Thursday, December 27, 2007

Legislative Update: National Housing Budget HUD Funding

HUD FY08 Appropriation Passes Congress; Awaiting President’s Signature
On December 19, the House and Senate passed a $555 billion omnibus spending bill and sent it to President Bush for his signature. If signed, the bill would end the long standoff between Congressional Democrats and the President on domestic spending priorities and funding for the war in Iraq. The President has until December 31, when the current continuing resolution ends, to sign the bill.

The bill provides funding for most domestic programs, including the Department of Housing and Urban Development (HUD), but reduces the total program funding from the levels provided in the individual House and Senate passed appropriation bills to the levels set in the President’s budget. It also provides $70 billion for the wars in Afghanistan and Iraq.

The President and the Democratic Congress have been at odds over funding levels for domestic programs since January. Initially, the House and Senate approved domestic spending legislation that was $22 billion over the President’s request. The President threatened to veto this legislation. The size of the Democratic majorities in the House and the Senate make it difficult to obtain the two-thirds majority required to override a veto. Consequently, the Democratic leadership proposed to “split the difference” and cut $11 billion from the proposed levels in an effort to obtain Republican support. When the President again threatened to veto any legislation that exceeded his spending requests, the Democrats, unable to garner enough Republican support to override the promised veto, agreed to the President’s overall spending levels. But many of the President’s priorities were cut in order to fund some of the Democrats’ spending priorities, including the funding of housing programs. (See Memo, 11/16, 9/14 and 7/27).

The HUD provisions of the omnibus bill, which are similar to those of the Transportation, HUD and Related Agencies conference report, H. Report 110-446, continue to provide modest yet critical funding increases for many programs. The report also includes important policy guidance on a range of HUD programs. The details of funding levels for various programs can be found at The discussion below highlights most of the significant differences between the omnibus bill and the conference report.

The omnibus bill provides $14.685 billion for Housing Choice Voucher renewals. While less than provided in the conference report, this amount should be sufficient to renew all vouchers in use in FY07. The omnibus bill does provide for renewals to be based on the most recent federal fiscal year data available, with exceptions to the distribution formula for public housing agencies (PHAs) that went into receivership within the previous 24 months, overspent their FY07 allocation or were impacted by the 2005 hurricanes.

PHAs in receivership or that overspent their 2007 allocation will receive funding in calendar year 2008 equal to what they received in calendar year 2007. PHAs impacted by the 2005 hurricanes will receive funding for the calendar year 2008 equal to the greater of the amount provided using the most recent federal fiscal year data or the amount received in calendar year 2007. The bill also reduces the renewal amounts for agencies with large unspent voucher reserves by amounts in excess of 7% of the amount of renewal funding allocated to the agency for the calendar 2007 funding cycle. This functionally shifts funds from retention for future needs to addressing current priorities, such as renewals and the funding of the first new incremental vouchers since FY02.
The funding levels provided in the omnibus bill for the HOME, Community Development Block Grants (CDBG), and HOPE VI are also below those provided in the conference report. In the omnibus bill, HOME is funded at $1.629 billon, $73 million less than the conference report. CDBG is funded at $3.6 billion, $130 less than the conference report. The omnibus bill provides $100 million for HOPE VI, $20 million less than the conference report.

The President is expected to sign the omnibus bill.

SPECIAL THANKS: National Low Income Housing Coalition

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