National Housing Law Project Housing Law Bulletin

Stepped Up Congressional Activity
on Rescission, Budget and Appropriations

Vetoed Rescission Gives Housing Programs Temporary Reprieve

On Thursday, June 8, President Clinton, in the first veto of his administration, rejected the Fiscal Year 1995 rescission bill, H.R. 1158, which would have made deep cuts in housing and other social programs serving low-income persons. The Senate had approved the conference report by a vote of 61-38.¹ A joint leadership amendment responded to some of the President's concerns outlined in a veto threat. The conferees reinstated funds for several of the President's cherished programs, including AmeriCorps, the summer jobs and school-to-work programs and WIC, the maternal and child nutrition program. The rescission measure had included $3.35 billion for FEMA disaster relief for 1995 and an equivalent advance amount for 1996. Another $250 million had been included for anti-terrorism initiatives and for rebuilding following the Oklahoma City bombing. In all, $16.2 billion in FY 1995 would have been rescinded from government programs in the vetoed measure. Another rescission bill is anticipated, but its content and parameters are uncertain as of late June.

Prior to the veto, Senator Christopher Bond (R-MO), chair of the Appropriations Subcommittee on VA, HUD and Independent Agencies, noted that funding for HUD programs had been cut $6.3 billion, more than three quarters of the total $8.5 billion rescission for all accounts within the subcommittee's jurisdiction. In part, reacting to President Clinton's threats to veto the measure, Senator Bond noted that the bill had contained $6.7 billion requested by the President for disaster relief for the Northridge Earthquake and other disasters. He observed that HUD had $35.2 billion in unobligated prior year balances carried forward in FY 1995 and the only way to bring HUD costs under control was to "turn off the pipeline of new subsidized units."²

To accomplish this objective, the rescission measure would have brought a halt to all incremental Section 8 assistance and public housing development, and would have made deep cuts in public housing modernization. It would have made programmatic changes to ensure greater flexibility in the use of modernization funds for many non-operating expense purposes, including demolition, replacement housing, temporary relocation and rehabilitation of developments held jointly with non-public housing entities. Among the most significant of its so-called "administrative provisions" was the relaxation of public housing site and neighborhood standards and the virtual repeal of the "one-for-one" replacement requirement.³

Pending Legislation Poses Ongoing Threat

In addition to repeal of one-for-one replacement, authorizing or appropriations legislation this year is still almost certain to move to block grants and end both federal preferences and the protections of the Brooke Amendment which cap the percentage of income that low-income persons in the federal housing programs may pay as rent.⁴

On May 25, the Senate adopted the FY 1996 Budget Resolution by a vote of 57-42, with Democrats Sam Nunn of Georgia, Bob Kerrey of Nebraska, and Charles Robb of Virginia supporting the measure.⁵ Unlike the House resolution, adopted by a vote of 238 to 193 on May 18, the Senate declined to include tax cuts but did include drastic reductions in Medicare, Medicaid and other entitlements, as well as discretionary programs. The House had rejected an amendment to eliminate four cabinet-level departments, including HUD, which would have yielded savings of $612 billion over seven years. Some of the specific recommendations and assumptions in each budget resolution that related to the low-income housing programs are highlighted below.

Summary of Budget Resolution Proposals Affecting Federal Housing Programs

For the first time since inception of the program, neither the House nor Senate budget resolutions recommend incremental Section 8 assistance. In addition, the House resolution recommends that only half of the Rental Assistance that becomes available on an annual basis as a result of turnovers be reissued. The House Budget Resolution⁶ assumes gargantuan reductions in funding levels for public housing operating subsidies, development and modernization, as well as less severe but still significant reductions in the Section 202 program for the elderly, the HOME program and homeless assistance. The House Budget Resolution raises the rent burden for poor families in both Section 8 and public housing by assuming an increase in tenant rent contributions from the current 30 percent of income to 35 percent. This would save outlays of $7 billion by the year 2002. Both the House and Senate have also recommended huge cuts in the Community Development Block Grant (CDBG) program used by states and localities to revitalize primarily urban neighborhoods. While the House proposes a 20-percent cut, the Senate resolution includes a 50-percent cut over the seven-year period covered in the proposal.

