On March 20 and March 22, U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson testified before the U.S. House Transportation, Housing and Urban Development Appropriations Subcommittee and the U.S. Senate Committee on Banking, Housing and Urban Affairs, respectively, regarding the administration’s FY 2019 budget request and oversight of HUD.
The administration’s budget proposes a $41.24 billion spending plan for HUD – a $1.46 billion reduction to HUD’s budget relative to FY 2018 enacted levels. The proposed budget would eliminate the Community Development Block Grant (CDBG) program, currently funded at $3.3 billion, and the HOME Investment Partnerships (HOME) program, currently funded at $1.36 billion. Other programs slated for elimination include the Self-Help Homeownership Opportunity Program (SHOP), the Choice Neighborhoods program, the Public Housing Capital Fund Program and the Housing Trust Fund (HTF).
The CDBG program provides annual grants on a formula basis to nearly 1,200 metropolitan city and county governments, as well as to state governments. Nearly 200 counties are “entitlement counties” – those counties with populations exceeding 200,000, not including metropolitan areas – which receive CDBG grants directly. Local entitlement cities and counties receive 70 percent of all CDBG funds, while states receive the remaining 30 percent. Non-entitlement communities must compete for funding through the state formula allocation. Counties utilize the flexibility of CDBG funds to support projects addressing community and economic development priorities, including housing, water, infrastructure and human services.
The HOME program assists state and local governments in providing affordable housing for low-income families, with 60 percent of HOME funds being allotted to the 650 participating jurisdictions in counties and cities. HOME funds can be used towards the acquisition and rehabilitation of housing, or towards tenant-based rental assistance, depending on a county’s housing needs.
Subcommittee members from both parties expressed concerns about the changes proposed in the administration’s budget, especially to CDBG and HOME, which historically enjoy bipartisan support. Secretary Carson agreed the CDBG program “has had a very positive impact in many areas of the country,” and he told lawmakers the cuts to CDBG were implemented to reduce federal deficit spending. He also suggested the new Opportunity Zone program could act as a “substitute” for CDBG for communities in the future. Established in the Tax Cut and Jobs Act of 2017, the Opportunity Zones program is a tax incentive to encourage investment of capital gains in low-income communities in exchange for preferential tax treatment of those gains. To watch Senators Tim Scott (R-S.C.) and Cory Booker (D-N.J.) discuss opportunity zones at NACo’s Legislative Conference, please click here.
Both CDBG and HOME were fully funded in the recently-passed FY 2018 appropriations package. NACo will continue working with the House and Senate as they move forward with the FY 2019 appropriations process to ensure county priorities, including CDBG and HOME, are supported.