Budget Deal Doesn’t Guarantee Adequate Funding
Before leaving for their August recess, the House and Senate adopted important legislation that will avert sequestration in the coming fiscal year and raise the overall spending caps for domestic discretionary programs in both FY 20 and 21. The bipartisan package will also help the government avoid a fiscal meltdown by raising the debt limit ceiling for the next two years. The latter provision is needed because the government has reached its maximum borrowing authority and would have been forced to drastically cut spending had Congress not acted.
Under the terms of the bipartisan agreement, Congress will be able to increase non-defense discretionary (NDD) spending by $27 billion compared to FY 19. Congressional Democrats had insisted on the NDD increases in exchange for the Republicans’ request to boost defense spending (see Figure 1).
The Senate’s leadership had previously stated that chamber would not work on appropriations bills until a macro budget compromise was in place. The cap increase will now allow the Senate to move forward to develop its various bills when Congress returns to Washington next month. It appears the Senate Appropriations Committee will try to conclude consideration of appropriations in September and then sit down to iron out final legislation with the House. A Continuing Resolution of some length will probably be needed because that process is not likely to be completed by the end of September.
Between now and when the new fiscal years starts on October 1, lawmakers will need to distribute the overall funding amounts amongst the various subcommittees and then make decisions on final funding levels for specific accounts. While the spending caps increase is certainly welcome news, it remains to be seen exactly how it will impact our programs. In addition, it is not at all certain our programs will see any increases from last year, and in fact, they could be reduced.
New Caps Are Lower Than the House’s Budget Assumptions
The House of Representatives already drafted and passed most of its appropriations bills. The House T-HUD legislation was approved earlier this summer and includes some modest increases for public and assisted housing accounts. It is important to note, however, that the House bill was considered BEFORE the new cap limit was established. Indeed, the House legislation assumes a government-wide increase of $34 billion in NDD compared to $27 billion in the bipartisan agreement. Thus, depending on how Congress decides to divide up the funds, this could result in some downward adjustments in housing accounts in the final FY 20 bill.
This would be problematic especially with respect to the public housing operating and capital accounts. We have seen some much-needed recent gains in those two accounts the last couple of years and do not want to lose momentum. We need at least the sums in the House version to maintain progress and to continue the positive trends in rents for the Rental Assistance Demonstration (RAD). This is so because the operating and capital finds are used (with the tenant rent contribution) to determine the RAD rents for HAs seeking to convert their properties to that program. PHADA learned from HUD RAD staff that RAD rents have increased on average between $40 and $50 per unit per month due to the last two appropriations packages.
In addition to operating and capital funding and RAD, PHADA’s other major budget priorities include the Project-based Rental Assistance (PBRA) account, the Housing Choice Voucher account and HCV administrative fees.
PHADA earlier estimated that the House bill includes full funding for HAP renewals but only about 77 percent for the HCV admin fee account. Given the low admin fee funding, it is particularly important for members to advocate that there be no further reductions in this account whenever a final appropriations bill is completed.
For further information, see Figure 2. Please use this to communicate our budget priorities to your Representatives and Senators between now and when Congress returns to Washington. The message is simple: At a minimum, ask that they include the sums in the House version. In addition to funding, we are also asking House and Senate appropriators to include language in the final appropriations package that would prohibit HUD from initiating what PHADA believes is a deeply flawed (and likely illegal) proposed Annual Contributions Contract (ACC.)
Another important policy matter in the House bill would bar HUD from implementing its proposed rule prohibiting housing assistance to undocumented persons. PHADA supports the House prohibition. It is unclear if the Senate will include that provision in its bill. Importantly, the spending caps deal states that there will be “no poison pills or additional new riders” unless they are agreed to by the four leaders [in both parties] in the House and Senate and the President. The HUD immigration rule would likely fall into that category.
Members of Congress will be in their home districts and states throughout the August recess. Please take the time to voice your concerns and strongly advocate that no less than the House amounts be appropriated for our programs in FY 20.
In a related matter, I hope to see many of you at PHADA’s September Legislative Forum, which will be held at a very timely moment in the budget process. The meeting agenda and other information can be found here.