The Affordable Housing Bulletin
February 14, 2005

In this issue:

In Delaware
Governor's Council on Housing Meets, Wednesday, February 16
Joint Finance Committee Hearing, Thursday, February 17
First Annual DAY FOR HOUSING, Tuesday, March 22
New Endorsers of the Five-Year Strategic Housing Plan for Delaware!

Nationally
President's FY06 Budget Request Hits HUD Hard
Budget Maneuvers to Cut Some Spending, Protect Tax Cuts
Deep Cuts in Federal Grants in FY 2006 Would Squeeze Delaware

Governor's Council on Housing Meets, Wednesday, February 16
The next meeting of the Governor's Council on Housing will be this Wednesday, February 16 at 2:00 pm. The meeting will be held in the Buck Library at Buena Vista on Rt. 13 in New Castle. Included on the agenda is a presentation by the Delaware Rural Housing Consortium. All public sessions of the Council on Housing are open to the public.

Meetings are usually held on the second Wednesday of each month. Notice of meetings and agendas are available on the News and Events page of DSHA's website, http://www2.state.de.us/dsha.

Joint Finance Committee Hearing, Thursday, February 17
The Joint Finance Committee (JFC) of the Delaware General Assembly will hear testimony from the public on Thursday regarding the State's Housing Development Fund (HDF).

The hearing will begin at 10:00 AM in the basement of Legislative Hall.

After adding $6 million to the regular $3.4 million annual allocation last year, the Governor is proposing no increase over and above the $3.4 million this coming year.

Each of you who is concerned about the growing lack of affordable housing in Delaware can make a difference in next year's budget by attending the JFC hearing this week and speaking from your own experience about the need for more funds for the HDF.

First Annual DAY FOR HOUSING, Tuesday, March 22
The Delaware Housing Coalition will hold its first annual DAY FOR HOUSING on Tuesday, March 22.

You know housing matters…but do your legislators?
Come to Dover to inform and educate your state representative and senator about affordable housing!

Please join the Delaware Housing Coalition for its

DAY FOR HOUSING
March 22, 2005

* 1:30 pm -- Opening Remarks & Special Announcement

* 2:00 pm – 5:00 pm -- Register & get packet of materials at:

Delaware Room
Public Archives Building
121 Duke of York Street, Dover, DE 19901
(across the street from Legislative Hall)

Please pre-register by calling
302/678-2286, x 202 or email mkm@housingforall.org

New Endorsers of the Five-Year Strategic Housing Plan for Delaware
There are now over 40 endorsers of the Five-Year Strategic Housing Plan.

Your group can become an endorser by going to the DHC website (www.housingforall.org) and downloading and filling out the endorsement form.

Endorsers to date:

Appoquinimink Development, Inc.
Arbor Management, LLC
The ARC of Delaware
Better Homes of Seaford, Inc.
Brandywine Counseling, Inc.
Church Women United in Dover
Cornell Management Corporation
Delaware Community Reinvestment Action Council
Delaware HIV Consortium
Delaware Housing Coalition
Delaware Rural Housing Consortium
Delaware NAHRO
Delmarva Rural Ministries, Inc.
City of Dover
First State Community Action Agency, Inc.
First State Resource Conservation & Development Council
Gilman Development Company
Governor’s Advisory Council on Exceptional Citizens
Homebuilders Association of Delaware
Housing Opportunities of Northern Delaware
Ingleside Homes, Inc.
Inter Faith Mission of Sussex County
Interfaith Housing Delaware
Robert Kaplan, AGM Financial Services
Latin American Community Center Development Corp.
League of Women Voters of Greater Dover
Lutheran Community Services of Delaware
Lutheran Office on Public Policy, Delaware
Mary Mother of Hope House I
Milford Housing Development Corporation
Millsboro Housing for Progress, Inc.
NCALL Research, Inc.
Neighborhood House, Inc.
Provest Realty Associates, Inc.
Roger P. Pryor and Associates, Inc.
Rebuilding Together Wilmington
Sister Mary Sheehan, IHM, Marydale Catholic Ministry
St. Helena's “Journey to Justice”
S.T.E.H.M., Inc.
The Salvation Army
Leon N. Weiner & Associates, Inc.
West End Neighborhood House
Wilmington Housing Partnership
YWCA of New Castle County


President's FY06 Budget Request Hits HUD Hard
President Bush delivered his FY06 budget to Congress on February 7. The HUD request cuts Section 811 housing for persons with disabilities by half, and substantially cuts public housing, fair housing, Housing for Persons With AIDS, HOME formula grants and Native American Housing Block Grants as well. Homeless Assistance Grants are increased by $175 million, but include the $200 million Samaritan Initiative and $25 million for prisoner re-entry proposed, but not enacted last year.

One of the White House's key HUD proposals moves the Community Development Block Grant, several CDBG set-asides, the National Community Development Initiative, Section 108 loan guarantees, Brownfields, Enterprise Zone / Enterprise Communities and HUD's office of rural housing and economic development to the Department of Commerce. These, along with 11 other programs from Agriculture, Health and Human Services and Commerce will constitute a new Strengthening America's Communities (SAC) initiative within Commerce. Separately, these programs had a combined FY05 appropriation of $5.31 billion; the FY06 request for SAC is $3.71 billion. Information about the CDBG crisis can be found at www.nlihc.org.

