Senate Committee Rejects HUD Funding Cuts Proposed by House
The full Senate Appropriations Committee approved its proposed Transportation-HUD spending bill for the 2025 fiscal year on July 25, 2024, rejecting the 60 percent HOME program cut proposed in the bill that passed its House counterpart on July 10.
— HAC’s analysis of FY25 appropriations for USDA housing programs is available here. —
The Senate THUD bill is highlighted by a plethora of budgetary increases for different HUD programs, including increased funding for the Self-help Homeownership Opportunity Program and Rural Capacity Building program, $1.455 billion for the Native American Housing Block Grant program, and a $268 million increase in funding for Homeless Assistance Grants. The Senate would also increase funding for both the HOME program and the Choice Neighborhoods Initiative. The House bill proposes to cut the HOME Program’s funding from $1.25 billion in FY24 to $500 million and to eliminate funding entirely for the Choice Neighborhoods Initiative, which received $75 million this year. The Senate bill proposes funding levels of $1.425 billion and $100 million for these programs, respectively.
The next steps will be for the full House and full Senate to vote. The House is currently on its August recess and will not return until September 9. Congress is not expected to be able to finalize FY25 appropriations by the beginning of the fiscal year on October 1. It is likely that legislators will adopt a continuing resolution to temporarily maintain federal funding; the alternative would be a government shutdown.
Program ($ in millions) |
FY23 Final | FY24 Final | FY25 Budget | FY25 House | FY25 Senate | FY25 Final* |
CDBG | $3,300 | $3,300 | $2,900 | $3,300 | $3,300 | |
HOME | 1,500 | 1,250 | 1,250 | 500 | 1,425 | |
PRICE Manuf. Hsg. | 225 | 10 | 0 | 10 | 10 | |
Self-Help Hmownrshp (SHOP) | 13.5 | 12 | 9 | 9 | 13 | |
Veterans Home Rehab | 1 | 0 | 0 | 0 | 0 | |
Rural Cap’y Bldg (RCB) | 6 | 6 | 5 | 5 | 10 | |
Tenant-Based Rental Asst. | 27,600 | 32,387 | 32,756 | 32,272 | 35,260 | |
VASH | 50 | 15 | 0 | 0 | 15 | |
Tribal VASH | 7.5 | 7.5 | 5 | 8 | 7.5 | |
Replacemts for 521 RA | – | – | 20** | – | – | |
Project-Based Rental Asst. | 13,938 | 16,010 | 16,686 | 16,195 | 16,654 | |
Public Hsg. Capital Fund | 3,200 | 3,410 | 3,312 | 3,047 | 3,200 | |
Public Hsg. Operating Fund | 5,109 | 5,501 | 5,238 | 5,097 | 5,366 | |
Choice Neighborhd. Initiative | 350 | 75 | 140 | 0 | 100 | |
Native Amer. Hsg. | 1,020 | 1,344 | 1,053 | 1,455 | 1,455 | |
Homeless Asst. Grants | 3,633 | 4,051 | 4,060 | 4,060 | 4,319 | |
Hsg. Oppties for Persons w/ AIDS (HOPWA) | 499 | 505 | 505 | 505 | 524 | |
202 Hsg. for Elderly | 1,075 | 913 | 931.4 | 931.4 | 1,046.4 | |
811 Hsg. for Disabled | 360 | 208 | 256.7 | 256.7 | 256.7 | |
Fair Hsg. | 86 | 86.4 | 86.4 | 85 | 86.4 | |
Healthy Homes & Lead Control | 410 | 345 | 350 | 335 | 345 | |
Hsg. Counseling | 57.5 | 57.5 | 57.5 | 57.5 | 57.5 |
* These columns will be filled in as the FY25 funding process progresses.
** Up to $20 million would be set aside to provide tenant protection vouchers to tenants who had USDA Section 521 Rental Assistance but are losing it because their building is losing or ending its USDA mortgage.
House Committee Approves 60% Cut in HOME Program Funding
UPDATE July 11, 2024 – The full House Appropriations Committee approved the proposed FY25 Transportation-HUD spending bill on July 10. The Senate Appropriations Committee has begun releasing summaries of its FY25 bills, but T-HUD is not yet available.
