FY1999 HUD Budget
“Cities have been at a competitive disadvantage with outlying counties,” said HUD Secretary Andrew Cuomo in a February 2 New York Times article. The President’s FY 1999 budget, which contains $1.8 billion in increased funding for HUD programs “will help level the playing field,” he said. The core of the proposal consists of $400 million in grants for a HUD Community Empowerment Fund, aimed at creating an estimated 280,000 jobs in economically distressed cities. The proposed budget would also increase funding for Empowerment Zones and CDBG.
Clinton has also called for 100,000 new Section 8 vouchers, 34,000 of which would be targeted to the homeless. Another 50,000 would be available to localities on a competitive basis, to assist welfare recipients making the transition to work. This would represent the first increase in new or incremental vouchers since 1995. The budget also proposes modest increases in other housing programs, including homeless assistance and HOME, but continues to underfund public housing and cuts funding for elderly and disabled housing. Details of the budget can be found online, http://www.hud.gov/library/bookshelf18/pressrel/pr98-32.html
The administration’s budget proposal has already become a source of contention between Democrats, who support the President’s proposed funding increases, and Republicans, who want savings from the balanced budget to be passed on to the public in the form of tax cuts.
Congress is also considering a number of last year’s bills related to housing and community development, and some new legislation.
Last year the House and Senate each passed bills to overhaul public housing. HR 2 and S 462 would give local housing authorities much more autonomy, remove many existing protections for residents, and weaken resident participation requirements.
The Senate bill is better than the House bill with respect to income targeting. While the repeal of federal preferences in both bills leaves no assurance that public housing and vouchers will serve those with the greatest housing need, the Senate bill would ensure that the lowest income families, including minimum wage workers, continue to benefit from these programs. So far, the House and Senate have made no move to reconcile their two bills, and there is speculation that a streamlined bill, containing non-controversial items, may surface instead.
McKinney Act Homeless Programs
The House Banking Committee’s bill (HR 217) to change the way states and localities receive federal dollars for homeless assistance would consolidate HUD programs for the homeless into two block grants. Twenty-five percent of annual funding would go to the Permanent Housing Development Block Grant, and the remaining 75 percent to the Flexible Block Grant. The flexible grant would be divided between states (30 percent) and localities (70 percent), with some matching requirements. Overall, only 35 percent of McKinney funds could be used for supportive services. Local governments would be required to set up advisory boards to make funding recommendations. At least 51 percent of the membership of these boards would consist of homeless individuals and nonprofit organizations.
Homeless advocates, and some HUD officials, are uncertain about whether the block grant approach is the best way to reform McKinney programs. The full House may vote on the bill early in the session, but Senate legislation is not likely to move this year, as the Banking Committee is still drafting the bill.
Low Income Housing Tax Credit
The administration and some members of Congress aim to expand the LIHTC, a credit to corporations that invest in affordable housing construction. The President’s budget calls for a 40 percent increase in the credit, and an increase in the amount of credit states may allocate to projects each year, from $1.25 per capita (the level set when the program was enacted in 1986) to $1.75 per capita. Several Republicans and Democrats in both chambers have also sponsored legislation to increase the per capita cap, and index the amount according to inflation in future years.
After failing to reach consensus in the 104th Congress, the House and Senate are making a second, bipartisan attempt to streamline numerous federal job training programs. The House passed HR 1385 to overhaul the Job Training Partnership Act and other education and training programs last May. The Senate is expected to vote on its bill, S 1186, early this session.
The House and Senate bills propose the same basic delivery system, using “one-stop” centers to provide information and advice. Participants would then receive vouchers, or “skill grants,” which are supposed to provide a greater sense of choice. But the onus would be on recipients to find high-quality training leading to decent paying jobs. Advocates are also concerned about ease of access to one-stops and their capacity to serve diverse populations and needs. Though some representation by labor and community groups would be required on Workforce Development Boards overseeing the training programs locally, these boards would mainly include private sector representatives.
Senator Edward Kennedy (D-MA) and Representative David Bonior (D-MI) have introduced legislation to increase the minimum wage 50¢ a year for three years and then adjust it for inflation. The current minimum wage is $5.15 an hour. To have the same purchasing power as in 1968, it would now have to be $7.33. The new legislation would bring the minimum wage to $5.65 by September 1, 1998; $6.15 by September 1, 1999; and $6.65 by September 1, 2000.
The Economic Policy Institute predicts that the increase would affect over 12 million workers, of which 50 percent will be full-time, and 82 percent will work at least 20 hours a week. The increase is expected to benefit minorities.
For more details on the 1998 Legislative Outlook, click here.