Budget cuts mandated by the Gramm-Rudman-Hollings deficit reduction law and spending deferrals proposed by the Reagan administration together would kill housing aid for an estimated 64,000 low-income families who were scheduled this year to get help for the first time.
As a result, only about 34,000 households, one-third of the number Congress intended to assist when it passed the 1986 appropriations bill for the Department of Housing and Urban Development, would receive federal housing help this fiscal year, which ends next Sept. 30, according to HUD figures.
The 1986 cuts and deferrals, along with a drastic scaling back of spending the administration is expected to propose for 1987 and additional Gramm-Rudman cuts that will be required next October, could eliminate most housing and community development programs in the next two years, according to housing experts.
HUD has been a major target of administration budget-cutters since 1981, suffering a 60 percent cutback in funds in the last five years. The White House again is training its big guns on the department as part of an effort to make large domestic cuts that will diminish the extent to which defense budget reductions would be required under Gramm-Rudman, administration critics said.
If Congress and the president agree on spending reductions before Gramm-Rudman deadlines, they are not obligated to maintain the legislation's provision for reductions of 4.3 percent in domestic programs and 4.9 percent in defense that would go into effect automatically on March 1.
The next deadline for mandatory spending cuts under the deficit reduction law is October, when fiscal 1987 begins. The amount will be dictated by the size of the deficit, but current estimates are that federal agencies and departments will have to trim a total of $50 billion from their budgets.
Administration efforts to rescind or defer spending appropriated funds have been rejected by Congress for several years, but fighting off these attempts will be much more difficult now because of Gramm-Rudman pressures, according to Paul H. Schieber, executive director of the Public Housing Authorities Directors Association.
Budget recision requests die unless Congress approves them within 45 days after they are submitted. Deferrals can be rejected by a resolution from one house of Congress, although a Supreme Court decision two years ago could be invoked to challenge the constitutionality of this rule.
If the massive recisions and deferrals the administration is expected to seek were proposed last year, "pre-Gramm-Rudman, there's no question that Congress would reject them," said a staff member of the House subcommittee on housing and community development, part of the Banking, Finance and Urban Affairs Committee. "I don't know what Congress will do now . . . that there is a mind set to cut everything."
"Gramm-Rudman is a complete, all-out attack on housing, because of the pressure it creates" to find spending cuts, said Barry Zigas, president of the National Low Income Housing Coalition. Administration actions to meet the deficit legislation's targets "are an excuse for the real Reagan agenda to eliminate housing programs," he said.
HUD Secretary Samuel R. Pierce Jr. argues, however, that the department "is doing more with less" money than previous administrations. Every government agency is expected "to receive serious cuts" as a result of the deficit-reduction requirements, but "we are trying as best we can to protect low-income housing," he said during a press conference at the recent National Association of Home Builders convention. Pierce said the total number of families receiving housing aid since the beginning of the Reagan administration will have increased from 3.2 million to 4.2 million by the end of 1986.
Plans by the Office of Management and Budget to postpone spending a majority of HUD's housing budget, if approved, could scale back the increase in the number of families assisted.
OMB has given HUD only about $3.5 billion of the $10.4 billion appropriated for housing assistance in fiscal 1986 because it wants to defer spending the remaining $6.9 billion, according to Janet Hale, the department's general deputy assistant secretary for housing. The deferral proposal will be part of the president's 1987 budget, she said.
About 60,000 families or individuals could be assisted with the money OMB is holding back. Another 4,000 families would have been aided by the $422 million HUD will slice from its housing assistance budget to meet the Gramm-Rudman targets, according to Hale. The total of 98,000 low-income households provided for in the 1986 appropriation bill passed by Congress would be new families added to the rolls of aid recipients.
The $11.7 billion that must be cut from all federal spending by March 1 requires a 4.3 percent cut from all nondefense spending, and HUD will reduce each of its individual programs by the same percentage, Hale said. Low-income families who will be affected include those eligible for public and Indian housing and for units for the elderly and handicapped, as well as those who qualify for rental assistance payments.
The Federal Housing Administration's mortgage insurance credit limit also will be trimmed from $60 billion to $57.4 billion, a cutback that is not expected to prevent any homebuyer who qualifies for an FHA-insured loan from getting one, Hale said. Because the credit cap applies to insurance commitments the FHA is allowed to make, a figure that is always higher than the amount of insurance that finally is issued, "We believe we'll be okay," she said.
One community development program, Urban Development Action Grants, was shut down this week when HUD ordered its field offices to stop taking applications for the grants, leaving $200 million in appropriated funds unspent. The agency said it will ask to defer spending $500 million in the 1986 appropriations for the Community Development Block Grant program. The two programs, under which more than $40 billion in development grants have been made since 1974, are credited with creating hundreds of thousands of jobs.
HUD's administrative budget, which was nearly $600 million for 1986, will be pared by about $25 million, according to another HUD official, who asked not to be named. To meet the target, the agency ordered a freeze, effective Jan. 16, on hiring and reassigning employes to other areas of the country from where they presently work. A freeze on promotions took effect on Jan. 24 and several hundred of HUD's "600 to 700" temporary employes will be fired by the end of February, the official said.
"We're studying the impact of these personnel actions," said David A. Dalton, president of the National Council of HUD Locals of the American Federation of Government Employes. "Initially, I'm concerned about why there are no announced cuts in contracting" for work to be done in the private sector, he said.
Although Hale would discuss only the $6.9 billion in 1986 housing assistance funds she said HUD wants to postpone spending, other sources said the administration will ask for recision or deferral of a total of $8.3 billion. Cutbacks of this magnitude would wipe out funds for several major housing assistance programs in 1986, sources said.
The 1987 HUD budget request is not expected to revive any of these programs, but instead to limit low-income-housing assistance to 50,000 vouchers, the sources said. Vouchers pay a portion of the rent for poor families living in privately owned housing. Next year's budget proposal also is expected to cut public housing administrative fees in half and provide only enough modernization money for public housing to cover emergencies, according to the sources.