On May 23, 2017, the President released its 2018 Budget Proposal, which includes a 13% ($6.2 billion) cut in HUD funding. HUD’s largest single expense item, the Housing Choice Voucher, is maintained at its current level, but only be increasing expenses for tenants and placing a freeze on rent adjustment increases for Project Based Rental Assistance (PBRA), Section 202, and Section 811. The proposal eliminates funding for major community development programs, including the Community Development Block Grant (CDBG) Program, HOME and the Choice Neighborhoods Initiative. Huge cuts are also proposed for project-based and Tenant-Based Rental Assistance, Section 811, Homeless Assistance Grants, and Public Housing Capital and Operating Funds. There is a small increase in funding proposed for the Section 202 Program.
The only bright spot in the proposed budget is changes to the RAD program, including:
*Elimination of the 225,000 unit cap;
*Elimination of the September 30, 2020 deadline for first component applications;
*Expanded authority to include conversion of Section 202 PRAC projects; and
*Non-profit ownership at conversion may also now include situations where LIHTCs are used or where foreclosure, bankruptcy, or default occurs.
Changes to rental assistance programs include:
*A one-year freeze would be placed on rent adjustment increases for PBRA, Section 202, and Section 811;
*Decreased voucher funding – while the same number of vouchers would be available, cost savings will come from requiring residents to contribute 35% of gross income in monthly rent as opposed to 30% of adjusted income;
*Establishes a minimum rental payment of $50 per month for tenants; and
*Eliminates utility reimbursements (tenants would now be required to pay for utility costs in excess of rents limits).
HUD would have authority to define hardship exemptions for items like the increase in tenant rent contribution and the $50 minimum rent payment.
As with most Presidential budgets, this is a starting point for discussion and will meet with a good deal of Congressional resistance. Hopefully, many of the most draconian cuts will be eliminated when a final budget is approved.