Reinforces Harmful Cuts Included in Skinny Budget
Over the weekend, the administration released its full FY 26 budget request and Congressional Justification (CJ), which provides additional detail on the “skinny” budget that the President released in early May. Overall, the budget request proposes cutting non-defense discretionary spending by $163.1 billion, a decrease of more than 22 percent.
As first put forth in the skinny budget, the President proposes both dramatic cuts to, and a major restructuring of, federal housing assistance. Overall, HUD funding in the budget request is $43.5 billion—one-third less than was appropriated for the Department in 2025—and the President proposes fundamentally changing how housing assistance is delivered. PHADA strongly opposes both proposals and will vigorously advocate for Congress to reject them.
Deep Cuts and Restructuring of Rental Assistance Programs
The budget proposes creating a “State Rental Assistance Program” that would replace virtually all housing assistance funding. Programs that would be replaced include Housing Choice Voucher renewals and administrative fees (including special purpose vouchers), public housing operating and capital funds, Project-based Rental Assistance, Housing for the Elderly (Section 202), and Housing for Persons with Disabilities (Section 811).
This proposal would effectively block grant housing program funding to the states, which would have less than five months to establish oversight offices and then design and implement programs. PHADA has many deep concerns regarding the block-granting model, including that it could weaken long-term support for affordable housing programs, allow states to divert housing funding to non-housing uses, and create inconsistencies in subsidy levels and service delivery across states.
The CJ provides some additional details on the block grant, noting that it would require states to prioritize assistance to elderly and disabled households and to impose two-year time limits to non-elderly, non-disabled residents. It also notes that Congress would have to provide authorizing language to create the block grant program.
Additionally, the budget only proposes allocating $36.2 billion for the State Rental Assistance Program. Compared to the funding allocated to the programs it would replace, this represents a $26.7 billion cut to housing assistance programs relative to FY 25 levels.
The budget request states that “this proposal would encourage States to provide funding… to ensure that similar levels of recipients can benefit.” However, this would just shift funding responsibilities to already-strapped state governments. Shifting this much responsibility would force states to increase taxes and would lead to year-to-year unpredictability in money provided for needed affordable housing programs.
Key Programs to Receive No or Significantly Reduced Funding
Beyond the harmful cuts proposed to rental assistance programs, the budget does not request appropriations for several key community development and all self-sufficiency programs. It zeroes out funding for both Community Development Block Grants (CDBG), HOME Investment Partnerships, and the Pathways to Removing Obstacles to Housing (PRO Housing) programs.
Other proposed cuts include:
- Consolidating Continuum of Care (CoC) and Housing Opportunities for Persons with AIDS (HOPWA) programs into the existing Emergency Solutions Grant (ESG) program. The result of this consolidation would be a reduction in funding for homeless programs of $532 million.
- Closure of the Fair Housing Initiatives Program and the National Fair Housing Training Academy.
- Cutting Rural Development programs by $721 million.
President’s Budget is the Beginning of the Appropriations Process, not the End
The release of the administration’s budget proposal marks the beginning of the FY 26 appropriations process. Both the House and Senate will work to develop their respective funding bills over the summer, and the House has tentatively scheduled mark-ups for its Transportation and HUD (THUD) appropriations bill in early July.
As in past years, PHADA does not expect either the House or Senate’s appropriations bill to closely follow the President’s budget request. While the administration’s FY 26 spending plan is unlikely to advance, the Association will continue to strongly advocate for preserving federal programs that ensure safe and decent housing for low-income households.