traffic and, as all flyers know, vigilantly trying to keep us from hijacking or blowing up planes.

Education gets a 2.8% share, according to NPP’s analysis. I’d put it at 3.2% because NPP classifies Head Start and related programs as community spending.

It’s true that Head Start and Early Head Start for younger kids do more than ready them for kindergarten, e.g. screen them for health and developmental problems, link families to needed services. But their primary aim is starting low-income children off on as level a playing field as possible.

Wherever you put it, Head Start’s share is far from the largest NPP breaks out. That distinction goes to Pell grants, work-study and other forms of federal aid for lower-income college students. These rolled together receive a larger share than federal aid to elementary and secondary schools — 35 %, as compared to 27%.

And I’d be remiss not to note that the National Endowment for the Arts, which Trump wants to eliminate, gets less than .002% of education’s share, as NPP calculates it — and roughly a tenth of that for everything our federal government uses our income tax dollars for.

Shifting Head Start and EHS, as I have, leaves housing and community with a 1.7%, rather than a 2.1% share.

Here we have everything the Department of Housing and Urban Development spends to help make housing affordable for lower-income people, shelter and temporarily house those who are homeless and make lower-income neighborhoods better places to live, e.g., by attracting businesses and thus job opportunities, providing needed services.

The money goes to local communities as grants. The largest of these is the Community Development Block Grant — another program on the Trump hit list because it’s “not well-targeted to the poorest populations and “has not demonstrated results.”

Followers already know what I — and many others — think of that line of argument.

Energy and environment get a 1.6% share of our income taxes. Seems it’s likely to shrink to an even smaller fraction, what with Trump’s seeking a 31% cut in the Environmental Protection Agency’s budget, crippling its ability to fulfill its legal responsibilities for protecting us from range of environmental health hazards, including climate change.

Lastly, we have, in rank order international affairs and science. These together get about 2.8% of the total.

Say you don’t like the way the budget apportions your federal income tax dollars. NPP has a tool that lets you reallocate them — and gives you trade-offs.

These are mostly shifts from the $528.5 billion Defense Department budget, which NPP has long viewed as excessive. Interesting to see what even small nicks could do for lower-income people.


Bowser Budget Scants Needs of Homeless and Others at High Risk

April 20, 2017

Picking up where I left off, some major parts of Mayor Bowser’s proposed budget don’t link as obviously to the inclusive prosperity road its title promises as, for example, adult education and available, affordable child care.

Yet two other parts we care about do because both are virtual preconditions to earning income and having enough left over after basic needs to invest in boosting one’s marketable knowledge and skills.

But I don’t want to leave impression that I equate “prosperity” with income or wealth, as I think Bowser’s budget title does because it seems an indirect way of referring to the extraordinarily high level of income inequality in the District.

The Latin root of “prosperity” means made successful, but also made happy, according to one’s hopes. One can surely make a homeless family happy by providing it with decent, stable housing it can afford without—or before — doing whatever necessary to boost its income so that it can pay full rent.

So we need to look at the following from multiple perspectives.

Affordable Housing

No one, I suppose, needs anything further said about the acute shortage of housing in the District that its lowest-income residents can afford.

Such prosperity as they might achieve — through taking college courses, for example — is beyond their means because, if they’re not homeless, most are paying more than half their income for rent and more than half of those at least 80%.

The Mayor, to her credit, would again commit $100 million to the Housing Production Trust Fund, plus $10 million to a new fund dedicated solely to preserving existing affordable housing.

But helping developers finance new affordable housing construction and/or renovations isn’t enough to produce units affordable for the lowest-income residents.

Those units need housing vouchers attached to cover the difference between what tenants must pay — no more than 30% of their income — and ongoing operating costs, e.g., maintenance, utilities, staff wages. The Mayor fails to propose funding to increase the number of these so-called project-based vouchers.

