For his first State of the Union address, President Trump gave the third longest speech in the past 50 years. With all that to say, he did not once touch on the affordable housing crisis in America. He did, however, say things that foreshadow the future of affordable housing and the prospects for low-income renters.
The only reference to safety net programs is when he said, “We can lift our citizens from welfare to work, from dependence to independence, and from poverty to prosperity.” Affordable housing supporters are concerned that this is a preview of measures that will make it harder for the poorest Americans to receive housing assistance. These include imposing work requirements and raising minimum rents.
HUD has prepared draft legislative language for its Fiscal Year 2019 budget proposal. The draft legislation calls for imposing work requirements on some subsidized housing residents and setting a new minimum rent structure for most programs. It would allow subsidized housing operators to impose minimum work requirements of up to 32 hours per week. There would be exclusions for elderly and disabled residents. According to the Center on Budget and Priorities, more than half of all affordable housing residents are senior or disabled, and more than one-quarter have an adult who is working. The draft legislation would also remove volunteering as an eligible work activity.
Most subsidized housing residents currently pay 30% of their adjusted income for rent. HUD’s proposal would raise this to 35% of gross monthly income or a minimum rent of $152.25, whichever is higher. This minimum rent is based on paying 35% of wages for 15 hours of work per week at the federal minimum wage. This would be an increase that many tenants living in federally subsidized housing cannot afford. Because the income deductions for childcare and medical expenses will no longer figure into calculating income, low-income seniors, disabled persons and single-parent households will be hit especially hard. You can read an early report about the proposed legislation’s work and rent changes here.
There is already a precedent for HUD’s proposal to impose work requirements on persons who receive housing assistance. This is happening with the Medicaid program, which provides health insurance for poor and disabled Americans. The Trump administration authorized states to seek waivers for their Medicaid programs that will allow them to impose work requirements on Medicaid recipients. It would exempt elderly and disabled persons, as well as pregnant women, from work requirements. However, the Kaiser Family Foundation found that 60% of non-elderly people on Medicaid are already working. Those not working are mostly ill or disabled, caregiving or attending school. The Medicaid work requirements will affect only about 7% of recipients but cost a lot for oversight. It is also unclear, especially in those states that expanded Medicaid under the Affordable Care Act (ACA), how waivers will affect efforts to treat those with opioid addictions. Ten states have already submitted Medicaid waiver requests to institute work requirements.
President Trump touted his goal to make America a nation of “builders” again. He talked about the need to repair infrastructure and called for $1.5 trillion to rebuild bridges, roads and rails. He did not mention affordable housing when talking about his infrastructure proposal. Affordable housing supporters do hope that infrastructure legislation passed by Congress will include housing as a priority too.
President Trump did call for investment in workforce development, job training and vocational schools. However, his upcoming FY 19 budget will likely propose cuts in many of these programs. It is likely that the administration will also propose a large budget cut for HUD. In FY2018, the administration proposed cutting $6 billion from HUD’s budget. Republican leadership in Congress has already said that reforming safety net and entitlement programs will be a priority in coming years. Affordable housing supporters are concerned that Congress will make housing program cuts to pay for the deficits from tax cuts mostly going to corporations and wealthy individuals.
Another issue that may affect how much funding goes to housing relates to budget rules passed by Congress in 2013. Called a sequester, the legislation imposed limits on annual spending for both defense and domestic agencies. In his State of the Union speech, President Trump called for ending the defense spending sequester but did not mention domestic programs. Democrats want to see the sequester caps also lifted on domestic programs, which would make it possible to get more funding for affordable housing in FY 19 and beyond. This issue is part of the ongoing negotiations over passing final appropriations for FY 18 so that the government can stop operating under the temporary funding measures passed every few weeks since October.