SEATTLE—April 12, 2004—Once President Bush announced his administration's plans for the 2005 Federal Budget, housing authorities across the country began to calculate the potential cuts to housing programs across the board.
The proposed budget makes cuts in virtually every low-income housing program, including $1 billion in cuts to the Housing Choice Voucher Program. These cuts would rise to more than $4 billion by 2009, which represents a 30 percent cut in the program. The proposed budget also continues the trend of under-funding both the public housing operating and capital fund.
The administration proposes sweeping changes to the current voucher program, replacing it with a new "Flexible Voucher Program." Under the new program, the federal government would block grant subsidy to local housing authorities and would reduce some of the regulatory demands of the program.
Officials with the U.S. Department of Housing and Urban Development have suggested that with less regulation, housing authorities should be able to provide more subsidy to renters even though the funding from HUD is reduced. Housing authority leaders, on the other hand, have criticized the proposal as "a budget cut in search of a policy," noting that such a severe reduction would put many low-income families at risk of losing their housing.
The proposed program would provide funding as a block grant to housing authorities, rather than providing funding for a specific number of housing units. Housing authorities would then have to chose between reducing the amount of subsidy to low-income households, serving fewer households overall, or serving higher income households.
Nationwide, the Section 8 program provides $14.949 billion in housing subsidies to 2 million households, 40 percent of which are made up of the elderly and people with disabilities. In the President's budget request, that subsidy is cut to $13.176 billion.
Other changes include the elimination of the HOPE VI program, which would mean that no new HOPE VI grants would be awarded. Seattle's HOPE VI projects would not be affected.
Cuts of $6 million from public housing operating subsidy and $22 million from the capital fund are also proposed.
In Seattle, the housing authority would feel the effects of these cuts beginning in October of 2005. SHA's financial analysts project an 8 percent decrease in Section 8 funds (from $61.7 million to $56.8 million).
Another potential impact to SHA's budget is the likely adoption of new regulations that control how much public housing subsidy each housing authority is entitled to. It is still unclear whether SHA would gain slightly under new rules, or lose up to 5 percent.