Transportation, Housing and Urban Development, and Related Agencies (THUD): FY2018 Appropriations

Contents

• Introduction to Transportation, HUD, and Related Agencies (THUD) Appropriations
• Budget Concepts Relevant to THUD Appropriations
• THUD Funding Trends
• Status of the FY2018 THUD Appropriations Bill
• FY2018 THUD Discretionary Funding Allocation
• FY2018 THUD Funding
• How Lower Budget Authority Becomes Greater Funding—the Impact of Offsets
• Detailed Tables and Selected Key Issues
• Title I: Department of Transportation
• DOT in Brief
• President's Budget
• House Action
• Senate Action
• Title II: Department of Housing and Urban Development (HUD)
• HUD in Brief
• President's Budget
• House Action
• Senate Action
• Title III: Related Agencies
• Related Agencies, In Brief

Summary

The House and Senate Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Subcommittees are charged with providing annual appropriations for the Department of Transportation (DOT), Department of Housing and Urban Development (HUD), and related agencies. THUD programs receive both discretionary and mandatory budget authority; HUD's budget generally accounts for the largest share of discretionary appropriations in the THUD bill, but when mandatory funding is taken into account, DOT's budget is larger than HUD's budget. Mandatory funding typically accounts for around half of the THUD appropriation.

The Trump Administration requested net new budget authority of $106.65 billion (after scorekeeping adjustments), including $47.9 billion in discretionary funding, for the departments and agencies funded in the THUD bill for FY2018, $9.65 billion (8%) less than the FY2017 level. The House Appropriations Committee reported its version of an FY2018 THUD appropriations bill on July 17, 2017 (H.R. 3353). It recommended $115.3 billion ($56.5 billion in discretionary funding), less than 1% below the FY2017 level. The text of that bill was incorporated into a consolidated appropriations bill (H.R. 3354), amended (with no change in total funding for THUD, but changes in some accounts within THUD), and passed by the House on September 14, 2017. The Senate Appropriations Committee reported its version of an FY2018 THUD bill on July 27, 2017 (S. 1655). It recommended $119.1 billion ($60.1 billion in discretionary funding), 2.4% more than FY2017. With inflation forecast at 1.9% for FY2018, the House bill would result in a roughly 3% decrease in real THUD funding, while the Senate bill would result in a slight increase in real funding, compared to FY2017.

With no agreement on FY2018 funding, Congress passed a continuing resolution (H.R. 601) to provide funding through December 8, 2017, for federal agencies. That act extended FY2017 funding levels for the THUD agencies, less an across-the board rescission 0.6791%.

DOT: The Trump Administration requested $75.1 billion in net new budgetary authority for DOT for FY2018. That was about $2 billion less than the comparable figure ($77.1 billion) for FY2016, with significant cuts requested for transit and rail programs. Both the House and Senate bills largely rejected the proposed cuts; the House approved $77.5 billion in new funding, and the Senate Appropriations Committee recommended $78.6 billion.

HUD: The Trump Administration requested $31.4 billion in net new budget authority for HUD for FY2018, $7.4 billion less than FY2017 (-19%). It requested no funding for several major grant programs, including the Community Development Block Grant (CDBG) program and the HOME Investment Partnership program. The House bill proposed $38.3 billion, a small increase in overall funding relative to FY2017 (-1.3%), and did not include the proposed eliminations of HOME and CDBG funding. The Senate committee bill recommended $40.2 billion, a 4% increase over FY2017.

Related Agencies: The Trump Administration requested $226 million for the agencies in Title III of the THUD bill (the Related Agencies). This was about $113 million less than was provided in FY2017. The major change in funding from FY2017 levels in the request was proposals to terminate funding for the Neighborhood Reinvestment Corporation (NRC) and the Interagency Council on Homelessness (ICH). The President's budget requested only enough funding to close out the commitments of those two entities. Neither the House nor Senate committee bills included the President's proposal to wind down funding for the NRC; the House bill, but not the Senate committee-passed bill, would eliminate funding for the ICH.

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Introduction to Transportation, HUD, and Related Agencies (THUD) Appropriations

The Transportation, Housing and Urban Development, and Related Agencies (THUD) Appropriations Subcommittees in the House and Senate are charged with drafting bills to provide annual appropriations for the Department of Transportation (DOT), the Department of Housing and Urban Development (HUD), and six small related agencies.

Title I of the annual THUD appropriations bill generally funds DOT. The department is primarily a grant-making and regulatory organization. Its programs are organized roughly by mode of transportation, providing grants to state and local government agencies to support the construction of highways, transit, airport, and intercity passenger rail infrastructure, while overseeing safety in all modes of transportation. The Federal Aviation Administration (FAA) is exceptional among DOT's large sub-agencies in that the largest portion of its budget is not for grants but for operating the U.S. air traffic control system. In support of that task, it employs over 80% of DOT's total workforce, roughly 46,000 of DOT's approximately 56,000 employees.

Title II of the annual THUD appropriations bill generally funds HUD. The department's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs. These include several programs of rental assistance for persons who are poor, elderly, and/or have disabilities. Three rental assistance programs—Public Housing, Section 8 Housing Choice Vouchers, and Section 8 project-based rental assistance—account for the majority of the department's funding. Two block grant programs—the HOME Investment Partnerships Program and Community Development Block Grants (CDBG)—help communities finance a variety of housing and community development activities designed to serve low-income families. Other, more specialized grant programs help communities meet the needs of homeless persons, including those with AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to homebuyers with low down payments, often first-time homebuyers, and to buyers and developers of multifamily rental buildings containing relatively affordable units.

Title III of the THUD appropriations bill generally funds a collection of agencies involved in transportation or housing and community development. They include the Access Board, the Federal Maritime Commission, the National Transportation Safety Board, the Amtrak Office of Inspector General (IG), the Neighborhood Reinvestment Corporation (often referred to as NeighborWorks), the U.S. Interagency Council on Homelessness, and the costs associated with the government conservatorship and regulation of the housing-related government-sponsored enterprises, Fannie Mae and Freddie Mac. The Surface Transportation Board, formerly an agency of DOT, was made independent of DOT in 2015 legislation, and now appears in Title III of the THUD bill.

Title IV of the THUD appropriations bill typically sets out general provisions applicable to the bill. They can range from, for example, restrictions placed on funding in the bill to supplemental funding for disasters.

Budget Concepts Relevant to THUD Appropriations

Most of the programs and activities in the THUD bill are funded through regular annual appropriations, also referred to as discretionary appropriations.¹ This is the amount of new funding allocated each year by the appropriations committees. Appropriations are drawn from the general fund of the Treasury. For some accounts, the appropriations committees provide advance appropriations, or regular appropriations that are not available until the next fiscal year.

In some years, Congress will also provide emergency appropriations, usually in response to disasters. These funds are sometimes provided outside of the regular appropriations acts—often in emergency supplemental spending bills. Although emergency appropriations typically come from the general fund, they may not be included in the discretionary appropriation total reported for an agency.

Most of DOT's budget is in the form of contract authority. Contract authority is a form of mandatory budget authority based on federal trust fund resources, in contrast to discretionary budget authority, which is based on resources in the general fund. Contract authority controls spending from the Highway Trust Fund and the Airport and Airway Trust Fund. While the amount of contract authority is typically set in DOT authorizing legislation, appropriators have the final say in the amount of contract authority available each year by establishing a limitation on obligations (i.e., a limit on how much contract authority can be obligated). Total annual discretionary budget authority for THUD is typically around half of the total funding provided in the bill, with the remainder made up of DOT's mandatory contract authority.

Congressional appropriators are generally subject to limits on the amount of new nonemergency discretionary funding they can provide in a year. One way to stay within these limits is to appropriate no more than the allocated amount of discretionary funding in the regular annual appropriations act. Another way is to find ways to offset a higher level of discretionary funding. A portion of the cost of regular annual appropriations for the THUD bill is generally offset in two ways. The first is through rescissions, or cancellations of unobligated or recaptured balances from previous years' funding. The second is through offsetting receipts and collections, generally derived from fees collected by federal agencies, the largest source being fees collected from the FHA mortgage insurance programs at HUD.