And as I earlier said, additional funding could be needed merely to sustain vouchers now in use because if Congress extends the current funding level for federal Housing Choice vouchers, the DC Housing Authority won’t have the money to issue any.

If the Republican majorities in Congress accede to anything like Trump’s budget plan, a larger loss, as yet unestimated at the state/District level.

Homelessness

Want of affordable housing obviously causes homelessness. But it does more than that. It’s hard to get and keep a job when you’re living in a shelter.

That’s especially true if the shelter’s for adults only because they generally have to get in line in mid-afternoon to get back in. And those who make it may not be able to wash themselves and are highly vulnerable to theft.

There goes the cell phone that’s the only way to contact them — and the photo ID they’ll need, if they have one.

All but impossible to get a job if they’re among the chronically homeless without the safety, stability and appropriate services they’d get in permanent supportive housing.

The Mayor does increase PSH funding by $2.7 million. But that would meet only 30% of what’s needed to end chronic homelessness, the DC Fiscal Policy Institute reports. (The target year set by the strategic plan the Mayor’s embraced obviously won’t be met,)

Other single homeless people get shorted in several different ways. No additional rapid re-housing for them, though some temporarily down on their luck could pick up the full rent when their short-term subsidies end.

About 46% for less for families as in the current fiscal year. But its success in ending homelessness — or as the program’s formally titled achieving “stabilization” — is at the very least debatable.

And the District’s youngest homeless people — those under 25 who’re on their own in the city — will continue to suffer from neglect, in addition to the egregious neglect (or abuse) that caused some to leave home to begin with.

Others became homeless when they became legally adults. Various reasons for this. For example, they were either kicked out by their parents (something that can happen earlier) or reached the maximum age for foster care and didn’t have foster parents who’d foster them for free — or any one else who’d take them in.

These young people need safe, stable housing, but also education and/or training and mentoring because, as the National Network for Youth puts it, many are in a state of “extreme disconnection.”

In other words, they’re worst cases of youth commonly referred to as “disconnected” — or more hopefully, “opportunity.” They’re not only neither in school or working. They lack basic life skills, e.g., how to keep themselves healthy, look for a job, manage such money as they make.

The DC Interagency Council on Homelessness developed a five-year plan specifically for homeless youth, based on census (no link available) that’s surely an undercount. It nevertheless captured 545 youth who were either homeless or insecurely housed, e.g. couch-surfing.

The ICH developed a five-year homeless youth plan, as an amendment to the District’s basic homeless services plan requires. The Mayor’s budget invests $2.4 million — less than half what the upcoming (and first) year requires.

Homeless now — others to become so. How then will the District make not only youth, but former youth homelessness brief, rare, brief and non-recurring  — let alone enable these potential contributors to our economy and our civic life share in the prosperity the Mayor dangles before us?


Inclusive Prosperity Programs Shortchanged in Mayor Bowser’s Budget

April 17, 2017

My last post merely mentioned shortfalls in the Mayor’s proposed budget, due at least partly to the $100 million or so she chose to forfeit by doing nothing to halt the automatically triggered tax cuts.

I’ll turn now to my picks for programs she shortchanges, based on how she styles her budget — a roadmap to inclusive prosperity.” Still only summaries. And not all programs some advocates have flagged.

Nevertheless, more than I can cover in a single post with enough substance to convey what’s under-funded — or unfunded — and why that violates the budget’s promise. So I’ll deal here with what seem the most obvious and followup with a couple of others that matter too.

Education and Training

We also all know that education and relevant job training generally move people along the road to some modicum of prosperity. For many adults in the District, the first step must be remedial education — basic literacy in reading and math, help in preparing for the GED exams.

For others, appropriate programs include those leading to a regular high school diploma and /or vocational education courses in other publicly-funded institutions, e.g., charter schools and alternative education in regular public schools like the Ballou High School’s STAY program.

Several surveys have found that adult learners miss classes because they can’t come up with the transit fare. Eighty-six percent of the youngest who had subsidized transportation said it would hard or altogether impossible to attend without it.

