PHADA Advocating for More Funding, Local Flexibility
PHADA President John T. Mahon.
President Trump recently signed into law a major bill that has received a lot of media coverage. The new law has some implications for all federally assisted programs including ours. Still, it is sometimes confused with other legislation that directly funds our programs.
Below, I explain the differences between budget reconciliation and appropriations bills while also highlighting some of the major provisions of the “One Big Beautiful Bill” (OBBB) that is now law.
Both political parties often use the budget reconciliation process to get legislation through Congress more expeditiously. This is because reconciliation bills are not subject to the Senate’s filibuster rule, which requires at least sixty votes to proceed to debate. This particular bill included a good deal of the President’s domestic policy agenda, including more funds for defense and border security in addition to tax cuts.
On July 3, the House passed the budget reconciliation bill, the same version the Senate passed earlier that week. President Trump signed the bill into law on the 4th of July.
U.S. Debt Ceiling
Among many other provisions, the law raises the statutory debt ceiling by roughly $5 trillion. This is an important provision because the government cannot meet all its obligations without more borrowing. While helpful, the increase is also troubling because of the country’s already huge debt burden (see below).
LIHTC Expansion
The new law includes a permanent 12 percent increase in 9 percent Low Income Housing Tax Credit (LIHTC) authority beginning in 2026. It also permanently lowers the bond financing threshold from 50 to 25 percent for 4 percent credit projects financed with tax-exempt private activity bonds that have an issue date after December 31.
The bill represents the most substantial expansion of federal affordable housing resources in 25 years. It will enable state housing credit agencies and their partners to finance up to an additional 1.22 million affordable homes that otherwise would have been possible over the next decade. Many HAs—and residents—will benefit from this law.
Law Will Increase USA’s Debt
On a negative note, the Congressional Budget Office and other independent budget watchdog organizations observe that the law will result in major increases in the United States’ already massive debt, which now totals $36 trillion. Critics note that the country is already spending more each year just to pay the interest on the debt compared to what we spend on the defense budget. The law is also likely to affect many of our residents due to provisions that will cut funding for Medicaid and impose new work requirements for some people enrolled in that program.
Appropriations, the 30-Day Notice Law, and MTW
Up until now, Congress has focused most of its attention on the OBBB. Now, lawmakers will turn to other priorities, including the FY 26 appropriations process.
Given that FY 26 is just a little more than 2 months away, the prospects for another Continuing Resolution are growing more likely. There is also some talk about a possible government shutdown come October 1. No one knows for sure what will happen.
While the Trump Administration’s proposed spending plan is unlikely to advance, we are concerned about the possibility of inadequate “topline” spending targets Congress may set for domestic programs, including housing. For more information, see the separate report on the House appropriations bill here.
As I noted in a previous column, PHADA will continue to strongly advocate for preserving federal programs that ensure safe and decent housing for low-income households. PHADA and the other industry groups recently issued our joint budget recommendations, which can be found here. I again urge you to consult this material and use the information in your communications with your own Representatives and your two Senators.
PHADA and others have also recommended that congressional appropriators address a problem in the spending bill. We recently joined with a diverse coalition of housing organizations that wrote to the House leadership requesting the repeal of the 30-day notice provision for non-payment of rent initially enacted through the CARES Act. The letter is addressed to the Chair and Ranking Member of both the full House Appropriations Committee and of the Transportation, Housing and Urban Development, and Related Agencies Subcommittee.
We have long called for the repeal of the 30-day notice provision, which has led to dramatically increased Tenant Accounts Receivable (TARs) for HAs across the country. In fact, HUD’s own data shows that HAs have been “severely impacted” by TARs—meaning they have experienced higher receivables and decreased reserves. We will therefore continue to advocate that Congress address this problem in the FY 26 spending bill.
Lastly, the Senate may soon take up housing authorization legislation. Again, we are working with our industry partners, advocating for an expanded version of the original Moving to Work (MTW) program, as outlined in Section 301 of the ROAD to Housing Act, introduced by Sen. Tim Scott (R-SC) and Rep. French Hill (R-AR) in the House.
PHADA strongly supports the goals of this legislation. With all the uncertainty surrounding the budget, it is essential that HAs been afforded more local discretion and the latitude to use our funds more flexibly. An expansion of the original MTW program would certainly help in this regard.
Keep informed. Keep engaged. Keep the faith!