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Jun 28, 2017

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A Better Budget: Rebuild affordable housing

by | Jun 28, 2017

Family Economic Security

President Donald Trump calls his proposed budget for fiscal year 2018, “A New Foundation For American Greatness.” Alternately dubbed the “taxpayer-first budget,” the document proposes $3.6 trillion in cuts over 10 years – largely at the expense of education, health care, housing and services that give low-income individuals and families a chance to maintain financial security – while decreasing taxes for the wealthy.

As Congress reviews the components of the Trump budget, we at Colorado Center on Law and Policy believe that a true foundation for “American greatness” begins with policies that invest in struggling Americans. To that point, we are publishing a series of analyses entitled, “A Better Budget,” which will examine the importance of programs targeted for reduction or elimination under the Trump budget. We will then outline how policymakers can strengthen – not undermine – the nation’s safety net while building an inclusive, fair and just economy that reflects our American ideals and puts more Americans on a path toward self-sufficiency.

Part Two of the series examines proposed cuts in programs that make it easier for low- to middle-income Americans to obtain and keep safe and affordable housing.

Proposed cuts: Housing
All told, President Trump’s proposed budget includes a $6.2 billion cut to the U.S. Department of Housing and Urban Development (HUD), a department that’s already woefully underfunded considering the critical importance of housing to people’s health and wellbeing and the growing problem of displacement and homelessness across the county.

Established as part of President Lyndon Johnson’s “Great Society” initiative, HUD distributes funds that allow states and local governments to develop and preserve affordable housing and invest in community development projects. After precipitous cuts from the Reagan era, HUD’s funding has remained virtually flat since the mid 80’s – with occasional ups and downs from year to year.

Under the Trump budget, HUD’s funds would be decreased by 13.2 percent. HUD Secretary Ben Carson said the cuts would be implemented through rental-assistance reforms and by eliminating certain HUD programs, while “streamlining” HUD’s internal operations. “This Budget reflects this administration’s commitment to fiscal responsibility while continuing HUD’s core support of our most vulnerable households,” Carson said.

Nationwide, Trump’s proposed cuts could cause more than 250,000 low-income people to lose their housing vouchers — jeopardizing their family stability and increasing the financial burdens they face to cover the costs of rent and utilities such as water and heat.

In Colorado, where there’s already a dearth of affordable housing and a growing homelessness crisis, the effect of such cuts may be even more pronounced since the state does not have a permanent funding source for affordable housing. Colorado would lose as much as $95 million annually across several housing and community development programs if Trump’s proposed HUD budget cuts became a reality.

The proposed cuts in the Trump budget are alarming because housing plays such a critical role in people’s lives. Housing is a source of safety and stability. It shapes where people are able to go to school and work. It is also important for a family’s health and well-being. Because of an influx of new, affluent residents, low-income Coloradans are being displaced from their communities – notably, communities of color in the Denver area.  Indeed, the number of renters in the Denver area is on the rise as fewer and fewer residents can afford the dream of home ownership.

Here are a few ways the president’s budget undermines affordable housing efforts, nationwide and in Colorado:

* The budget eliminates the Community Development Block Grant (CDBG), funded at $3.06 billion and used for various community-development projects. Under the Trump budget, the program would be phased out entirely. Colorado communities from Montrose to Costilla County would lose $33.7 million a year, eliminating funds for projects such as sidewalks, sewer systems, community programs like Meals on Wheels, senior centers and many others. From 1977 through 2014, the program has funded an estimated $1.5 billion in community projects in the state.

* The budget cuts about $1.3 billion of the $1.9 billion Public Housing Capital fund – reducing money available for repairs at 1.2 million public housing rental units nationwide. Public housing properties in Colorado qualified for $10 million in capital repairs. These cuts would slow down or halt repairs for 7,923 families in Colorado and cost the state nearly $7 million in 2018 – not to mention the untold costs to residents dignity and self-worth.

* The budget cuts $500 million of the $4.4 billion Public Housing Operating Fund, used to subsidize the rent of 1.2 million families living in public housing. In 2016, public housing properties located in Colorado qualified for $32 million in operating subsidies. Trump’s budget would reduce services to 8,137 Colorado families living in public housing and take some units out of service due to inadequate funding. Colorado would lose about $3.7 million a year if this cut goes into effect.