No reason to believe that’s not true for at least as many older adults, who’ve often got to spend more of such income as they have on basic needs for both themselves and their children. And, of course, we’ve got to assume that some of all ages drop out.

The Deputy Mayor for Education recommended an adult learner parallel to the Kids Ride program, which covers the public transit costs of getting to and from school.

Not a big ticket item—a mere $1.5–2 million. But no money in the Mayor’s budget for it.

Double-Duty Work Support

The full, unsubsidized cost of child care in the District is higher, on average, than in any state. Though low-income parents are officially eligible for subsidies that help pay for it, as a practical matter it’s difficult, if not impossible to find a center that will accept them.

This is a long-standing problem rooted in the insufficient rates the District uses to reimburse providers. For this, among other reasons, it was shy roughly 14,000 slots for infants and toddlers in 2015.

They’re the most costly to care for properly, what with diaper changing, feeding and all — hence local center charges averaging $22,658 a year.

The kids are too young for pre-K, of course. But the quality of care, e.g., nurturing relationships, talking to, has more impact on brain development than at any later stage. The very young children who get it will do better in school — and thus have a better chance of sharing in prosperity.

Now, if you can’t find trustworthy care for your child, you’re unlikely to work. Nor enroll in an education or training program that would prepare you to do so. And you won’t do either if you can’t pay for it.

Charges for licensed childcare are likely to increase, since the District recently set new licensing standards that require not only teachers, but their assistants to have at least a two-year college degree, unless they’ve got an independently-awarded Child Development Associate credential.

Those who manage to get either surely — and reasonably — will expect increases in their pay. It’s already, on average, extremely low — $26,470, on average, according to the latest figures.

If they don’t get them they can find employers that will. And that’s likely to further reduce open slots, since replacing them would be as difficult as keeping those who left.

Yet the Mayor’s budget doesn’t nothing about this. It would instead put $15.3 million into a new initiative to increase center capacity. But the new slots would be market rate — helpful for better-off parents, but no help at all for the most in need of affordable care to move down her road.

Paid Family Leave

The Mayor proposes no funding to translate the paid family leave law the Council passed into an operating program.

That requires both the creation of a new agency to administer the law, e.g., to ensure employers pay what they owe, pay out to eligible workers for the time off they take, and a new computer system to make all this possible.

We know the Mayor doesn’t like the law. But the essence of being an executive is executing laws.

Forcing more than half a million workers to wait for who knows how much longer to either keep working when they need time off for compelling  for compelling family reasons — or at least as likely forgo needed income — hardly comports with including them in prosperity.

Her refusal to propose the $20 million needed to get the program started doesn’t, I think, reflect only spending constraints imposed by her deciding not to even hit the pause button on the tax cuts. But they do perhaps provide some cover.


DC Mayor Bowser Won’t Halt Triggered Tax Cuts to Gain Needed Funding

April 13, 2017

Just finished my annual dialogue with my tax preparation software. So as always, my thoughts turn to the tax laws that determine what I have to pay. A sweeping federal tax reform is much in the news. And I’ll probably have things to say about that.

But I’ll start with the automatically triggered tax cuts Mayor Bowser has decided to let alone in her proposed budget, styled “DC Values in Action: A Roadmap to Inclusive Prosperity.”

These because they don’t hinge on new legislation. And they push down spending because the District, like most states must balance its budget every year.

As you may know, the triggered tax cuts reflect recommendations made by the Tax Revision Commission in 2014. It didn’t recommend triggering them whenever a certain revenue projection exceeded the version the budget was built on.

That was the work of DC Council Chairman Phil Mendelson, who folded them, ranked according to his preferences into the final version of the legislative package that accompanied the Fiscal Year 2015 budget.

A last minute thing. Other Councilmembers had no chance to consider them — perhaps didn’t even know they were there.

