WASHINGTON — President Bush yesterday unveiled a $35.2 billion fiscal 2008 Department of Housing and Urban Development budget that would keep the Community Development Block Grant program in HUD but cut its funding by about 28%, boost spending on the mammoth Section 8 housing voucher program, and wipe out funding for a program that demolishes severely distressed public housing units.
The overall proposed funding level for HUD in fiscal 2008 is $532 million more than the department’s estimated budget for fiscal 2007, according to budget briefing books the administration released yesterday.
HUD Secretary Alphonso Jackson lauded the proposed budget, which he said reflected Bush’s desire to “build an ownership society while recognizing the need to promote affordable housing programs across the country.”
“Our budget reflects the president’s goal to support what works and cut the federal budget deficit by prioritizing funding towards programs with measurable, documented results,” Jackson said in a statement, a reference to cuts in certain key areas, particularly the CDBG.
The administration’s proposal to reduce funding for the CDBG to $3.04 billion in fiscal 2008 from $4.22 billion in the current fiscal year, which began Oct. 1, will probably encounter stiff resistance from lawmakers and lobbyists on Capitol Hill, as it has the past several years.
John C. Murphy, executive director of the National Association of Local Housing Finance Agencies, predicted that Congress would pass a “radically different” budget that would restore at least some of the funding to program the administration was trying to cut.
“Certainly this won’t be the budget that passes Congress,” he said.
When that fiscal 2007 budget was submitted to Congress a year ago, several lawmakers reacted furiously that the administration planned to cut both the CDBG and Hope VI, the program for severely distressed housing. Last March, members of the House Financial Services Committee gave Jackson a bipartisan rhetorical beating over the proposed cuts, and ultimately Congress restored funding for both programs.
Two years ago, the administration tried unsuccessfully to replace the CDBG and various other community and economic development programs with a less well-funded “Strengthening America’s Communities Initiative” that would have been administered by the Commerce Department. Lawmakers overwhelmingly rejected the proposed overhaul, but agreed to cut CDBG funding by 10%. The SACI proposal was not revisited again this year.
In the past, ideology seemed to drive the administration’s push to kill or cut the CDBG. Conservative critics have long urged gutting the program because they say it amounts to a congressional slush fund for favored interests that funds local projects that local governments wouldn’t spend their own tax dollars on.
But Roy A. Bernardi, HUD’s deputy secretary, said that the proposed new cuts to the CDBG for fiscal 2008 were practical but painful necessities as the department grappled with spending cuts.
“[We’re] trying to cut the budget deficit, as we need to do, with the necessary restrictions that we have as a department,” Bernardi said in a telephone media briefing. Jackson read a statement at the beginning of the same telephone conference but left before taking questions from reporters.
Meanwhile, the HUD budget also calls for $16 billion in funding for tenant-based Section 8 rental-assistance vouchers, up from the current funding level of $15.8 billion, along with $5.81 billion for project-based vouchers, up from the current funding level of $5.46 billion. The two prongs of the program together would eat up the bulk of the total HUD budget for fiscal 2008, budget documents show.
The administration has warned for years that the rising costs of the Section 8 program imperil housing programs in general because the increasingly expensive program continues to swallow growing portions of HUD’s annual budget. Three years ago, Congress converted the program from a unit-based program to a budget-based program, which has helped to cap costs to an extent.
In the new budgetary blueprint, the administration again proposed no new funding for HUD’s HOPE VI program. In addition to eliminating funding, Bush has proposed taking back the $99 million that Congress appropriated for HOPE VI two years ago. Bush has tried several times in recent years to eliminate the program, which the administration calls inefficient, but each time lawmakers have refused his request. They provided $183 million in the current year, according to the budget documents.
The administration also proposed spending $2.02 billion on the public housing capital fund in fiscal 2008, down from $2.54 billion in the current year. It proposed $4 billion in spending for the public housing operating fund, which is up from $3.57 billion in the current year.
Bush proposed funding the HOME Investment Partnerships program at $2 billion, up from $1.8 billion in the current year.
The CDBG, HOME, HOPE VI, Section 8 funds, and public housing capital grants can be leveraged in municipal bond transactions. HUD officials are working on regulations that would allow the securitization of public housing operating grants. The department originally planned to unveil them last year but is still working on them, a HUD spokesman said yesterday.
