Trump FY 19 Budget Makes Drastic Cuts in Housing and Safety Net Programs

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The Trump Administration’s FY 19 budget proposes drastic cuts to HUD and USDA housing programs. It would eliminate almost all direct grant and loan programs that build and repair affordable housing, under-fund rental assistance and impose harsh rent and work requirements.

These affordable housing cuts mirror additional cuts the Administration has proposed for other safety net programs that benefit low-income renters. These include eliminating energy assistance and legal services funding, plus making cuts to the SNAP food assistance program.

It can be difficult to comb through the 160-page budget proposal, so read below for a summary of the cuts that would be most significant to low-income renters.

HUD Program Cuts

The FY 19 budget requests $39.2 billion for the Department of Housing and Urban Development (HUD). This is an $8.8 billion, or 18.3%, reduction from FY 17. Congress has not yet passed FY 18 appropriations and has a March 23 deadline before government funding runs out. HUD’s FY 19 request is $2 billion more than the cuts proposed by the Administration for FY 18.

The proposals emphasize the Administration’s desire to move housing funding strictly to rental assistance. It calls for eliminating the Community Development Block Grant (CDBG) program, the HOME program and the Public Housing Capital Fund (PHCF). The budget also eliminates the Self-Help Homeownership Opportunity Program (SHOP). CDBG funds infrastructure, affordable housing, community development and economic revitalization. It is also one of the major sources used in disaster recovery. The HOME program supports affordable housing development and rental assistance. The PHCF pays for repairs to public housing properties. SHOP helps low-income renters become homebuyers by helping build their own homes. By cutting these programs, the Trump Administration is eliminating all the HUD resources that currently pay for building or repairing affordable housing.

This budget cuts the Public Housing operating fund by $1.6 billion. It would also authorize Public Housing Authorities (PHAs) to combine their operating and capital accounts. This would allow them to use their operating funds to pay for repairs. With the PHCF eliminated and operating funding reduced, this will put a financial strain on many PHAs and lead to deferred maintenance for public housing properties.

Section 8 Housing Choice Vouchers (HCV) are under-funded by $3 billion. The budget notes that $2 billion could be added back to this program because of Congress lifting spending caps in the two-year budget deal enacted February 9. The National Low-Income Housing Coalition (NLIHC) estimates that will still leave 200,000 vouchers unfunded in FY 19. The Administration also request no funding for Veterans Administration Supportive Housing (VASH) vouchers.

The Trump Administration proposes to achieve program savings and promote work by making changes in rents and imposing work requirements. The FY 19 budget proposes increasing tenant rent contributions from 30% of their adjusted income to 35% of their gross income. It would set minimum rents at $50 for elderly and disabled households and $150 for households with a member able to work. The Administration also supports work requirements for Public Housing residents, excluding elderly and disabled residents. These measures, if enacted, will promote homelessness as tenants cannot pay their rent and make it harder for low-income families to achieve stability.

The Administration proposes $100 million for a Rental Assistance Demonstration (RAD) program. These funds would be used to accelerate the number of Public Housing units converted to Project-Based Rental Assistance (PBRA). Converting units from Public Housing to PBRA allows them to be renovated and maintained appropriately. It also proposes $30 million in competitive grant funding for public housing demolition. In addition, the budget proposal calls for a $300 million fund to help PHAs that would lack the money to operate  due to the budget cuts.

Programs for populations with special needs were the only programs creating new affordable housing that received funding in the FY 19 budget. The Administration proposed $563 million for the Section 202 Supportive Housing for the Elderly program. This is a $61 million increase over FY 17, but $10 million less that the Senate and House are considering for FY 18. The Section 811 Supportive Housing for Disabled Persons program received $132 million, a decrease of $14 million from FY 17. Funding for the Housing Opportunities for People with AIDS (HOPWA) would decrease to $330 million, a reduction of $26 million.

The Administration also proposes program savings by giving the HUD secretary the authority to freeze rent increases. This will pose financial challenges to operate many of these properties.

USDA Rural Housing Program Cuts

As with HUD, the FY 19 Department of Agriculture budget proposes eliminating all the rural housing programs that provide grants or loans for building, repairing, purchasing or preserving affordable housing in rural areas. It retains programs that provide loan guarantees. These guarantee programs have limited impact on the federal budget and tend to service renters and buyers with higher incomes.

The Administration proposes eliminating funding for the Section 515 Rural Rental Housing loans and Section 514/516 Farm Labor Housing loans and grants. It also eliminates Section 502 Direct Home Loans, which help low-income households purchase modest homes. In addition, it provides no funding for the Section 523 Mutual Self-Help Housing program, Section 504 Rural Housing Assistance grants or the Multifamily Preservation and Revitalization demonstration.

The FY 19 budget does provide $1.37 billion for Section 521 Rural Rental Assistance. This includes $20 million for resident vouchers in properties that lose their restrictions to serve low-income renters. It is not clear whether this amount will be able to cover all current rental assistance contracts.

Other Program and Agency Cuts Impacting Low-Income Renters

A number of other program cuts have been proposed by the Trump Administration that have a big impact on  low-income renters. These cuts will affect food security, home heating assistance, legal representation and assistance to homeless persons.

The Administration’s FY 19 budget proposes to cut the Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps) by $213 billion over the next 10 years, or 30%. They propose benefit and eligibility changes that will cut 4 million people from the program. They also propose to change how SNAP benefits are received. SNAP recipients would continue to receive half their current cash award on electronic benefit cards, but the other half would be replaced by a monthly food box.

Another cut calls for eliminating the Legal Services Corporation. Legal Aid serves millions of low income tenants who cannot otherwise afford a legal representation. Also eliminated would be the Neighborhood Reinvestment Corporation (NeighborWorks). The NeighborWorks network includes hundreds of community development organizations that serve millions of low-income renters and homebuyers.

The Administration would also eliminate two programs that help low-income households heat their homes and conserve energy. They propose eliminating the Low Income Home Energy Assistance Program (LIHEAP) administered by the Department of Health and Human Services (HHS). LIHEAP helps low-income renters and homeowners pay their heating and utility bills. Also proposed for elimination is the Weatherization Assistance Program (WAP) run by the Department of Energy. WAP provides energy efficiency upgrades, including Energy Star appliances, for low-income households to lower their energy bills.  

Additionally, the FY 19 budget eliminates the Interagency Council on Homelessness. This council is charged with coordinating homeless programs and policy across all the federal agencies that address homeless needs. It has been cited as a key piece in reducing homelessness prior to last year’s rise in the homeless population. Also eliminated is funding for loans and grants from the Treasury Department’s Community Development Financial Institutions fund (CDFI). CDFI funds community development and affordable housing lenders who finance new low-income housing and economic development initiatives.

Finally, the Administration calls for $1.4 trillion in cuts to Medicaid over the next 10 years. This will require congressional action to reform the Medicaid program. Republican Congressional leaders have said that Medicare and Medicaid are the most likely sources to balance the $1 trillion in tax cuts enacted two months ago. In addition, the FY 19 budget proposes new eligibility and work requirements.

What You Can Do

These proposals are important to consider since it reflects the direction that the Trump Administration wants to take. But this document is not official US legislation, and the House and Senate must now take time to reach an agreement on the budget’s funding.

While there is still time, tell your Congressperson to fully fund America’s affordable housing needs by taking a minute to complete the form here, or click the button below.