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President’s Forum: Major Budget Challenges in Store for New Congress & Biden Administration

We Need to Keep Pressing for Adequate Funding

PHADA President David A. Northern, Sr.

With Election Day now in its rearview mirror, Congress will return to Washington to hopefully reach agreement on a FY 23 omnibus spending bill. Action must be completed by December 16 when the current Continuing Resolution (CR) expires. At this stage, the question is whether lawmakers can reach a deal by the middle of next month, or if they will opt to push a decision to later December, or the new year when the 118th Congress takes office. PHADA would prefer completion before the close of 2022.

I reiterated our budget priorities in the October 19 edition of the Advocate and our FY 23 Appropriations Position Paper can be found here. Briefly, adequate operating and capital funding are at the top of our list. This not only helps HAs with their current operations but ensures more workable Rental Assistance Demonstration (RAD) rents since those are based on each HA’s formula share of operating and capital funds. For the Operating Fund, the Senate and House figure is the same, but we are advocating for the House figure for the Capital Fund, which is $175 million higher than the Senate’s proposed amount. On the Section 8 side, we are advocating for the full cost of all voucher renewals and the Senate’s greater appropriation needed for administrative fees. We are also recommending the House amount for the project-based rental assistance account, which, in part, funds RAD agencies.

At this stage, Congress has not yet reached an agreement on “top line” spending for defense and non-defense programs. Consequently, it is possible that amounts referenced in the PHADA chart could be reduced. Accordingly, please ask your Representatives and Senators to, at the very least, approve the higher of the House-Senate sums in the final spending measure.

 

New Congress Will Take Office Amid Economic Turbulence

With a new Congress that has different priorities than the Biden Administration, it will be harder to get agreement on spending bills in the next few years. This is compounded by that fact that we are in a period of economic uncertainty with escalating inflation, unprecedented government debt, stock market volatility, and Covid-19 variants still spreading. I do not have to tell you about the effect of supply chain delays and the fact that many HAs are experiencing labor shortages. Some economists predict a recession in the near term.

As if all this were not enough, some government entitlement programs – the biggest part of the federal budget – are in trouble. Medicare Part A becomes fiscally insolvent in just 4–5 years. Moreover, knowledgeable budget observers have noted that because interest costs are rapidly escalating, the annual debt service costs could exceed Defense spending in the not-too-distant future.

All this could mean there may be a need to divert funding to entitlements and interest costs, leading to less funding for domestic programs unless lawmakers agree to tax and revenue increases. Is that likely when there is divided control of Capitol Hill and the White House? Additionally, some lawmakers are again raising the specter of blocking an extension of the debt ceiling in exchange for large budget cuts.

In the area we are most concerned about, the Section 8 part of the budget may not be sustainable in this budgetary and political environment. This year, for example, it cost slightly over $2 billion more just to renew all vouchers. Meantime, we need more resources for capital funding and tenant protection vouchers. Some HAs also have real financial problems because of unpaid rent and pandemic-related issues. For more details, please see PHADA’s related letter here.

 

Conclusion

We have made progress in recent years, securing additional funding for both public housing and Section 8 programs including RAD. PHADA’s goal will be to build on this progress in the next Congress. Given the aforementioned factors, the budget environment may be more challenging than ever. In any case, please be assured PHADA will work closely with other industry groups, housing advocates and others to ensure our number one objective – adequate funding for public and assisted housing programs.

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Scheduled for January 8–11, 2023, at the Hilton Lake Buena Vista in Orlando, FL.

In-Person EDEP courses to be held January 6–7, 2023.

 

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