The triggered tax cuts have already reduced revenues by $102 million — none a one-time loss. The rest will all kick next fiscal year, unless the Council decides to instead recoup about $100 million.

Some of the cuts, would benefit lower and moderate-income residents, though not those with incomes so low they already don’t owe income taxes, once they’ve taken all now allowable exemptions, credits and the like. Nor, of course, those who’ve no taxable income at all.

These cuts include a further increase in the standard deduction, which a very large percent of DC filers with incomes less than $75,000 choose because they don’t have more costly specific deductions like interest on a mortgage or real property taxes high out-of-pocket medical expenses. (The District relies on the federal government’s Schedule A for these.)

The other of this sort is a multi-part increase in the personal exemption, which applies to all filers and their dependents, except apparently those whose incomes exceed $275,000.

But the surplus also triggers a second increase in the threshold for the estate tax, bringing it to $5.49 million if left by an individual and twice that for a married couple — the same as in federal law.*

Why the District should aim to mirror a tax giveaway to heirs of the very most prosperous that Congressional Republicans insisted on as part of the deal that pulled us back from the fiscal cliff is a mystery.

Additional cuts in the business franchise tax, coupled with a further cut in the business income tax are, at the very least questionable.

Sure, we want profit-making businesses in the city — a source of jobs, among other things. But a recent survey indicates that the taxes they must pay are a relatively minor factor in their decisions on whether to locate here or elsewhere.

Topping the list is the ready availability of workers with the knowledge and/or skills they need. One could do a lot to help residents qualify for and get jobs with the potential loss of $35.7 million.

Advocacy organizations of various sorts have already flagged a wide range of shortfalls in the Mayor’s proposed budget. We’ll have a fuller accounting from the DC Fiscal Policy Institute fairly soon — and undoubtedly more from other concerned nonprofits too.

I’d thought to cite examples, based on the Mayor’s prosperity promise and my own topmost concerns. But even summaries made this post far longer than my somewhat flexible maxim. So I’ll return to them shortly.

Yet I don’t want to leave the impression that the Mayor’s budget shortchanges her low-income constituents in every way.

The most significant example of how it would benefit them is the funding she proposes to begin the Temporary Assistance for Needy Families time limit reforms recommended by diverse working group the Department of Human Services convened.

This will not only save roughly 6,500 families from losing all their benefits when the new fiscal year begins — and more as time goes on.

It will preserve those benefits for all children and all parents who’re meeting their work preparation and/or job requirements until they’ve found jobs or otherwise gained enough income to put them over the eligibility cut-off.

Cash benefits being as low as they are — and will be — the initiative in and of itself hardly shares the non-inclusive prosperity reflected in the District’s tax revenues. But it does save very poor families from the most dire poverty.

And the non-cash benefits — free training and, in some cases, formal education, no-cost child care and transportation — give parents a chance to move from welfare to decent-paying work and, in the process, improve their children’s future prospects.

* The thresholds were somewhat lower when the Council adopted the triggers, but the legislation refers to raising the threshold “to conform to the federal level.” And the federal level rises with the inflation rate.

UPDATE: I’ve learned that the Mayor’s budget doesn’t altogether reflect the working group’s recommendations. They would significantly protect children if their parents had their benefits cut for not complying with their work requirements by allocating 80% of the family grant to them.

The Mayor would split the grant 50-50. As a practical matter, this might not make much difference. The parents will have the same amount to spend, and it will surely go for the same basic needs. We will need to see how the Mayor justifies her split, assuming she or a Department of Human Services official is asked.


No Proof Trump-Targeted Programs Work?

April 6, 2017

Congress set in motion a sensible response to the incessant claims from the right that anti-poverty programs don’t work.

It passed a bill that creates an expert commission to review federal program data and make recommendations for using it to support program evaluations and improvements based on results.

Now we’ve got justifications for Trump’s budget that fly in its face — specifically that certain programs that serve low-income people’s needs should cease to exist right now because we don’t have enough proof they work.

