Chairman Allard, Ranking Member Reed, and distinguished Members of the Committee, thank you for this opportunity to discuss the Department of Housing and Urban Development’s budget for fiscal year 2002.
I am both humbled and energized by the challenges that face us, in this Department and this nation, as we work to improve housing and expand opportunities for families seeking to move ahead. President Bush and I are committed to restoring the confidence of the Congress, the Department’s constituents, and the American people in the operation of this Agency.
This budget is the first step toward restoring that confidence. It is a compassionate and responsible budget that will allow us to serve people more effectively, empowering individuals and communities across this great land.
We cannot face this challenge alone. We look forward to the support of this Congress and particularly this Subcommittee to accomplish this.
The American Taxpayer will measure our success not by how much money we spend, but by how many families have a better home, by how many immigrants get the chance to buy their first house, and by how many children grow up in the kind of neighborhood we all want to live in.
Our existing programs must operate efficiently and effectively before we create additional programs. Over the past two decades, the Department has grown to include more than 300 programs. Simply adding new government programs does not necessarily improve the lives of the citizens who need the most help.
The Administration’s overall growth for federal spending of four percent is a responsible and appropriate level. Nevertheless, the President also recognizes that we have an obligation to increase homeownership opportunities and serve those that cannot afford decent housing. The Department of Housing and Urban Development’s proposed budget requests an increase
s of nearly seven percent in budget authority for fiscal year 2002.
Buying a home is the biggest investment most families ever make. By building equity in a home families can pass on wealth from one generation to the next, can provide for child’s higher education, or can access venture capital for small businesses --- all the while strengthening their communities. All Americans should have these opportunities, no matter the color of their skin.
Nearly 70 percent of all families have come to realize the American Dream and own their own home. Yet, despite this record number of homeownership, there are still communities that lag behind: less than half of African-American and Hispanic-American families own their homes.
We can do better. We need to tear down barriers to homeownership for families that are financially able to sustain homeownership. President Bush’s budget includes three new homeownership initiatives to expand opportunities for hundreds of thousands of low-income and minority families.
The "American Dream Down Payment Fund" provides $200 million to match down payment assistance, helping more than 130,000 low-income families overcome the single greatest obstacle to homeownership. President Bush also proposes a tax credit to support the rehabilitation or construction of at least 100,000 homes for low-income families over the next five years. The Administration will seek authority to offer low-income families new adjustable-rate mortgages that protect new homebuyers from dramatic changes in market rates until they can establish an economic foothold.
The American Homeownership and Economic Opportunity Act of 2000 provided low-income families the ability to use rental vouchers for down payment on a home. President Bush proposes to make this provision permanent and not subject to appropriations, enabling the Department to help more low-income families become homeowners. This builds on the existing authority to use vouchers for mortgage payments.
Finding affordable and decent housing continues to be a problem for many Americans. Almost five million very low-income renter households have "worst case needs" for rental housing. While this number represents an eight percent decline from 1997 to 1999, it is still unacceptable.
In order to expand the production of affordable housing, President Bush proposes to raise the limits for FHA multi-family insurance by twenty-five percent. This is the first increase in nearly ten years and will help spur the development of affordable housing in moderate to high cost urban areas.
We are strengthening our traditional obligations to public housing by increasing the public housing operating budget by $150 million. This money can be used by local housing authorities to fund those programs that best meet urgent needs, including the rising costs of utilities.
President Bush and I are also continuing our strong commitment to helping families with the costs of rental housing through Section 8 housing vouchers. This budget renews all expiring Section 8 contracts at a cost of $15.1 billion – an increase of $2.2 billion over fiscal year 2001 – and funds an additional 34,000 Section 8 housing vouchers at an additional cost of nearly $200 million.
The budget proposal does not request as many new housing vouchers as in previous years for two reasons. First, we cannot continue to increase the Department’s budget each year by 12 to 16 percent. At the previous year’s rate of increase, our budget would surpass $100 billion by 2010. Second, there has been a serious problem with the utilization of existing Section 8 vouchers by state and local agencies and some vouchers do not get used as quickly as they should. I will work with Congress to improve the utilization of Section 8 vouchers by state and local housing agencies.
