Federal Government 2018 Budget Proposes Sharp Cuts to HUD

The Trump Administration unveiled its preliminary fiscal 2018 budget, which proposes the largest cuts to HUD funding since the Reagan Administration.

In its budget proposal (https://www.gpo.gov/fdsys/pkg/BUDGET-2018-BLUEPRINT/pdf/BUDGET-2018-BLUEPRINT.pdf), the Administration repeatedly emphasized that some programs now funded by the federal government would be better served at the state and local level.

The budget, which covers discretionary (not mandatory) spending, proposes a $6.2 billion cut in HUD appropriations to $40.7 billion, a 13.2 percent decrease from the 2017 annualized Continuing Resolution level.

HUD Secretary Ben Carson said the budget plan aligns with department plans to provide rental assistance to low-income and vulnerable households and to help families achieve self-sufficiency.

“The budget also promotes fiscal responsibility at HUD by promoting better efficiencies and leveraging IT modernization,” Carson said in a statement. “I look forward to working with the President and remain keenly focused on HUD’s mission and core values.”

Among the cuts, the 2018 Budget would eliminate funding for the Community Development Block Grant program ($3 billion 2017).

“The federal government has spent over $150 billion on this block grant since its inception in 1974, but the program is not well-targeted to the poorest populations and has not demonstrated results,” the Administration said. “The Budget devolves community and economic development activities to the state and local level, and redirects federal resources to other activities.”

The budget proposal would also eliminate funding for a number of lower priority programs, including the HOME Investment Partnerships Program, Choice Neighborhoods and the Self-help Homeownership Opportunity Program, a proposed savings of more than $1.1 billion from the 2017 annualized CR level. “State and local governments are better positioned to serve their communities based on local needs and priorities,” The Administration said.

Additionally, the proposal would eliminate funding for Section 4 Capacity Building for Community Development and Affordable Housing, a savings of $35 million from the 2017 annualized CR level. “This program is duplicative of efforts funded by philanthropy and other more flexible private-sector investments,” the Administration said.

The budget provides $35 billion for HUD’s rental assistance programs for 4.5 million low-income households. It increases spending by $20 million for mitigation of lead-based paint and other hazards in low-income housing.

The proposal would also preserve rescission of the Obama Administration’s December reduction of FHA mortgage insurance premiums.

Mortgage Bankers Association President and CEO David Stevens, CMB, issued a brief statement.

“The release of this budget is just the first step of a much longer budget process,” Stevens said. “MBA will continue to work with the Administration, Congress and all stakeholders, in order to support vibrant real estate markets that grow and strengthen America’s communities.”

MBA released an initial summary (http://mba.informz.net/MBA/data/images/FY2018SkinnyBudget_InitialSummary.pdf).

“This Budget release is the beginning of a long process that will include the release of a full budget later this spring,” MBA said. “The full budget is expected to include specific spending and tax proposals and detail a full fiscal path for the next decade. Once released, Congress will consider it in parts and may accept, decline, or modify each section. It’s vital to understand that today’s Budget Blueprint is as much a political statement of priorities as it is a governing document, and that Congress is unlikely to go along with many of its more stringent spending reductions.

MBA noted, Republicans and Democrats in Congress have already expressed reservations or outright opposition to many of its recommendations. “The backdrop of these significant agency funding cuts creates a difficult road ahead for many federal programs,” MBA said. “MBA will work to ensure that the government continues to support vibrant real estate markets that grow and strengthen America’s communities through the continued funding of Federal Housing Administration, Veterans Affairs and Rural Housing Service programs.”