Pursuant to a congressional request, GAO discussed selected aspects of 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 request for Section 8 tenant-based and moderate rehabilitation housing 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 (RCI); (6) HUD's capacity to manage its HOPE VI program; and (7) the budgetary implications for public and assisted housing of welfare reform.

GAO noted that: (1) HUD has recognized the need to improve its budget-estimating process with better oversight and documentation, and has started to modify its organizational structure to increase its oversight of the staff responsible for formulating budget estimates; (2) however, many of HUD's planned improvements--such as the Office of Management and Budget's analysis of the program offices' submissions--were not implemented in time to help ensure the accuracy of HUD's FY 1999 budget estimate; (3) according to HUD officials, these improvements will be in place to enhance the FY 2000 process; (4) while HUD has significantly improved its budgeting for Section 8 tenant-based and moderate rehabilitation contract renewals, HUD's request for $4.8 billion to renew and amend Section 8 tenant-based and moderate housing contracts for FY 1999 could be overstated by as much as $691 million; (5) because this excess budget authority exists, HUD will not be likely to need the $70 million it has requested to amend Section 8 moderate rehabilitation contracts; (6) HUD's budget request for $1.3 billion to amend Section 8 project-based contracts--needed to cover shortfalls in these long-term contracts--substantially exceeds the amounts that HUD's analyses indicated are needed; (7) this figure exceeds the amount of $463 million that HUD used in its budget request to offset its FY 1999 needs for funding to amend project-based contracts; (8) to help address the needs of the nation's homeless, HUD has requested 34,000 new Section 8 vouchers; (9) if approved, the vouchers would help to address congressional concern that a high proportion of funding for homeless assistance has been spent in the past on supportive services instead of on direct housing assistance; (10) however, HUD has not developed the eligibility standards or other planning criteria that would facilitate the program's implementation; (11) HUD's budget request for $100 million for RCI does not provide enough detail to indicate whether this level of funding is reasonable for the program; (12) HUD may not have the capacity to properly manage $550 million it is requesting for the HOPE VI program and it will have to rely more on outside contractors to oversee the program; (13) welfare reform may have a substantial future impact on HUD's spending for assisted housing for low-income households; and (14) estimating the impact may not be possible because the states' differing welfare reform provisions produce different effects from state to state and year to year.