HUD officials now acknowledge public housing authorities will face an operating financial crunch in the months ahead. As a result, the department will begin front-loading operating subsidies into PHA accounts to avert severe cuts and service rate hikes to public housing programs, according to Housing Affairs Letter, a weekly online service covering public, private and assisted housing. (Access a sample copy.)
HUD's move was outlined at the Public Housing Authorities Directors Association annual legislative conference Sept. 11 in Washington, DC. PHAs have prepared for months for a deep financial crisis, laying off employees and cutting services. Public housing advocates have pressed lawmakers to restore $750 million to operations in the continuing resolution that will keep the government running through the first quarter of 2013. The $750 million fiscal crunch resulted when Congress allowed HUD to divert the money to other needs.
Under HUD's plan, PHAs -- whichnow operate on a calendar year -- will subsist at FY 2012 spending levels until Dec. 31. On Jan. 1, when stopgap spending law provisions kick in for PHAs, HUD will revert to its new plan. The continuing resolution, as now designed, will finance government operations temporarily until March 31 at FY 2012 levels. But the CR provides no extra housing aid or restores the $750 million diverted by HUD to boost the Section 8 housing voucher program.
Well-placed sources tell Housing Affairs Letter that HUD's plan would allow PHAs to continue operating at 90% of their documented funding needs. Without the new plan, PHAs would have been forced to operate at about 80% of need. What happens after March 31 remains to be seen. Congress could extend the stopgap spending law for the entire fiscal year, but doing so would likely spawn financial chaos in several of HUD's housing programs.
HUD is undertaking the new move, anticipating Congress eventually will approve a $4.5 billion subsidy for the coming year, compared with $3.9 billion for the current year. Even so, the department's expectations do not account for the looming sequestration of federal spending that would reduce money for housing programs by at least 9% across the board beginning Jan. 2. The sequestration is mandated in the Budget Control Act of 2011 and aimed at reducing the federal deficit.
For more information contact:
Tom Edwards, Housing Affairs Letter 301-588-6380 x137; email@example.com