HUD Releases 2015 Budget Request

By Affordable Housing Finance Staff

Cuts to the HOME program and Community Development Block Grants are among the tough choices made in the fiscal 2015 budget request released by the Obama administration.

At the same time, several other housing programs, including tenant-based rental assistance and Choice Neighborhoods, would receive a funding increase.

“The good news is that between 2014 and 2015 HUD will be able to reverse most of the harmful sequestration cuts and thereby stabilize our programs and in key areas begin to grow our investments again,” said Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD).

The bad news is that the agency continues to operate within an overall tough budget environment, he said.

Overall, the plan increases HUD’s gross budget authority by 2.6 percent over fiscal 2014 levels and 10.1 percent over the sequestration levels in 2013. The total HUD budget proposal is for $46.7 billion.

Shift in PBRA cycles proposed

The project-based rental assistance program would receive $9.75 billion next year under President Obama's spending plan, a drop from $9.92 billion in 2014.

In addition, the administration proposes changing the program’s funding cycle from a fiscal year to a calendar year, a move that will introduce more stability to the program, according to Donovan.

This is a shift from the existing system of funding contracts at different points throughout the year, which has led to uncertainty about the amount of money needed to fully fund these contracts.

A calendar-year cycle is expected to minimize end-of-year-budget disruptions and result in more predictable funding. “It will make crystal clear to Congress each year exactly what we need to fully fund this program,” Donovan said in a call with reporters.

On the other hand, the tenant-based rental assistance program would be funded at slightly more than $20 billion for the first time, up from $19.2 billion in fiscal 2014. This would allow HUD to served 2.2 million low-income families and reverse the impacts of sequestration.

Helping vulnerable families in need of rental assistance was one of the principles guiding the spending request, said Donovan. This includes restoring and increasing assistance to key rental programs.

“Eighty-four percent of all of HUD’s proposed investment for 2015 would go into protecting existing families in our rental assistance programs,” Donovan said. This includes funding accrued capital needs of public housing and renewing existing homeless assistance grants.

Homeless assistance grants would receive $2.4 billion under the plan, an increase of $301 million above the fiscal 2014 level. “This significant increase is absolutely critical to allow us to get back on track with Opening Doors, which is the country’s first federal strategic plan to prevent and end homelessness,” Donovan said.

The Veterans Affairs Supportive Housing (VASH) program would receive $75 million to support 10,000 new VASH vouchers for homeless vets.

The administration also proposes $1 billion in funding to jump-start the National Housing Trust Fund.

The 2015 budget also estimates that the Federal Housing Administration’s Mutual Mortgage Insurance Fund will have a positive end-of-year capital reserve balance of $7.8 billion and will not require a mandatory appropriation from the U.S. Treasury, said Carol Galante, FHA commissioner.

“The improved strength of the fund allows FHA to sharpen its focus on placing homeownership within the reach of credit-worthy Americans,” Galante told reporters. “We know we still have more work to do on sustaining the FHA fund, and we will continue to do that.”

Budget highlights

The HUD programs that would receive a funding increase under the Obama administration’s plan include:

Tenant-based rental assistance: $20 billion, up from $19.2 billion in fiscal 2014;
Public housing operating fund: $4.6 billion, up from $4.4 billion;
Public housing capital fund: $1.93 billion, up from $1.88 billion;
Sec. 202: $440 million, up from $384 million;
Sec. 811: $160 million, up from $126 million;
Housing Opportunities for Persons with AIDS: $332 million, up from $330 million;
Homeless assistance grants: $2.4 billion, up from $2.1 billion; and
Choice Neighborhoods: $120 million, up from $90 million. The program would also receive another $280 million under a separate Opportunity, Growth, and Security Initiative.

The HUD programs that would receive a funding cut under the Obama administration’s plan include: