Congressional Budget Office Releases Gloomy Outlook
PHADA President John T. Mahon.
PHADA reported on the FY 26 HUD appropriations bill in the previous edition of the Advocate. That legislation was enacted in early February, more than four months after the start of the fiscal year. With the 2026 process just closed, the Trump Administration will release its proposed budget for next year in a few weeks, and Congress will almost immediately commence hearings on the multitrillion-dollar plan. FY 27 begins October 1.
Most Washington observers believe the federal government’s budget process is broken. This is the eleventh year in a row a presidential administration (both parties) released their budget late. The last time Congress finalized all appropriations bills before the autumn deadline was during the Clinton Administration thirty years ago.
In addition to the perennial lateness surrounding the budget, the fiscal outlook has grown steadily worse in recent years. The Congressional Budget Office (CBO) issued its latest update in mid-February.
The CBO reported that the national debt is now at $38.5 trillion with annual interest costs exceeding Pentagon spending. CBO further reported that a $1.8 trillion deficit is expected. “Debt is on track to grow even larger…” says the new report. “To avoid the consequences [associated with the debt] lawmakers would have to make significant changes to tax and spending policies—increasing revenues, reducing spending, or adopting some combination of those approaches. The size of the policy changes needed to put debt on a sustainable path will grow the longer lawmakers wait to implement those changes,” CBO added.
Other Factors
What else can we expect to affect the budget deliberations this year? For one thing, it is likely that the timing will be condensed as lawmakers usually leave Washington early in election years. In 2026, all 435 members of the House of Representatives are up for election and one-third of the Senate, too. They will want to go home early to campaign. Other dynamics will be in play as Congress considers spending legislation. The voting margins in both chambers are extremely close, forcing House and Senate leaders to at least try and secure some bipartisan support. Whether that will be achievable remains to be seen.
The Trump Administration has said it will again seek a substantial increase in defense spending—more than $600 million in additional funds compared to this year. The administration is also expected to propose large cuts in non-defense programs. This could result in more contentiousness on Capitol Hill.
The HUD Budget
In its FY 26 proposed budget, the Trump Administration sought to block-grant all housing programs to the states. Those plans were not seriously considered on Capitol Hill last year and, if proposed again, will not be in this session, especially with the voting margins so close.
The Department will need another significant increase to renew all vouchers. Congressional appropriators added about 9 percent for renewals in the current year, and that may still not be sufficient to cover full costs. In any case, a significant increase for Section 8 will again impact the funding available for other low-income housing programs.
Public housing needs additional funding in FY 27. Current appropriations for the operating and capital funds are woefully inadequate. This is particularly problematic as HAs face large increases in insurance premiums and increased costs from mandates such as cash management, HOTMA and BABA rules.
Conclusion
PHADA’s policy team will keep members abreast of all budget developments in this publication, at our annual convention and elsewhere. Given the upcoming campaign season, it is quite possible that lawmakers will punt and enact a Continuing Resolution to get through the November elections.
Whatever the timing, it is essential that we actively engage with our Representatives and Senators to try and attain optimal funding. Please be assured PHADA will do its utmost to secure that outcome.