WASHINGTON - The $38.5 billion fiscal 2009 budget for the Department of Housing and Urban Development that President Bush unveiled yesterday would cut funding for the Community Development Block Grant program by 30%, boost funding for Section 8 tenant-based housing vouchers by $336 million, and eliminate the HOPE VI program, which demolishes severely distressed public housing units.

Barbara Thompson, executive director of the National Council of State Housing Agencies, said that said she appreciated the proposed increases to thee programs, under which grants can be used to leverage tax-exempt bonds. However, she said more needs to be done, especially considering the housing crisis currently facing the country.

"While we're pleased with some of the increases for some of the programs, overall it's deficient, as it has been for many, many years," Thompson said. "Of all years, this is the year to give housing a greater boost than it has received over the last many years."

The proposed funding for HUD in fiscal 2009 is $1.07 billion more than the amount the administration proposed for fiscal 2008, according to budget documents the administration released yesterday.

However, it is unclear how many of the proposals will be put into action by Congress, as Bush approaches his final year in office.

In a press conference yesterday, HUD Secretary Alphonso Jackson said the proposed budget is aimed at balancing the need to aid new homeowners while addressing the struggles of others.

"We're in the business of building dreams, the dream of American homeownership," he said. "At the same time, we must be aware of the new reality .... Our budget addresses both."

The cuts to the CDBG program mark the fourth consecutive year the administration has weakened the initiative. Last year, Bush's proposal included a 28% cut in the grants, and the year before that, the administration attempted to replace the program with another, less well-funded program called the "Strengthening America's Communities Initiative." Jackson told reporters that the program's allocation formula is "outdated," and that HUD will ask Congress to update it.

Lawmakers rebuffed the administration both times it has tried to cut or abolish the program. They exceeded the administration's proposal in fiscal 2008 by nearly a billion dollars, and saved the CDBG program in fiscal 2007, agreeing to a 10% funding cut.

The HOPE VI program, which the administration hopes to cut in fiscal 2009, is another initiative that has been placed repeatedly on the budgetary chopping block, only to be salvaged by lawmakers. The administration maintains that the program, which provides grants to public housing agencies to demolish dilapidated public housing so it can be replaced with mixed-income, mixed-use developments, is inefficient.

However, it appears that lawmakers will again combat the proposed cut. Sen. Barbara Mikulski, D-Md., who created the program in 1992, criticized the proposed elimination in a statement yesterday.

"How can the pesident ask so much, while providing so little? We need to support federal programs that help those who help themselves," she said. "While President Bush continues to spend billions of dollars a week in Iraq, his budget leaves our domestic priorities behind.

Mikulski added that she will work to restore spending for the program to at least $100 million, as she did in last year's omnibus spending bill

Meanwhile, the White House proposed a $336 million increase to Section 8 tenant-based rental assistance, bringing it to total of $16.04 billion for the upcoming fiscal year. The proposed budget also includes a $618 million increase to Section 8 project-based voucher program.

In addition, Bush proposed $1.97 billion for the HOME Investment Partnerships Program, an increase of $263 million from fiscal 2008. q

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.