Transportation, Housing and Urban Development, and Related Agencies (THUD): FY2009 Appropriations

Congressional research reportSep 9, 2008

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Prepared for Members and Committees of Congress

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The FY2009 Transportation, Housing and Urban Development, and Related Agencies

appropriations bill (THUD) provides funding for the Department of Transportation (DOT), the

Department of Housing and Urban Development (HUD), and five independent agencies related to

those two departments.

The Bush Administration requested net budgetary authority of $102.5 billion (after scorekeeping

adjustments) for FY2009, a cut of $36 million (less than 1%) from the comparable FY2008 level.

DOT would receive a net total of $63.5 billion, a cut of $1 billion from the comparable FY2008

level. HUD would receive $39.1 billion, an increase of 4% ($1.4 billion) over the comparable

FY2008 level. However, the requested increase in net budget authority for HUD is largely

attributable to a decline in the amount available to offset new funding in the HUD budget. The

President’s budget request would actually result in an overall decline in non-emergency

appropriations for HUD’s programs and activities of just over 1% from the FY2008 level.

The House Committee on Appropriations Subcommittee on THUD reportedly marked up a draft

FY2009 THUD appropriations bill on June 20, 2008. The details of that draft have not been made

public. The full committee has not yet marked up the bill, and it is not clear that it will do so. The

Senate Committee on Appropriations marked up an FY2009 THUD bill, S. 3261, on July 10,

2008. The Senate committee recommended $109.4 billion, $6.6 billion more than the

Administration requested.

Congressional leaders have been quoted in press reports indicating that they will not try to enact

most of the FY2009 appropriations bills, including the THUD bill, until sometime after the next

Administration has taken office in 2009. In the meantime, they reportedly intend to provide

FY2009 funding for most federal agencies, including those in the THUD bill, through one or

more continuing resolutions.

Among the THUD appropriation issues facing Congress is the impending deficit in the Highway

Trust Fund. The portion of the Fund that provides money for federal highway programs has long

been projected to have a $3 billion deficit by the end of FY2009; the portion that provides money

for transit projects is projected to run a deficit in FY2011. The House passed separate legislation

(H.R. 6532) to transfer $8 billion from the general fund to the Highway Trust Fund to prevent the

FY2009 shortfall. This legislation was opposed by the Administration. However, on September 5,

2008, the Administration announced that revenues to the Fund had declined more than expected

in recent months, resulting in the Fund facing a shortfall as early as October 2008. The

Administration is now urging Congress to immediately pass the legislation transferring money to

the Highway Trust Fund.

This report will be updated.

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Most Recent Developments............................................................................................................. 1

Overview ......................................................................................................................................... 1

The President’s Budget Request................................................................................................ 2

Changing Appropriations Subcommittee Structures ................................................................. 3

Transportation Appropriations......................................................................................................... 5

Department of Transportation Budget and Key Policy Issues .................................................. 7

Highway Trust Fund Status................................................................................................. 7

Federal Aviation Administration (FAA).............................................................................. 8

Federal Highway Administration (FHWA) ......................................................................... 9

Federal Motor Carrier Safety Administration (FMCSA).................................................. 10

National Highway Traffic Safety Administration (NHTSA) .............................................11

Federal Railroad Administration (FRA) ............................................................................11

Federal Transit Administration (FTA)............................................................................... 12

Maritime Administration (MARAD) ................................................................................ 12

Housing and Urban Development Appropriations ........................................................................ 13

FY2009.................................................................................................................................... 14

Key Issues ............................................................................................................................... 16

Tenant-Based Rental Assistance: Renewal Funding ............................................................... 16

Project-Based Rental Assistance: Renewal Funding............................................................... 18

HOPE VI: No New Funding ................................................................................................... 18

Community Development and the Community Development Block Grant: Funding

Reductions............................................................................................................................ 19

Increased Funding for HOME................................................................................................. 20

Housing for the Elderly and Disabled: Funding Reductions................................................... 20

Federal Housing Administration (FHA): Declining Receipts ................................................. 20

Table 1. Status of FY2009 Transportation, Housing and Urban Development, and Related

Agencies Appropriations .............................................................................................................. 2

Table 2. Transportation, Housing and Urban Development, and Related Agencies

Appropriations, FY2008-FY2009 ................................................................................................ 3

Table 3. Funding Trends for Transportation, Housing and Urban Development, and

Related Agencies, FY2004-FY2009............................................................................................. 4

Table 4. Department of Transportation Appropriations, FY2008-FY2009 ..................................... 5

Table 5. Appropriations: Housing and Urban Development, FY2008-FY2009 ............................ 14

Author Contact Information .......................................................................................................... 21

CRS Key Policy Staff for Transportation, Housing and Urban Development, and Related

Agencies (THUD) Appropriations ............................................................................................. 21

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On September 5, Department of Transportation (DOT) Secretary Mary Peters announced that the

Highway Trust Fund faced a shortfall as soon as October 2008, due to lower than expected

revenues in 2008, and called on Congress to immediately pass legislation transferring general

fund revenues to the Trust Fund, a step that the Administration had previously opposed.

On July 10, the Senate Committee on Appropriations approved S. 3261, the FY2009 THUD

appropriations bill, and ordered it to be reported. The committee recommended $109.4 billion in

funding, $6.6 billion more than the amount requested by the Administration.

