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President’s Forum: What is “Reconciliation” and Why is it Important?

House Bill Includes Billions More in Housing Assistance

Excerpts from the House Financial Services Committee Memorandum

$25 billion for Emergency Rental Assistance. The economic impact of the coronavirus pandemic has taken a heavy toll on renters. More than 50 percent of renters lost income in the early part of the pandemic, and renters – particularly Black and Latinx renters – have been more likely to lose employment than homeowners. According to the U.S. Census Bureau’s Household Pulse Survey, 19 percent of renter households reported that they were not caught up on rent in December of 2020, with Black and Latinx renters more likely to be behind than White renters. While Congress provided $25 billion in emergency rent and utility assistance in December 2020, Moody’s Analytics unpaid rent, utilities, and additional fees. Prior to imposition of the CDC eviction moratorium order, researchers predicted that between 29 and 40 million renters could be evicted by the end of 2020 due to financial instability.

While the CDC order has helped some families remain in their homes, it is only a half-solution, as people will still owe any back-rent they have accrued. The reconciliation package includes $25 billion to provide assistance to renters, including assistance targeted to specific populations to ensure vulnerable families in all communities are able to access the relief they need.

  • Section 4201. This section would provide $19.05 billion in funding to the Department of Treasury for emergency rental and utility assistance that would be allocated to states, territories, counties, and cities to help stabilize renters during the coronavirus pandemic and help rental property owners of all sizes continue to cover their costs.
  • Section 4202. This section would provide $5 billion for emergency Housing Choice Vouchers to transition people experiencing or at risk of homelessness, survivors of domestic violence, and victims of human trafficking to stable housing.
  • Section 4203. This section would provide $100 million to support unassisted households living in USDA-subsidized properties and who are struggling to pay rent during the coronavirus pandemic.
  • Section 4204. This section would provide $750 million to support the Indian Housing Block Grant program and the Indian Community Development Block Grant program to help Alaska Natives, Native Americans, and Native Hawaiians respond to pressing housing needs during the coronavirus pandemic.
  • Section 4205. This section would authorize $100 million in funding for NeighborWorks to support housing counseling services that help renters, people experiencing homelessness, people at risk of homelessness, and homeowners navigate their housing options and rights, including protections and resources provided through coronavirus relief legislation.

PHADA President John Hodge.

Like me, many of you follow what is happening in Congress and have been hearing and reading a lot about the term “budget reconciliation” in recent weeks. In fact, we have more frequently heard those two words over the last several years, but we may not totally understand what the process entails and why it is so important in public policy formulation and even to the programs we administer.

Under normal circumstances, legislation typically requires the approval of at least 60 Senators to move through that chamber. This dynamic is otherwise known as the “legislative filibuster.” Budget reconciliation is an arcane process stemming from a 1974 law, which allows Congress to pass measures with just a simple majority in the Senate.

The reconciliation process has been used more frequently in recent years. During the Obama Administration, Congress used it as vehicle to secure approval of the Affordable Care Act, for example. During the terms of Presidents George W. Bush and Donald Trump, lawmakers employed it to pass significant tax cuts. In all these instances, the measures passed by very narrow margins, especially in the Senate.

Readers might wonder why Congress does not use this process to move other legislation including annual appropriations bills. Under Congressional rules, reconciliation can only be used once per fiscal year. In addition, the provisions of any reconciliation package must be limited to tax and spending matters. Thus, Congress cannot include “extraneous” provisions such as immigration, environmental law reform, etc. Also, any elements that are deemed to increase the deficit beyond a decade’s duration must then be reversed after a decade. That is why the Bush and Trump tax cuts were limited to ten years.

Congress is using the reconciliation process right now to try and pass the Biden Administration’s $1.9 trillion coronavirus relief plan. The House and Senate both passed budget resolutions instructing about a dozen committees in each chamber to devise measures that would provide relief to Americans impacted by the pandemic. Some of the provisions include direct payments to families, extended unemployment benefits, and hundreds of billions of dollars in State and local government relief.

 

Housing Funds in the House Bill

As PHADA recently reported, the House Financial Services Committee included billions of dollars in housing assistance in its reconciliation package. The bill provides about $19 billion in emergency housing assistance and an additional $5 billion to be utilized for vouchers.

In addition to vouchers, the $5 billion is also meant to cover administrative expenses, renewal costs, and supplemental funding to prevent shortfalls and for housing authorities that have significant increases in voucher costs. The legislation would restrict eligibility of the vouchers to households that are homeless, at risk of homelessness, fleeing or attempting to flee domestic violence, or recently homeless.

We have some concerns that the eligibility criteria are too restrictive and not optimal because they would require HUD to develop guidance for HAs to evaluate eligibility and may thus complicate and slow the provision of assistance at the local level. You can read more about the bill in the committee’s memorandum below.

 

Conclusion

Congress is hoping to complete action on the $1.9 trillion relief package by the middle of March. This is an ambitious timetable considering the small 10-vote margin between the two parties in the House and the Senate’s split at 50-50 with Vice President Harris serving as a tie breaking vote.

PHADA will, of course, provide its feedback to House lawmakers. We will also report details on the Senate’s developing package as they become available. Lastly, please feel free to contact our Washington staff with any questions or to add your input on the legislation.