New Developments: Trump budget neglects the neediest
By Thom Amdur
3 min read
Affordable housing developers take on many risks during their day-to-day business. There is construction risk, interest rate risk, headline risk and, as we are experiencing more and more, political risk.
Since the election last November, NH&RA and our members have redoubled our advocacy efforts to confront the biggest existential political risk we have faced in 30 years – the potential for comprehensive tax reform. While the actual prospects of tax reform succeeding in this Congress are uncertain at best, the “hidden hand” of tax credit equity market has priced-in the potential for lower corporate tax rates into investor-yield models. This “correction” has caused so much consternation in our industry that it has sucked up much of the air in affordable housing policy circles and dominated the discussion at conferences. As disruptive as this has been, tax reform is not the only political risk facing our industry.
On March 16, President Trump released his 62-page FY-2018 “America First Budget” proposal and we got our taste of the potential scale of the appropriations risk our industry may face in the coming year. The “skinny”1 budget would cut HUD funding from $46.9 billion in Fiscal Year 2017 to $40.7 billion – a 13.2 percent reduction. The budget blueprint “insists on $54 billion in reductions to non-Defense programs. We are going to do more with less, and make the Government lean and accountable to the people.” The document acknowledges that “it makes hard choices” but justifies such cuts by arguing, “State and local governments are better positioned to serve their communities based on local needs and priorities.”
The budget blueprint is light on specifics – the HUD portion is just over one page long – so we will have to use our powers of deduction to make some conclusions until a full budget is released later this spring. The blueprint proposes to eliminate funding for the Community Development Block Grant (CDBG) noting that the program has “not demonstrated results” and also eliminates funding for “lower priority” or “duplicative” programs including HOME Investment Partnership Program, Choice Neighborhoods Initiative, Section 4 Community Development and Affordable Housing and the Self-help Homeownership Opportunity Program. Combined, these programs account for approximately $4.135 billion in FY 2017 budget authority. At press time, it is still unclear where the remaining $2 billion in proposed cuts will be incurred.
If enacted, these cuts would cause substantial harm to our industry. Many affordable housing transactions, particularly those serving the elderly, disabled and/or lowest income individuals, depend directly or indirectly on HUD grants and rental assistance programs.
There is much we do not yet know about the program specifics, as well as “to be announced” policy changes to make HUD programs more efficient. Still, it is hard to reconcile how a budget that proposes such deep cuts to programs serving the most vulnerable members of our society puts “America First.”
Now more than ever, we must educate the Administration and members of the House and Senate about the vital role HUD and its programs play in serving working class Americans, the elderly, the disabled, returning veterans and how these investments create jobs, revitalize communities and break the cycle of poverty. As you engage with your elected officials this spring, don’t forget to share with them the vital role HUD plays in your communities.
