HUD Secretary: Contemplated Cuts Would Cause Mass Evictions
In response to a proposal by a majority of House Republicans to cut discretionary spending for FY24 back to FY22 levels, House Committee on Appropriations Ranking Member Rosa DeLauro asked every agency what such a rollback to FY22 funding levels or to a cut of 22% compared to FY23 levels would mean for programs they administer.
On March 20, Chair DeLauro published the full suite of responses from Administration departments and agencies, including the response from HUD Secretary Marcia Fudge.
In the opening of her letter, Secretary Fudge said her letter would “consider two scenarios, a reduction to 2022 enacted levels and a 22 percent reduction to 2023 enacted levels.”
“Except for targeted funding increases for homeless assistance and tenant-based Housing Choice Vouchers (HCV), almost all of HUD’s programs remained at or near level funding with zero or minimal increases. Consequently, any cuts to the 2023 level do not eliminate ‘extra’ funding added in 2023 but translate to direct cuts to the 2022 baseline. These cuts, in turn, would reduce existing services that families and communities rely on, including programs housing low-income families,” Secretary Fudge says in the letter.
“Under the 22 percent potential funding cut scenario, it would be impossible to stave off mass evictions,” Secretary Fudge says. The letter spells out possible impact scenarios for various HUD programs under the discussed cuts.
Project-Based Rental Assistance
HUD’s Project-Based Rental Assistance (PBRA) program, which serves approximately 1.3 million households, needed almost $1 billion above 2022 levels to just renew the existing owner contracts for 2023. The Project-Based Rental Assistance program provides the operating subsidy for two-thirds of Section 202 Supportive Housing for the Elderly communities. The increases needed annually for the PBRA program are “statutory and reflect increased costs, and HUD cannot avoid them within the contracts. As a result, any cuts to the 2023 level would force HUD to short fund or cancel existing contracts between the federal government and private property owners,” the letter says. “The termination of contracts with rental owners will likely lead the owners to convert their housing to market-rate, leaving currently supported tenants in units that are now unaffordable to them, likely resulting in evictions. This would represent an historically unprecedented loss of existing affordable housing, a breach of federal contracts, and a repudiation of decades of long-term bipartisan federal investment.”
HUD estimates that funding flat with 2022 would eliminate funding for approximately 87,000 PBRA households, and a 22% cut to 2023 funding would eliminate funding for approximately 286,000 families.
Housing Choice Voucher Program
The Housing Choice Voucher program currently assists approximately 2.3 million families. HUD estimates that funding flat with 2022 would eliminate funding for 350,000 families, and a 22% cut to 2023 funding would eliminates funding for 640,000 households. Approximately 29% of voucher-assisted families are older adults.
If there is a 22% cut, HUD calculates an expected 78% proration for the Operating Fund and a projected $700 million cut from the capital grants, which would leave no funding to address backlog needs and $2 billion in unfunded accrual needs. Unmet capital needs mean the further deterioration of the inventory and contribute to lower occupancy rates, higher costs for utilities, less resilience to climate change, and increased health and safety risks for residents. Approximately 35% of public housing households are older adults.
The estimated impact of the funding cut of 22% from 2023 to the average HOME formula grant of $1.5 million will reduce the average grant by $330,000 and will result in more than 6,700 fewer units of affordable housing produced, Secretary Fudge’s letter says.
Homeless Assistance Grants
Cuts to the Emergency Solutions Grants (ESG) program from the 2023 baseline would result in less emergency shelter, homelessness prevention, and rapid rehousing. A funding cut of 22% would result in over 24,000 fewer people receiving assistance, likely leading to large increases in the number of people sleeping on the streets, the letter says.
Section 202 Supportive Housing for the Elderly
The letter does not discuss the impact of cuts to every account, including to the Section 202 Supportive Housing for the Elderly account. The Project-Based Rental Assistance program, above, provides the operating subsidy for two-thirds of Section 202 communities (the other one-third of Section 202 operating subsidy contracts are through the Section 202 account’s Project Rental Assistance Contracts). The Section 202 program was funded at $1.033 billion in FY22; for FY24, HUD has said PRAC and Service Coordinator renewal costs would total $907 million. Funding at FY22 levels would likely mean no new Section 202 housing could be build. If a 22% cut to FY23 funding was enacted, the Section 202 account would not have the funds it needs to renew many existing PRACs and Service Coordinator grants in FY24.
HUD’s letter to Ranking Member Pelosi also says that dire housing conditions in Indian country would be exacerbated, efforts to abate lead hazards would be slowed, critical research would be jeopardized, and efforts to combat housing discrimination would be severely impacted if the HUD budget was cut by 22% or back to FY22 levels.
The Republican Study Committee is comprised of 173 of the House of Representatives’ 222 Republican members. In a platform released earlier this year, Republican Study Committee members said, “Conservatives could push for a single spending cap on annual discretionary spending that would provide flexibility to ensure adequate national security funding. Some conservatives have pushed for such a cap on overall annual discretionary spending for FY 2024 to be tied to FY 2022 levels. Returning to FY 2022 levels would require cutting over $100 billion in overall discretionary spending from currently enacted FY 2023 levels.” The House is working on its overall FY24 budget framework and the Republican Study Committee is presumed to have great influence over the budget framework, which will them guide the work of House appropriators.
The Senate is not expected to seek funding cuts to domestic discretionary programs such as HUD’s housing programs. But, the House and Senate will have to jointly agree on a final HUD funding bill to ward off a lengthy or year-long Continuing Resolution, which would also be damaging to HUD programs and the people they serve.
Because of the severe shortage of affordable housing for older adults with very low incomes and to preserve existing affordable senior housing, LeadingAge is seeking increases in FY24 to meet housing needs.