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.

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No Government Shutdown (Now), But Congress May Shut Out More From Affordable Housing

October 5, 2015

If the official poverty rate ticks down at the same pace it did last year, we won’t see it cut in half until 2040, the Coalition on Human Needs reports. Not even then if we have another recession, which, of course, we will.

What this tells us, CHN says, is that economic growth won’t reduce poverty fast enough. We need bigger investments in programs with a strong anti-poverty track record.

Doesn’t look as if bigger investments are in the cards. The Republican majorities in Congress insist that appropriations for non-defense programs total no more than the budget cap set by the 2011 Budget Control Act.

What we may forget is that the cap — and caps going forward — were set after Congress cut appropriations by about $38 billion, thus lowering the baseline the caps were based on. So even if the non-defense cap were lifted by $37 billion, as the President proposed, funding would still be lower than in 2010.

Hard to know whether we will have a genuine budget for the upcoming fiscal year. We’ll have a short-term continuing resolution instead.

But not an ordinary CR because it doesn’t maintain program-by-program spending at the same level it’s been. It instead makes cuts in non-defense programs — a total of about $7 billion — so as to bring spending below the FY 2016 cap.

And we might not have even this if House Speaker John Boehner hadn’t resigned, freeing himself, it seems, to let the House vote on the CR, even though so many of his Republican colleagues signaled they’d balk that it couldn’t pass without Democrats.

So we won’t have a government shutdown. We’ll instead have the stage set for a showdown in early December — or sooner.

A more complex situation then because Congress will have to somehow deal with not only the expiring CR, but the expiration of nominally temporary tax breaks and the fact that the Treasury Department will have exhausted measures it can take to avert a default on the federal debt.

Some predict another budget deal like the one that pulled us back from the so-called fiscal cliff at the tail end of 2012. Others a year-long CR.

Assume that becomes the solution. Well, we know (or should) that even level funding doesn’t mean as many people served as well as they’ve been served.

Take Housing Choice (formerly Section 8) vouchers, for example. Actually, you probably can’t if you don’t already have a voucher — perhaps not even if you do.

We all know that rents generally rise — and have been rising faster in recent years. Utility costs are rising also. And they’re folded into what housing vouchers help pay for.

Incomes of households in the bottom tier of the affordability scale generally haven’t kept pace. So their share of rent, plus basic utilities — 30% of income — covers less. Each voucher then usually costs the agency that issues it more.

What this means is that funding for Housing Choice would have to increase each year just to maintain a steady state. But it hasn’t. Quite the contrary.

The across-the-board cuts in 2013 left a large majority of local housing agencies without funds to cover their share of rent for all the vouchers they’d issued.

By and large, they coped by holding back vouchers they’d otherwise have reissued when households that had them not longer qualified, e.g., because they’d moved out of the area or gained enough income to boost them over the eligibility cut-off.

Some pulled back vouchers they’d issued to people who hadn’t yet found apartments. At least one changed its standards, requiring voucher holders to either move to smaller units or come up with the money for rooms that were now “extra.”

And some actually shifted funds from vouchers to cope with other shortfalls, exacerbated, but not originating in the cuts — mainly under-funding for the program that covers the costs of maintaining and renovating public housing.

They could do this because they were part of the U.S. Department of Housing and Urban Development’s Moving to Work pilot, which essentially converted their federal housing assistance funding to a block grant.

But for a seemingly over-flexible, under-monitored MTW, about 63,000 more households would have had vouchers last year, the Center on Budget and Policy Priorities estimates.

On the other hand, more probably had apartments in public housing than if the MTW agencies hadn’t shifted funds to keep units from becoming unlivable.

So the story’s a bit more complicated than direct cuts to the Housing Choice program. But choices Congress has made nevertheless account for the shrinking number of households that make rent affordable.

The across-the-board cuts ultimately denied about 100,000 households vouchers they’d otherwise have had. Congress later restored some of the lost funds — enough to renew all vouchers issued and put some back in circulation.