* The budget slices more than $2.3 billion from the $20 billion Housing Choice Voucher program, which helps low-income families pay their rent when they rent from regular private property owners. The average monthly support provided by a voucher was $840 in 2016. The cuts could mean almost 4,000 of the 33,000 families in Colorado receiving rental assistance would lose that support. All told, Colorado would lose about $39.4 million a year.

* The budget eliminates the national Housing Trust Fund, the first new resource in decades to help build and preserve affordable housing options for low-income Americans – including those experiencing homelessness. Signed into law in 2008 by President George W. Bush, the fund began receiving money from an assessment on transactions conducted by Freddie Mac and Fannie Mae in 2015, and became “fully operational” in 2016. The first tranche of funding, $174 million, was distributed among various housing agencies around the country. Beneficiaries include low-income seniors, families of people with disabilities and other vulnerable populations. The funds amount to roughly $3 million per state on average and was expected to grow. While insufficient for solving housing needs locally and nationwide, a recent report from The Urban Institute (“Denver and the State of Low- and Middle Income Housing”) cited the new fund as a ray of hope for Denver’s housing market. Eliminating the program would dash any such hopes while not providing any additional funds for other budgetary priorities.

Overall, these cuts would have a devastating effect in a state where housing costs are out of reach for many residents. Low-income Coloradans in particular would be at greater risk of financial strain — and even homelessness — if these cuts see the light of day.

While Trump’s budget is built on the principle that states should take a bigger role in providing human-service programs, Colorado could not absorb cuts of this magnitude, which effectively means that critical needs will go unmet.

What policymakers should do
Lower-income households – particularly people of color who have been disadvantaged over generations – had much of their wealth wiped out during the Great Recession due to foreclosure on their homes. Hispanics experienced the highest rate of foreclosures on loans originated between 2004 and 2008 – 11.9 percent, compared with 9.8 percent for Blacks and 5.1 percent for Whites. Federal funds are essential to give these families the financial footing they lost during the recession. We agree with the National Association of Housing and Redevelopment Officials’ (NAHRO) assertion that the ability of housing and community-development agencies to meet the needs of their communities is dependent on a responsible level of federal investment.

Data shows that families experiencing housing instability have a harder time maintaining healthy relationships and managing personal stress. This could lead to or exacerbate problems at work or health issues. Recent research finds that Latino and Black adolescents had better educational outcomes when they resided in economically secure neighborhoods. The pattern holds true in Denver, where many low-income families are being displaced from the city and pushed into the concentrated disadvantaged neighborhoods in the suburbs.

If lawmakers considered policies that helped more people obtain safe and affordable housing, communities, economies and kids around the country and future generations would have a better chance to thrive. Funding levels for all the programs should be increased, not decreased.

Along with increasing funds for vouchers and housing acquisition, here are some recommendations to promote affordable housing and economic mobility among low-income people, notably people of color:

* Restructure the mortgage interest deduction so the benefit is directed to low- and middle-income taxpayers who are more likely to be deciding whether to own or to rent. The Urban Institute says the restructuring could be accomplished by changing the deduction to a refundable credit, limiting the maximum amount and providing a credit only for a household’s primary residence, not second homes. Other tax strategies might include implementing a first-time homebuyer’s tax credit or helping people save for a down payment through a “first-time homebuyers’ savings plan” that provides federal matching funds and allows tax-free withdrawals for first-time home purchases.

* Implement a “renter’s tax credit,” on a federal and/or statewide level as recommended by the Center on Budget Policy Priorities. Such tax credits would be available to tenants, landlords or the owner’s lender (in exchange for reducing the owner’s mortgage loan payments). The tax credit would be based on a percentage of the rent reduction that the owner provides to the tenants. The tax credit could be structured to go directly to renters. If passed, such a tax credit would decrease the need for housing subsidies and promote affordability.

