The Department of Housing and Urban Development (HUD): FY2005 Budget

Publication Date: December 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Social conditions

Type:

Abstract:

The Administration presented its proposed budget for FY2005 to Congress on February 2, 2004, requesting $31.5 billion for the Department of Housing and Urban Development (HUD), an increase of about 1% above the $31.2 billion enacted for FY2004. On November 20, 2004, the House and Senate passed the Consolidated Appropriations Act, 2005 (H.Rept. 108-792, H.R. 4818) that provided HUD with $32.0 billion, $838 million or 2.7% above the FY2004 enacted level. The President signed the omnibus bill on December 8, 2004, as P.L.108-447. (Figures in this report do not include an across-the-board cut of 0.80% that will reduce HUD appropriations by approximately $256 million. With this reduction, the increase from FY2004 to FY2005 would be about $582 million, or 1.9%.)

HUD's largest program, the Housing Certificate Fund, contains the Section 8 rental voucher program. Central to the Administration's proposed FY2005 budget was a controversial initiative, the Flexible Voucher Program (FVP), that would have significantly revised the Section 8 voucher program. Public Housing Authorities (PHAs) would no longer be reimbursed based on their number and cost of in-use vouchers, but would be given a lump sum of money (a "block grant") to assist any households with incomes up to 80% of the local area median. Low-income housing advocates contended that this change and the level of proposed funding could require PHAs either to reduce the number of families assisted, increase the average rent that voucher holders pay, or shift assistance away from the poorest of the poor. HUD countered that the FVP proposal would provide an incentive for PHAs to control the rapidly rising costs of housing vouchers and PHAs that are good managers would be rewarded with performance-based incentives. The Administration requested almost $1 billion less for the FVP than provided in the previous year for vouchers.

Congress did not adopt the FVP but continued with dollar-based funding, a practice first adopted in FY2004 that provides some constraint on spending. However, the final funding law provided $1.6 billion more for Section 8 than the requested level. To pay for this significant increase, all other HUD programs were reduced below their FY2004 appropriation levels: for example, Community Development Block Grants, down $225 million; HOME, down $91 million; housing for the elderly, down $27 million; homeless assistance grants, down $9 million; and housing opportunities for persons with AIDS, down $11 million. While the Administration proposed no funding for the HOPE VI public housing rehabilitation program, P.L. 108-447 appropriated $144 million, $5 million less than for FY2004.

The conferees provided $50 million for the Administration's Downpayment Assistance Initiative, a set-aside within the HOME program, which helps lowerincome families buy a first home, considerably less than the $200 million request. Congress did not provide funding for the Administration's Zero Downpayment Homeownership Initiative (H.R. 3755).

This report will not be further updated.