Leaked Documents Show Massive HUD Cuts Contemplated

Legislation | March 09, 2017

The White House is working on a fiscal year 2018 (FY18) budget request to Congress that could cut HUD’s budget by 14%, to $40.8 billion, including a $42 million cut to the $505 million Section 202 Housing for the Elderly program, hundreds of millions in cuts to public housing and Section 8 assistance, elimination of the Community Development Block Grants program, and cuts to the HOME program, according to documents obtained by The Washington Post.

According to the leaked documents, HUD is contemplating asking Congress for a $42 million cut to the Section 202 program, whose renewal funding need in fiscal year 2017 is $412 million. Funding for Service Coordinator renewals and Senior Preservation Rental Assistance Contracts comprise the rest of the $505 million Section 202 account.

Each year, the President sends his request to Congress for the next fiscal year’s appropriations levels, which are ultimately decided by Congress. The White House’s Office of Management and Budget (OMB) works with HUD (and other agencies) to determine the appropriations level that the White House will be requesting of Congress. These negotiations between the OMB and federal agencies is referred to as the “passback” process. It is in the midst of this pass back process that the HUD documents were leaked to the media.

President Trump had announced in late February that he intends to seek a $54 billion increase to defense spending and a $54 billion decrease to nondefense discretionary spending in FY18. LeadingAge understands that HUD program offices were given just two or three days to suggest ways to OMB that cuts of this magnitude could be achieved. The leaked documents’ 14% overall cut to HUD are in line with the Center on Budget and Policy Priorities’ (CBPP) estimates of the cuts nondefense discretionary programs would have to absorb to reach $54 billion in overall federal savings.CBPP estimates that if HUD's rental assistance programs are cut by 15%, approximately 625,000 households would lose their housing assistance. HUD's programs serve about 5 million households; about 1.6 million of these are older adult households.

The leaked documents also describe plans to seek a $1.9 billion cut to public housing’s $6.4 billion annual budget; more than 342,000 of public housing’s 1.1 million units are headed by older adults.

The proposed cut to Section 8 is less clear. Reports on the leaked documents describe a $300 million cut to “Section 8 housing and housing vouchers” with a potential overall request of $19.3 billion. These numbers are more in line with the Section 8 Housing Choice Voucher program, where 24% of vouchers serve older adult households. Given the sweeping cuts in the leaked document, it is hard to imagine that Section 8 Project-Based Rental Assistance, which provides rental assistance to about two-thirds of Section 202 units and whose overall 1.2 million units serve almost 600,000 older adult households.

The leaked documents also describe a planned $29 million cut to the Section 811 Housing for Persons with Disabilities $154 million program.

President Trump is expected to release his agency-level (not program by program) on March 15 or 16. The final, programmatic level request from the White House are expected to be delivered to Congress in April or May.

The President’s request is an early volley in the appropriations timeline. Congress must develop its own appropriations bills. Given the struggles Congress has had in producing bills that can garner sufficient support to pass the Senate and House in recent years, the President’s request would be almost impossible to pass as-is. But, with a Republican-controlled House and Senate, scenarios abound that a compromise could be reached between the President’s request and funding levels needed to receive enough votes to actually pass the appropriations bill. Any compromise, however, between a 14% overall cut to HUD and, for example, no cut to HUD, could leave housing programs with “only” a 5 or 8% cut to HUD, which would be completely insufficient to maintain existing housing programs. LeadingAge is committed to protecting existing programs and the residents they serve, and to expanding the supply of affordable housing to older adults.