President Trump's budget proposal, announced Tuesday, calls for the most dramatic cuts to the Department of Housing and Urban Development since President Ronald Reagan slashed the agency’s funding in the early 1980s and leaves a wide opening for introducing work requirements for people who receive federal housing subsidies.
In gutting federal funding for affordable housing and neighborhood improvements, the budget essentially kicks responsibility for addressing community revitalization and economic development to state and local governments, as well as charities and the private sector.
“We will work very closely with Congress to support the critical work of our agency as we vigorously pursue new approaches to help work-eligible households achieve self-sufficiency,” Housing Secretary Ben Carson said in a statement Tuesday.
The largest of Trump’s $6.2 billion in proposed cuts to HUD is the elimination of the four-decade-old Community Development Block Grant program, which provides cities with money for affordable housing and other community needs, such as fighting blight, improving infrastructure and delivering food to homebound seniors. The $3 billion in block grants, which benefit 1,250 state and local recipients, make up half of the cuts to HUD.
The Trump administration, in making its case to terminate the block grant program, argues that it “has not demonstrated results.” Its purpose is so broad, its nature so flexible, that it has become too challenging to measure the program’s impact in terms of improving communities, the administration says.
“While the scale of this reduction is significant, we are prepared to meet its challenges,” Carson said in a separate statement to his department. “The proposed reductions are primarily from rental assistance reform and eliminating funding for programs that haven’t consistently been targeted to address need.”
Linda Thompson, director of advocacy and federal programs at the Council of State Community Development Agencies, said eliminating the grants would devastate low-income communities that rely on the money to build roads and bridges, lay water and sewer lines, and refurbish housing. A third of the money goes directly to states to decide how it should be spent.
"HUD has all the numbers of people who are helped by these programs," Thompson said. "I don't understand the rationale behind the program's effectiveness not being able to be measured. It really just doesn't make any sense to me."
Also slated for the cutting board: other grant programs worth more than $1 billion meant to help hundreds of communities improve neighborhoods with distressed public housing, expand the supply of affordable housing, and assist low-income home buyers willing to help build their own houses.
In addition to shuttering the grant programs, the budget proposes cutting the $37 billion rental assistance program by $2 billion through “policies that encourage work and self-sufficiency, including increases to tenant rent contributions,” the document said.
Rental reforms for 2018 would include raising tenant rent contribution from 30 percent of adjusted income to 35 percent of gross income, establishing a minimum rental payment of $50 a month and eliminating utility reimbursements. Exemptions would be made for hardships.
By 2019, the agency plans to present more comprehensive changes that include a “a path for work-able families to move toward self-sufficiency,” according to the proposal.
The budget does not offer further details about how work requirements, which would require statutory change, would be introduced. Elsewhere in the budget, the administration requests that Congress grant it blanket authority to change statutory or regulatory requirements for HUD programs.
Diane Yentel, president of the National Low Income Housing Coalition, said only 6 percent of households receiving federal subsidies include able-bodied adults who don’t already work and who are not caring for young children or dependents with disabilities. Establishing work requirements for this small population would require already underfunded state and local housing agencies to institute cumbersome monitoring and enforcement systems, she said.
A handful of communities have experimented with work requirements, and the 2016 budget appropriations bill gradually expands the number of public housing agencies allowed to do so from 39 to more than 100 over a period of seven years. HUD is using the programs to study the impact of various rent reforms. So far, there is no clear evidence showing that requiring people to work would boost employment levels.
“If there are ways that we can constructively help people increase their earnings, we should certainly do so," Yentel said. "Focusing on work requirements in a punitive manner is not helpful and doesn't get at the crux of the problem, which is that people don't earn enough to afford housing costs throughout the country.”
She said no U.S. community exists where someone earning minimum wage could afford to rent a two-bedroom apartment. "So framing this in a way where people just aren't working hard enough and that’s why they’re poor is unfair, unhelpful, and inaccurate."
HUD’s rental assistance programs provide housing subsidies for 4.5 million low-income households through vouchers, public housing or rental assistance for specific housing developments. The rental programs make up 85 percent of the agency’s $41 billion budget request.
More than 250,000 households are at risk of losing their vouchers, she said, increasing their exposure to evictions and homelessness.
The Trump administration said the budget serves as a starting point for a more comprehensive set of rental assistance reforms. It would also reduce HUD funding to Native American tribes by $100 million, in part by eliminating the Indian Community Development Block Grant, which the administration called "duplicative." The money would be re-directed to what the administration deemed "higher priority areas" such as national security and public safety.