The Center for Budget and Policy Priorities (CBPP) recently released a report detailing the implications that impending budget deficit reduction measures could have on housing and community development programs.

In last year’s Budget Control Act (BCA), the President and Congress set binding caps on total funding (or, budget authority) for discretionary programs in each fiscal year from 2012 to 2021. In addition to these caps, policymakers included in the BCA a mechanism referred to as “sequestration” which will automatically take place in January 2013 and requires more than $1 trillion in additional across-the-board cuts to discretionary spending. In part because the scheduled cuts are harsh, indiscriminate, and unpopular, the President and Congress have been trying to develop a framework to replace these cuts with a more balanced and comprehensive package. What’s more, policymakers broadly agree that, as part of their deficit reduction efforts, they should largely or entirely avoid cuts in Social Security benefits for current retirees and limit or avoid them for current Medicare beneficiaries. This leaves other discretionary, non-defense spending programs particularly vulnerable.

CBPP estimates that if the HUD budget was reduced in proportion to the yearly BCA caps, $2.5 billion in annual funding would be cut by 2021, which is equivalent to eliminating housing voucher assistance for more than 300,000 low-income families, or to reducing funding for the three large block grants “” CDBG, HOME, and the Native American Housing Block Grant “” by 55 percent. This, if combined with additional sequestration cuts, could potentially be devastating to HUD’s budget and programs.

CBPP offers four important steps to avoid deep cuts in assistance for low-income families and communities:

  1. Prioritize low-income programs in making discretionary funding decisions, including by passing a HUD funding bill for fiscal year 2013 that’s modeled on the Senate appropriations bill that covers HUD.
  2. Pass comprehensive rental assistance reform legislation, such as the Affordable Housing and Self-Sufficiency Act (AHISSA).
  3. Embrace public housing reforms that enable agencies to access more private capital to meet capital repair needs.
  4. Prevent further cuts in funding for non-defense discretionary programs by adopting a balanced approach to addressing the nation’s remaining fiscal challenges.

Finally, CBPP suggests that the only way to avoid cutting the majority of these low-income categories, policymakers will need to include very substantial new revenue measures in their deficit reduction package.

Click here to read the report.