In summary

Amid a worsening housing and homelessness crisis, President Trump’s proposed $6 billion cut to the Department of Housing and Urban Development comes at an inopportune time for the Golden State.

If California was looking to Washington for help in tackling its housing crisis, it got a firm response from the White House today: enquire elsewhere.

In a proposed budget released this morning, President Trump requested a $54 billion budgetary reshuffle that would see a significant spike in defense spending and deep cuts for just about every other discretionary program. If enacted, the “Budget Blueprint to Make America Great Again” would affect virtually every aspect of California policy. But amid a worsening housing and homelessness crisis, the proposed $6 billion (13 percent) cut to the Department of Housing and Urban Development would come at an inopportune time for the Golden State.

Trump’s “skinny budget” is a wish-list—a starting point for Congressional budget negotiations. But even as a declaration of presidential priorities, it has many California housing agency heads and progressive advocates worried.

Yesterday, as rumors of the ten-digit spending cut were circulating, the Sacramento Bee reported that the cuts might mean that no additional vouchers will be awarded this year to those awaiting Section 8 housing support in that city. Similar concerns echoed across the state.

Though the President’s preliminary budget is short on detail, the bulk of the proposed cuts would fall upon housing development grants, rather than on programs that provide direct rental aid to those who need it. It would zero out the following:

  • Community Development Block Grant Program
  • HOME Investment Partnership Program
  • Choice Neighborhoods
  • Self-help Homeownership Opportunity Program
  • Section 4 Capacity Building for Community Development and Affordable Housing

Of those, the loss of the Community Development Block Grant would hit the state the hardest. Last year, California received $357 million dollars through these grants. They’re awarded to cities and counties and then channeled to affordable housing and public space development initiatives, small business loans, community beautification projects, and even general assistance programs like Meals on Wheels. The scope is broad by design, based on the idea that locals are in the best position to know how to solve local problems. But what some call flexible, others see as scattershot. In its budget proposal, the Trump administration says that the program is “not well-targeted to the poorest populations and has not demonstrated results.”

Likewise, the end of the HOME Program would mean the phasing out of the largest federal block grant system aimed exclusively at local and state affordable housing development. Last year, the state received $129.5 million through this program; since 2012 HOPE has funded the construction and renovation of 7,391 units. 

Choice Neighborhoods is a legacy of the Obama administration that has supported public housing revitalization projects in San Francisco, Sacramento, and Los Angeles. The Self-Help Homeownership Opportunity Program goes towards housing construction nonprofits like Habitat For Humanity.

Taken at face value the budget appears to leave many of HUD’s more high-profile programs, such as the Low Income Housing Tax Credit program and the Housing Choice (Section 8) program, largely intact. But some policy analysts and advocates are skeptical.

The cuts to HUD come at a time when many housing advocates are urgently calling for more spending. The Center on Budget and Policy Priorities estimates that if current spending levels are maintained, housing agencies across the country would be forced to issue 100,000 fewer housing vouchers for low-income families, as rising rents mean that there is less rental assistance to go around. Nearly 15,000 of those lost vouchers would be in California. Speaking to the Washington Post, Douglas Rice of the center said that the proposed HUD cuts would double that shortfall to 200,000. 

Policy makers across the state have offered similar reactions. Butte County is contemplating cutting assistance to 250 to 300 households. This morning, Los Angeles Congresswoman Karen Bass warned that eroding support for Section 8 could undercut the city’s new voter-affirmed plan to tackle homelessness.

Low-Income Housing Tax Credits appears to be safe for now—but with Republicans clamoring for tax reform, many housing advocates worry that future cuts to the corporate income tax could reduce demand for such federally issued credits. Housing developers have already noted a reduction in demand for such credits as businesses anticipate facing lower rates before too long.

Those concerned about housing in California shouldn’t panic yet. The presidential budget proposal is only the opening bid in what is sure to be a long, tedious debate, and already there are signs that even the President’s allies in Congress may not have the stomach for such spending reductions. But for those who were hoping that D.C. might chip in to help California address the housing crisis, this isn’t an encouraging first step.

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Ben Christopher

Ben covers California politics and elections. Prior to that, he was a contributing writer for CalMatters reporting on the state's economy and budget. Based out of the San Francisco Bay Area, he has written...