The White House has made clear that President Barack Obama will not sign FY16 spending bills that do not lift sequester spending caps.
In the short term, Congress is likely to pass a CR lasting anywhere from four weeks to three months. A CR allows discretionary programs to continue, but at FY15 funding levels. Before a short-term CR expires, Congress must decide whether to lift the sequester spending caps for FY16 or vote for a longer, possibly year-long CR.
With the White House insisting that FY16 spending bills maintaining sequester spending caps will not be signed by the President, if Congress cannot reach agreement on whether and how to lift the caps and opts instead to pass a year-long CR, the White House and Congress will be in yet another stand-off. However, Republican leaders have stated they want to avoid another government shutdown.
HUD’s largest programs can weather a CR through December. HUD’s major rental assistance programs including Housing Choice Vouchers are funded on a calendar year basis. They have sufficient resources to last until the end of the year from FY15 appropriations.
However, renewal costs for vouchers require increases next year simply to serve the same number of households currently served and receipts from the Federal Housing Administration (FHA) are down compared to FY15. Level funding into 2016 would result in a shortfall of about $3 billion for HUD programs in FY16. A year-long CR that funds federal programs would be below sequester cap levels and result in funding levels for housing and community development programs in FY16 of as much as 4% below FY15 levels.
The negative impact of the sequester cap levels is evident in both the House and Senate THUD FY16 bills. The House bill raids 100% of National Housing Trust Fund resources in 2016 and directs them to the HOME Investment Partnerships Program (HOME), which the House bill cuts from $900 million in FY15 to $767 million. (Funding for the HOME program has already been reduced dramatically since FY10, when it received $1.8 billion.)
The House bill does not fully fund the renewal of either current vouchers or PBRA contracts. The House bill would cut public housing capital funds from $1.875 billion in FY15 to $1.681 billion in FY16 and would reduce funding for HUD’s Office of Healthy Homes and Lead Hazard Control from $110 million to $75 million in FY16.
If Congress does raise sequestration spending caps, as many observers anticipate, it cannot be at the expense of other programs that assist low income households. Also, any acceptable sequester relief must have parity, meaning any spending caps imposed on non-defense discretionary programs, like housing, must be on par with those sustained by defense programs.