President Trump’s proposed full budget request for fiscal year (FY) 2018 is in. As previously reported and finally confirmed, several housing and rental programs maintained by the Housing and Urban Development will lose billions in funding. The U.S. Department of Agriculture also stands to lose funds for its rural direct home loans program.
HUD Housing Programs
The current administration will allot $40.7 billion for HUD’s housing spending for 2018, a decrease of 13.2% from the previous year’s $46.9 billion.
For 2018, the President seeks to spend $20.5 billion for HUD’s housing programs, or $6.8 billion less from FY 2017 per calculations by rental housing data provider, Affordable Housing Online. This represents a 34.56-percent decrease from 2017’s budget of $31.3 billion.
President Trump will discontinue or reduce the funding for the following housing programs with his corresponding justification:
- Choice Neighborhoods. The budget for this program that aims to revitalize struggling neighborhoods is slashed from $125 million in 2017 to $0 in 2018. In eliminating the program, the current admin recognizes “a greater role for State and local governments and the private sector to address community revitalization needs.”
- Community Development Block Grant. The CDBG — which provides decent, affordable housing to communities through annual grants, on a formula basis, to 1,209 local and state government units — will receive $0 funding in 2018 compared to $2.9 billion in 2017. The Trump administration reasoned, “Studies have shown that the allocation formula poorly targets funds to the areas of greatest need, and many aspects of the program have become outdated.”
- Grants to Native American Tribes and Alaska Native Villages. First off, the President wishes to reduce the funding for Native American Housing Block Grant to $600 million from $648 million, with savings to be redirected to other higher priority areas. The President also proposes to allot $0 funding (from 2017’s $60 million) for Indian Community Development Block Grant, saying it is duplicative of other government programs.
- HOME Investment Partnership Program. With a budget of $0 for 2018 compared to $948 million in 2017, the Trump administration again defers to state and local governments and even the private sector to address the need to provide affordable housing to low-income families.
- Rental Assistance Programs. To fund the HUD’s rental assistance programs for very- low-income families, the elderly and persons with disabilities, the Federal Government proposes a funding of $35.2 billion in 2018, from $37.2 billion in 2017. “Due to rent and utility inflation, program costs increase every year just to assist roughly the same number of households,” per the current administration.
- Self-Help and Assisted Homeownership Opportunity Program Account. The Federal Government will not fund this program in 2018, a change of ($56) million in 2017. It reasoned that these small grant programs duplicate other local, state and federal programs, emphasizing the greater role of the private sector and governments at the local and state level in providing affordable housing.
USDA Direct Loans
The President seeks to provide $18 billion in funding to the USDA for FY 2018, a 1.6% decrease from the prior year’s $22.7 billion.
Among the programs that will take a hit is the Single-Family Housing Direct Loans provided by the USDA’s Rural Development agency. The current administration will not fund the direct loans program in 2018; the program has a budget of $61 million in 2017.
The current administration has this to say about the $0 funding for USDA’s direct loans:
“Beginning in 2018, USDA will offer home ownership assistance only through its single family housing guaranteed loans. Financial markets have become more efficient, and increased the reach of mortgage credit to lower credit qualities and incomes. Therefore, utilizing the private banking industry to provide this service, with a guarantee from the Federal Government, is a more efficient way to deliver this assistance.”
With no/reduced funding for direct loans and other applicable USDA Rural Development programs, the President expects to spend less for salaries and expenses in the said agency to $624 million from $677 million.
The National Low Income Housing Coalition prepared a summary of select HUD and USDA programs subject to the FY18 budget.
Last May 24 and 25 respectively, the House and Senate Budget Committees conducted hearings on the federal budget proposal.