THUD Funding Trends

Table 1 and Figure 1 show recent funding trends for the primary THUD agencies, DOT and HUD, in both nominal and constant dollars (excluding emergency supplemental funding). In real terms, DOT and HUD funding declined for several years after FY2010, and even in FY2017 their funding was still below their FY2010 levels.

Figure 1. Funding Trends for Department of Transportation and Department of Housing and Urban Development, FY2010-FY2017 (in billions of constant 2017 dollars)

Source: Graphic created by CRS based on data presented in Table 1.

Status of the FY2018 THUD Appropriations Bill

Table 2 provides a timeline of legislative action on the FY2018 THUD appropriations bill.

FY2018 THUD Discretionary Funding Allocation

The annual budget resolution includes spending and revenue levels for the upcoming fiscal year, including spending allocations to House and Senate committees. These levels are enforceable by points of order. After the House and the Senate Appropriations Committees receive their discretionary spending allocations from the budget resolution (referred to as 302(a) allocations), they divide their allocations among their 12 subcommittees (referred to as the 302(b) suballocations). Each subcommittee is responsible for developing and reporting one of the 12 regular appropriations bills. Once the Appropriations Committees reports these suballocations to their respective chamber, these levels are also enforceable by points of order. While these suballocations alone cannot be used to determine how much funding any individual account or program will receive, they do set the parameters within which decisions about funding for individual accounts and programs can be made.

The House and Senate did not agree to a budget resolution for FY2018 (H.Con.Res. 71) until October. By that point, the House and Senate Appropriations Committees had each already taken action on THUD appropriations. In July of 2017, both committees released an informal suballocation for THUD. While such informal suballocations cannot be enforced by points of order, it was stated by the House Appropriations Committees that that the levels were being issued in order "to continue developing the 12 fiscal year 2018 appropriations bills ... given a concurrent resolution for the budget for fiscal year 2018 has yet to be adopted."² Subsequently, the House and Senate Appropriations Committee each reported their FY2018 THUD appropriations bills at the level noted in their interim suballocations.

Table 3 shows the discretionary funding provided for THUD in FY2017, the Trump Administration request for FY2018, and the informal suballocations made by the House and Senate Appropriations Committees to the THUD subcommittees. Table 4 lists the total funding provided for each of the titles in the bill for FY2017 and the amount requested for that title for FY2018.

As discussed earlier, much of the funding for this bill is in the form of contract authority, a type of mandatory budget authority. Thus the discretionary funding provided is only about half of the total funding provided in this bill.

FY2018 THUD Funding

As shown in Table 4, the Trump Administration's FY2018 budget included $106.65 billion for the programs in the THUD bill, $9.7 billion less than the $116.3 billion provided in FY2017. The request represented a reduction of roughly $2 billion for DOT and $7.5 billion for HUD. The DOT reduction came from zeroing out the Essential Air Service program and the TIGER (National Infrastructure Improvements) grant program and cutting funding for the New Starts program in DOT; the HUD reduction came from reducing funding for most HUD programs and eliminating funding for several large grant programs, including the CDBG and HOME programs.

The House-passed H.R. 3354 would provide $115.3 billion for THUD; this represents a reduction of less than 1% from the comparable figure for FY2017. The Senate-reported S. 1655 recommended $119.1 billion for THUD; this represents an increase of just over 2% over FY2017 funding. With inflation forecast at 1.9% for FY2018, the House bill would result in a reduction of roughly 3% in real THUD funding, while the Senate bill would result in a slight increase in real funding, compared to FY2017. This situation is explored further in the next section of this report and in Table 5.

How Lower Budget Authority Becomes Greater Funding—the Impact of Offsets

In the case of the THUD bill, net discretionary budget authority (which is the level of funding measured against the 302(b) allocation) is typically not the same as the amount of new discretionary budget authority made available to THUD agencies, due to budgetary savings available from rescissions and offsets. Each dollar available to the subcommittees in rescissions and offsets enables the subcommittee to provide an additional dollar of funding that does not count against the 302(b) allocation limit. As shown in Table 5, in FY2017, due to rescissions and offsets, the THUD subcommittees were able to provide $10.1 billion in discretionary appropriations to THUD agencies above the net discretionary budget authority level.

