The Housing and Urban Development Department is considering a shift in the 1984 budget that could cut federal operating funds for 200 of the nation's largest public housing authorities by 10 percent or more a year.
Assistant HUD Secretary Philip Abrams said yesterday that the still-tentative proposal could come in the form of modified block grants to states or cities, instead of having HUD provide operating money directly to the local housing authorities as it does now.
Abrams said the proposal would combine public housing operating subsidies, which now total more than $1.2 billion a year, with funds to modernize older public housing projects, currently dispensed separately. He said the contemplated system would save the government money in the long run.
"About 200 housing authorities would have to cut down on operating expenses," Abrams said. He said these agencies are plagued by soaring heating bills for aging high-rise projects, and that HUD would provide them with a one-time grant to lower costs by insulating the buildings.
Abrams said HUD's operating subsidies now "reward inefficiency and vacancies" by making up the gap between tenants' rents and the cost of running the housing projects. The new formula, he said, would be based on "fair market rents," or what HUD thinks it should cost a private landlord to maintain the apartments.
HUD officials have floated the idea over the past week in meetings with a number of mayors and state and local officials. Reaction ranged from cautious to negative, with several mayors saying they don't want state officials to dole out the housing subsidies.
Gordon Kavanagh, an official with the Council of Large Public Housing Authorities, said the HUD plan "appears to shortchange the needs of public housing. This would penalize those in major cities with the oldest projects and the highest cost. Even HUD would tell you that they're making this proposal to find a cheaper way to finance public housing."
Abrams said a block grant approach would give mayors more flexibility and greater control over public housing, in part because they could spend the federal repair money however they wanted, including for operating expenses. HUD now finances about $900 million a year in housing repairs through a separate program.
The plan got a chilly initial reception in Congress, which would have to approve the changes. "This is just another one of the Reagan administration's block grant fantasies," said a Democratic staff member on the House Banking Committee. "Even in this Congress, I don't think there would be six votes for it on the committee."
Other local officials said they needed more details on the sketchy plan. One official said there would be a great temptation for mayors to defer improvements by dipping into their federal repair money to pay day-to-day expenses.
Abrams said the changes would not raise the rents of the nation's 3 million public housing tenants; their rents were already raised in earlier housing budget cuts.
The HUD proposal is one of several possible budget-cutting measures that have surfaced in recent weeks. Others have included a reduction in food stamp benefits to persons aged 60 to 64 and an income eligibility test for Medicare recipients.
The Office of Management and Budget is now at work on the fiscal 1984 budget which President Reagan will send to Congress early next year. It is known to be searching hard for additional cuts in domestic spending programs. But it is also reportedly seeking to minimize political repercussions by keeping the process quiet until the Nov. 2 election.