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MAY 2, 1997
ADMINISTRATION AND CONGRESS REACH AGREEMENT ON BALANCED BUDGET
On Friday, May 2, after weeks of intense, on/off negotiations, President Clinton and Congressional Leaders settled a major stumbling block and reached a deal to balance the federal budget by the year 2002. In addition to increased domestic spending of $60 billion, to cover Presidential priorities of education and the environment, the five year plan cuts overall spending for domestic programs by $68 billion, slows entitlement spending for programs like Medicare and Medicaid and provides an $85 billion tax relief package, that includes a per child tax credit, expanded IRA accounts, estate tax and capital gains tax relief and some as yet to be determined form of education assistance, via a tax cut. The deal also provides funding to deal with HUD's Section 8 renewal crisis.
The budget agreement, which provides a broad budget framework, will assist Congressional Committees in fashioning a FY98 Budget Resolution and sets the stage for the 13 House and Senate Appropriations Committees to begin acting on their specific spending bills. These bills must be signed by the President into law by the October 1 start of the new fiscal year .
Recapping the FY98 Budget History:
On February 6, the Clinton Administration sent to Congress its FY98
budget proposal containing $1.688 trillion in spending and projected revenues
of some $1.567 trillion, an increase of approximately $60 billion over
the previous year budget.
Despite a climate of tight budget ceilings for all domestic discretionary programs , HUD obtained an increase of about $5.5 billion in overall HUD budget authority from $19.26 in FY97 to $24.75 in FY98 - more than a 25% increase in funding. However, this increase is essentially to help offset funding shortfalls in the Section 8 program, in which about 1.8 million contracts, covering 4.4 million Americans are set to expire in FY98. Taking these budget constraints into account the HUD budget is essentially level with that of last years budget. The most critical affordable housing issue facing the Department this year was the need to renew the expiring contracts. Therefore, HUD's budget contains $9.2 billion in budget authority to renew for one year all subsidy contracts that will expire in FY98. The FY98 budget also requests sufficient budget authority to renew all Section 8 contracts that expire between FY99 and FY2002. The FY98 request for renewals is up from $3.55 billion in FY97. By implementing a series of tough reforms, HUD hopes to be able to keep future spending in check. Within HUD's FY98 budget request, the Office of Community Planning and Development (CPD) yet again, survived without up front cuts to the baseline of CDBG and the Homeless Assistance Programs, but HOME received a 6.5% cut dropping the funding level from $1.4 billion to $1.309. The CDBG program also suffered losses through set-asides totalling $289.6 million, the same as last year.
Action on FY97 Supplemental Appropriation Proceeds Slowly
The House Appropriations Committee approved, H.R. 1469, a FY97 supplemental
spending bill that will provide funds to clean up from flood related disasters.
The measure contains $5.5 billion for disaster relief, $2 billion in peacekeeping
funds, along with $103.5 million for domestic non-emergency spending which
must be off-set by cuts in other domestic spending inorder to avoid increases
to the deficit. The Committee chose to pay for the disaster relief in part
by eliminating nearly $3.6 billion in "excess" Section 8 low
income housing subsidy funds, otherwise known as public housing authority
reserve funds. HUD Secretary Andrew Cuomo has vehemently opposed the use
of these reserves to pay for disaster relief. In a letter to Representative
Jerry Lewis, (R-CA) Chairman of the House VA, HUD Appropriations Subcommittee,
Cuomo stated, that HUD has "grave concerns over the use of housing
funds..." for the purpose of the supplemental and that the "$3.5
billion represents funds authorized for housing that is desperately needed."
Full House action on the measure has been stalled and is expected to be taken up late during the week of May 5.
The Senate Appropriations Committee reported out a similar measure on a largely party line vote of 16-12. The measure then moved to the full Senate, where work continues on the $8.4 billion Disaster Recovery Act, (S. 672) a supplemental spending bill that will provide funds to clean up flood and hurricane related disasters in California and the Mid-West. Of the total, $5.5 billion is slated for disaster relief, with $1.8 billion to be used to pay for peace keeping operations in Bosnia and to enforce the no fly zone in Iraq. The bill also provides $125 million to states to extend welfare benefits to legal immigrants beyond the August 22 cut-off this year.
