US Federal housing expenditures

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Revision as of 07:03, 14 February 2020 by imported>Tmccormick

Summary:
there has been a 108% increase, from 1980-2018, in US Federal direct expenditures on affordable housing programs (mainly HUD), in inflation adjusted, absolute dollar terms [Congressional Research Service, 2019].  In addition, the Low Income Housing Tax Credit tax expenditure program was created in 1986, and since then has been how most Federally-supported new affordable housing is subsidized, creating 2.4M+ new homes since 2016.

The often-stated claims of Federal funding being only 1/3 of pre-1980 levels, or being cut 75% or 80%, appear to come from references to HUD Budget Authority, which is the sum of all future contracted spending. This dropped sharply after the 1970s due to HUD moving from very long-term contracts towards short-term; see HUD Budget Outlays vs Budget Authority section below for further discussion. 

Another point of view is that the Federal government has effectively withdrawn or disinvested from regulated-affordable housing because a) it has not nearly met the much-increased need, which it pledged to do for example with the 1949 Housing Act; or b) it has cut back substantially on rate of creating new housing, compared to the 1968-78 period; c) much public housing has been lost by disrepair or conversion; and d) increasingly expenditure is consumed by maintenance rather than new housing. 
 

(1) NLIHC (2002) study

HUD expenditures, 1976-2007, from NLIHC 2002
 
Dolbeare, Cushing N1., and Sheila Crowley2 (2002). "Changing Priorities: The Federal Budget and Housing Assistance 1976-2007." National Low Income Housing Coalition, August 2002. https://nlihc.org/sites/default/files/Changing-Priorities-Report_August-2002.pdf. 
1Founder and Chair Emeritus, National Low Income Housing Coalition
2President, National Low Income Housing Coalition. 
 

(2) Congresssional Research Service 2019 report on HUD

According to 2019 report by Congress' Congressional Research Service, there was a 108% increase in direct expenditures affordable housing programs (mainly HUD) between 1980-2018, in inflation adjusted, absolute dollar terms. Number of housing vouchers and households served have also increased substantially.

Also, this does not include the LIHTC tax credit introduced in 1986, that has become the primary source of new affordable-housing creation, building about 2.4M homes since then. https://crsreports.congress.gov/product/pdf/RL/RL34591.

 

HUD budget outlays, 1966-2005, from Thompson 2006
 

(3) 2019 HUD funding increases

2019 HUD funding

from Center on Budget and Policy Priorities [Bell 2019]:

"The 2019 government funding bill that President Trump signed into law today sustains most of the substantial funding increases of 2018 for Department of Housing and Urban Development (HUD) programs, and it includes funding to further expand the number of new housing vouchers and other rental assistance.

"Overall, the bill provides $53.8 billion for HUD programs, a $1 billion (nearly 2 percent) increase over the 2018 funding level. It provides enough funding, $20.3 billion, to renew all housing vouchers that low-income families are now using. The bill also creates an innovative new mobility demonstration that will enable housing agencies to provide robust support for low-income families with children seeking to use their vouchers to move to neighborhoods with quality schools and other opportunities. In addition, it funds about 19,000 new vouchers for low-income people with disabilities, homeless veterans, and families with children

"Congress also increased funds for public housing. Capital funds, which agencies use to update and maintain their housing stock, received a modest boost of $25 million over the 2018 funding level. However, there remains a capital backlog of over $26 billion throughout the public housing portfolio. The bill raised funding for the Public Housing Operating Fund, which provides funds to housing agencies for ongoing operational and utility costs, by $103 million.

"The Section 8 Project-Based Rental Assistance program received a $232 million increase over its 2018 levels." 

 

(4) Funding vs growth in need, population, Federal budget

Of course, rather than considering absolute dollars spent, we might ask what was the need, given growing population and housing costs; or consider that increasing portions of spending have gone into merely maintaining old public housing rather than creating new housing. Or, we could note that Federal spending in general has increased greatly since 1980, so this housing spending is declining as portion of budget. Also, post-1980 saw major cuts and reforms in other welfare programs, which may have helped push/keep many more people into poverty and housing insecurity or homelessness. Finally, we could compare to Federal tax expenditures on Mortgage Interest Deduction and other homeownership subsidies, which have increased tremendously since 1980 and now is much larger than HUD and LIHTC expenditures combined, and go mostly to high-income households.

However, given HUD budget figures and LIHTC, it seems inaccurate to say that US Federal affordable-housing support was substantially cut after 1980.
 

(5) HUD Budget Outlays vs Budget Authority

• Budget authority. Authorized amount of obligations each year regardless of when the spending occurs.
• Outlays. Actual spending each year

from [NLIHC 2002] report: 

"The much lower level of HUD budget authority that has persisted since 1985 reflects cuts to programs and changes in the way subsidized housing has been financed. In the 1960s and 70s, subsidy contracts ran for 30 years (or 40 for public housing), so a high level of budget authority was required to finance the developments. The calculation of budget authority was the maximum subsidy commitment multiplied by the length of the commitment. This had the effect of making low income housing appear to be outrageously expensive. So contract lengths were shortened, to 15 years, then 10, then 5, then 1, bringing budget authority and outlays more closely into line.

