HUD Proposes Modest Cuts in Its Budget for FY12

Washington, D.C.—The U.S. Department of Housing and Urban Development (HUD) has released its proposed budget for the federal government’s fiscal 2012 (beginning Oct. 1, 2011), which it forecasts will be a net of about $43 billion for the year. The agency is asking for a gross appropriation of about $48 billion, which is more than FY2010’s (beginning Oct. 1, 2009) total of $43.5 billion, but which would be offset by projected FHA and Ginnie Mae receipts credited to HUD’s appropriations accounts. The comparison is being made to FY2010 because that was the last time Congress enacted a 12-month spending plan.

Under the proposal, spending on housing programs would be cut by about $1.1 billion, including $300 million from Community Development Block Grants (CDBGs). Other cuts would be made to HOME Investment Partnerships and new construction components of the Supportive Housing Programs for the Elderly (202) and Disabled (811).

HUD also asserts that the rationalization of some programs will squeeze savings out of its budget. Through the Section 8 Voucher Reform Act legislative proposal that’s part of the budget, HUD says that it will simplify the rent-setting provisions of its largest program, yielding over $150 million in savings in the first year and more later.

A handful of programs would actually see a rise in funding under the proposed HUD FY2012 budget, especially those that benefit the homeless. One of the increases would be $577 million more for assistance to the homeless; another would provide $145 million more specifically for new vouchers for homeless veterans.

The FY2012 budget also anticipates that the federal government will continue to play an important role in the nation’s mortgage market. It projects that the FHA will insure $218 billion in mortgage borrowing in 2012. FHA financing, according to the agency, is currently used by 38 percent of all homebuyers.

The spending plan contrasts markedly with the bill passed late last week by the U.S. House. That bill–HR 1–would cut HUD funding by about 20 percent, though it has little chance of being passed as written by the U.S. Senate or signed by President Obama. Funding for CDBGs under the Republican plan would be sliced by about $2.5 billion; moreover, CDBGs could not be used for sustainability grants. HOPE VI funding would also be eliminated.