Trump Administration Unveils Proposed Budget for Fiscal Year 2018

As reported by Tamara Schultz of CARH on May 25, 2017, in a Broadcast Email ...

On Tuesday, May 23, 2017, the Trump Administration unveiled its Fiscal Year (FY) 2018 proposed budget. The budget would seek $1.5 trillion in non-defense discretionary cuts (20.5 percent would be cut from the United States Department of Agriculture’s (USDA’s)  FY 2017 funding) and $1.4 trillion in Medicaid cuts over the course of a decade, while adding nearly half a trillion dollars to defense spending. The budget document titled “A New Foundation for American Greatness,” would dramatically reshape federal spending, cutting anti-poverty and safety net programs administered by USDA and the Department of Housing and Urban Development (HUD), but leaving Medicare and the retirement portion of Social Security untouched.

While Congress is expected to reject many of the proposals as it takes up the budget in the coming weeks and months, it is going to be contingent on CARH, it's members, and the rural housing industry to fight for restoration of funding from the programs that have been targeted both at USDA and at HUD, be it reduced funding or total elimination.

At USDA’s Rural Development (RD), housing as well as other program entities such as water and wastewater have been particularly hit hard. This is troubling given the reorganization announcement of RD. As you can see from the attached chart, the proposed budget would provide $1.345 billion for RD’s Section 521 Rental Assistance program, a $60 million reduction from the FY 2017 level.  The Section 515 and MPR programs would be eliminated; $20 million would be provided in the MPR account but funding would be only for vouchers. The only multifamily housing program not to experience reductions would be the Section 538 Guaranteed Rural Rental Housing program which would have $250 million in budget authority, an increase of $20 million over FY 2017. The Section 538 program does not cost the government money because of the fee structure that CARH, working with the department several years ago, was able to have approved. The only costs to the government are the administrative expenses associated with the program.

HUD’s proposed budget is equally as worrisome. As you can see from the attached chart, the HOME and CDBG programs would be eliminated. Housing Choice Vouchers would be cut by nearly $1 billion and Project-Based Rental Assistance by $465 million from FY 2017 levels. The Public Housing Operating Fund would shrink by $500 million, while the Public Housing Capital Fund would be reduced $1.31 billion. Related policy proposals include increasing tenant rent contributions for public housing to 35 percent of a family’s monthly income and eliminate utility allowance reimbursements. The Housing Trust Fund would be eliminated and the Community Development Financial Institutions (CDFI) Fund, which plays an important role in generating economic growth in distressed communities throughout the country, would also lose more than 90 percent of its funding, as it would see a reduction in funding from $234 million to only $14 million.

One program that would not be eliminated is the Rental Assistance Demonstration (RAD) program. RAD would see the removal of the 225,000 unit cap on public housing projects authorized to convert assistance to long-term Section 8 rental assistance contracts and make Section 202 Housing for the Elderly units eligible for participation as well. However, the ability to successfully convert public housing to more stable footing through RAD requires fully funding Section 8 – which the budget proposal would significantly cut.

The direct funding programs are vital as they provide a depth of commitment that only the government can provide. At the same time, government can’t and shouldn’t do it all and the system works best in a public-private partnership. Much of the private capital is raised through tax incentives. Tax reform is part of the Budget proposal, seeking flatter and simpler corporate and individual taxes. While not mentioned directly, it continues to implicate any tax incentive such as the Housing Tax Credit and tax-exempt Housing Bonds.

It will be vitally important for you and your residents to weigh in on the importance of these vital affordable housing programs. We know first-hand what cuts will mean to the Section 521 RA program because of the budget issues two years ago. Congress should not want a repeat of that issue, but on a much larger scale if this proposed budget is enacted. It is more important than ever for AHAIN members to invite their members of Congress to your multifamily properties in order for them to see the work that you do and its importance to the residents and rural communities throughout rural America. It is also important that members of Congress understand that the direct funding programs help the Housing Credit and Housing Bond programs work and vice versa.

CARH plans to address these topics at their Annual Meeting and Legislative Conference next month. AHAIN Executive Director, Charyl Luth, and several board members will be in attendance to hear and participate in discussions. 

Posted in: HUD, LIHTC, USDA