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$6 Billion in Cuts for HUD Met with Opposition

White House BHThe Trump administration promised to cut domestic spending as recently underscored in preliminary budget documents obtained by The Washington Post. The plan would cut more than $6 billion in funding for the Department of Housing and Urban Development (HUD). 

This directive would shrink HUD’s budget by about 14 percent to $40.5 billion in fiscal 2018, which begins in October. It’s the latest evidence that the President is serious about cutting domestic spending by $54 billion in order to bolster the defense budget.

Marc Morial, president of the National Urban League, said such cuts would be “devastating and hard­hearted,” potentially leading to rent increases for those in subsidized housing.

“These sorts of cuts could . . . increase the number of families and people that are homeless because housing is less affordable,” he said. “It’s a slap in the face of working Americans and urban communities, to suggest that you should make all these cuts to buy more tankers, aircraft carriers, and missile systems.”

The plan would squeeze public housing support and end most federally funded community development grants, which provide services such as meal assistance and cleaning up abandoned properties in low-income neighborhoods.

HUD Secretary Ben Carson has defended this action by saying that dependency on HUD programs could become “a way of life” for recipients. According to the Huffington Post, an email to the HUD staff on Thursday by Carson assured that the numbers were not final and that budget negotiations are in place.

“Today you may have read preliminary HUD FY18 budget negotiations in national media reports. Please understand that budget negotiations currently underway are very similar to those that have occurred in previous years,” the email read. “This budget process is a lengthy, back and forth process that will continue. It’s unfortunate that preliminary numbers were published but, please take some comfort in knowing that starting numbers are rarely final numbers. Rest assured, we are working hard to support those programs that help so many Americans, focus on our core mission, and ensure that every tax dollar is spent wisely and effectively.”

This proposed cut of HUD’s budget has brought many protests throughout the nation.  On Twitter. Former HUD Deputy Assistant Secretary for Public Affairs Brandon Friedman, said, “With a capital needs backlog among 1.2 million public housing units, totaling tens of *billions* of dollars, they want to cut funding.”

Rep. Maxine Waters, D-California, said, “Inflationary cost increases are needed just to keep roofs over heads of millions of seniors, disabled, and kids. These cuts will cause homelessness.”

About $1.3 billion would be cut from the public housing capital fund, under the preliminary plan, when compared to funding in 2016, and an additional $600 million would be cut from the public housing operating fund.

Budgets for public housing authorities, city and state agencies that provide subsidized housing and vouchers to local residents, would be among the hardest hit. Under the preliminary budget, those operational funds would be reduced by $600 million, or 13 percent. 

Funds for big-ticket repairs at public housing facilities would be cut by an additional $1.3 billion, about 32 percent. That could have a major quality-of-life effect on low-income families who rely on public housing. According to a 2010 HUD report, tens of billions of dollars in backlogged repairs already plague the country’s 1.2 million public housing units. 

Barbara Sard, Vice President for housing policy at the Center on Budget and Policy Priorities, said that even flat funding for HUD’s core programs ultimately could affect the number of subsidized housing vouchers available to families because of inflation. As a result, she said, hundreds of thousands of vouchers could be eliminated in the coming years if the department’s funding allocations for subsidized housing stay the same.

HUD salaries and administrative expenses will also be cut by 5 percent, down from $1.36 billion in 2016 to $1.28 billion in 2018. It is not yet clear how that reduction in staff or wages would be achieved.

In the process of developing the federal budget, agencies submit an initial funding request to OMB, which makes adjustments and returns the budget markup. The budget document obtained by The Washington Post details OMB’s budget priorities, program by program. Brown, the HUD spokesman, said the preliminary document is likely a HUD working draft as part of the budgeting process and might not have been reviewed by OMB, which is responsible for finalizing the president’s budget proposal before it is sent to Congress.

About Author: Sandra Lane

Sandra Lane has extensive experience covering the default servicing industry. She contributed regularly to DS News' predecessor, REO Magazine, from 2004 to 2006, covering local market trends, the effects of macroeconomic shifts on market conditions, and "big-picture" analyses of industry-driving indicators. But her understanding of the mortgage and real estate business extends even beyond those pre-crisis days. She is a former real estate broker and grew up in what she calls "a real estate family." A journalism graduate of the University of North Texas, she has written articles for various newspapers and trade journals, as well as company communications for several major corporations.

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