HUD slices $377 million in disaster relief to meet mandated cut

Housing and Urban Development has cut $377 million from its $6.5 billion share of supplemental disaster relief included in the fiscal 2009 stopgap funding bill to comply with a congressional requirement in an fiscal 2008 measure that HUD implement a $1.25 billion rescission.

Most of the $1.25 billion -- $873 million -- came from the unspent dollars of various agency accounts, like the Section 8 low income housing assistance program, HUD officials said Wednesday in an interview with CongressDaily.

"To comply with the law, HUD rescinded $713 million from excess tenant and project-based Section 8 balances and $160 million from other unobligated balances, totaling $873 million," a HUD official said. "The $873 million was comprised of unused prior appropriations, expiring funds, and recaptured balances; all of which had minimal, if any, impact on the quality or level of services provided by our programs."

But to come up with the remaining $377 million, HUD decided cut into its share of Community Development Block Grant disaster funding included in the fiscal 2009 continuing resolution. The spending package, which was signed into law Sept. 30, included a total of $23 billion in supplemental disaster funding, $6.5 billion of which went to HUD.

HUD decided to take the funding from the disaster funding pool because it typically takes states a long time to spend those dollars to rebuild, a HUD official said, citing such things as public comment periods for housing projects and the time it takes to line up financing, especially in the current economy. For example, while Louisiana has spent about 72 percent of the first two tranches of federal disaster funding it received this year, it has only spent about 16 percent of a third block of funding, according to HUD data. Over all, the Gulf States have only spent about 54 percent of the disaster funding they have received this year.

The HUD officials stressed that the only other option would have been to take funding from elderly, disabled and homeless programs, which would have immediately reduced aid to those populations. Eliminating funding from those accounts would have reduced the production of permanent elderly housing by approximately 2,313 units for a population whose typical member is a 74-year-old widow with an income of less than $10,000 per year, according to HUD. The move would have also cost the nation over 420 new accessible units for persons with disabilities -- a population with an average household income of just $9,875. A reduction in homeless grant funding would have meant that roughly 7,000 adults and children would have lost supportive services that keep them off the streets, the agency concluded.