There is some good news to report. Federal spending for nondefense discretionary programs, including housing and homelessness, appears to hold steady in the debt ceiling agreement reached late last week. The deal caps discretionary spending at FY 2023 levels for FY 2024 and allows a small 1% increase in FY 2025. President Biden’s budget proposal originally sought a 1.6% increase in spending for the Department of Housing and Urban Development while Congressional Republicans had proposed cuts as high as 24%. Because the final deal only covers FY 2024 and 2025, the longer-term impact on discretionary programs will be modest. Republicans had not just proposed larger cuts to discretionary spending but had proposed extending those cuts for a decade. 

However, there are concerns that while discretionary program funding remains constant, HUD housing programs that are impacted by inflation and market changes will not have the resources needed to assist all households currently receiving assistance. The National Low Income Housing Coalition has said that the agreement could result in tens of thousands of households losing their rental assistance. In addition, the deal would rescind unobligated COVID-19 relief funding, but spare Emergency Housing Vouchers and Emergency Rental Assistance funding. The impact of the lost COVID-19 funding on California is unknown at this time. 

Note that the conversations over where budget cuts will be made will continue and is unlikely that these cuts will be made across the board. As a result, the precise impact to housing and homelessness programs will not be known until all spending bills are drafted and approved. In past years, cuts to impacted programs have been reversed through legislation or through the budget process, so there remain a lot of unknowns. LeSar will continue to update you on the impact of budget negotiations on federal housing and homelessness funding as information becomes available.