WASHINGTON - President Bush yesterday unveiled a proposed $31.3 billion fiscal 2004Department of Housing and Urban Development budget that would convert the tenant-basedSection 8 voucher program into a state-run block grant program and also cut all fundingfor a program that funds the rehabilitation of severely distressed public housing units.
The overall proposed funding level for HUD in fiscal 2004 is down approximately $200million from the $31.5 billion fiscal 2003 level the president unveiled a year ago,according to budget documents. However, HUD Secretary Mel Martinez yesterdaycharacterized the proposed spending level for fiscal 2004 level as 1.3% higher than theproposed 2003 level.
"We think of it as a budget of opportunity," he said, "also filled with compassion andalso with empowerment. A 1.3% increase: we will have the resources and the tools that weneed in order to carry out the president's housing agenda."
Angela Antonelli, chief financial officer for HUD, acknowledged that Bush requested$31.5 billion in HUD funds for fiscal 2003 one year ago, but said that since then,"offsetting receipts and rescissions" have "lowered that number to $30.9 billion."
Given that the fiscal 2003 "baseline" number is now actually $30.9 billion, the proposedfunding level for fiscal 2004 is actually an increase over the proposed funding levelfor fiscal 2003, she said yesterday in an interview. Dave Gibbons, HUD budget director,added that "none of this has any impact on any current HUD program."
Congress appropriated $29.4 billion for HUD in fiscal 2002 but has not yet completed theappropriations process for fiscal 2003, which began Oct. 1. An omnibus spending billintroduced in the Senate would provide a total of $31.1 billion for HUD in fiscal 2003,which is below the $36.1 billion figure that House appropriators approved on Oct. 9.House and Senate lawmakers are currently negotiating in an effort to resolve the 2003budget impasse.
The fiscal 2004 spending blueprint, which federal lawmakers will begin considering afterthey complete the remaining 2003 appropriations bills, proposes to convert the Section 8tenant-based rental assistance voucher program into a state-run block grant programcalled Housing Assistance for Needy Families. The administration proposes appropriating$12.53 billion in funding in fiscal 2004 for the new program and argues that allowingstates to run it will better assist low-income households to locate affordable housingbecause states could tailor programs to the needs of particular communities.
Barbara J. Thompson, executive director of the National Council of State HousingAgencies, praised the block grant proposal. "This is a bold and creative idea, which ifimplemented as HUD proposes, with limited federal regulation and adequate funding, couldpositively transform the delivery of Section 8 housing help in this country," Thompsonsaid.
However, John C. Murphy, executive director of the National Association of Local HousingFinance Agencies, said his group cannot support the proposed change. "We don't believeall housing expertise resides at the state level - there are many capable cities andcounties that administer the Section 8 program in a very professional and cost-effectivemanner," Murphy said.
The spending plan unveiled yesterday also proposes $4.52 billion in fiscal 2004 fundingfor the Section 8 project-based rental assistance program. The president proposed thatthat program continue to be administered by HUD.
The HUD spending package would also cut all funding for the Revitalization of SeverelyDistressed Public Housing program, known as "HOPE VI," which funds the rehabilitation -and in some cases the demolition - of deteriorating public housing units. The omnibusspending bill introduced in the Senate last month would provide $574 million for theprogram in fiscal 2003, which is identical to the sum requested by the president a yearago and approved by House appropriators in the fall. Congress also appropriated $574million for HOPE VI in fiscal 2002.
The 2004 blueprint also proposes a funding level of $2.2 billion for the HOME InvestmentPartnerships Program, which Martinez said is a $113 million increase over the level thepresident requested for fiscal 2003. The omnibus spending bill introduced in the Senatelast month would provide $1.95 billion for the program in fiscal 2003, which is belowthe $2.22 billion funding level House appropriators approved in the fall. Congressappropriated $1.85 billion for HOME in fiscal 2002.
The blueprint also proposes $4.73 billion in fiscal 2004 appropriations for thecommunity development block grant program, which is below the $5 billion level forfiscal 2003 approved by House appropriators in the fall and included in the omnibusspending bill in the Senate. Congress appropriated $5 billion for CDBG in fiscal 2002.Municipal bond financing is sometimes used on projects that receive HOPE VI, HOME, CDBG,and Section 8 funding.
The budget outline released by the administration also acknowledged that a HUD mortgageinsurance fraud scheme that was dramatized in a recent episode of the television series"The Sopranos" had "its roots in reality - an actual scam involving New York Citybrownstones."
The blueprint noted that in the recent past, families receiving FHA financing have beenvictimized by "property flipping," which uses inflated appraisals to make distressedproperties appear as good homes to buy. "Today's HUD is out to end this troubledhistory," it noted, adding that FHA has issued new rules to prevent property flippingand catch inflated appraisals.
