Senate Appropriators Question HUD '08 Budget
HUD Secretary Alphonso Jackson appeared before the Senate Appropriations
Transportation-HUD (THUD) Subcommittee to defend the administration's budget
on May 3. The THUD subcommittee is lead by Chairwoman Murray (D-Wash.) and Ranking
Member Bond (R-Mo.). In his written statement (www.hud.gov/offices/cir/test050307.cfm),
Jackson maintained that the "President's proposed FY 2008 Budget makes
good progress toward successfully realigning Federal government priorities according
to our nation's current needs." Despite the many cuts to HUD programs in
this year's budget, Jackson's written and oral testimony touted proposed reforms
to programs such as Section 8 Vouchers, public housing, Community Development
Block Grants and the FHA that would increase the effectiveness of HUD programs.
Subcommittee leaders, charged with assembling HUD's budget this
summer, were much less confident that the budget request would meet program
or national needs. Murray noted that, looking at the President's HUD budget,
she sees "a budget that abdicates responsibility and shortchanges programs
serving some of the nation's neediest citizens." Bond was personally complimentary
of Jackson, but stated that "we begin the appropriations process by being
hamstrung by [the White House Office of Management and Budget] OMB's apparent
mission to underfund most HUD programs" through a request that is "simply
a 're-run' of a bad budget movie that I am tired of watching." Murray's
opening statement is online at murray.senate.gov/news.cfm?id=273652,
and Bond's opening statement is at www.nahro.org/members/news/2007/0503_bondstmt.pdf.
Both Bond and Murray raised serious concerns about HUD's FY 2008
voucher budget proposals. As noted by Murray, the HUD budget proposes just a
$9 million (.0006 percent) increase for voucher housing assistance payments
for the coming year, an amount insufficient to provide even inflation adjustments
to local agencies. According to Jackson, this budget will still serve nearly
170,000 additional families due to the administration's proposal to "lift
the cap" on authorized leased vouchers. This proposal would permit those
agencies that are 100 percent leased and happen to have reserves to use them
to serve additional families. Both Bond and Murray noted that lifting the cap
would do nothing to help the hundreds of agencies who would not even receive
an inflation adjustment under the budget, particularly those who happen not
to have substantial reserves. Bond stated that any new voucher allocations should
be implemented under "objective, balanced, and equitable" criteria
and mentioned concerns that limiting PHA voucher budgets may lead to further
concentrations of poverty.
In response to the Senators' voucher questions, the Secretary
reiterated that he believes that the funding is sufficient if only Congress
would adopt HUD's voucher reforms. Jackson cited modification of payment standards,
aggressively negotiating with landlords, and adoption of minimum rents as strategies
PHAs can undertake to manage their budgets. He also restated previous observations
that the cost of the program has increased significantly without serving additional
families and that the program was budget-based before 1998.
Over 500,000 families were added to the voucher program through
new incrementals, tenant-protection vouchers, and increased utilization between
1998 and 2004. Unlike the budget-based proposals advanced by the administration,
the pre-1998 budgets provided by HUD assumed 100 percent funding of ACC units
plus inflation, had unlimited reserves, and provided for mid-year budget revisions.
HUD voucher legislation, expected in March or April, has not yet been sent to
Congress.
Issues Covered
Both Bond and Murray raised a litany of concerns about proposed
cuts in HUD programs in their remarks and questions. Cuts cited included: HOPE
VI, Section 202 housing for the elderly, Section 811 housing for persons with
disabilities, the Lead-Based Paint Hazard Reduction Program.
Both Senators raised serious concerns about HUD's FY 2008 voucher
budget proposals. As noted by Murray, the HUD budget proposes just a $9 million
(.0006 percent) increase for voucher housing assistance payments for the coming
year, an amount insufficient to provide even inflation adjustments to local
agencies. According to Jackson, this budget will still serve nearly 170,000
additional families due to the administration's proposal to "lift the cap"
on authorized leased vouchers. This proposal would permit those agencies which
are 100 percent leased and happen to have reserves to use them to serve additional
families. Both Bond and Murray noted that lifting the cap would do nothing to
help the hundreds of agencies who would not even receive an inflation adjustment
under the budget, particularly those who happen not to have substantial undesignated
fund balances. Bond stated that any new voucher allocations should be implemented
under "objective, balanced, and equitable" criteria and mentioned
concerns that limiting PHA voucher budgets may lead to further concentrations
of poverty.
