NEW ORLEANS -- With federal housing assistance already cut more than any other program during the Reagan years, city and state housing officials said this week they believe that an estimated $2.3 billion in automatic spending cuts mandated by the Gramm-Rudman-Hollings deficit reduction law will cripple the remaining housing and community development programs.
A hold has been placed on spending the money, and the cuts will become permanent Nov. 20, as required by the recently amended Gramm-Rudman law, unless Congress and the president agree on an alternative budget reduction plan before that time.
The prospective cuts are "an immediate and serious threat" to housing assistance for the poor and elderly and to local community development activities, already cut by more than 60 percent from levels of the 1970s, according to Helen Sause, new president of the National Association of Housing and Redevelopment Officials. More than 3,000 members of the group attended the association's annual convention in New Orleans this week.
Congress and the administration have thus far been unable to reach agreement on deficit reductions because President Reagan has said he is opposed to tax increases Congress wants to impose to help meet the Gramm-Rudman targets. However, this week he called for high-level negotiations on ways to reduce the deficit.
A total of 78 percent of the federal budget, including allocations for Social Security and other so-called entitlement programs, is exempt from the mandatory cuts. The remaining 22 percent, from which $23 billion must be cut to meet the Gramm-Rudman requirements, includes all housing and community development spending.
Washington-area housing agencies would be hard hit if the cuts become final, according to several officials attending the conference.
Angus Olson, executive director of the Alexandria public housing authority, said the agency had "our best year out of the last seven" in the fiscal year that ended last month, thanks to a more generous federal operating subsidy than usual. But a "long dry spell" requiring the Alexandria agency to use its estimated $4 million reserve fund for day-to-day operations could exhaust the reserve within a few years, he said.
The D.C. public housing agency has been "very fortunate that the city government has been willing to add money to our budget" to help compensate for federal cuts, said Alphonso Jackson, director of the agency. He said he hopes the city will continue to help "but I'm not sure how long the District can sustain" its contributions. The housing authority has received about $8 million for public housing operating expenses and $135 million for modernization work from the city government, Jackson said. The city operates 12,000 units of public housing.
But many large city housing authorities "will be in serious trouble through no fault of their own" if they do not receive "the kind of subsidies they need to operate efficiently," Jackson said.
Nationwide, the cuts would mean rental assistance payments for 9,000 fewer low-income families and 1,000 fewer elderly poor, according to Senate Budget committee estimates. An estimated $640 million would be cut from the funds for housing assistance. Public housing operating subsidies would be slashed by $129 million, rural housing assistance by $180 million, community development block grants by $300 million and urban development action grants by $20 million. As far as local governments are concerned, the threatened spending reductions are the latest actions in "a decade of neglect," Sause said. "While needs have increased dramatically, federal support has declined dramatically.
"Four out of every five low-income families with children pay excessive amounts for rent, often for substandard housing," Sause said. Despite the mounting housing problems of the poor, she said that fewer than 20 percent of those eligible for federal housing assistance receive government aid. Most local officials said they believe that the days of heavy federal spending on housing -- as exemplified by the fiscal 1980 budget that financed construction and rehabilitation of 130,000 units of low-income housing -- are gone forever. But most believe future budgets will be somewhat more generous.
"When federal government involvement is restored -- and I have every confidence that it will be restored -- we are not likely to see a return to earlier approaches," said Mary Nenno, NAHRO's associate director for policy development.
She predicted "broad-based grants" to local governments, which will make decisions on how to spend the money and whether it should go into construction, rental assistance or both.
Without federal help, "it will be impossible to meet the needs" of the poor, Nenno said, but "there is no question that there will be a major shift in the action to state and local agencies." Because state governments will be increasingly involved, housing groups should begin establishing relationships with state officials, she said.
A top official of the Department of Housing and Urban Development offered no reassurance that the Reagan administration will ease up on cuts in housing assistance for the poor. "HUD has taken its fair share of cuts in the Reagan administration, but there is more to do," Undersecretary Carl E. Covitz said in a speech here. "We have to get more for less."
Covitz said the administration and Congress are still negotiating their differences on the 1987 housing authorization bill, which the White House threatens to veto as too expensive. The two sides "are still far apart" on how much money should be spent on housing, he said. If congressional and administration negotiators can resolve spending differences, most of the bill's program proposals "will come to pass" in legislation the president will sign, Covitz said.
The administration favors housing vouchers over the longer-term Section 8 certificates for helping low-income families pay their rent in the private housing market. Vouchers allow tenants to rent wherever they want and to pay as much as they wish, possibly even receiving some extra cash. The certificates limit tenants to specific buildings and allow them to pay only 30 percent of their income in rent. The administration also favors funds to assist low-income elderly and handicapped Americans, community development block grants and a program for tenant management of public housing. One controversial Republican housing proposal would help public housing residents buy the units they occupy.
New Orleans Mayor Sidney J. Barthelemy told the convention that the Reagan administration's "shift in national priorities as they relate to housing and social services" has been a mistake, and that "we must get the country back on the right track" in order to improve housing for our poor.
In New Orleans, every eighth person lives in public housing, and 85 percent of the families in public housing are headed by single women, according to Jessie Smallwood, executive director of the Housing Authority of New Orleans. "We no longer have the luxury of allowing Congress repeatedly to lower and lower and lower our major subsidies for insurance, management, maintenance, computerization" and other needs, she said.