The amount of these budget savings generally vary from year to year, meaning that the "cost" in terms of 302(b) allocation of appropriating a given level of gross budget authority varies as well. The largest source of budgetary savings for the THUD subcommittees is generally HUD's FHA insurance fund. Estimates of FHA offsets change from year to year based on estimates of the number of mortgages that FHA will insure and how much those mortgages are expected to earn in fees versus cost in insurance payouts. Those estimates, in turn, are based on expectations about the housing market, the economy, the credit quality of borrowers, and changes to FHA's fee structure, most of which are factors outside of the immediate control of policymakers.³

Detailed Tables and Selected Key Issues

Title I: Department of Transportation

Table 6 presents FY2018 appropriations totals and selected accounts for DOT, compared to FY2017 enacted levels. A brief summary of key highlights follows the table. For an expanded discussion, see CRS Report R44915, Department of Transportation (DOT): FY2018 Appropriations, by [author name scrubbed].

DOT in Brief

President's Budget

The Trump Administration requested a $1.1 billion reduction in DOT from FY2017 levels, chiefly by zeroing out the Essential Air Service program (-$150 million) and the TIGER (National Infrastructure Investments) grant program (-$500 million) and reducing funding for the transit New Starts program by $400 million.

House Action

The House-passed bill would provide DOT an increase of less than 1% from FY2017.

Senate Action

The Senate-reported bill recommends a 2% increase for DOT over FY2017. The increase is chiefly for highways ($1.0 billion) and FAA programs ($563 million). In addition to providing more funding than in the House-passed bill, the Senate bill includes several policy provisions different from those in the House bill. These include authorizing an increase in the passenger facility charge that airports can charge passengers to help pay for airport improvements, from the current limit of $4.50 (limited to two charges per one-way ticket) to $8.50 (limited to the originating airport; an airport through which the passenger is connecting would still be limited to a $4.50 charge). The bill would also authorize DOT to ban cell phone calls by passengers in flight. It also would appropriate considerably less funding for the Federal Railroad Administration State of Good Repair grant program than does the House bill, which may signal a disagreement over funding for Amtrak's Hudson Tunnel Replacement project.

Title II: Department of Housing and Urban Development (HUD)

Table 7 presents account-level funding information for HUD, comparing FY2017 with FY2018 congressional action.

HUD in Brief

President's Budget

The President's FY2018 budget request for HUD included the following:

• $40.7 billion in gross discretionary appropriations for HUD, not accounting for savings from offsets and other sources. That amount is about $7.3 billion (15%) less than was provided in the final FY2017 appropriations law.
• $31.2 billion in net discretionary appropriations for HUD, accounting for the effect of offsets, rescissions, and other savings.
• A proposal to eliminate funding for several HUD grant programs. Most notable among these are HUD's two largest block grant programs for states and localities, the CDBG and HOME programs, as well as grants funded in the Self-Help Homeownership Opportunity (SHOP) account (i.e., funding for sweat-equity programs, like Habitat for Humanity, and certain capacity building programs).
• Large funding reductions for public housing, including a 68% cut relative to FY2017 for the capital fund and elimination of funding for the Choice Neighborhoods program.
• Funding reductions for most other accounts relative to FY2017, with the exception of the Housing for the Elderly account (2% increase).
• Several policy proposals, including an increase in the share of rent paid by certain recipients of HUD-assisted housing from 30% of family income to 35% and an elimination of utility reimbursements paid to families in assisted housing.

House Action

As reported by the House Appropriations Committee, H.R. 3353 would have provided the following for HUD:

• $48.0 billion in gross discretionary appropriations for HUD, which is about $7.3 billion (15%) more than was requested by the President and only slightly (<1%) less than was enacted for FY2017. ($38.3 billion in net discretionary funding.)
• Small increases in funding for the tenant-based rental assistance account (+1%) and project-based rental assistance account (+2%) relative to FY2017. The public housing operating fund would receive level funding, and the capital fund would be cut by 5%.
• Funding reductions for major HUD grant programs, but not an elimination of funding, as proposed in the President's budget. Relative to FY2017, the bill would have cut the SHOP account by 17%, HOME by 11%, and CDBG by 3%.