Yet the boosts in the last two budgets will still leave roughly 68,560 fewer households with vouchers than pre-sequestration, according to CBPP estimates (and my calculator). And there weren’t enough vouchers well before the Budget Control Act and aftermath.

Of course, the House and Senate might agree to an actual budget. So it’s worth a look at what could then arrive on the President’s desk. Will confine myself again to Housing Choice.

House funding for HUD would reverse the progress made toward restoring lost vouchers. The White House predicts a loss of 28,000 more.

Over on the Senate side, the Appropriations Committee says its bill would “continue assistance to all individuals and families served by both Section 8 and public housing.” The White House, however, contends that the funding level falls short of what would be needed to renew roughly 50,300 vouchers.

Distressing, to put it mildly, that folks who call the shots in Congress seem disposed to make a bad situation worse.


Billions More for Defense, But Less for Low-Income Moms and Kids

June 10, 2013

Two lesser-known facts about WIC (the Special Supplemental Nutrition Program for Women, Infants and Children).

First, unlike most of the major federal nutrition assistance programs, it’s funded by annual appropriations.

This potentially exposes it to cuts designed to bring total non-defense discretionary spending below the caps Congress agreed to as part of the Budget Control Act, the same law that gave us this year’s across-the-board cuts.

Second, WIC does more than provide low-income mothers with coupons or the equivalent to help ensure that they and their young children get enough of the foods and beverages they need for a healthful diet.

WIC also offers participating mothers breastfeeding counseling. The counselors are other mothers who’ve got both the experience and the training to encourage breastfeeding and help with problems some nursing mothers experience.

The Breastfeeding Peer Counselor program was created in 2004 on the basis of compelling evidence that breastfeeding reduces a range of health risks for both babies and their mothers.

Now the House Agriculture Appropriations Subcommittee has decided to block spending on the program unless the U.S. Department of Agriculture is sure that WIC has enough funds to serve all eligible women, infants and children — both those enrolled now and those who will apply.

The Center on Budget and Policy Priorities doubts that the proposed funding level for WIC — about $6.65 billion — will be enough to cover the costs of food assistance for all these people.

Perhaps if the Agriculture Department uses the program’s contingency reserves to supplement the appropriation, it says.

But the reserves are supposed to be available for unexpected costs, e.g. price spikes in foods the coupons cover, downturns in the economy that increase the number of eligible mothers and children.

So using them to make up for under-funding that can be predicted now would be risky.

WIC has already been whacked by several rounds of mandatory across-the-board cuts. Before these, it had more than $7.04 billion for the current fiscal year.

The cut the Agriculture Appropriations Subcommittee passed isn’t mandated.

It’s a choice the subcommittee majority made — one prompted, but not compelled by choices the Appropriations Committee made when it set the funding allocations each subcommittee got.

And these reflect decisions by House Budget Committee Chairman Paul Ryan.

The first of these sets total spending at the level the BCA requires. Both the President’s proposed budget and the Senate’s budget plan set a higher level and still reduce the deficit because they include some revenue-raisers.

The second decision is to ignore the specific spending caps in the BCA. Defense would get more than the cap allows — $26.2 billion more than it has now, in fact.

CBPP estimates that Defense is at least $45 billion over its cap, once funding it gets from other appropriations is factored in.

The unrealized savings get shifted to the non-defense part of the budget, thus requiring larger cuts than the BCA cap itself would force.

But the House Appropriation Committee’s allocations increased funding for Homeland Security and a budget component that combines military construction and Veterans Affairs. So all the other NDD components got smaller allocations to compensate.

Agriculture didn’t fare so badly, though this is cold comfort to the families WIC is supposed to serve.

Cuts to other programs that serve basic human needs will have to be huge. Those lumped together as Labor, Health and Human Services and Education will lose a total of $27.8 billion — 18.6% of what they collectively have now.

Sequestration was dumb to begin with. The House Republican leadership is making it worse by taking a rather casual view of what the law requires — and refusing to even discuss an alternative that would include any tax increases.

Low-income people won’t be the only ones to suffer. But House Republicans seem bound and determined to target cuts where they’ll get hurt.