HUD 2012 Budget: Increased Outlays Offset by Incoming FHA Receipts

by devteam February 19th, 2011 | Share

U.S. Department of Housing and Urban Development (HUD) Secretary ShaunrnDonovan has released HUD’s 2012 Fiscal Year budget request.</p

The latest HUD budget proposal outlines a $48 billion spending program for fiscal year 2012, an increase of more than $900 million from 2010.  The $48 billion gross budget appropriation proposal is expected to  be offset by a projected $5 billion in receipts from FHA and Ginnie Mae. When including receipts,  HUD’s net budget authority will total $43rnbillion, this is a 1.1 percent reduction from FY 2010.</p

Donovan said that the budget meets the Presidents directive to freezerndomestic spending for the next five years and because the President’s State ofrnthe Union charge to “Win the Future” requires reforming government to bernleaner and more transparent, HUD is proposing reforming the administrativerninfrastructure that oversees its programs. </p

Majorrncuts made to trim the budget include what Donovan calls “the difficultrnchoice” to reduce funding for new units and projects. Community Development Block Grant fundsrnwere cut by $746 million to $3.8 billion and HOME Investment Partnerships fundsrnwill drop to $1.65 billion from $1.83 billion, largely through cuts to newrnconstruction components of the Supportive Housing Programs for the Elderlyrn(202) and Disabled (811).  </p

Donovan said that the budget maintains HUD’s commitment to its corernrental assistance programs, requesting 19.2 billion for the Housing ChoicernVoucher program an increase from 18.2 in FY 2010. This will allow HUD to helprnmore than two million extremely low- to low-income families with rentalrnassistance in the neighborhoods of their choice.  The requested amount will fund all existingrnmainstream vouchers and provide new vouchers targeted to homeless veterans,rnfamilies, and the chronically homeless.  ThernDepartment is requesting $9.4 billion for Project-based Rental Assistance tornpreserve approximately 1.3 million affordable housing units through contractsrnwith private owners of multifamily properties. rnThis is an increase of $871 million from FY 2010 enacted levels.</p

The budget asks for $4.96 billion for the Public Housing OperatingrnFund, an increase of $187 million, and $2.37 billion for Homeless AssistancernGrants to maintain existing units and expand prevention, rapid rehousing, andrnpermanent supportive housing; an increase of $507 million.  Another $145 million is sought for newrnhousing vouchers for over 19,000 homeless veterans and homeless persons whornreceive education, health care and other services through the Departments ofrnEducation (DOE), Health and Human Services (HHS) and Veterans Affairs (VA).</p

The proposed budget will provide a total of $953 million for Housingrnfor the Elderly and Housing for Persons with Disabilities Programs which willrnnot only preserve all existing housing units but also provide $499 million forrnnew construction and incremental project rental assistance contracts.</p

The budget calls again for funding the National Housing Trust Fund (NHTF)rnwhich was not funded in FY2010.  It wasrndesigned to provide capital resources to build and rehabilitate housing to fillrnthe growing gap in housing identified in the recent WorstrnCase Housing Needs Report.</p

HUD projects that FHA will insure $218 billion in mortgage borrowing inrn2012.  In 2009 FHA was used by 38 percentrnof all homebuyers.  FHA along with VA andrnfederal farm programs guaranteed 81 percent of all mortgages to AfricanrnAmericans, 73 percent to Hispanics, and 30 percent of first-time homebuyers. </p

“The budget provides a roadmap for HUD to work with our regional andrnlocal partners to win the future by investing in innovation, buildingrnneighborhoods that are connected to jobs and providing greater access tornopportunity, so American businesses and communities are the best in the world”rnsaid Donovan. “The President has said that we need to live within our means torninvest in the future. That has meant tough choices, including to programs that,rnabsent the fiscal situation, we would not cut. But American families arerntightening their belts and we need to do the same.” </p

HUD’s budget, working in coordination with the Department of thernTreasury’s budget request is proposing two reforms to the Low Income HousingrnTax Credit (LIHTC) that will replace the current cap on household income at 60rnpercent of area median income with the option that properties serve householdsrnwhose average income is no greater thanrn60 percent of AMI and with no individual household above 80 percent ofrnAMI.  This will allow greater income-mixing at the project level, creatingrnopportunities for workforce housing; help align LIHTC with HUD’s and USDA’srnaffordable housing programs (which define low-income at 80 percent of arearnmedian income); and lead to the creation of more units targeted to the lowestrnincome households.  <br /<br /HUD is requesting $72 million, to support administration of two Fair Housing programsrnand for funds for a multi-agencyrninitiative to assist communities in using their funds more effectively tornsupport job creation-an improved successor to the Empowerment Zones that expirernthis year.  </p

Donovan said of the budget, “The American people deserve a federalrngovernment that works effectively across its “silos” to deliver results. rnThis Administration has prioritized collaborative initiatives that featurernagencies streamlining and coordinating their funding processes, so theyrncomplement rather than complicate-or even conflict with-each other.”  To that end, the budget continuesrncross-agency collaborations with the VA, Department of Transportation, and thernEnvironmental Protection Agency.  </p

A summary of the 2012 HUD Budget is available HERE</p


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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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