* Expand federal Low-Income Housing Tax Credit (LIHTC) programs. Established in 1986, the LIHTC promotes the private production of affordable rental housing by providing an income tax credit in exchange for private-sector equity investment. States are allocated tax credits, which are awarded to private developers for affordable-housing projects. The program cost the federal government an estimated $7.8 billion in 2015. Colorado has a state LIHTC as well, which augments the federal tax credits. Senators Cantwell and Hatch have introduced a bill to expand the federal LIHTC. That’s the direction Congress should be going.

As policymakers, developers and philanthropists work on a statewide and local level to address the complicated and vexing problem of affordable housing, more federal funding tied to innovative solutions is essential.

Maintaining the “status quo” in this area clearly isn’t acceptable, but Trump’s proposed budget cuts in housing for low-income Americans will only worsen matters. Having healthy and vibrant communities is correlated with having safe and affordable places where people can live and work.

Ask your U.S. representatives to oppose cuts to HUD and instead to invest in affordable housing that will give all Coloradans a chance to contribute to Colorado’s continued and sustainable economic success.

– By Bob Mook

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HEALTH:
HEALTH FIRST COLORADO (MEDICAID)

Health First Colorado is the name given to Colorado’s Medicaid program. Medicaid provides public, low-cost health insurance to qualifying adults and children. It is an entitlement program funded by the federal, state, and county governments and is administered by counties in Colorado. Those who are required to pay must pay a small co-pay when receiving certain health care services.

State Department: Department of Health Care Policy and Financing

Eligibility: Most adults 18 to 64 are eligible for Medicaid in Colorado if their household income is at or below 133% of the federal poverty limit (FPL). Pregnant women are eligible with incomes of up to 195% FPL, while children under 18 may be eligible if the live in a household with income at or below 142% FPL. Some adults over 65 may also be eligible for Medicaid.

Program Benefits: Through Medicaid, low-income Coloradans are eligible for a range of health care services at little to not cost. Services provided include doctors visits, prescription drugs, mental health services, and dental care. Co-pays for certain individuals may be needed for certain services.

Program Funding and Access: Colorado funds our Medicaid program through state and federal dollars. Medicaid is an entitlement program, which means that all who are eligible for Medicaid can access the program, regardless of the funding level in a given year. This does not mean that it is always easy to access Medicaid, even when eligible. And since the program is administered by counties, funding levels for county staff and other administrative roles can make it easier or harder for Coloradans to access the program. On top of this, not all medical providers accept Medicaid which limits the ability of Coloradans to seek health services even if enrolled, such as if the nearest provider is a 2+ hour drive away.

Note: This data is from before the pandemic and does not reflect changes in enrollment rules during the COVID-19 pandemic and public health emergency.

Statewide Program Access 2015-19: Over the study period of this report, an average of 89.0% of the population at or below 133% of FPL (i.e., the population who is likely to be eligible for Medicaid) were enrolled in Medicaid in Colorado.

FOOD SECURITY:
SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM (SNAP)

The Supplemental Nutrition Assistance Program or SNAP helps low-income Coloradans purchase food by providing individuals and families with a monthly cash benefit that can be used to buy certain foods. SNAP is an entitlement program that is funded by the federal and state governments and administered by counties in Colorado.

State Department: Department of Human Services

Eligibility: Currently, Coloradans qualify for SNAP if they have incomes below 200% FPL, are unemployed or work part-time or receive other forms of assistance such as TANF, among other eligibility criteria. Income eligibility for SNAP was different during the study period of this report than today—it was 130% FPL back in 2019 for example. The US Department of Agriculture uses the population at or below 125% FPL when calculating the Program Access Index (or PAI) for SNAP. We follow this practice in our analysis despite Colorado currently having a higher income eligibility threshold.

Program Benefits: SNAP participants receive a monthly SNAP benefit that is determined by the number of people in their household and their income. Benefit amounts decrease as income increases, helping households avoid a sudden loss of SNAP when their incomes increase, even by a minor amount. Benefits are provided to an Electronic Benefit Transfer (EBT) card that can be used to purchase eligible food items, such as fruits and vegetables; meat, poultry, and fish; dairy products; and breads and cereals. Other items, such as foods that are hot at their point of sale, are not allowable purchases under current SNAP rules.