During floor consideration of H.R. 3354, which includes as Division H the text of H.R. 3353, HUD-related floor amendments were approved:

• Increasing funding for: CDBG, SHOP, Public Housing Capital Fund, Housing for Persons with AIDS, and Housing for the Elderly (Section 202).
• Offsetting those increases with decreases for: Public Housing Operating Fund, Information Technology, FHA administrative expenses, and Research and Technology.
• Making policy changes to block HUD's implementation of some manufactured housing regulations and guidance (Sec. 424) and to allow for the study of certain foundation materials (amendment to the Community Development Fund account).

Senate Action

As reported by the Senate Appropriations Committee, S. 1655 would provide the following for HUD:

• $49.9 billion in gross discretionary appropriations for HUD's programs and activities, which is 4% more than was enacted for FY2017 and 23% more than was proposed by the President ($40.2 billion in net discretionary appropriations).
• Increases in funding for the Section 202 Housing for the Elderly program (+14% over FY2017 enacted), the project-based rental assistance account (+6%), and the tenant-based rental assistance account (+5%).
• Level funding, relative to FY2017, for the grant programs slated for elimination in the President's budget request (CDBG, HOME, and the programs included in the SHOP account).
• Several new policy changes, including an expansion of the Rental Assistance Demonstration (eliminating the cap on the number of units that may convert, modifying the terms of conversion for some properties and expanding the program to Section 202 Housing for the Elderly properties (Section 236 of the General Provisions)) and new penalties for HUD if the agency does not issue reports to the committee about properties that fail inspection (Section 202 of the General Provisions).

Title III: Related Agencies

Table 8 shows appropriations levels for the various related agencies funded within the Transportation, HUD, and Related Agencies appropriations bill. The Surface Transportation Board was transferred from the DOT title to the Related Agencies title starting with FY2017.

Related Agencies, In Brief

The President's FY2018 budget request included that Congress begin the process of winding down the Interagency Council on Homelessness (USICH), which was created in 1987 to coordinate across government agencies to reduce and end homelessness. The requested funding level—$57 a more than 80% reduction from FY2017—is intended to cover salaries, benefits, and operational costs for permanently closing the agency by November 2017. The USICH has a statutory sunset date—currently, October 1, 2018—that has generally been extended in annual appropriations acts. The House committee bill would adopt the President's request, allowing for the termination of the USICH; the Senate committee bill would not, funding the USICH at FY2017 levels and permanently eliminating the statutory sunset.

The President's FY2018 budget also included a request that Congress begin the process of winding down federal funding for the Neighborhood Reinvestment Corporation (commonly known as NeighborWorks America), which was created via federal charter in 1978 to support affordable housing and neighborhood revitalization nationwide. The requested funding level of $27 million is intended to cover personnel, administrative, and other costs associated with winding down existing commitments. Both the House and Senate committee bills would continue to fund NeighborWorks at the FY2017 level.⁴

Author Contact Information

Footnotes

1.	According to Congressional Quarterly's American Congressional Dictionary, discretionary appropriations are appropriations not mandated by existing law and therefore made available annually in appropriations bills in such amounts as Congress chooses. The Budget Enforcement Act of 1990 defines discretionary appropriations as budget authority provided in annual appropriations acts and the outlays derived from that authority, but it excludes appropriations for entitlements.
2.	This statement and the House Appropriations Committee's informal suballocations, referred to as "interim suballocations" can be accessed at https://appropriations.house.gov/uploadedfiles/sbdv-3.pdf. The Senate Appropriations Committee's informal suballocations, referred to as "funding guidance" can be accessed at https://www.appropriations.senate.gov/imo/media/doc/072017%20FY2018%20Funding-Guidance.pdf.
3.	For more information about the FHA insurance fund, see CRS Report R42875, FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund), by [author name scrubbed].
4.	Between FY2008 and FY2016, appropriations acts provided additional funding to NeighborWorks America for housing counseling for mortgage borrowers facing foreclosure. This funding was known as the National Foreclosure Mitigation Counseling Program (NFMCP). In light of decreasing foreclosure rates, Congress stopped providing funding for this program in FY2017. Congress continues to provide funding that can be used for a range of housing counseling activities, including foreclosure prevention counseling, to HUD's Housing Counseling Assistance Program.