Proposed Cuts to Section 8 Restored, Most Other HUD Programs Cut

On December 8, 2004, the President signed the 2005 Consolidated Appropriations Bill into law.  This appropriations bill contains budget authorization for several different spending measures - including the VA-HUD appropriations - for the fiscal year 2005 that began on October 1, 2004.  Typically, the VA-HUD appropriations bill is passed separately as one of 13 appropriations bills. This year, however, Congress consolidated the majority of the appropriations bills into one “omnibus” appropriations bill. 

The FY 2005 omnibus spending bill contains funding for several important housing programs within the U.S. Department of Housing and Urban Development (HUD), including the Section 8 Housing Choice Voucher program (Section 8 HCVP), the McKinney/Vento Homeless Assistance Act, and the Section 811 Supportive Housing for Persons with Disabilities Program (Section 811).

Overall, the HUD budget for FY 2005 is $37.3 billion, or $521 million above the President's request, which is actually $618 million below the level Congress allocated last year. Most importantly, the omnibus bill rejects the Bush Administration's effort to under fund the Section 8 program by nearly $1.6 billion and enact the “Flexible Voucher” block grant proposal.  Specifically, the omnibus bill allocates $14.9 billion to renew all current tenant-based Section 8 vouchers under lease ($13.36 billion will be available once the .8% reduction is taken into account).  This is $697 million more than last year, and $1.77 billion above the President's request. Current estimates project that this is sufficient funding to ensure that all current Section 8 vouchers are renewed consistent with most existing rules. More importantly, the omnibus bill specifically rejects key provisions in the Administration's “Flexible Voucher” proposal, including efforts to repeal requirements for targeting of vouchers to extremely low-income households and allow housing agencies to increase tenant rents and time limit assistance.

At the same time, the omnibus bill does include language shifting Section 8 to a “budget-based” (or “dollar-based”) program. It is unclear at this point what the impact of this shift will be for the remainder of FY 2005. HUD will now be responsible for notifying each housing agency of its budget within 45 days. The amount of renewal funding each agency  gets will be determined by multiplying the average number of vouchers in  use in May-July 2004 by the average cost of vouchers in the same period  (with a small regional adjustment factor).

Section 811 and McKinney/Vento Homeless Assistance

Beyond Section 8, most other HUD programs were cut by an average of 4%.  These reductions were driven in large part by the need to accommodate  additional funding for the Section 8 program. Included in these cuts is  a $9 million reduction for the Section 811 – dropping funding for FY  2005 down to $240 million. The bill allocates as much as $50 million for  Section 811 tenant-based voucher renewals, i.e. renewal funding for 811  vouchers funded in previous years. Programs under the McKinney/Vento Homeless Assistance Act are funded at $1.3 billion in the omnibus  spending bill, including $186 million for renewal of expiring housing  subsidies under the Shelter Plus Care program. While this is $40.5 million above FY 2004 levels, all of this increase is directed to the  growing cost of renewing Shelter Plus Care rent subsidies. 

TAC will be carefully  monitoring further developments in the Section 8 Program for 2005 as they occur. 

Bush Administration's FY 2005 Budget Proposal
The Bush Administration's FY 2005 Budget proposal called for deep cuts in the Section 8 Housing Choice Voucher Program (HCVP). The budget would have radically altered the fundamental design of the program by converting it to a block grant administered by Public Housing Agencies (PHAs) for the benefit of higher income households. 

• Listen to National Public Radio (NPR) feature on the Section 8 proposal (aired 7/9/04).
• Read the testimony regarding FY 2005 Appropriations submitted by the CCD Housing Task Force.
• Read the position paper from TAC and the CCD Housing Task Force in HTML or PDF.