Community Reinvestment Act Under Attack Again

Threats to the CRA statute are expected from the House side as well, beginning with a bill already introduced by Rep. Bill McCollum (R-FL) that would allow banks with assets of less than $100 million to self-certify their compliance with CRA compliance and to create “safe harbors” for banks receiving at least a satisfactory CRA rating.

HUD submitted a very aggressive budget proposal for FY 2000 (which begins October 1, 1999) to the Administration’s Office of Management and Budget (OMB), attempting to maintain and even expand some of the funding gains made in the FY 1999 budget. However, OMB’s response (called a “passback”) represented a major step back, with proposed cuts to public housing capital and operating funds and the HOME program. The number of welfare-to-work vouchers would also be scaled back. It is unclear whether OMB’s numbers will prevail or whether HUD has persuaded the White House to increase them.

On a positive note, the president announced in December that he will ask Congress for more homeless funding, to the tune of $1.125 billion. The amount represents a 15 percent increase over the $975 million enacted in 1998. If enacted, the $1.125 billion will be the largest ever appropriation to HUD for homeless assistance.

While it is significant that the administration sees the need to increase funds for HUD, these announcements are not necessarily any indication of what Congress will actually allocate for the department during budget negotiations. After the president introduces his budget, Congressional Budget committees set spending limits for each Appropriations subcommittee, and then the House and Senate Appropriations subcommittees which oversee HUD each decide funding for the individual programs. The full Appropriations committees and full House and Senate then vote on the spending bills, and then work out a compromise between the two chambers.

Low Income Housing Tax Credit (LIHTC)

Despite support from the administration and bipartisan sponsorship in Congress, legislation to expand the LIHTC program was not enacted during the 105th Congress. Predictions are that the chances of enactment are greatly improved this session because a larger tax cut bill is expected in Congress, providing the appropriate vehicle to attach a LIHTC expansion. The tax credit goes to corporations that invest in affordable housing construction. Representatives Nancy Johnson (R-CT) and Charles Rangel (D-NY), as expected, introduced a bill, HR 175, to increase each state’s per capita Low Income Housing Tax Credit allocation from $1.25 (the level set when the program was enacted in 1986) to $1.75 per capita, to be adjusted by inflation each year. Already, over half of the House Ways and Means Committee have cosponsored HR 175. Similar legislation is expected in the Senate.

Preservation Bill Introduced

Representative Bruce Vento (D-MN) has re-introduced legislation to provide for matching grants to states for the preservation of affordable housing stock. The bill, HR 425 introduced on January 19, authorizes the Secretary of HUD to make matching grants to states for acquisition, preservation incentives, operating costs and capital expenditures for housing projects that have HUD-insured mortgages, have Section 8 project-based assistance, or are projects purchased by residents. The bill authorizes $500 million per fiscal year in appropriations for the next several years.

Minimum Wage

Senator Edward Kennedy (D-MA) and Representative David Bonior (D-MI) are expected to introduce legislation which would increase the minimum wage. The current minimum wage is $5.15 an hour. In order to have the same purchasing power that the minimum wage had in 1968, it would have to be $7.33. The new legislation will likely seek to raise the minimum wage by a dollar to $6.15 an hour. In the 105th Congress, many legislators decided it was too soon after the last increase to raise it again, and that it would negatively affect the business sector. Studies have shown, however, that the most recent increase produced no such negative effect.

Census Can’t Use Sampling for Apportionment

The U.S. Supreme Court ruled on January 25 that the 2000 Census must report a head count of every U.S. citizen, rather than relying on statistical sampling methods to estimate the number of people who don’t voluntarily respond. The administration’s proposal was to use such sampling methods to obtain a more accurate picture of the population to determine how the 435 seats in the U.S. House of Representatives are divided among the states. The administration was quick to seize, however, on the fact that the ruling does not preclude the use of sampling for allocating funds for federal programs or for drawing legislative boundaries within states, and indicated that plans for sampling to be implemented will proceed.

Gore vs. Sprawl

Vice-President Gore has announced a multi-billion dollar “Comprehensive Livability Agenda,” seen as the first significant attempt on the part of the administration to contain urban sprawl. The proposed agenda first would provide communities with $9.5 billion in bond authority and tax credits totaling more than $700 million, to preserve green space. Second, the program seeks to ease traffic congestion by providing funding for public transit. Third, the initiative would promote “smart growth” strategies, or development strategies that cross local jurisdictional lines. The agenda’s Regional Connections Initiative will work through HUD to provide $50 million in matching funds for local partnerships. Other components of the agenda deal with education, crime, and planning and information sharing.