Talk of the Town: Passing the Buck

The National Association of State Budget Officers and the National Governors Association have a new report (PDF) out showing the strain federal spending cuts and increasing healthcare costs put on state budgets. In short, if the plan for deficit reduction was to pass the buck to the states, the message from the states is that it’s not working.

According to the report, states depend on the federal government for about a third of their budgets. Infrastructure, education and public safety programs have to compete with growing healthcare costs for a shrinking pool of federal aid.

The National Low Income Housing Coalition has chronicled the impact of shrinking federal resources on the ability of states to provide housing for their lowest income residents. We wrote earlier this week about our research into ways state and local governments can maximize scarce housing resources to serve extremely low income households.

Meanwhile, the brewing (and largely pointless) fight over the debt ceiling means that negotiations over the budget, debt and deficit will continue well into next year. Extended negotiations mean additional opportunities for spending cuts, and as one commentator says, “if you’re not willing to inflict epic levels of suffering on the very poor, there just aren’t a lot of cuts to be had.”

How are federal budget cuts impacting your state? Have you talked with your Member of Congress or her staff about what budget cuts mean for the housing situation of low income people in your state? Share your thoughts with us in the comments.

Reforming a Deduction to Provide Homes for the Poor

When the National Low Income Housing Coalition first launched our proposal to fund the building and preservation of affordable housing with the savings from modification of the mortgage interest deduction, there were skeptics who told us the mortgage interest tax break was untouchable. With everything we heard about “sacred cows” and “third rails,” it would not have surprised us if we suddenly found ourselves working on a dairy farm or in a subway station.

Just a few weeks have passed, and it seems the cows have shed their halos and the rails are no longer electrified. The reality of our nation’s fiscal challenges has shocked many in Congress into realizing that what was once viewed as untouchable might indeed be a source of funding for many things, including deficit reduction.

Conventional wisdom aside, it just so happens that this is far from the first time the mortgage interest deduction has come under scrutiny. Back in 1984, even President Reagan suggested that it might be worth reconsidering the deduction. But even more relevant to our interests is a 1972 proposal from HUD Secretary George W. Romney (father of Governor Mitt Romney) for a “staged reduction” in the mortgage interest deduction, with a shift of the savings to affordable housing for low income people.

In the midst of the fear and furor over sequestration and the fiscal cliff (and the argument over whether there even is a cliff at all), it is easy to forget one simple truth: as it is, the federal programs that provide safe, affordable housing for the lowest income Americans do not have enough funding to serve all of the people who need them. Housing advocates wish we had the luxury of defending housing programs from “entitlement reform;” while entitlements like Social Security are promised to everyone who qualifies, only about 25% of people who qualify for housing assistance receive it, because the funding just isn’t there to serve everyone who needs help with housing. The result? For every 100 extremely low income renter households, there are only 30 housing units affordable and available to them. This means that 4.3 million renter households stand at the edge of their own fiscal cliff, every day of the year.

So before they go scrambling to fill in holes in the federal budget with money from sacred-cow deductions, we hope lawmakers take a step back and consider the impact investing these savings into people and communities, not just deficit holes, could have. Building and rehabilitating affordable housing means low income renters will have some disposable income to spare, and they can then spend that cash in their communities. Safe, stable housing means kids who can concentrate in school, and go on to lead productive, fulfilling lives. Healthy homes for families and seniors mean lower healthcare costs for all of us.

We think it’s time to reform the mortgage interest deduction and use the savings to fund the National Housing Trust Fund, which can build and rehabilitate housing that lower income people can afford. If you feel similarly, we hope you’ll sign on to support our proposal and help us show lawmakers that there is a better way.

Talk of the Town: Over the Cliff

Ground feel unsteady under your feet? It might be that you’re standing at the edge of a fiscal cliff.

According to Politico, “If Congress doesn’t take action by the end of the year, a package of tax cuts adopted during George W. Bush’s administration expire while deep spending cuts kick in. If that happens, the economy would go over a ‘fiscal cliff.'” While a steep reduction in federal spending could help shrink the budget deficit, less spending also means even less stimulus to our weak and struggling economy.

Recent reports have shown Members of Congress in heated debate over the issue, but expectations are low for any resolution occurring before the November 6 elections.

As we noted in Memo to Members recently, there is another theory: it’s not a fiscal cliff, it’s a fiscal slope. According to the Center on Budget and Policy Priorities, chances are, even if a deal is not reached by the beginning of 2013, Congress is likely to work something out eventually– meaning that consumers and businesses will have enough confidence to keep spending. Democrats have shown a willingness to test that fiscal slope theory, if it means the richest 2% of Americans would pay their fair share of taxes.

Do you believe we’re at the edge of a cliff, or a slope? What action do you think Congress needs to take? Let’s talk about it in the comments.

News Round-Up: Strapped for Cash

Farmworkers are essential to maintaining a functioning economy in areas where agriculture is an important industry. But often, agricultural workers’ wages are so low that they are unable to afford housing in their communities. This report from Ventura County, California shows the impact of low wages and high rents on farmworker families, like extreme overcrowding and impacts on the ability of children to learn.

Farmworker housing advocates in Ventura are raising money to support the development of more housing affordable to agricultural workers and their families. But according to NLIHC President and CEO Sheila Crowley in an interview (subscription required), relying exclusively on local funding for housing results in an inequitable situation.

“There are some local communities which are very wealthy that have an economic base that would allow them to be able to come up with these kinds of programs and pay for them,” Crowley said. “But by and large, local governments are really strapped for cash, and they have enormous obligations, in particular education. So the notion that there will be extra money floating around to do these kinds of things seems highly unlikely.”

While many cities and service providers feel federal block grants, like HOME and CDBG, provide necessary funding for local projects, some in the House of Representatives attempted to limit or eliminate those programs, favoring the exclusive use of local funds.

News Round-Up: Desperate Times, Inadequate Measures

Evidence has been mounting for decades that there exists in the United States an extreme shortage of rental housing affordable to the lowest income Americans. What those with influence choose to do about this situation is another matter.

The Los Angeles Times and the Huffington Post reported last week that a Los Angeles landlord took advantage of that city’s demand for low-cost rental housing by subdividing a triplex into 44 separate apartments. While housing this substandard is illegal, and criminal charges have been filed, as Huffington Post notes it is no surprise that demand exist for this kind of living situation, when the national Housing Wage is $18.25.

Presumably, those Los Angeles renters must now move to new apartments. As reported by Affordable Housing Finance and in Memo to Members, a recent study from the Brookings Institution and First Focus shows that switching schools due to a move is detrimental to a child’s education, as well as to her physical and mental health. The report recommends funding the National Housing Trust Fund, as well as increasing funding for HUD’s voucher, public housing, and project-based rental assistance programs.

How will Congressional appropriators address this issue? The House passed its FY13 budget for HUD on Friday with inadequate funding for key programs serving low income people. According to Coalition president Sheila Crowley, in spite of the efforts of a few Representatives to introduce helpful amendments to the bill,

“The U.S. House of Representatives broke faith with many thousands of the poorest, most vulnerable Americans who are served by the programs of the Department of Housing and Urban Development. Housing assistance is not an abstraction. Real people, the majority of whom are elderly or disabled, will lose their homes if these cuts are enacted. And turning the clock back on fair housing shows that the House is out-of-step with 21st century American values.”

It might be some time before the FY13 budget is decided; the Senate has yet to weigh in with its own appropriations bills.