The FY 1996 budget landscape has been made murkier in recent days with President Clinton's entry into the debate announcing his own plan designed to achieve a balanced budget in 10 years through reductions in Medicare, Medicaid and welfare, and smaller tax cuts than those proposed in the House Budget Resolution.

The FY 1996 appropriations process has commenced with the allocation of spending levels by the House Appropriations Committee pursuant to the so-called "602(b) process."⁷ The full House Appropriations Committee is scheduled to meet later this summer to approve probable FY 1996 levels of $61.7 billion for programs under the jurisdiction of the Appropriations Subcommittee on VA, HUD and Independent Agencies. This represents a reduction in spending authority of $8.5 billion from FY 1995. Appropriations subcommittee members may include programmatic changes, such as the restructuring of much of the Section 8 project-based inventory, the elimination of one-for-one replacement requirements and federal admission preferences, and public housing rent reform. However, inclusion of such issues in an appropriations measure could be subject to a point of order for authorization in an appropriations bill. Mark-up is anticipated in the House Appropriations Subcommittee in July.

The Administration's housing bill, the American Community Partnerships Act, promulgated in early May, has yet to be introduced in the Congress. However, some features of HUD's proposal — including block granting and "vouchering out" of project-based housing — have served as the conceptual framework for much of the discussion about authorizing measures anticipated soon in both the House and Senate. The Senate Housing Subcommittee, chaired by Senator Connie Mack (R-FL), held hearings on HUD's Reinvention Blueprint. In May, Chairman Mack's staff sponsored a symposium at which both public housing authority (PHA) directors and tenant representatives reacted skeptically to HUD's proposed public housing transition provisions, particularly the move to a voucher system.

The House Housing Subcommittee's Chairman, Rep. Rick Lazio (R-NY), has held hearings on discrete aspects of HUD's reinvention proposal, including its "mark-to-market" proposal to restructure the Section 8 project-based program in response to its skyrocketing subsidy needs. The Subcommittee has reported out one bill that reauthorizes the Section 515 rural rental housing program and makes adjustments to self-help housing programs, including Speaker Newt Gingrich's pet, Habitat for Humanity.⁸ Chairman Lazio has indicated that there is going to be a reauthorization bill introduced by mid-summer and that this bill may or may not include debt restructuring of Section 8 Existing Housing assisted stock.

The Senate Housing Subcommittee is also in the process of drafting authorizing legislation which will have as its hallmark extensive deregulation of public housing. Although Chairman Mack has been one of the staunchest congressional proponents of "vouchering out" the project-based housing programs, there is no indication whether full vouchering will be a feature of his yet-to-be-introduced reauthorization bill. The Subcommittee's public housing authorization package may be unveiled later this summer.

1. H.R. CONF. REP. NO. 124, 104 Cong., 1st Sess. (May 25, 1995), containing emergency supplemental appropriations for disaster assistance and making rescissions for the fiscal year ending September 30, 1995. The Conference Report on Concurrent Budget Resolution was adopted June 29, 1995, by both the House and Senate. The compromise rescission package was adopted by House on June 29, to be considered by the Senate on June 30.
2. 141 CONG. REC. S7383 (May 25, 1995).
3. It should be noted that the rescission bill would have retained the one-for-one replacement requirement where the replacement housing had been required pursuant to a court order or litigation settlement.
4. Pub. L. No. 91-152, § 213(a), 83 Stat. 389, 42 U.S.C. § 1437a (1969).
5. H.R. Con. Res. 67, as amended (May 25, 1995), setting forth the Congressional Budget for the United States for 1996-2002.
6. H.R. Con. Res. 67, 104th Cong., 1st Sess. (passed House on May 18, 1995).
7. This is a reference to Section 602(b) of the Congressional Budget Act of 1974 under which each House appropriations subcommittee is granted an annual allocation level by the full House Appropriations Committee, setting the funding parameters for programs within the subcommittee's jurisdiction.
8. H.R. 1691, 104th Cong., 1st Sess. (May 24, 1995).