Vouchers are more than just a piece of paper; for many families they are the first step in the process of greater economic opportunity and homeownership. There are two issues regarding the voucher utilization problem: making vouchers easier to use and improving the management capacity of local housing agencies. First, we should take additional steps to ensure that more families are able to use their housing vouchers. While vouchers work well in most markets, there is growing evidence that families are having difficulties using vouchers in certain markets. We should resolve that.
Although market conditions affect the utilization of vouchers in different areas, under-utilization is ultimately a management issue. Good managers can overcome difficult market conditions and ensure that all of their vouchers are used. I plan to work with housing authorities to help them become better managers so that they can serve more families. We can do this through a combination of management techniques: fully employing the Section 8 Management Assessment Program (SEMAP) that gives substantial weight to utilization rates, giving priority in fund allocation to housing authorities with high utilization rates, and implementing HUD’s new authority to make some vouchers project-based.
While we focus on our goal of improving housing opportunities, this budget does not neglect the Department’s traditional role of supporting community and economic development. Much of this support is carried out by the Community Development Block Grant (CDBG) Program and this Administration continues strong support of this important program. CDBG will receive almost $4.4 billion in funding for formula grants to meet the specific needs of local governments. CDBG funds locally developed programs that revitalize communities and help spur economic growth.
I would like to point out that, while we have kept funding for CDBG formula grants at historically high levels, the new Census data will inevitably result in changes in the funding level for each community. Some communities will get more money and some will get less. I emphasize this to explain why, even though the funding level for CDBG formula grants is kept constant for fiscal year 2002, some communities will experience a reduction in funds. Others, of course, will experience an increase. Any estimates that we generate at this time rely on the old Census data and are subject to change.
In addition to the $4.4 billion in formula funding for CDBG, we will provide $80 million in grants to help create or expand community technology centers in economically distressed communities and provide technical assistance to those centers. Through these centers, low- and moderate-income individuals will have access to computers and technology that will improve their educational opportunities and job skills. We cannot sustain homeownership without greater economic self-sufficiency. President Bush and I are committed to beginning to close the digital divide so that low- and moderate-income Americans are not left further behind. Every American deserves the opportunity to succeed in the 21st century workforce.
The President’s proposed budget strongly recognizes the needs of the most vulnerable people in our society – the elderly, persons with disabilities, the homeless and individuals with AIDS. All of HUD’s programs that provide assistance to these vulnerable populations will receive funding at or above current levels.
The budget increases funding for elderly housing programs by $6 million to $783 million. The largest Department program targeted to the elderly is the Supportive Housing for Elderly Program, which provides capital advances to finance the construction and rehabilitation of supportive housing for low-income senior citizens, including converting some properties to assisted-living facilities for frail elders. This program also provides the elderly with rent subsidies to help make living in these homes affordable.
To assist those with disabilities, we also fully fund the Supportive Housing for Persons with Disabilities Program, as well as providing an additional $20 million to fund the "Improving Access Initiative." This proposal will assist those non-profit groups and community organizations across the country that are exempt from the Americans with Disabilities Act, but who still want their facilities to be accessible to persons with disabilities.
In addition, we are funding at current levels – $1.123 billion – homeless assistance programs. These not only aid those with the most pressing need for shelter, but provide services, temporary housing and permanent housing to reduce homelessness. For those who lack adequate shelter, our goal should be to end chronic homelessness by getting people the help they need. At HUD that means increasing the availability of permanent housing. This agency is committed to continuing its homeless programs, but in the future we see ourselves spending more of our resources on permanent housing, and less on social services. We will work with HHS to reduce the barriers that prevent the homeless from accessing much-needed social services for which they are eligible.
Housing Opportunities for Persons with AIDS – also known as the "HOPWA" program – will see its budget increased by an additional $20 million, for a total of $277 million. These grants, provided to state and local governments, help low-income individuals stricken with AIDS find housing assistance, as well as support services.
This budget also recognizes the damage done by lead-based paint, especially to young children. The Administration increased funding for lead-based paint hazard reduction by $10 million. I want to do everything I can to ensure that our children are protected from such dangers so that they can grow up in safe and healthy homes. Since the late 1970s, incidents of lead poisoning have declined from 3 million to 890,000. Yet despite this progress, lead poisoning remains one of the most common diseases our children face. The solution lies in preventing lead-based paint hazards in housing.
