On February 14, 2012, the Obama administration released the fiscal year 2012 budget to Capital Hill. The budget aims to reduce the deficit by $1.1 trillion over the next decade by cutting spending levels for numerous housing programs. The budget provides the Department of Housing and Urban Development (HUD) with approximately $41.7 billion discretionary budget, a decrease of $1 billion from the previous year, along with the following proposals:
- Community Development Block Grant (CDBG) program reduced by $300 million, a 7.5 percent decrease from the previous year.
- HOME Investment Partnerships Programs cut by $175 million, a 9.5% decrease form the previous year.
- 19.2 billion for the Housing Choice Voucher program, which provides rental assistance to low-income families. This is a 6 percent increase from the previous year.
- $9.4 billion for the Section 8 Project-Based Rental Assistance program, a 10 percent increase, to preserve 1.3 million affordable units.
- $200 million for the Transforming Rental Assistance Initiative (TRA) to convert up to 255,000 public housing units to long-term project-based rental assistance contracts.
- Replace HOPE VI program with the $250 million Choice Neighbourhoods Initiative, which seeks to transform high-poverty areas into sustainable mixed-income neighborhoods with suitable services, schools, public assets, transportation, and access to jobs.
- 172 million cut to programs that fund new housing construction for the elderly and disabled.
- $2.37 billion for homeless assistance, a 28 percent increase, to further the Federal Strategic Plan to End Homelessness.
- Increase the annual mortgage insurance premium paid by borrowers through the Federal Housing Administration (FHA). This increase will strengthen Federal Housing Administration’s (FHA) capital reserves to allow it to keep up with its loan guarantee volume. The administration projects the Federal Housing Administration (FHA) will insure $218 billion in mortgage borrowing in 2012. (This week, FHA announced that it will be increasing mortgage premiums by a quarter of a percentage point on 30- and 15-year loans backed by the agency, effective April 18, 2011).
Now that the Obama administration has submitted the FY2012 budget, the House and Senate Budget Committees will go to work on drafting budget resolutions for setting spending parameters.