Program Funding and Access: SNAP, like Medicaid, is a federal entitlement program. This means that Colorado must serve any Coloradan who is eligible for the program. As such, funding should not be a limit to how many Coloradans can be served by the program. However, funding for administration of SNAP at the state and county level can limit the ability of county human service departments to enroll those who are eligible. Other program rules and administrative barriers can make it difficult for Coloradans to receive the benefits they are legally entitled to receive.

Statewide Program Access 2015-19: Over the study period of this report, an average of 61.1% of the population at or below 125% of FPL (i.e., the population who is likely to be eligible for SNAP) were enrolled.

FOOD SECURITY:
SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS AND CHILDREN (WIC)

The Special Supplemental Nutrition Program for Women, Infants, and Children, also know as WIC, provides healthcare and nutritional support to low-income Coloradans who are pregnant, recently pregnant, breastfeeding, and to children under 5 who are nutritionally at risk based on a nutrition assessment.

State Department: Department of Public Health and Environment

Eligibility: To participate in WIC you must be pregnant, pregnant in the last six months, breastfeeding a baby under 1 year of age, or a child under the age of 5. Coloradans do not need to be U.S. citizens to be eligible for WIC. In terms of income, households cannot have incomes that exceed 185% FPL. Families who are enrolled in SNAP, TANF, Food Distribution Program on Indian Reservations (FDPIR), or Medicaid are automatically eligible for WIC. Regardless of gender, any parents, foster parents, or caregivers are able to apply for and use WIC services for eligible children.

Program Benefits: WIC provides a range of services to young children and their parents. These include funds to purchase healthy, fresh foods; breastfeeding support; personalized nutrition education and shopping tips; and referrals to health care and other services participants may be eligible for.

Program Funding and Access: WIC is funded by the US Department of Agriculture. The state uses these federal funds to contract with local providers, known as WIC Clinics. In most cases, these are county public health agencies, but that is not the case in all Colorado counties. Some WIC Clinics cover multiple counties, while others are served by multiple clinics. Private non-profit providers are also eligible to be selected as a WIC Clinic.

Statewide Program Access 2015-17: Between 2015 and 2017, an average of 52.2% of the population eligible for WIC were enrolled in the program in Colorado.

Financial Security:
Colorado Works

Colorado Works is the name given to Colorado’s program for Temporary Assistance to Needy Families or TANF. It is an employment program that supports families with dependent children on their path to self-sufficiency. Participants can receive cash assistance, schooling, workforce development and skills training depending on the services available in their county.

State Department: Department of Human Services

Eligibility: In general, Coloradans are eligible to enroll in TANF if they are a resident of Colorado, have one or more children under the age of 18 or pregnant, and have very low or no income. For example, to be eligible to receive a basic cash assistance grant through TANF, a single-parent of one child could not earn more than $331 per month, with some exclusions—and would only receive $440 per month (as of 2022). That said, there are other services provided by counties through TANF that those with incomes as high as $75,000 may be eligible for. In addition to these, participants in TANF are required to work or be pursuing an eligible “work activity” or work-related activity. Any eligible individual can only receive assistance if they have not previously been enrolled in TANF for a cumulative amount of time of more than 60 months—this is a lifetime limit that does not reset. Counties may have additional requirements and offer benefits that are not available in other counties in Colorado.

Program Benefits:  While the exact benefits that one is eligible for under TANF can vary, all qualified participants are eligible to receive a monthly cash payment, call basic cash assistance. Other than cash assistance, counties are have a lot of choice in how to use their TANF funding; generally a use of TANF funds is appropriate so long as it advances one or more of the four purposes of the program: (1) provide assistance to needy families so that children can be cared for in their own homes or in the homes of their relatives; (2) end the dependence of needy families on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies; and (4) encourage the formation and maintenance of two-parent families.

It is important to note that those eligible for TANF are also eligible for many of the other programs we’ve included in this report, such as SNAP, Medicaid, and CCCAP.

Program Funding and Access: Colorado funds its TANF program through funds received from the federal government through the Temporary Assistance for Needy Families block grant. Most of the federal funds are allocated by the state to counties, which are required to provide a 20% match of state funding. Federal and state rules allow the state and counties to retain a portion of unspent funds in a TANF reserve.

