Proposed Budgets Cut More than Money

by Justin Walker on Jun 21, 2011

There is no getting around it; the federal budget appropriations process is messy. Despite comparisons, our nation’s budget is not analogous to a family budget that you or I would prepare. At billions of dollars in size, hundreds of pages in length, its own office within the White House, and a committee in each chamber of Congress – it stands alone. Not to mention that its lack of passage brought the federal government within hours of shutting down this April. However, given its integral role in the country’s operations the constant attention that it is receiving on Capitol Hill is warranted. Regardless of party affiliation, there is broad agreement that the next budget address the need for deficit reduction and more revenue generation. Elected officials disagree on how to get there, but the end goal is the same: a more financially stable country.

Efforts to do so have seen proposals where “everything is on the table” and demands for deep cuts across the board have been made; this includes the operating budget for the U.S. Department for Housing and Urban Development (HUD). HUD submits its own budget proposal, the President does the same, and finally Congress determines the final allocations. For comparison’s sake, the enacted budget for HUD in FY10 was $43.5 billion (National Low-Income Housing Coalition, 2011) and the agency has requested $47.9 billion (HUD, 2011) for FY12; FY11 was omitted due to the lack of a budget through Congress. Though these appear to be large figures, when looked at in the context of the entire budget, perception shrinks them considerably. President Obama’s proposed budget includes a request for $41.7 billion for all housing assistance programs, which works out to 1.59% of the nation’s total budget for FY12 (Office of Management and Budget, 2011).

The pie chart for how HUD allocates their funds is refreshingly simple. Though there are only three slices nearly three-quarters (72%) of their budget goes toward rental assistance, and of those HUD-assisted households, 72 percent of them are classified as “extremely low-income” meaning that they fall below 30% of area median income (HUD, 2011).

In the current economic climate there is a significant need for affordable housing. The recession left millions of Americans without incomes or homes. In addition to the displaced Americans due to foreclosure, mortgages are now more unattainable for many and for 23% of all mortgage holders, their homes are a lingering liability due to negative equity (CoreLogic, 2011). Apartment living offers an elegant solution to these problems. At its best, rental housing is inherently flexible, readily available, and most importantly affordable.

Rainbow Housing Assistance Corporation’s (Rainbow’s) mission is to preserve quality affordable housing for families and individuals of diverse ethnic, social, and economic backgrounds, while supporting their well-being through the delivery of onsite social service programs. These services come in a variety of ways including job placement, financial literacy training, sourcing rental assistance, and continuing education. We provide access and opportunity to individuals to collectively build strong, stable communities all the while stabilizing the financial aspects of the multi-family property. In one case, a Rainbow Resident Services Coordinator was able to transition an individual from homelessness to self-employed entrepreneur, the definition of a win-win. Rainbow can be that bridge for individuals and communities alike. Understanding that rental housing is a necessity for millions of low-income families, we are also witness to the harm that can come from massive, sweeping budget cuts for HUD funding. A reduction in HUD’s operating budget also directly translates into a decreased ability for subsidized property owners to partner with organizations such as Rainbow resulting in resident turn over, increased bad debt, higher unemployment, and rising crime rates.

A recent Joint Center for Housing Studies of Harvard University report notes that “1.7 percentage-point drop in vacancy rates and a 2.3 percentage point annualized increase in rents as of the fourth quarter of 2010” putting added pressure on the availability of affordable housing options for low-income Americans (America’s Rental Housing, p. 3). Reduced affordable housing options, increased rent, and diminished access to social services providers mean that proposed bills in Congress could cut a lot more than just dollars. It is a reality with which we are already faced given the House’s passage of H.R. 2112 last week, which cuts funding to three housing assistance programs. We must all be diligent working through this process to ensure that budget cuts are not allowed to cut access and opportunities for low-income individuals.

About the author: Justin Walker is the Director for Business Development and Media at Rainbow Housing Assistance Corporation (on the web at rainbowhousing.org and on Twitter @rainbowhousing).

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