Trump FY20 Budget Disastrous for Affordable Housing (Again) - Affordable Housing Online

Trump FY20 Budget Disastrous for Affordable Housing (Again)

By on March 19th, 2019

President Trump released the first part of his FY 2020 budget, and it proposes disastrous cuts to critical affordable housing programs. The White House is proposing $9.6 billion in cuts to HUD programs, a massive 18% decrease from FY 2019 funding. The administration also proposes eliminating all direct housing programs at USDA. Similar to last year’s budget, he is also again proposing higher rents and work requirements for residents of federally assisted housing. Even though Congress has rejected these proposals before, they show how President Trump would balance tax cuts for the rich on the backs of low-income renters.

You can see a breakdown of the FY 2020 Trump budget cuts and their impact here.

The administration proposes deep cuts to public housing. The budget proposal eliminates the Public Housing Capital Fund, which received $2.775 billion in FY 2019. This fund pays for major repairs, renovations and improvements to public housing. It covers things like new roofs and boilers, improving energy efficiency and removing environmental hazards. The budget also proposes a drastic reduction in funding for the Public Housing Operating Fund. It would fall by 38%, from $4.65 billion in FY 2019 to $2.86 billion in FY 2020. The Operating fund pays for ongoing maintenance, small repairs, screening new tenants and similar costs to keep up public housing.

Instead of fully funding the Public Housing Capital and Operating Funds, the administration proposes $100 million for the Rental Assistance Demonstration (RAD). RAD converts public housing to vouchers and project-based rental assistance. However, Section 8 Housing Choice Vouchers and Project-Based Rental Assistance must be fully funded so that tenants are protected when public housing gets rehabbed and converted.

The Trump budget claims it provides enough money for Section 8 Housing Choice Vouchers (HCV) and Section 8 Project-Based Rental Assistance (PBRA) to serve all 4.7 million low-income families currently assisted. HCV would receive $22.244 billion in FY 2020. PBRA would receive $12.021 billion in FY 2020, an increase of $274 million from FY 2019. Affordable housing providers are concerned that it is not enough to renew all vouchers and project rental assistance contracts. It would certainly not be enough to offset the loss of public housing that the budget cuts will promote.

For the third year, the Trump White House proposes eliminating two large block grant programs that support affordable housing and community development. The Community Development Block Grant (CDBG) program was funded at $3.365 billion in FY 2019. CDBG funds infrastructure, affordable housing, community development and economic revitalization. It supports many Meals on Wheels programs. It is also one of the major sources used in disaster recovery. The HOME program supports affordable housing development and rental assistance and received $1.25 billion in FY 2019.

The Trump administration has also proposed cuts to housing programs serving the most vulnerable people. The 2020 budget proposes cutting $34 million from the Section 202 Housing for Elderly Persons program. The Section 811 Housing for Persons with Disabilities program would be cut by $27 million. The Housing Opportunities for Persons with AIDS program would face a reduction of $63 million. The funding levels proposed would not be enough to renew all existing contracts for these developments.

White House again proposes to achieve program savings and promote “self-sufficiency” through rent hikes and imposing work requirements. The changes are outlined in draft legislation pushed by the administration last year, called the Making Affordable Housing Work Act.

The draft legislation would raise tenant rent contributions in all federally assisted housing programs. This includes Public Housing, Section 8 Housing Choice Vouchers (HCV)  and apartments with Section 8 Project-Based Rental Assistance (PBRA). Tenants in these properties typically pay 30% of their adjusted monthly income towards rent. The legislation would raise the tenant contribution to 35% of gross income or a new minimum rent of about $150, whichever is greater. The new minimum rent is based on a tenant paying 30% of the income earned working 15 hours per week at minimum wage. This proposal would also eliminate the income deductions for dependents, childcare, elderly, disabled and medical expenses. Seniors and disabled persons would have the minimum rent capped at $50, but this is still more than many with the lowest incomes can afford to pay.

The draft legislation would also allow PHAs and housing providers to require up to 32 hours of work per week from tenants. Education and job training can count towards the work requirement, but not volunteer activities. Seniors 62 and older and non-elderly disabled residents would be exempt from the requirement. Even so, it will place an additional burden on many tenants who may face eviction if they cannot find work.

USDA’s rural housing programs take extreme hits in the president’s budget proposal. The budget eliminates all direct funding for rural housing programs, leaving only rural rental assistance for existing properties and some guaranteed loan programs. The guaranteed loan programs do not serve the lowest-income renters well. Section 521 Rural Rental Assistance was funded at $1.407 billion, but it is not clear if this is enough to renew all rental assistance contracts.

The president’s budget provides zero funding for the Section 515 Rural Rental Housing program, which provides subsidized loans to build affordable rentals in rural areas. Section 515 developments serve rural residents with the lowest incomes, including seniors and disabled persons. They are often the only affordable housing for miles around. It eliminates a program to preserve affordable rental housing, the Multifamily Preservation and Revitalization Demonstration. The budget also zeroes out the Section 514/516 Farm Labor Housing programs, which provide affordable housing for low-income farmworkers, both on farms and in communities. In addition, it cuts all funding for Section 502 Direct Loans. These are subsidized loans that make homeownership affordable to low-income households in rural areas.

This is the same package of extreme housing cuts, unjust rent increases and cruel work requirements that a Republican Congress has rejected each of the past two years. Now that Democrats control the House of Representatives, there is little chance that these proposals will be enacted. The House and Senate Appropriations Committees will work on their own individual funding bills this spring and summer. The goal will be to reconcile the bills and pass the appropriations by September 30, the end of the federal fiscal year.

Affordable housing programs at HUD and USDA have seen funding increases in the last two years. This is due to Congress lifting spending caps for FY 2018 and FY 2019 that had been imposed by the Budget Control Act in 2011. These spending caps are called sequestration, and would require severe mandatory funding cuts across most programs in the federal government. According to the Center on Budget and Policy Priorities, sequestration caused a $400 billion drop in non-defense discretionary spending from 2011 to 2017. The 2018-2019 budget agreement started to reverse the government’s disinvestment in affordable housing. Congress needs to again lift the spending caps to make more affordable housing available for low-income renters.

President Trump’s most significant legislative achievement was the tax cut package passed in 2017. These tax cuts overwhelmingly benefit large corporations and wealthy Americans, and will increase the national deficit by more than $1 trillion. His budgets since then have proposed massive cuts to critical safety net programs, including affordable housing, to pay for these tax breaks. Congress has recognized that food assistance, health coverage and affordable housing are critical lifelines for millions of low-income Americans. As the FY 2020 appropriations process unfolds, representatives and senators will need to hear from low-income renters that affordable housing programs must be fully funded.