The Department of Housing and Urban Development has been leading the effort to eliminate lead-based paint hazards in our Nation’s housing stock. Our lead-based paint grant program, which began under the first Bush Administration, now funds lead hazard control operations in over 200 jurisdictions across the Nation. Since HUD cannot solve this problem alone, this additional money will go into a special grant program that will leverage more resources from the private sector to meet the needs of our children.
The President also increased the amount of funds available for fair housing enforcement. If this Agency is to fulfill its mission of increasing homeownership and affordable housing opportunities for all citizens, we must pledge ourselves to the principles embodied in our fair housing laws.
While most of the Department’s programs are funded at last year’s historically high levels or have received a slight increase, there have been a few well-publicized reductions. Let me take a few minutes to address these specific reductions.
One such program is the Public Housing Drug Elimination Program. Though no one can argue with the good intentions behind this program, unfortunately it suffered from a large number of abuses. Not only did the Inspector General find that it was nearly impossible to measure the program’s effectiveness, but she has also criticized the program for funding activities such as unauthorized travel, bank loans, and Christmas parties.
Some funds were used by the Department to implement a gun buy-back program, which the Comptroller General concluded was not a legal use of funds. Drug Elimination funds were also spent to provide public housing residents with "creative wellness" programs. These scientifically questionable programs are a significant diversion from this Agency’s mission and undermine public support for HUD’s programs.
We need to restore confidence that the Department of Housing and Urban Development can carry out its core mission. We are not a law enforcement agency or an agency with expertise in dealing with drug abuse. To the extent that there are law enforcement issues surrounding our public housing projects, we will work with the Justice Department and state and local police departments. To the extent that there are drug problems in public housing, we will work with those federal, state, and local agencies that are in a much better position to address these problems.
Although we have eliminated this $309 million program, we have taken, as I mentioned earlier, $150 million of those funds and placed them in the Public Housing Operating Fund. This extra $150 million can be used for a wide variety of purposes, including the continued funding of successful anti-drug efforts. But rather than mandating that housing authorities use this money for drug elimination programs, we trust these authorities to make those tough decisions about what programs best meet their needs.
As an example, if a certain housing authority found that fences, lighting, and greater police patrols funded by the Drug Elimination Program helped reduce crime and drug use, then it will have the opportunity to continue funding these worthwhile programs from the additional $150 million in the Operating Fund. Good anti-drug programs in our public housing projects will continue to find funding, while we filter out the waste and abuse that tarnished a program that began with such noble intentions.
Another reduction in our budget occurs in the Public Housing Capital Fund. Our fiscal year 2002 budget provides nearly $2.3 billion for the fund, which is a reduction of $700 million from the previous fiscal year. This money is sufficient to cover 100 percent of the modernization needs of housing authorities that are expected to accrue next year.
The purpose of this reduction is to draw down Capital Funds that have already been appropriated, but not yet expended by public housing authorities. Currently, there is $5 billion in unspent Capital Funds from FY 2000 and previous fiscal years. These figures do not include the $3 billion that was appropriated for fiscal year 2001. Once the Department distributes fiscal year 2001 Capital Funds, and approves plans for the use of those funds, housing authorities will have a total of $8 billion in unspent Capital Funds available to meet their modernization needs.
These billions of dollars of unspent Capital Funds ensure that no roof at any public housing project has to go unrepaired, and no severe modernization need has to be neglected. Public housing authorities currently have the funds that are necessary to begin addressing the backlog of modernization needs. Our fiscal year 2002 budget encourages them to spend those funds to address their priority needs.
We are not just looking to housing authorities for solutions to the problem of unspent funds. We are also examining the Department’s practices to determine whether funds are distributed and spent in a timely manner. Among other steps that we plan to take is a change in the timing of our initial allocation of funds to housing authorities, ensuring that they get funds sooner than in prior years.
I look forward to working with the Congress on the many issues facing the Department of Housing and Urban Development. Congress is now conducting two important commissions – the Millennial Housing Commission and the Commission on Affordable Housing and Health Care Facility Needs in the 21st Century. The Department is ready to offer any assistance it can to aid the work of these two commissions. I look forward to working together to assure that the Department of Housing and Urban Development can efficiently and effective meet America’s housing and community development needs.
Home | Menu | Links | Info | Chairman's Page