The Community Development Block Grant would end because it’s “not well targeted to the poorest populations and has not demonstrated results.”

Communities use CDBG funds to meet various needs. That’s what a flexible block grant is supposed let them do. Some unknown number support Meals on Wheels. They collectively supplied prepared meals for more than 2.4 million homebound seniors last year.

The OMB Director says that Meals on Wheels “sounds great,” but we can’t keep giving states money for “programs that don’t work.”

We do, in fact, have some research showing Meals on Wheels does—probably behind his ken. In any event, he brushes off the lost benefits by donning the mantle of fiscal responsibility.

The Trump budget would also zero-fund grants to local Community Learning Centers, which channel them to afterschool programs, especially in high-poverty, low-performing schools.

The director says more or less the same about them. “There’s no demonstrable evidence that they’re .. helping kids do better in school.” Again, we’ve got some evidence they do, though limited. Not, one infers, demonstrable enough to make the administration even pause.

The budget would also eliminate the Low Income Home Heating and Energy Assistance Program because it’s among the “lower-impact” programs and “unable to demonstrate strong performance outcomes.”

Now, we truly don’t want to fund programs that have no positive or only minimal effects. On the other hand, measuring a program’s effects by the so-called gold standard, i.e., a multi-year comparison of impacts on those who received benefits or services and a control group that didn’t, is a costly business — and still not conclusive.

One need only look at the gold-standard Head Start impact studies. The second, which tracked recent participants through the third grade found that gains didn’t last.

But when research teams at the Brookings Institution and UCLA looked instead at the long term, they found that the children fared better in significant ways

The real issue here, however, is what evidentiary standard a program has to meet for it to be considered funding-worthy.

Consider LIHEAP. It’s done less than it might for quite awhile because it’s been under-funded — and increasingly so. Its appropriations were small, even before the Budget Control Act capped spending on non-defense programs — just $5.1 billion in 2010. Less ever since.

At the same time, home heating costs have increased, as I’m sure you’ve noticed. So states, which get shares of the funding as block grant, have had to cut back on the number of low-income households whose home energy costs they subsidize and by how much.

The program nevertheless keeps the heat on for nearly 6.1 million poor households. Seventy percent are especially vulnerable, the National Energy Assistance Directors Association states, protesting what Trump intends.

Now, common sense tells us that that having heat in the winter averts new or aggravated illnesses due directly to the cold — even death, since roughly a quarter of LIHEAP households include a member who uses electrically-powered.medical equipment.

Bills paid for electricity also prevent injuries, since rooms can be lighted at night and food poisoning by keeping refrigerators running and stoves operating. (This last would be true of natural gas as well, of course.)

Whatever the energy source, the assistance LIHEAP provides can prevent homelessness and other hardships, e.g., food insecurity, because low-income households otherwise have to spend far more on home energy than the less cash-strapped—16%, as compared to 4%, according to findings when energy costs were lower.

Do we really need to find out what happened to another similar group of people who had their utilities cut off and couldn’t scrape up the money to get them turned back on?

It would be bad enough if the Trump administration were holding programs to an unreasonable standard — or merely ignorant of research-based evidence that they work.

But when it says it won’t fund programs without proof of that, it’s putting a self-serving, deceptive gloss on decisions made to cut spending on safety net and other non-defense programs.

How do we know? Well, Trump is bound and determined to fund private school vouchers. Do we have evidence of their outcomes? We do, to some extent, each focused exclusively on one state’s voucher program, plus the District of Columbia’s.

The earliest two found positive effects, e.g. higher graduation rates and, in the District, higher reading, but not math scores.

On the other hand, three of the four most recent, including one financed by a pro-voucher institute found that children in voucher programs scored lower in both reading and math than children in public schools. The fourth found no effect, as measured by graduates going on to college.

