Department of Housing and Urban Development (HUD): FY2020 Budget Request Fact Sheet

Contents

• Introduction
• HUD
• President's FY2020 Budget Request
• Totals
• Gross Budget Authority
• Net Budget Authority
• Program Eliminations
• Funding Reductions
• Rental Assistance
• Legislative Proposals

Introduction

This report provides a brief overview of the FY2020 budget request for the Department of Housing and Urban Development (HUD), with links to relevant Administration budget documents and CRS reports. This report will not be updated to track legislative action.

HUD

Most of the funding for HUD's programs and activities comes from discretionary appropriations provided each year in the annual appropriations acts. HUD's annual appropriations are generally considered along with those for the Department of Transportation and several related agencies (including the Neighborhood Reinvestment Corporation, also known as NeighborWorks America) by the Transportation, HUD, and Related Agencies subcommittees of the House and the Senate appropriations committees.

• For more information about HUD's programs and activities, see CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by Maggie McCarty, Libby Perl, and Katie Jones.

President's FY2020 Budget Request

On March 11, 2019, the Trump Administration submitted its FY2020 budget request to Congress. The budget request was released shortly after the enactment of the Consolidated Appropriations Act, 2019 (P.L. 116-6). Because the President's budget documents were likely prepared prior to enactment of final FY2019 appropriations, the FY2019 funding levels presented in those documents do not reflect actual final FY2019 funding levels. Figures in this report do reflect final FY2019 funding levels.

Totals

Gross Budget Authority

The President's FY2020 request proposes $44.1 billion in gross discretionary appropriations for HUD, which is the amount of new budget authority available for HUD programs and activities, not accounting for savings from offsets and other sources. The gross discretionary appropriations requested in the President's FY2020 budget for HUD is about $9.7 billion (18%) less than was provided in FY2019 (see Figure 1).

To achieve these savings, the President's budget proposes funding reductions for most HUD programs and activities as well as a number of program eliminations, both of which are explored later in this report (see "Funding Reductions" and "Program Eliminations"). A few accounts are slated for funding increases, the largest relative increase being for HUD's lead-based paint hazard reduction programs (+4%; +$11 million relative to FY2019) and the largest overall increase being for the project-based rental assistance account (+$274 million; + 2% relative to FY2019).

• For more information about HUD's budget request, see FY2020 Budget Appendix-HUD.
• For additional detail about funding levels for specific programs and activities, see HUD's FY2020 Congressional Budget Justifications. (Note that the President's budget documents were prepared prior to enactment of final FY2019 appropriations; thus, FY2019 funding figures in those documents for comparison do not reflect actual final FY2019 funding levels.)
• For a table of FY2020 requested funding levels compared to FY2019 enacted funding levels for selected HUD accounts, see Table 1.

Net Budget Authority

When looking at net discretionary budget authority—accounting for the effect of budgetary savings from offsetting collections and receipts, rescissions, and other sources—the President's budget appears to provide a smaller decrease relative to FY2019 than the decrease in gross budget authority. As shown in Figure 1, accounting for these savings, the President's FY2020 budget requests $37.6 billion in net discretionary funding for HUD, a decrease of about $6.7 billion (15%) compared to the net budget authority provided in FY2019. In other words, the cuts in funding for HUD's programs and activities from FY2019 to FY2020 (as represented by gross budget authority) are greater than they appear when accounting for budgetary savings (as represented by net budget authority).

The reason that the net decrease from FY2019 to FY2020 is lower than the gross decrease is because there is less estimated to be available in offsets in FY2020 relative to FY2019. Specifically, there is an estimated $3 billion (32%) decrease in budget savings available from offsetting collections and receipts for FY2020 relative to FY2019. Most of the reduction is attributable to an estimated decline of about $2.3 billion in receipts from the Federal Housing Administration's (FHA's) single family mortgage insurance programs and a decline of about $688 million in receipts from Ginnie Mae. However, these estimates of offsetting collections and receipts for FY2020 will likely change when the Congressional Budget Office (CBO) re-estimates the President's budget for the purposes of the congressional appropriations process. (For more information about offsetting collections and receipts and other components of the HUD budget, see CRS Report R42542, Department of Housing and Urban Development (HUD): Funding Trends Since FY2002, by Maggie McCarty. For more information about FHA and how it is accounted for in the budget, see CRS Report R42875, FHA Single-Family Mortgage Insurance: Financial Status of the Mutual Mortgage Insurance Fund (MMI Fund), by Katie Jones.)

