The Senate housing subcommittee will have about $675 million less than it expected to allocate on housing, community development and the activities of 18 other agencies in fiscal 1988, which begins Oct. 1.
The Senate appropriations committee made the unexpected cut in the subcommittee's budget allocation just before Congress left town last week for the August recess.
Public housing may take the biggest hit because of its huge cash outlays, although the National Aeronautics and Space Administration is also "vulnerable," subcommittee staff aide Thomas L. Van Der Voort said.
Congress lumps the Department of Housing and Urban Development and the independent agencies together in one budget. The cuts can be spread among them, although some programs are more politically sensitive than others.
The overall $1 trillion budget Congress passed in late June calls for spending on HUD programs at about the same level as the current fiscal year, a total of about $13 billion. The House appropriations committee approved its fiscal 1988 bill in June, giving HUD the amount the budget authorized plus $150 million to pay for homeless aid during the fiscal year.
The Senate appropriations committee, however, cut its housing subcommittee's allocation by about $675 million. The Senate's HUD and independent agency $59.6 billion spending package contains about $20 billion in "discretionary outlays," or funding not specifically required by law, said Van Der Voort.
Between $8 billion and $9 billion of this discretionary amount is earmarked for military veterans' programs, "which are difficult to cut," he said. If the Community Development Action Grants get the $3 billion they were allotted last year, the grants would be made during fiscal 1988 but only about $60 million actually would be spent during that year, with other outlays coming as projects got under way in subsequent years. The expected Urban Development Action Grants authorization of $225 million would require only about $11 million in spending during the first year.
However, about 55 percent of the $1.46 billion for public housing operating subsidies would be paid out during fiscal 1988, making it a tempting target. But Van Der Voort said, "It is an important program and something we hope we can avoid cutting."
Gordon Cavanaugh, an attorney who represents the Council of Large Public Housing Authorities, said reductions in public housing allocations "would be devastating," particularly because of increasing operating expenses and sharp rises in insurance premiums.
Rents paid by public housing tenants cover just over half the operating costs, making the authorities heavily dependent on federal subsidies. Utilities make up about 45 percent of total operating costs, Cavanaugh said. By "most estimates," the income from tenant rents and federal subsidies already is "from 7 percent to 10 percent below what the costs are of efficient operation of large housing authorities in older cities," he said.
The Senate committee cuts in allocations hit HUD harder than most other federal departments and agencies because "to some extent it was a case of the squeaky wheel getting the grease," Van Der Voort said. When the committee said it wanted to cut all the subcommittees' allocations by about 1.2 percent, many subcommittees then asked for more funds than the budget authorized. The HUD subcommittee, however, did not inflate its request, he said.
Sen. Jake Garn (R-Utah) complained that "the bulk of the committee's consideration was consumed in rhetorical flourishes about members' requests and special interest needs." The allocations are "entirely inconsistent with the general consensus that housing and urban development programs, environmental protections and programs serving our nation's veterans should be maintained."
Full congressional action on the appropriations bills probably will not be completed before the end of the fiscal year Sept. 30, forcing Congress to pass a 30-day continuing resolution to keep funds flowing to federal programs in the new fiscal year, one congressional aide said.