Both the House and Senate bills previously contained a provision to prevent a government shut down through the enactment of a permanent Continuing Resolution (CR) that would take effect if appropriations bills have not been signed into law by the October 1 start of each new fiscal year. Funding would be triggered at 98 percent (or a 2 percent cut) of the previous year's appropriations and would continue until Congress appropriates funds or the fiscal year ends. This provision was extremely controversial, however, it was resolved without a floor fight in either chamber, as a part of the budget agreement reached by the Clinton Administration and Congressional Leadership. (See above story) The Senate is expected to resume floor debate on Monday, May 5.
Four other Senate amendments: barring of funds for the use by the Census Bureau for sampling procedures for the next census (see story below); a return to states authority over federal right-of-way's on Western lands; a prohibited use of funds to implement a Clinton Executive order on federal contracts; and, funding for the Women's Infant and Children program, a nutrition program for low income persons are contained in the Senate measures.
States targeted for disaster assistance include: California, Oregon, Washington, Iowa, Idaho, Tennessee, West Virginia, Montana, Indiana, Wisconsin, Maine, Massachusetts, New York, North and South Dakota, Oklahoma, Louisiana, Alabama, Minnesota, Arkansas, Mississippi and Texas. Congressional Leadership has indicated that they expect to complete work on the entire supplemental measure by May 26.
PUBLIC HOUSING REFORM LEGISLATION IN ON-GOING DEBATE
H.R. 2, "The Housing Opportunity and Responsibility Act" underwent extensive debate in the House this week, with several provisions coming under fire, including the requirement that some residents of public housing perform community service during their stay in public housing. Numerous amendments are pending and the House is expected to take them up next week.
H.R. 2 still contains some of the controversial elements pertaining to community development and housing such as: the "Home Rule Provision"/Title IV, which allows jurisdictions to undertake a performance-based contract with HUD for the use of public housing and assisted housing funds; and, the "CDBG Sanction Provision", which permits the Secretary of HUD to withhold CDBG funds from a local government if the local public housing authority is designated as troubled and the local government is deemed partially responsible.
The Senate public housing bill, S. 462, "Public Housing Reform and Responsibility Act of 1997"is scheduled for markup on May 6 and HUD is poised to introduce their own public housing bill in the next few weeks.
LOW-INCOME HOUSING TAX CREDIT (LIHTC) RECEIVES SIGNIFICANT SCRUTINY -- CHALLENGES TO IT LIKELY TO ARISE THIS SESSION
The House Ways and Means Oversight Subcommittee, Chaired by Nancy Johnson (R-CT) has begun hearings on the low-income housing tax credit (LIHTC) following the release of the U.S. General Accounting Office (GAO) report on the program. During the hearing process Representative Johnson said, "It appears that there are several opportunities to improve enforcement, and it is my hope that these hearings will help the subcommittee develop recommendations to strengthen oversight and monitoring of compliance."
FEDERAL REGISTER NOTICES
Notice of Funding Availability (NOFA), FY97 Youthbuild Program -- FR 62 19860-19866, 4/23/97 - This notice of funding availability (NOFA) announces $30 million available for the Youthbuild Program.The deadline for applications is June 23, 1997. For a copy of the application package, contact HUD Community Connections at 1-800-998-9999 or through the internet at gopher://comcon.Org:75,r-d-bond.11.
Streamlining Final Rule: Approval of Lending Institutions and Mortgagees Streamlining -- FR 62 20080-20088, 4/24/97.
Proposed Rule: Fair Market Rents for the Section 8 Housing Assistance Payments Program, FY98 -- FR 62 23552-23611, 4/30/97 - Provides proposed FY98 FMRs for all areas for final publication in October 1.
HUD PUBLICATION
Best Practices Newsletter - Spotlighting What Works: A Showcase of Community Planning - Successes in the Field - April 7, 1997, Issue No. 17 - A issue on the "Best Practices Portfolio" just released by HUD earlier this week.