Section 8 housing choice vouchers receive an increase, some of which is for nearly doubling tenant protection vouchers and some of which is for renewals, the Family Self Sufficiency program and administrative fees. See NLIHC's budget break down and chart at www.nlihc.org.

Reaction to the request has been strong. Representative Maxine Waters (D-CA), Ranking Member on the House Financial Services Subcommittee on Housing and Community Opportunity, issued a statement blasting the request's cut to CDBG. "The public may not know or understand the details of how CDBG funds are allocated to local communities," said Ms. Waters, "but, every mayor, every county official, every community development professional knows the indispensable role of CDBG in funding housing, neighborhood improvements, and public services. The proposed cuts to the CDBG program will leave a huge hole in the budgets of our local governments, a hole they cannot and will not be able to fill with their own resources. The net effect of cuts to the CDBG program will be a huge decrease in housing and economic revitalization at the local level. When the public sees the programs and services that will have to be eliminated if these cuts are enacted, they will be outraged and they should be."

House Democrats have pledged to fight the HUD and other domestic spending cuts. Republicans are meeting to see where members of Congress take particular issue with specific cuts, in order to formulate their budget resolution in a way that protects their priorities while acknowledging the President's overall wishes to cut spending. [NLIHC, Memo to Members, 2/11/05]

Budget Maneuvers to Cut Some Spending, Protect Tax Cuts
Housing programs are not the only ones under the knife in the President's budget proposal - more than 150 programs, including Medicaid, are under threat of cuts or elimination. Many budget analysts are reporting that this is the worst federal budget for spending cuts since the Reagan years. The President's FY06 budget request proposes to cap the growth of overall discretionary spending at 2.1%. Such a cap would prohibit discretionary funding, including funding for defense and homeland security, from keeping pace with inflation. As the President has proposed increases to defense and homeland security, other discretionary accounts, including education, law enforcement, and housing, would face cuts totaling approximately $5 billion in FY06, and $214 billion over the next five years. In addition to cuts to discretionary spending, the President's proposal would also cut entitlement spending, which includes Social Security and Medicaid, by $55 billion over the next five years.

The President's tax cuts would be protected. The budget request again includes a proposal to pass "pay as you go" requirements for mandatory spending only. Similar to the Spending Control Act of 2004, the proposal would require any increases to mandatory spending to be offset by other revenue, while tax cuts would be exempt from such a requirement.

As reported by the Center on Budget and Policy Priorities, also included in the budget is a proposal that would exempt legislation to extend tax cuts or to make them permanent from any Congressional budget enforcement. In an attempt to pass deep domestic spending cuts while protecting tax cuts, Republicans are contemplating using budget reconciliation. This process links legislation to the budget resolution, which is technically not binding. The legislation that would accompany the resolution, however, would enact spending cuts into law. A budget reconciliation would protect spending cuts and tax legislation from a Senate filibuster, which Democrats would assuredly do without a budget reconciliation.

Congress has to pass a budget by April 15, or otherwise appropriators are allowed to begin the appropriation process without a budget. In efforts to move through the budget process quickly, both Senate and House Budget Committees have set March 7 as the goal to mark up the FY2006 budget. [NLIHC, Memo to Members, 2/11/05]

Deep Cuts in Federal Grants in FY 2006 Would Squeeze Delaware
According to a report released today by the Center for Budget and Policy Priorities, Delaware, adjusting for inflation, would lose almost $30 million under cuts in grants in aid to states for FY 2006. This figure comprises grants other than Medicaid.

Some of the spending austerity in the President’s budget is accomplished by passing down costs to other levels of government. This leaves states and localities the option of either curtailing services or increasing their own taxes to compensate for declining federal funds.

* Under the President’s budget, grants to state and local governments for all programs other than Medicaid would decline by $10.7 billion or 4.5 percent from fiscal year 2005 to 2006, after adjusting for inflation. (Medicaid is excluded because changes in Medicaid grants largely reflect inflation in health-care costs in the public and private sectors alike. Considering grants other than Medicaid gives a more accurate picture of the relative level of federal funding for state and local services.)

* Grants for all programs other than Medicaid would be lower in 2006 as a percent of the economy than they were in 2001. For 2006, the budget proposes grants for programs other than Medicaid that total just 1.75 percent of GDP. In 2001, such grants were 1.99 percent of GDP. Considering grant levels relative to the economy provides a somewhat better measure of whether the grants would be adequate to maintain the current level of state and local services they support, because the cost of providing services tends to grow in tandem with the economy. If grants for all programs other than Medicaid for 2006 were at their 2001 level relative to the economy, they would be $31 billion higher than their proposed 2006 level.

* Even if Medicaid is included, total grants relative to the economy would be lower in 2006 than in prior years. Total grants in 2006 would amount to 3.42 percent of GDP, as compared to levels of 3.5 to 3.6 percent of GDP in 2002 through 2004. (Note that fiscal relief payments are excluded from this analysis as a one-time phenomenon; they are not the reason for the higher levels in earlier years.)

* These shortfalls would be extremely difficult for states and localities to handle as they slowly emerge from the fiscal crisis. Even though revenue growth has resumed, at least 24 states face fiscal year 2006 budget deficits totaling some $35 billion, averaging about eight percent of general fund spending in the states with deficits. Cuts in federal grants will enlarge these deficit gaps, and will force states and localities to institute additional budget cuts and tax increases.

The full report is available at: http://www.cbpp.org/2-7-05sfp.htm