A foolish consistency isn’t always the hobgoblin of little minds. In this case, it’s minds of greater capacity engaging in inconsistency to justify their policy preferences — hoping futilely that no one will challenge their alternative facts.


DC Coalition Urges Major Investments in Affordable Housing

March 20, 2017

While I’m on an affordable housing tangent, I’ll turn to what’s going on in my own community, the District of Columbia.

We’re in the fairly early stages of the annual budget season. And advocates have already begun pressing their cases — for more affordable housing funds, among others.

The Fair Budget Coalition has released its annual recommendations — a far-reaching set, both in scope and total cost. Not a mere wish list, however, since we’ve reasons to expect funding increases for some of the priorities, even if not as hefty as FBC calls for.

Nine of the recommendations address what the report terms “housing security,” i.e., safe, affordable housing for both families with children and people without. These recommendations represent at least 53% of the total new spending FBC advocates.*

Surely everyone who lives in the District or attends to what goes on here outside the White House and the Capitol buildings knows that the shortage of housing the lowest-income residents can afford is a huge problem — hence also the homeless problem.

The recommendations go at the linked problems in several different, though in some cases related ways.

Housing Security in the FBC Report

Housing Production Trust Fund. This is the District’s single largest source of financial support for projects to develop and preserve affordable housing. Funds available for the upcoming fiscal year will be half again as high — $150 million — as what the Mayor has consistently committed to and the Council approved, if FBC and allies prevail.

The new figure reflects the DC Fiscal Policy Institute’s 10-year estimate of the cost of meeting the District’s affordable housing needs and what seems realistic for the administering agency to actually commit within the upcoming year.

The recommendation wouldn’t necessarily mean $50 million more in the budget itself because the Trust Fund, by law receives a small fraction of taxes the District collects when it records deeds to real property and transfers to new owners.

The larger policy issue here is that the Trust Fund hasn’t done what it’s supposed to for the lowest-income households, i.e., those with incomes below 30% of the median for the area. The law requires that it commit 40% of its resources to housing for them.

Last year, only 15% of funds awarded helped finance new rental housing affordable for this officially lowest-income group, DCFPI’s housing policy expert recently testified. FBC wants the required percent raised by 10% and a mandated plan for meeting the full need.

Permanent Supportive Housing. FBC recommends $18 million for permanent supportive housing, That, it says, would provide 535 units for single individuals and 317 families.

The former, by definition, have been homeless for a long time or recurrently and have at least one disability. The latter have at least one member who meets this definition. The “supportive” part of the term refers to individualized services residents are offered, but not required to accept.

So the budget would have to include additional funding for these services. Don’t suppose I need to say why the District can’t expect the federal government to provide more.

Housing Vouchers. These now come in two different flavors — those funded by the Local Rent Supplement Program, i.e., indefinite-term vouchers like the federal Housing Choice vouchers, and the almost-new Targeted Affordable Housing vouchers, first proposed in the DC Interagency Council on Homelessness.

The TAH vouchers subsidize rents for individuals and families that no longer need the ongoing, intensive services they’ve received while in PSH, but will probably become homeless again if they have to rent at market rates.

They’re also designed for individuals and families who’ve reached the end of their short-term rapid re-housing subsidies and like the prospective PSH graduates will probably return to shelters — or the streets — if left to fend for themselves.

FBC recommends 425 subsidized TAH units for singles and 513 for families. It also calls for enough LRSP funding to house an estimated 466 families on the DC Housing Authority’s enormously long — and still closed — waiting list.

These vouchers will all be the tenant-based kind, i.e., those the fortunate families could use to rent on the open market from any landlord that would accept them.

We’ve reasons to expect that the voucher increases, whatever the kind will be more than offset by losses due to insufficient Housing Choice funding — about 1,300, if Congress passes the nick Trump’s budget takes.

Rapid Re-housing. Rounding out subsidies of the voucher sort, FBC recommends enough funding to accommodate 343 single individuals in the rapid re-housing program.

