Federal Housing Program Funding Sees 6% Decline

Only One in Four Eligible Households Receive Assistance

Federal Housing Program Funding Sees 6% DeclineAt the request of the Senate Committee on the Budget, the Congressional Budget Office (CBO) recently published a report reviewing federal housing assistance for low income households.

The report describes federal low income housing programs, offers ideas on program reforms and their potential costs or savings, and reviews federal support for housing “that is not focused on low income households,” including the mortgage interest deduction.

The report notes that between 2011 and 2014, funding for federal housing programs declined by about 6% following the enactment of the Budget Control Act of 2011, which capped total non-defense discretionary funding. CBO describes shifting the federal strategies to provide rental assistance and an increased reliance on the private sector in the delivery of affordable, subsidized housing since the mid-1970s.

“Over the 2000 – 2014 period, real spending for public housing declined by about one-third, or $3.0 billion. During that same period, real spending for HCVs [housing choice vouchers] …] increased by the about one-third, or $6.9 billion.”

The report states.

Housing advocates are calling on Congress to lift the sequester caps and fully fund housing programs.

The report notes that only about one in four households eligible for housing assistance receive it and that more than 80% of eligible but unassisted households—those with incomes equal to 50% or less of area median income—pay more than 30% of their incomes for rent.

The report lists a broad array of policy options that lawmakers may consider and their associated costs or savings.

They include:

  • reducing or increasing the number of vouchers,
  • requiring or incentivizing work by program participants,
  • increasing or reducing the percentage of income residents pay in rent,
  • increasing public housing agencies’ (PHAs) access to private funds,
  • consolidating PHAs and decreasing funds for their administrative costs,
  • increasing PHA administrative funding,
  • increasing or decreasing funding for the National Housing Trust Fund,
  • repealing the Low Income Housing Tax Credit; and
  • enacting a renter’s tax credit.

The CBO report also details federal housing support for households that are not low income, noting that the costliest federal housing expenditure is the mortgage interest deduction (MID). Using figures from the Joint Committee on Taxation, the report states that the MID accounted for $68 billion in tax expenditures in 2014. “Relative to other taxpayers, lower-income households receive the least benefit from the current itemized deduction,” the report says. CBO estimates that households in the top income quintile receive three-quarters of this tax benefit.

“Only a small percentage [6%] of the benefit went to households in the middle quintile, and even those households had income that was about four times greater than the average income of households receiving means-tested federal housing assistance.”

The report states.

Click here to read CBO’s September 2015 Federal Housing Assistance for Low-Income Households.