Figure 1. Total HUD Discretionary Funding With and Without Savings from Offsets and Other Sources: FY2019 Enacted and FY2020 Request

Source: Chart prepared by the Congressional Research Service (CRS). FY2020 figures taken from FY2020 President's budget documents and HUD Congressional Budget Justifications; FY2019 figures taken from H.Rept. 116-9. Note that estimates from the President's budget will likely differ from congressional estimates (which are used in CRS appropriations reports) due to differences in estimates of various offsets between the Administration and the Congressional Budget Office (CBO). Notes: Figures exclude emergency funding.

Program Eliminations

The bulk of the funding reduction proposed in the FY2020 budget request comes from program eliminations. The budget proposes to eliminate funding for a number of HUD grant programs, which combined received over $7.5 billion in FY2019. The programs slated for elimination include the following:

• Community Development Block Grants (CDBG), funded at $3.37 billion in FY2019, which provide formula grants to states and localities for a variety of community and economic development activities.
• The Public Housing Capital Fund, funded at $2.78 billion in FY2019, which provides grants to public housing authorities (PHAs) to fund the major modernization needs in public housing.
• HOME Investment Partnerships grants, funded at $1.25 billion in FY2019, which provide formula grants to states and localities for various housing activities targeted to low-income families.
• Choice Neighborhoods grants, funded at $150 million in FY2019, which provide competitive grants to revitalize distressed public housing or other HUD assisted housing.
• The Self-Help Homeownership Opportunity Program (SHOP) account, funded at $54 million in FY2019, which includes funding for grants to national and regional intermediaries (such as Habitat for Humanity) to support self-help, sweat-equity model housing programs for low-income families, and grants for capacity building activities.
• Native Hawaiian Housing Block Grants, funded at $2 million in FY2019, which provide grants to Hawaii's Department of Hawaiian Home Lands (DHHL) for housing and related infrastructure for low-income Native Hawaiians on the Hawaiian home lands. (The President's budget states that DHHL has sufficient unexpended funds from prior fiscal years to continue carrying out the program in FY2020.)

Funding Reductions

Most other HUD programs are slated for funding reductions in the FY2020 request relative to FY2019 enacted appropriations. Those with the largest proposed reductions include the following:

• The Public Housing Operating Fund, proposed for a $1.8 billion (38%) reduction relative to FY2019, which provides formula grants to PHAs to fund the operating costs of public housing.
• Native American Housing Block Grants, proposed for a $155 million (21%) reduction relative to FY2019, which provides block grants to Native American tribes and Alaska Native Villages for affordable housing activities in tribal areas.
• Housing for Persons with AIDS (HOPWA), proposed for a $63 million (16%) reduction relative to FY2019, which primarily provides formula grants to states and localities to fund the development of low-income housing for persons living with AIDS and their families.
• Housing for Persons with Disabilities, proposed for a $27 million (15%) reduction relative to FY2019, which provides competitive grants to state housing agencies to support the development of low-income housing for persons with disabilities and their families.

Rental Assistance

The largest share of spending in HUD's budget is attributable to the cost of maintaining HUD's rental assistance programs—the public housing, Housing Choice Voucher, and Section 8 and other project-based rental assistance programs—which provide deeply subsidized affordable housing to low-income families, seniors, and persons with disabilities. In FY2019, these programs accounted for nearly 80% of HUD's budget; in light of proposals to eliminate funding for a number of HUD's grant programs, under the President's budget request the rental assistance programs' share of HUD's budget would increase to 86%.

The amount of funding requested for these accounts for FY2020 would be unlikely to ensure that all currently assisted families continue to receive the same level of assistance they presently receive, given general rental inflation across the programs. The President's budget documents state that the estimates used to derive the requested funding level assume adoption of a set of reforms that would reduce subsidies and increase rents for tenants. These include the Making Affordable Housing Work Act, a legislative reform proposal announced by HUD Secretary Carson in April 2018. The proposal includes a number of statutory changes to HUD's rental assistance programs that, if enacted, would result in rent increases for assisted housing recipients, and corresponding decreases in the cost of federal subsidies, as well as options for program administrators to adopt new policies, such as work requirements for tenants.

Legislative Proposals

The FY2020 budget request contains a number of legislative proposals that would make changes to HUD programs. Several of these proposals were also included in the President's FY2019 budget request. A selection of general provisions being proposed is summarized here:

• Expansion of the Rental Assistance Demonstration (RAD), including elimination of the cap on the number of public housing units that can convert under the program. (§219)
• Authority for FHA to charge a fee to lenders to upgrade FHA's Information Technology infrastructure. (§223)
• Authority for the HUD Secretary to freeze rent increases in the project-based rental assistance programs to restrain cost growth. (§224)
• Broad statutory and regulatory waiver authority for the HUD Secretary in administering the public housing and Section 8 Housing Choice Voucher program. (§§225, 226)

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