Trump Proposes $6.2B HUD Cut. What Impact Will It Have on U.S. Cities?

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President Donald Trump is wasting no time making good on his campaign promise to slash government spending, as evidenced by the release of his 2018 budget. It faces a long dance through lobbyists and Congress before approval. But once you get past the handful of areas slated for increases—mainly the departments of Defense, Veterans Affairs, and Homeland Security—almost everything is on the chopping block. Some, like the National Endowment for the Arts, are being slated for full-on termination.

And then there’s the U.S. Department of Housing and Urban Development, which faces very big cuts at a time when some experts believe the nation can afford them the least.

The president seeks to lop $6.2 billion off HUD’s current $47 billion budget. That’s a 13.2% cut in funding at a time when home and rental prices are reaching record heights in many parts of the country. It could have major repercussions for some of the nation’s poorest citizens, some believe, and could alter the very landscape of the nation’s cities.

“A reduction of that size means that more families, people with disabilities, and the elderly are going to be struggling to pay their rent and avoid homelessness,” says Mary Cunningham, who focuses on housing affordability at the Urban Institute, a nonpartisan research institute based in Washington, DC.

The cuts will help pay for things that the administration has prioritized, including a down payment on the president’s proposed wall along the border of Mexico. Administration officials are saying the HUD slashing is long overdue.

“We’ve spent a lot of money on Housing and Urban Development over the last decade without a lot to show for it,” Office of Management and Budget Director Mick Mulvaney recently told reporters. “Certainly, there are some successes, but there are a lot of programs that simply cannot justify their existence, and that’s where we zeroed in.”

The budget is likely to see substantial changes before a final version is released in May.

“This budget reflects the President’s commitment to fiscal responsibility while supporting critical functions that provide rental assistance to low-income and vulnerable households and help work-eligible families achieve self-sufficiency,” a passage from the hefty document says.

Trump’s new budget proposal

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What the president has proposed slashing

One of the first programs to go at HUD would be the $3 billion Community Development Block Grant Program. It gives grants to cities and counties for things like senior citizen centers, playgrounds and parks, and disaster relief assistance.

The budget document says the program “is not well targeted to the poorest populations and has not demonstrated results,” despite the fact that the neighborhood improvement grants are typically popular with politicians on both sides of the aisle.

Other programs like the HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-Help Homeownership Opportunity Program wouldn’t make the grade either. The programs give grants to build, buy, and rehabilitate affordable housing, provide rental assistance to low-income Americans, and help spur improvements in poorer neighborhoods. Eliminating these programs would save the agency an additional $1.1 billion.

The $35 million Capacity Building for Community Development and Affordable Housing program is also on the block. It provides grants to nonprofit groups that help to develop new affordable housing projects.

But in what appears to be a nod to new HUD Secretary Ben Carson, the agency would receive an extra $20 million for lead paint and other hazardous materials abatements in low-income housing. The former neurosurgeon had pledged to make housing healthier during his U.S. Senate confirmation hearing in January.

“Now is the wrong time to be cutting HUD, because we’re at the top of the real estate cycle where prices are at their highest,” says Ken Johnson, a real estate economist at Florida Atlantic University in Boca Raton, FL. “The proposed cut in HUD is only going to exacerbate the affordability problem.”

What else might be on the cutting block?

Those who have done the math will see that these proposed cuts don’t add up to $6.2 billion.

So it remains a mystery where the other more than $2 billion will come from. And that has low-income housing advocates really worried.

“There has to be cuts to rental assistance in order to make up the total proposed decreases,” says Barbara Sard, vice president for housing policy at the Center on Budget and Policy Priorities, a nonpartisan think tank based in Washington, DC. She predicts that about 200,000 families could lose housing vouchers as a result.

“That’s a serious mistake that will increase homelessness and hardship for poor families, elderly people living on Social Security, people working low-wage jobs, and others,” she says.

Even at current funding levels, just one in four of those who qualify for housing assistance from the government currently receives any, says Sarah Mickelson, director of public policy at the National Low Income Housing Coalition. That’s because there simply aren’t enough homes to go around.

“This budget proposal deserves an F,” Julián Castro, the most recent head of HUD before Carson, said in a statement. “By cutting funds for housing opportunity, this budget would drive up homelessness for veterans, families and young people. Congress should reject it.”

The proposed cuts may not be as bad as they seem

But some contend that the proposed budget might not be quite so bleak as many are making it out to be.

“The most important thing is to continue to help the poor families who are now receiving help with their housing,” says John Weicher, director of the Center for Housing and Financial Markets at the Hudson Institute, a conservative-leaning think tank in Washington, DC. This budget appears “to be doing that.”

The bulk of the cuts are more on the urban development side, says Weicher, who was a former HUD assistant secretary of housing during President George W. Bush‘s first term.

And he pointed out that the key programs, like the FHA home mortgage insurance program, which helps home buyers who don’t have a full 20% down payment, and housing assistance for poorer families, won’t be touched—at least in this version of the budget.

Yet even if the rental assistance programs receive the same amount of funding, it doesn’t mean more families won’t go without.

“Because of rising rents, inevitably family vouchers will get cut,” says the Urban Institute’s Cunningham.

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