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Douglas Rice. Federal Budget Outlook for Low-Income Housing. February 24, 2012. HUD’s FY 2013 Budget Principles. Bring Private Capital Back into the Mortgage Market Prioritize Renewals to Protect Current HUD Families Continue Progress on Signature Initiatives

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hud s fy 2013 budget principles
HUD’s FY 2013 Budget Principles

Bring Private Capital Back into the Mortgage Market

Prioritize Renewals to Protect Current HUD Families

Continue Progress on Signature Initiatives

Reduce Regulatory Burdens and Increase Efficiency [and Cut Costs]

who receives hud rental assistance
Who receives HUD rental assistance?

Half of HUD-assisted households are headed by seniors or people with disabilities; 4 out of 10 include children

Average income for these households is just over $10,000, well below the federal poverty line.

About 1 out of 7 HUD-assisted households are in rural or other non-metro areas

Of the non-elderly, non-disabled households in the Housing Choice (Section 8) voucher program, ¾ are working or subject to work requirements

housing choice vouchers
Housing Choice Vouchers

HUD requests $17.2B for renewals, level w/ 2012

Rent/utility inflation will add $200-$400M to renewal costs in 2013; new “tenant protection” and veterans’ vouchers issued in 2011/2012 could increase costs by another $200-$250M

HUD assumes that agency reserves and policy-related cost savings will fill renewal funding gap

But savings estimates are unrealistic and agency reserves will already be low by end of 2012 – leaving thousands of vouchers unfunded in 2013

Shortfall of $350M in funding for program administration; 3rd straight year of deep cuts

public housing
Public Housing

HUD requests $4.52B for public housing operating fund, about $500M below full funding level; would be 2nd consecutive year of deep shortfalls

$2.02B for capital fund, well below the $3.4B for new repairs/renovations that HUD study says will accrue in 2013, adding to $26B backlog

Policy-related cost savings will close only small portion of gap in operating funding

section 8 project based rental assistance
Section 8 Project-Based Rental Assistance

HUD requests $8.7B for PBRA, including $8.4B for renewals, $610M below the 2012 level and at least $1B below amount needed to provide 12 months of renewal funding for all contracts

HUD proposes to (1) narrowrenewal gap by implementing cost-saving measures and (2) “short fund” renewals, i.e., shift some costs into FY 2014

“Short funding” could make it more difficult or expensive for owners to secure capital, and discourage owners from continuing to participate

“Short funding” creates hole in HUD budget that must be filled eventually to prevent cuts in units

hud request relies on unrealistic savings estimates and unwise policy choices
HUD Request Relies on Unrealistic Savings Estimates and Unwise Policy Choices

Mandatory $75/month minimum rent in all programs; approximately 500,000 of the poorest HUD-assisted residents would face rent hikes

Increase in medical deduction threshold from 3% to 10% of income would raise rents on more than 600,000 elderly and disabled households

Proposed change in income targeting and “ceiling rents” are sound policy

HUD estimates of cost savings in 2013 are unrealistic, e.g., assume full implementation at the first of the year

strong 302 b critical but other decisions will also have big impact on hud outlook
Strong “302(b)” Critical, But Other Decisions Will Also Have Big Impact on HUD Outlook

Deficit reduction: several trillion $ in additional deficit reduction beyond BCA needed to achieve fiscal balance over next decade

Sequestration: BCA-mandated across-the-board cuts in January 2013

Taxes: Deep tax cuts enacted in 2001/2003, and later expanded/extended, expire end of 2012

Debt limit: will be reached in early 2013

Only a balanced approach to deficit reduction that includes substantial revenues will avoid further deep cuts in low-income programs, including housing

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CBPP Resources

  • Background/analysis of low-income housing policy
      • http://www.cbpp.org/research/index.cfm?fa=topic&id=33
  • Fact sheets on federal rental assistance programs
    • http://www.cbpp.org/cms/index.cfm?fa=view&id=3586
  • Timely updates on housing policy issues
    • http://www.offthechartsblog.org/category/housing/
    • http://www.cbpp.org/research/index.cfm?fa=topic&id=143
    • Sign up for CBPP housing email updates
      • http://www.cbpp.org/research/index.cfm?fa=housing
    • Primer on federal budget process
      • http://www.cbpp.org/cms/index.cfm?fa=view&id=155
    • Background/analysis of federal budget issues
      • http://www.cbpp.org/research/index.cfm?fa=topic&id=29