Statewide Program Access 2015-19: Over the study period of this report, an average of 50.7% of the population at or below 100% of FPL (i.e., the population who is likely to be eligible for TANF) were enrolled in TANF in Colorado.

EARLY LEARNING:
COLORADO CHILD CARE ASSISTANCE PROGRAM (CCCAP)

The Colorado Child Care Assistance Program provides child care assistance to low-income families and caregivers living in Colorado in the form of reduced payments for child care. It is a program funded by the federal, state, and county governments and is administered by counties in Colorado. The share owed by parents/caregivers is determined on a sliding scale based on the family’s income.

State Department: Department of Early Childhood Education

Eligibility: Counties set eligibility for families separately, but must serve families with incomes at or below 185% of the Federal Poverty Limit. Families accepted to the program are no longer eligible once their income exceeds 85% of the state median income. Parents or caregivers must be employed, searching for work, or engaged in another approved activity to be eligible for CCCAP. Parents and caregivers enrolled in Colorado Works (Temporary Assistance to Needy Families or TANF) or in the child welfare system are also eligible to participate in CCCAP. Generally, CCCAP serves families with children under 13, although children as old as 19 may be eligible under certain circumstances.

Program Benefits: If a family is eligible for CCCAP and has income, they may likely have to pay a portion of their child’s or children’s child care costs each month. The amount that families owe is based on their gross income, number of household members, and the number of children in child care in the household. As such, households tend not to experience a benefit cliff with CCCAP when they see their incomes increase

Program Funding and Access: Colorado funds the CCCAP program using federal dollars it receives from the Child Care and Development Block Grant program. The state allocates federal and state funds to counties using a formula that takes into account factors like current caseloads and the number of eligible residents. Assistance is available until the county’s funds are spent, so the number of families that can be served is often a function of how much funding is available and the income and composition of the household that applies. It is not uncommon for counties to overspend or underspend their allocations of funds. The state reallocates unspent funds from counties who underspent to those who overspent. While underspending could indicate a problem with the way a county administers its CCCAP program, it could just as likely be a sign that there are few providers in the county who participate in CCCAP—or a lack of providers generally.

Statewide Program Access 2015-19: Over the study period of this report, an average of 10.8% of the population at or below 165% of FPL and younger than age 13 (i.e., the population who is likely to be eligible for CCCAP) were enrolled in CCCAP.

Housing:
HUD rental assistance programs

The US Department of Housing and Urban Development (HUD) has three housing assistance programs that we look at together: Housing Choice Vouchers (Section 8), Project-based Section 8, and Public Housing. In Colorado, these programs provided assistance to over 90% of the households who received federal housing assistance from all HUD programs. Through federally funded, local or regional public housing agencies (PHAs) are the agencies that administer these programs, through not all are available in all counties. These are not the only programs available in Colorado that assist households afford the cost of housing, such as units funded through federal and state tax credit programs.

State Department: Department of Local Affairs

Eligibility: Generally, households with incomes under 50% of the area median income (AMI) of the county they live in are eligible for these rental assistance programs, although PHAs have discretion to select households with incomes at higher percentages of AMI. That said, HUD requires that 75% of new vouchers issued through the Housing Choice Voucher/Section 8 program in a given year are targeted to households with incomes at or below 30% of AMI. PHAs are also able to create criteria that give priority to certain types of households who are on waiting lists for these programs.

Program Benefits: These rental assistance programs help households afford the cost of housing by reducing their housing costs to around 30% of their household income. In the case of the Housing Choice Voucher program, the PHA pays the voucher holder’s landlord the remaining portion of the rent.

Program Funding and Access: Funding and access are both challenges for these rental assistance programs. In addition to limitations on the number of public housing units or housing vouchers a PHA can manage or issue, lack of funding compared to the need constrains the ability of PHAs to assist low-income households. In 2020, Coloradans were on waitlists for Housing Choice Vouchers for an average of 17 months. Waitlists also exist for the other rental assistance programs.

Statewide Program Access 2015-19: Over the study period of this report, an average of 21.1% of renter households with incomes at or below 50% AMI (i.e., the population who is likely to be eligible for HUD rental assistance programs) were living in subsidized housing.