In response to the Senators' voucher questions, the Secretary
reiterated that he believes that the funding is sufficient if only Congress
would adopt HUD's voucher reforms. Jackson cited modification of payment standards,
aggressively negotiating with landlords, and adoption of minimum rents as strategies
PHAs can undertake to manage their budgets. He also restated his previous observations
that the cost of the program has increased significantly without serving additional
families, that agencies have no incentives to serve additional families because
"they get their administrative fee whether they house or don't house"
and that the program was budget-based before 1998.
Over 500,000 families were added to the voucher program through
new incrementals, tenant-protection vouchers, and increased utilization between
1998 and 2004. Unlike the budget-based proposals advanced by the administration,
the pre-1998 budgets provided by HUD assumed 100 percent funding of ACC units,
had four-month reserves, and provided for mid-year budget revisions. Prior to
the post-QHWRA conversion of certificates to vouchers, 75 percent of the program
was tied to Section 8 certificates, which ensured that families paid no more
than 30 percent of income towards rent. Contrary to NAHRO recommendations, HUD's
own budgets included budget-based, rather than leasing-based, administrative
fee formula in recent years (until its FY 2008 proposal). HUD voucher legislation,
expected in March or April, has not yet been sent to Congress.
The Secretary also repeated a previous statement that NAHRO, CLPHA,
and PHADA had agreed to support a budget-based approach to Section 8 voucher
funding in exchange for a $1 billion increase in voucher funding. NAHRO and
its industry partners are unaware of such an agreement. Since 2004, NAHRO has
consistently advocated against the snapshot funding formula and warned of the
liabilities of a conversion to a block grant funding system.
Other Hearing Highlights:
-
Project-Based Section 8 Shortfall: Senator Bond focused several
questions on the potential shortfall in the administration's request for
the project-based Section 8 contracts, which his staff estimates at $1.2
billion. In the early months of FY 2007, the Department short-funded project-based
Section 8 contracts due to funding shortfalls and the final FY 2007 appropriations
bill provided $300 more in project-based funding than originally requested
by the Department. The Department is engaged in a full audit of Section
8 contracts in order to discover true funding needs, due sometime this fall.
With an eye towards their appropriations schedule, Senator Bond requested
that the Secretary try to provide more accurate estimates prior to their
anticipated July markup of the bill or come back with a revised request
if the administration's budget proves to be far short of need. The lack
of accurate information has potentially large negative consequences for
the remainder of the HUD budget. The appropriations committee will act soon
to divvy up the appropriations pie between subcommittees, most likely without
adequate knowledge of the true needs in HUD programs.
-
Community Development Block Grants: Senator Murray questioned the
Secretary's assertions that the budget proposal would adequately meet needs,
even in the face of the formula reforms proposed by the Department. (See
full CDBG hearing coverage at http://www.nahro.org/members/monitor/2007/515.cfm#d)
-
Federal Housing Administration: Following up on an earlier subcommittee
FHA hearing, Murray and Bond asked the Secretary about the role of increasing
FHA's presence in the market, particularly as a way to provide alternatives
to predatory lending. The Secretary discussed the Administration's FHA reform
proposals. These proposals include controversial risk-based premium proposals
as well as streamlining of FHA paperwork. The House Financial Services Committee
recently passed FHA modernization legislation (HR 1852). The House proposal
also includes a provision for an affordable housing fund.
-
Disaster Recovery: Senators questioned the Secretary on the pace
of Gulf Coast disaster recovery; housing in the Housing Authority of New
Orleans; and the slow pace of expenditures of the $15 billion in emergency
funding appropriated for the Gulf Coast, particularly in Louisiana. The
Secretary stated that about 2,000 of HANO's units were back online, and
only 1,600 families had returned to date.
-
Other Senators' Questions: Senator Lautenberg (D-NJ) questioned
the Secretary about the rationale for the elimination of the HOPE VI program
and steps that might be taken to improve the implementation schedule in
the program. Lautenberg also questioned Jackson about remarks the Secretary
had made before a Dallas business group last year, which indicated that
the Secretary had steered contracts away from opponents of President Bush.
The Secretary denied that such steering had happened, and indicated that
HUD has established a contract review board to prevent this from happening.
Senator Wayne Allard (R-CO) asked the Secretary about his plans for RESPA
implementation, actions taken by HUD to improve programs that had not done
well on OMB's Program Assessment Rating Tool (PART) reviews, and staffing
implications of FHA modernization. In addition to being an appropriator,
Allard also sits on the Senate Banking Committee's HUD authorization subcommittee.
To see a full transcript of this and previous FY 2008 HUD Budget
hearings, see NAHRO's Budget and Appropriations webpage at http://www.nahro.org/legislative/programs/budget/index.cfm.
| 