June 27, 2024 – The HOME program would be dramatically smaller under the FY25 spending bill approved by an appropriations subcommittee on June 26, 2024. The bill, which will be considered by the full Appropriations Committee on July 10, would also block implementation of the Biden administration’s proposed Affirmatively Furthering Fair Housing rule and the recent energy efficiency determination made by HUD and USDA.
The summary of the House bill provided by the Transportation-HUD Appropriations Subcommittee says that it funds “full renewal for all currently-leased, tenant-based rental assistance vouchers, all project-based rental assistance contracts, and all housing for the elderly and persons with disabilities contracts.” It would cut HOME, however, to $500 million from $1.25 billion in FY24. The Self-Help Homeownership Opportunity Program (SHOP) would be cut from $12 million in FY24 to $9 million next year. And the Choice Neighborhoods program would receive no funding at all.
The Senate has not yet released its version of the bill.
Administration’s Budget Requests Substantial New HUD Funding
March 12, 2024 – The Biden Administration’s budget for fiscal year 2025, released on March 11, 2024, includes proposals for HUD and other housing programs – USDA, the Low-Income Housing Tax Credit, and others – that are part of broader Administration efforts to help meet increasing housing costs and address homelessness. If the budget were adopted as proposed, several pieces of this mosaic would be mandatory funding rather than discretionary, and others would be tax credits. Discretionary funds are subject to annual appropriations, while mandatory spending is not, so it is not subject to the caps on discretionary spending imposed by the 2023 debt limit agreement.
The recording and slides from HAC’s March 13 webinar on Rural Housing in the Fiscal Year 2025 White House Budget are posted here.
Discretionary Funds
The budget would reduce funding for many of HUD’s housing production programs, including HOME, CDBG, SHOP, and Native American housing. It requests a total of $1.053 billion for Native American housing, just barely above the $1.02 billion provided in FY23 and notably lower than the $1.34 billion just adopted for FY24.
Tenant support fares somewhat better. For example, the budget proposes a total of almost $32.8 billion for Tenant-Based Rental Assistance (Housing Choice Vouchers), of which $29.25 billion is intended to renew all existing vouchers. An additional $241 million would provide 20,000 new incremental vouchers. (Separately, the mandatory funding proposals would guarantee vouchers to all extremely low-income veterans and all youth aging out of foster care.)
The budget also requests $30 million for the Recovery Housing Program, which allocates funds to states to provide temporary housing for individuals recovering from substance use disorders, including opioids.
Proposed New Mandatory Spending
The Administration’s proposals for mandatory spending programs cover production of new units, tenant assistance, and homelessness solutions.
- Extremely low-income housing supply subsidy: $15 billion
- New Project-Based Rental Assistance: $7.5 billion
- Preserve distressed public housing: $7.5 billion
- Innovation Fund for Housing Expansion: $20 billion
- Housing vouchers for vulnerable low-income populations: $22 billion
- all youth aging out of foster care: $9 billion
- extremely low-income veterans: $13 billion
- First-generation homebuyer down payment assistance: $10 billion
- Sustainable eviction prevention reform: $3 billion
- Homelessness grants: $8 billion
- Emergency rental assistance for older adults at risk of homelessness: $3 billion
Tax Credit Proposals
- The budget would expand the Low-Income Housing Tax Credit to build or preserve 1.2 million more affordable rental units. It asks Congress to increase per capital credit allocations, reduce the bond financing threshold, and revise the “qualified contract” and “right of first refusal” provisions for future developments.
- A mortgage relief credit would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years. The White House says that “this is the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home, and will help more than 3.5 million middle-class families purchase their first home over the next two years.”
- A separate one-year tax credit is intended to assist homeowners who could purchase a larger or more expensive home but hesitate to sell their starter home because of high mortgage rates or high housing costs. A middle-class homeowner would receive a credit up to $10,000 for selling a home below the area median home price in the county to another owner-occupant. The White House estimates this proposal would help nearly 3 million families.
- A new Neighborhood Homes Tax Credit would allocate credits to developers and other sponsors of new construction or substantial rehabilitation of homeownership units in distressed areas. The White House estimates this would generate over 400,000 homes.
The Administration also proposes requiring each Federal Home Loan Bank to contribute 20 percent, rather than the current 10 percent, of annual income to the Affordable Housing Program. It calculates the change would raise an additional $3.79 billion for affordable housing over the next decade and assist nearly 380,0000 households.