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Sequestration Cuts Devastate Low-Income Housing Programs

Chart of unmet need for rental assistance
*HUD defines households with “worst-case housing needs” as renters who have incomes below half of the local median, receive no housing assistance, and pay more than half of their income for rent and utilities or live in severely substandard housing. Source: Worst Case Needs 2011: Report to Congress, Summary, HUD, February 2013 © Center on Budget and Policy Priorities

Last Friday, the White House Office of Management and Budget released details of the across-the-board budget cuts known as sequestration, including the fact that funding for the Housing Choice Voucher (HCV) program will be cut by $938 million this year. We estimate that this cut will cause more than 100,000 low-income families to lose rental assistance over the next 12 months—and that the figure could be as high as 140,000.

These cuts will fall on highly vulnerable families. Half of the 2.1 million households that the HCV program serves are seniors or people with disabilities; most of the rest are families with children. On average, these households have incomes of about $12,500 per year, well below the poverty line. Without rental assistance, housing would be unaffordable for these families, placing them at heightened risk of becoming homeless and sharply reducing the resources they can use to buy food, medicine, and other essentials.

Meanwhile, housing hardships among low-income renters are rising sharply. Since 2007, the number of renters with what the Department of Housing and Urban Development (HUD) terms “worst-case housing needs,” has risen by 43 percent, to 8.5 million households. Hardships for families with children have been particularly acute—for instance, the number of families living in homeless shelters has risen 32 percent over the same period.

In anticipation of voucher funding cuts, which will amount to about a seven percent reduction for the rest of this year, some housing agencies are already cutting the number of families they assist by not reissuing vouchers when families leave the program. Most of the 2,300 state and local housing agencies that administer the program are likely to follow suit. (Roughly 200,000 families leave the program every year, and there are long waiting lists for assistance in nearly every community.)

For one in 10 agencies, however, cutting the number of families served via attrition won’t be enough to make up for the budget shortfalls. These agencies will be forced to take more drastic steps—such as terminating assistance for some families currently using vouchers—as early as this summer.

If sequestration remains in place, it will hit other critical housing assistance programs hard. Funds that communities use to assist homeless individuals and families will be cut by $96 million; HUD Secretary Shaun Donovan estimates that 100,000 homeless people will lose access to temporary shelters and housing as a result. Funding to operate public housing—which provides affordable housing to 1.1 million households—will fall to historically low levels, with agencies receiving just 81 percent of the amount they need to fill the gap between resident rents and operating costs. As a result, most agencies will be compelled to cut back on building security, furlough staff, raise resident rents and utility costs, or delay or forego maintenance and repairs, causing living conditions in developments to deteriorate and accelerating the loss of badly needed affordable housing due to disrepair. Finally, Community Development Block Grant funding—which is used to build and rehabilitate affordable housing, repair and upgrade basic infrastructure such as sewers, and many other activities—will be cut by $147 million. You can find our estimates of the state-by-state distribution of these cuts here.

Moreover, sequestration will weaken other pieces of the safety net. My colleagues estimate, for example, that as many as 750,000 women and children could be denied nutrition assistance through the federal WIC program. (Entitlement safety net programs such as Medicaid and food stamps are exempted from sequestration under the law.)

What should be done to protect vulnerable people—and the general public—from the increased hardships that sequestration will bring? First and foremost, policymakers should replace sequestration with a balanced package of tax and spending measures that do not increase poverty or inequality.

But that’s not likely to happen soon—and the effects of the cuts on low-income families in communities across the country will be growing. Meanwhile, Congress must enact, by March 27, legislation to fund the federal government for the remainder of the year. While this legislation will likely leave sequestration untouched, it offers the opportunity to reapportion funding among the various areas of the federal budget in ways that would mitigate some of the harmful effects of sequestration.

This week, the House of Representatives approved legislation that does this—but only for the Department of Defense and the Veterans’ Administration. Funding for other federal agencies is continued at the 2012 level (with exceptions for a few programs), with sequestration’s cuts then applied against those amounts. Senator Barbara Mikulski, chair of the Senate Appropriations Committee, is spearheading a bipartisan effort to add updated budgets for some of the other federal agencies. It is essential that the Department of Housing and Urban Development be included in this effort. An updated HUD budget could, for example, sharply reduce the expected shortfall in funding for public housing operations, and also lessen the number of families losing voucher assistance. Such action would be a step in the right direction in support of low-income families. 

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