9/20/2012

On September 14, the Office of Management and Budget (OMB) submitted a report to Congress on the projected impact of sequestration on federal programs, including housing programs.  The Administration was required to submit the report as part of the Sequestration Transparency Act of 2012.  View the HUD portion of the report.

The report uses an 8.2 percent reduction under the assumptions required by the Sequestration Transparency Act for non-exempt nondefense discretionary funding.  (Percent reductions from other organizations and federal agencies have ranged anywhere between 7 and 11 percent.)  The report estimates the amount of sequestrable budgetary resources using FY12 funding levels and the estimated reduction in sequestrable budgetary resources for FY13.  The sequester amounts estimated for several HUD programs listed in the report are as follows:

• Public Housing Operating Fund: $325 million
• Public Housing Capital Fund: $154 million
• Tenant Based Rental Assistance: $1.530 billion
• Choice Neighborhoods: $10 million

CLPHA has published a document detailing the effects sequestration would have on major HUD program accounts, including an estimate for HCV Administrative fees, using a percent reduction range of 7.8 to 9 percent (we’ve also included the 8.2 percent OMB estimate for illustrative purposes).  CLPHA estimates that the sequestrable amount for HCV Administrative fees at the OMB estimated reduction of 8.2% would be approximately $111 million.

HUD Secretary Shaun Donovan has stated publicly, on more than one occasion in recent weeks, that more than 250,000 families (nearly one million individuals) would lose their Housing Choice Vouchers (HCV) under sequestration.  Sec. Donovan also asserted that 100,000 families (1,500 of whom are veterans) would lose Homeless Assistance Grants, 80,000 homeowners would lose housing counseling assistance, and 53,000 jobs would be lost.

If Congress does not come up with and pass an alternative plan to sequestration between now and the end of the 112^th Congress, sequestration will begin January 1, 2013.  These automatic, across-the-board spending cuts would be apportioned in equal dollar amounts through 2021 totaling roughly $1.2 trillion (in addition to the already imposed budget caps). Alternative plans have been introduced in the House in recent weeks, though none feasible enough to pass the Senate. 

The report makes clear that “[t]he Administration strongly believes that sequestration is bad policy, and that Congress can and should take action to avoid it by passing a comprehensive and balanced deficit reduction package.”  The report advocates for a deficit reduction package comprised of both spending cuts and revenue increases.

Questions about this report or sequestration in general can be directed to CLPHA Legislative Director Gerard Holder.