HUD's FY 1998 Budget Request: Some Requests for Funding May Be Unnecessary

Highlights

GAO discussed the Department of Housing and Urban Development's (HUD) fiscal year (FY) 1998 budget request, focusing on: (1) the estimates HUD used to develop its budget request for renewing Section 8 assisted housing contracts; (2) HUD's justification for 50,000 additional Section 8 certificates; (3) HUD's success in reducing the level of uncommitted public housing modernization funds held by housing authorities; and (4) HUD's request for $100 million to fund the second round of the Empowerment Zone/Enterprise Community (EZ/EC) program.

Recommendations

Matter for Congressional Consideration

Matter	Status	Comments
The Congress may wish to consider not funding the various contingency allowances that HUD has proposed in its FY 1998 budget request for tenant-based Section 8 contract renewals until HUD provides the Congress a more complete justification of the need for each contingency allowance, including HUD's policy that allows housing authorities to retain large excess contract reserves. As part of that justification, HUD should advise the Congress to what extent, if any, each of the allowances or reserves duplicates other allowances or reserves.	Closed – Implemented	Instead of not funding one or more line items or allowances in HUD's fiscal year 1998 budget proposal for Section 8 assisted housing contract renewals, the House Appropriations Committee stated that it is recommending to fully fund the Section 8 program because of the Balanced Budget Agreement. However, in the fiscal year 1997 Emergency Supplemental Appropriations Act, the Congress took an alternative but similar action to what GAO suggested regarding the 1998 budget submission. In that act, the Congress required HUD to recapture $5.8 billion of Section 8 excess budget authority from prior-year appropriations so that the Congress could rescind $3.65 billion and assign the remaining $2.15 billion to a "Reserve Preservation Fund." This action by the Congress more than addressed the matter for consideration and went far toward improving the accuracy of HUD's future budget submissions.
Because HUD has determined that $90 million in project-based contract renewals is not needed in FY 1998, the Congress should consider not appropriating this amount for such contract renewals.	Closed – Not Implemented	The House Appropriations Committee stated that it fully funded HUD's Section 8 contract renewal request because of the Balanced Budget Agreement. Although neither the House nor the Senate chose to deny HUD's request for funding for these project-based Section 8 contract renewals, as GAO suggested in the matter for consideration, the Congress did rescind $3.65 billion from prior-year Section 8 tenant-based reserves in the fiscal year 1997 Emergency Supplemental Appropriation (Public Law 105-18) because of the extra funding built into the fiscal year 1998 request.
Congress may wish to review HUD's need for budget authority in FY 1998 of $100 million for the second round of the EZ/EC program and to seek assurances from HUD that the program will be ready to commit funds.	Closed – Implemented	The House version of the appropriations bill deleted the entire $100 million requested for the EZ/EC program, the Senate version reinstated $25 million for the program, and the conference bill, which was signed into Public Law 105-65 on October 27, 1997, included $5 million for the program. Therefore, GAO's analysis resulted in a $95-million reduction in HUD's budget authority for fiscal year 1998.

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Topics

Housing

Budgetary reservesCommunity development programsFederal aid for housingFuture budget projectionsHousing programsHousing repairsLow income housingPresidential budgetsRent subsidiesUnobligated budget balances