"In the early 1990s, these subsidy contracts of varying lengths started expiring. Again to cope with the amount of budget authority generated, the renewal terms were shortened."

 


(6) Claims of major funding cuts post-1980

1981 NYT article by Andre Shashaty

This article is often cited in discussions of post-1980 housing budgets: 

Shashaty, Andre. "U.S. Cuts Back and Shifts Course on Housing Aid." The New York Times, Oct. 18, 1981. https://www.nytimes.com/1981/10/18/realestate/us-cuts-back-and-shifts-course-on-housing-aid.html.

"When Congress passed the Housing Act of 1968, it committed the nation to the goal of producing 2.6 million units of housing a year, including 600,000 annually for low-income families. Now, if the Reagan Administration has its way, the direct Federal subsidy programs enacted by Congress to help meet that goal will be drastically curtailed." "

The Department of Housing and Urban Development is proposing deep cuts in the two main subsidy programs - Section 8 rental housing assistance and public housing - for fiscal year 1983, which begins in a year. Not only are the programs too expensive in light of the President's plans to balance the budget, H.U.D. officials say, but they just do not fit in the Administration's new approach to housing."

"In the last year of the Carter Administration, Housing and Urban Development and Congress, alarmed by reports of a growing shortage of rental housing, frantically searched for a new way to use Federal subsidies to produce more apartments. Now, the department contends, there is no nationwide shortage of rental housing."

"For fiscal year 1983, H.U.D. is proposing a 142,000-unit program. But, in a complete shift from prior years, when most of the subsidized units were newly constructed or totally rehabilitated, H.U.D. is proposing only 10,000 units of new construction. The remaining funds would be used to help low-income tenants pay rent in 132,000 existing housing units through the current Section 8 existing housing program and a modified version called housing vouchers."

"The department is proposing no new production under the public housing program." [..]

"The philosophical underpinning for this approach comes from two studies of the rental housing supply that question the conclusion of a 1979 report by the General Accounting Office. The G.A.O. report found that prompt Federal action was required to deal with a worsening shortage of rental housing. The new reports seem to be having as much influence on Federal policymakers now as the G.A.O. report had on the Carter Administration."

" I am unable to find persuasive evidence of a (general) shortage of rental housing, said Ira S. Lowry in a report first delivered at a Housing and Urban Development rental housing conference in 1980 and soon to be published by the Rand Corporation, a Santa Monica, Calif., consultant."



News coverage and advocacy materials often state variations of this statement: 

  • the US Federal government spent three times as much on housing programs in before 1980 compared to now [i.e. late 2010s]; or
  • Federal housing funding has been cut 75% [sometimes 80%] since 1980, or since Reagan presidency.


It appears this claim is based on HUD Budget Authority Figures, which were much higher before the early 1980s largely because of change in how they were calculated (see HUD Budget Outlays vs Budget Authority section above.  Also, it is not including funding via tax expenditure: the Low-Income Housing Tax Credit, which since the mid-1980s has been the primary way US government has supported new affordable housing, funding 2.4M new homes since it began in 1986.

 

Diane Yentel (NLIHC) testimony to Congress, 2018

Diane Yentel, president of the National Low Income Housing Coalition, presented testimony to the Financial Services Committee, US House of Representatives, December 21, 2018. [Yentel 2018]: 

"The shortage of affordable rental homes is caused by market failure and chronic underfunding of solutions..."

"Today’s modern phenomenon of homelessness did not exist in the late-1970s because our country housed almost everyone, including the lowest-income and most vulnerable families. At that time, our country had a modest surplus of homes affordable and available to the lowest income people. The primary difference between then and now: federal subsidies. Funding for affordable housing solutions has been declining for decades. Adjusting for inflation, the federal budget authority for housing assistance programs in the 1970s was nearly three times more than it is today,18despite the significant growth in the number of low-income renters eligible for housing assistance (see figure 3).19"


Figure 3 from Yentel's testimony is below: 

HUD Budget Authority 1977-2017, from Yentel 2018
 

Emily Badger 2019 NYT article

NYT: Microsoft's Leap Into Housing Illuminates Government's Retreat

One key dissemination of the statement about major Federal cuts was the New York Times article of January 18, 2019, "Microsoft’s Leap Into Housing Illuminates Government’s Retreat," by Emily Badger:

"The government spent about three times as much on housing programs in the 1970s as it does today, according to the National Low Income Housing Coalition. "

“Diane Yentel, the president of the National Low Income Housing Coalition, said she would welcome a trend in which more major tech companies put up money to address housing. But she warned of the risk of further letting the government off the hook.

'Today’s modern phenomenon of homelessness didn’t exist in the late 1970s because our country housed almost everyone, including the lowest-income and most vulnerable families,' Ms. Yentel said in an email. 'The key difference between then and now is declining federal subsidies.'"

For the "spent about three times as much" figure, the article cites Yentel's testimony, see above. 

 

@MKushel Margot Kushel Jul 23, 2019
Living in encampments is NOT a choice but a sx of our collective choices. (Fed $s for affordable housing ⬇️ by >50% since 1980). Eric Tars ⁦@NLCHPhomeless  #NAEH2019

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References 

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