No more for families, which may tell us something — at the very least, doubts about how successful the vouchers are at truly ending homelessness for all but those temporarily down on their luck.

Public Housing. Funding to repair public housing units is the single biggest ticket item on the FBC housing security list — $25 million to eliminate such safety and health hazards as leaking indoor pipes, broken windows and doors, holes that rats and roaches crawl through.

This wouldn’t make all public housing units fully habitable. DCHA estimated its capital needs at $1.3 billion last year, noting ongoing shortfalls in federal funding for them. Yet another prospective cut that the District may have to deal with at best it can.

Bottom Line

FBC’s housing security recommendations total $118.9 million — not counting, as we probably should some portion of the Trust Fund investment.

In one respect, this is what we’re told good bargainers do — put on the table more than you think the folks on the other side will agree to.

But more importantly, it’s yet another sign that the Mayor and DC Council should revise policies that unduly limit what the District can spend.

The Chief Financial Officer’s latest revenue forecast estimates about $221 million more than the the current budget requires — and further increases over the next four years.

Under current policy, the forecast will automatically trigger all the tax cuts that haven’t already reduced what the District can spend.

Next year’s budget would then have only 57% of what it could without the cuts — $103 million less for a host of critical needs. Even less in future years, as DCFPI’s analysis shows.

At the same time, the District continues to sweep all budgeted funds unspent at the end of each fiscal year into what are essentially savings accounts. It’s now got about $2.4 billion parked, probably earning at a miniscule interest rate.

It could well end the fiscal year with more unspent funds again. We’ve had surpluses every year since 2010, when the Council decided to save every penny of them.

They can’t be used for budget items that require ongoing funding commitments, but any one-time expense is okay. A transfer to the Trust Fund would qualify.

So, as the current campaign slogan says, the Mayor and Council should untie DC’s hands — or more precisely, their own. At the same time, with prospects of budgetary tornadoes, rather than rainy days, setting some money aside in a reserve they can readily tap would be prudent.

* In some cases other than housing, FBC recommends a range, rather than single dollar figure. And, as noted above, the Trust Fund recommendation would not involve total spending through the budget. The percent I’ve cited is the lowest.


Policy Changes Could Shrink the Affordable Housing Gap, But Trump Budget Likely to Worsen It

March 15, 2017

Picking up where I left off on the acute shortage of housing for the lowest-income renters. As I said, we’ve got policy remedies, but also threats. Those seem more imminent since the Washington Post reported a leaked preview of Trump’s proposed budget.

A Range of Policy Remedies

More Financing for Affordable Housing. The National Low Income Housing, as you might expect, focuses on the housing, rather than the income side of the equation. Within this broad spectrum, it’s zeroed in, though not exclusively on building the National Housing Trust Fund.

First, it calls for legislative changes that would significantly increase revenues that Fannie Mae and Freddie Mac could transfer to the Fund, which at long last got some money last year — a down payment, of sorts, on its promise.

Second, NLICH would have the mortgage interest deduction cut in half, to $500,000 and the additional tax revenues shifted into the Fund.

These two measures — if swiftly enacted and gradually phased in — would generate an estimated $21.3 billion over the first 10 years, NLIHC says, using in part a study by the Tax Policy Center. Millions more then to states and the District of Columbia.

They can use their Trust Fund shares to help finance a range of activities that preserve, create, upgrade and otherwise make available more affordable housing.

All but 10% must go to rental housing and at least 75% of that for the benefit of extremely low income households, i.e., those with incomes no more than 30% of the median for the area they live in.

More Opportunity to Increase Housing Assistance. Even with a beefed-up Trust Fund, we’d still need more funding for Housing Choice vouchers — both project-based, i.e., those that subsidize rents for specific units, and tenant-based, i.e., those that enable recipients to rent at market-based rates, while still paying only 30% of their income.

