Housing and Urban Development:

Comments on HUD's Fiscal Year 1999 Budget Request

T-RCED-98-123: Published: Mar 12, 1998. Publicly Released: Mar 12, 1998.

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Judy A. England Joseph
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GAO discussed the Department of Housing and Urban Development's (HUD) fiscal year (FY) 1999 budget request, focusing on: (1) actions HUD has taken or plans to take to improve its budget estimates; (2) the reasonableness of HUD's estimate for Section 8 tenant-based assistance; (3) HUD's justification for its Section 8 project-based amendment request; (4) HUD's request for funding to assist the homeless; (5) HUD's request for $100 million to fund its new Regional Connections Initiative; and (6) the future budgetary implication of welfare reform.

GAO noted that: (1) HUD recognizes the need to improve its budget estimating process with better oversight and documentation and has started to improve its process by modifying its organizational structure to increase oversight among the staff responsible for formulating budget estimates; (2) however, many of HUD's planned improvements were not implemented in time to affect HUD's FY 1999 budget estimate but, according to HUD officials, will be in place to enhance the FY 2000 process; (3) HUD's request for $4.7 billion to renew Section 8 tenant-based assisted housing contracts for FY 1999 could be reduced by $439 million; (4) this is the amount of excess budget authority in the Section 8 moderate rehabilitation program that could be used in place of new budget authority to renew expiring housing assistance contracts; (5) in addition, because this excess budget authority exists, HUD may not need the $70 million it has requested for Section 8 moderate rehabilitation amendment funding; (6) HUD's budget request for $1.3 billion in Section 8 project-based amendment funding--funds needed to cover shortfalls in long-term Section 8 contracts--substantially exceeds the amounts that HUD's analyses indicated are needed; (7) to help address the needs of the nation's homeless, HUD has requested 34,000 new Section 8 vouchers; (8) although these new vouchers will increase the amount of direct housing assistance for the homeless, HUD has not developed the eligibility standards or other planning criteria for these new vouchers that would facilitate implementing the program; (9) HUD's budget request for $100 million for the Regional Connections Initiative (RCI), a new set-aside within the Community Development Block Grant program to address key regional issues, does not provide enough detail to indicate whether this is a reasonable funding level for the program; (10) the additional support that HUD provided, however, does not recommend a significant federal effort to address regional problems; (11) nevertheless, HUD officials believe the funding level is a manageable set aside; (12) because of the work required to initiate a new program like this, GAO questions whether the funds can be awarded in FY 1999; (13) welfare reform may have a substantial future impact on HUD's spending for assisted housing for low-income households; and (14) however, estimating the impact may not be possible because the states' differing welfare reform provisions will create varied state-by-state and year-by-year impacts.

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