Funding for these vouchers got whacked by the 2013 across-the-board cuts. The annual caps on appropriations now leave a lot of discretion to the top-level decision-makers in Congress — and even to majorities in the subcommittees.

The caps have nevertheless surely played a role in severely limiting the reach of not only Housing Choice vouchers, but available public housing units and those funded by several programs that are smaller and more specifically targeted, e.g., for the elderly, for people with disabilities.

The Campaign for Housing and Community Development — a substantial, broad-based coalition — has just called on Congress to lift the originally-mandated caps, which will otherwise again become effective for the next fiscal year’s budget.

Very importantly, it calls for parity, unlike the lopsided defense increase/non-defense decrease we’re likely to see in Trump’s proposed budget, of which more below.

New Renters Credit. The Center on Budget and Policy Priorities has floated a proposal that would get around the caps — a renters credit. Not, you note, technically federal spending, because spending through the tax code doesn’t count.

The credit would work somewhat like the Low Income Housing Tax Credit in that states would get a certain number of the credits and then parcel them out to expand housing affordable for low-income people.

The new credit could go to both developers and owners and would subsidize rents like the Housing Choice vouchers, limiting what tenants pay to 30% of their income.

The difference here is that the developers and/or owners would get the difference as a tax reduction, rather than a direct payment from a public housing authority. And the big difference from the LIHT is that it would make units available for only the lowest-income households.

Like the NILHC mortgage tax interest reduction, the renters credit would shift the balance in current federal policies from housing assistance for high-income homeowners to the lowest-income renters and prospective renters.

The mortgage interest deduction, the related property tax deduction and some other tax preferences recently saved the highest-income households a total of more than $130 billion, according to the Center’s estimates.

All rental assistance was somewhere around $55 billion — less than the mortgage interest deduction alone.

Threats on the Horizon

We don’t know yet exactly what Trump will propose for next fiscal year’s budget, but he’s said it will increase defense spending by $54 billion. Not, however, so as to increase the deficit. He seems intent on doing that in other ways.

His forthcoming budget will offset the significant breach in the defense spending cap by reducing spending for non-defense programs that depend on annual appropriations. How he’ll apportion the cuts remains to be seen.

But the Washington Post reports that “preliminary budget documents,” probably the marks that the Office of Management of Budget passes down to federal agencies, call for more than $6 billion in cuts to Housing and Urban Development programs — roughly 14% of the insufficient amount they get now.

The work-in-progress budget would level-fund rental assistance programs, the Post says. This would not preserve the number of vouchers in current use because they cost more annually to plug gaps between what renters pay and landlords’ permissible rental charges, which HUD bases on the costs of  modest units on the open market.

Both the Center and NLIHC say that about 200,000 vouchers would effectively vanish, leaving more low-income renters with the huge cost burdens many already bear — or homeless.

Public housing would take big hits. The capital fund would lose about $1.3 billion or more than 31%* — this when public housing has major repair/rehabilitation needs that now total nearly $40 billion, NLIHC says.

The cut, on top of years of under-funding would mean the loss of even more public housing units — more than half of which provide affordable units, presumably with accommodations hard to find on the open market, for seniors and younger people with disabilities.

The budget document also cuts funding for operating public housing by $600 million. This funding stream subsidizes not only administrative activities like overseeing buildings and renting vacating units, but routine maintenance. Neglect that and you’ve got a capital need, as all of us housed people know

The prospective budget would also blow away a flexible block grant that densely-populated communities can use to provide affordable housing and cuts two others, including one helps fund improvements in rundown subsidized housing and surrounding neighborhoods.

A fourth — the Native American Housing Block Grant—would be cut by more than 20%, leaving housing on some reservations severely over-crowded and without such basics as hot and cold running water and/or toilets.

In not-so-short, billions more for defense, billions less for poor and near-poor people who urgently need affordable housing — like, for example, what the First Lady’s living in, rent-free.

* The Center, which links to the Post report, says the capital fund cut is about $2 billion.