On June 20, 2008, the House Committee on Appropriations, Subcommittee on Transportation

HUD (THUD) marked up an unnumbered draft FY2009 THUD appropriations bill. The date of a

full committee markup is unknown, and no bill has yet been reported. According to the

subcommittee’s press release, the bill would increase funding for a number of housing and

transportation programs over the President’s request, including the Community Development

Block Grant (CDBG) program, housing for the elderly and disabled, public housing (including

HOPE VI), Amtrak, the Federal Transit Administration, and grants to airports.1

On February 5, 2008, the Administration submitted its budget request for FY2009 to Congress.

The budget request for both DOT and HUD represented a reduction in funding compared to the

non-emergency funding enacted for those agencies in FY2008.

Congress faces a difficult challenge in the FY2009 appropriations process. The nation is facing a

variety of economic challenges—including a general slowdown in the economy, record high oil

prices, and a decline in housing values. The budget deficit for FY2008 is expected to be around

$400 billion.2 The President presented a constrained budget to Congress—the THUD request

represented no net increase over the FY2008 level (excluding FY2008 emergency

appropriations)—and threatened to veto any appropriations bills that exceed the requested level of

funding.

Citing last year’s appropriations experience, when some in Congress contended that the President

refused to negotiate with Congress over the final level of FY2008 appropriations, congressional

leaders have been cited in press reports indicating that Congress may not pass many—if any—

regular appropriations bills before the end of the 2008 calendar year. Instead, reports indicate that

Congress will pass one or more continuing resolutions to keep the government operating after the

end of FY2008, and complete the FY2009 appropriations process in calendar year 2009, when it

will be dealing with a new Administration.

A summary table published on the website of the House Committee on Appropriations provides selected figures from

the marked-up version of the draft bill; http://appropriations.house.gov/pdf/09THUDTableSubMarkup.pdf.

Congressional Budget Office, Monthly Budget Review, August 6, 2008.

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The President’s net FY2009 request for the programs covered by this appropriations bill is $102.5

billion (after scorekeeping adjustments). This is $36 million (less than 1%) below the comparable

total enacted for FY2008.

The DOT request was $63.5 billion, $1.2 billion (2%) below the amount provided for FY2008. It

provided a 7% increase for transit funding ($644 million), though that is less than the authorized

funding level.

The President’s FY2009 Budget requests $39.1 billion, a less than 4% increase in total, regular

(non-emergency) budget authority for HUD. Following recent trends, the requested increase in

budget authority is largely driven by declines in the amount available for rescission (88% decline

from FY2008) and projected to be available in offsetting receipts (23% decline from FY2008).

The FY2009 request for regular (non-emergency) appropriations—which is the amount available

for HUD’s programs and activities—represents a slight decline (1.4%) from FY2008.

The Administration’s FY2009 budget request included funding reductions that had also been

proposed by the Administration in previous budget requests, without success. Among the

programs proposed for reductions or elimination were

•

DOT highway funding (-$1.8 billion), airport grants (-$764 million), Amtrak

(-$525 million), and subsidies for air service to small communities (-$60 million)

programs;

•

HUD’s Community Development Fund (-$866 million), Housing for the Elderly

(-$195 million), and Housing for the Disabled (-$77 million) programs; and

•

HUD’s HOPE VI, Rural Housing and Economic Development, Brownfields

Redevelopment, and Section 108 Loan Guarantees programs, for which no

funding was requested (-$132 million total).

Table 1 notes the status of the FY2009 THUD appropriations bill.

Table 1. Status of FY2009 Transportation, Housing and Urban Development, and

Related Agencies Appropriations

Bill

Subcommittee

Markup

House Senate

House House Senate Senate Conf.

Report Passage Report Passage Report

Conference

Report

Public

Approval

Law

House Senate

7/14/08

Draft

6/20/08

7/9/08

S.Rept.

110-418

Table 2 lists the total funding provided for each of the titles in the bill for FY2008 and the

amount requested for that title for FY2009.

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.Transportation, Housing and Urban Development, and Related Agencies

Appropriations, FY2008-FY2009

Table 2

(millions of dollars)

Title

Title I: Department of

Transportation

Title II: Housing and

Urban Development

Title III: Related

Agencies

Total

FY2008

FY2009

Enacteda

Request

House

Senate

Conf.

Enacted

$64,708

$63,494

$66,796

37,637

39,076

42,364

415

270

279

$102,560

$102,840

$109,439

Budget table published in S.Rept. 110-418. “Total” represents total budgetary resources after

scorekeeping adjustments. Totals may not add up due to rounding and scorekeeping adjustments.

a. FY2008 total does not include $3.2 billion in emergency funding.

Source:

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Since 2003, the House and Senate Committees on Appropriations have reorganized their

subcommittee structure three times. In 2003, a new subcommittee (Homeland Security) was

added; in order to maintain the existing number of subcommittees at 13, the Transportation

appropriations subcommittees were combined with the Treasury, Postal Service, and General

Government appropriations subcommittees, becoming the Subcommittees on Transportation,

Treasury, and Independent Agencies.

In early 2005, the House and Senate Committees on Appropriations again reorganized their

subcommittee structures. The House Committee on Appropriations reduced its number of

subcommittees from 13 to 10. This change included combining the Transportation, Treasury, and

Independent Agencies subcommittee with the District of Columbia subcommittee; to the resulting

subcommittee, in addition, jurisdiction over appropriations for the Department of Housing and

Urban Development and the Judiciary, as well as several additional independent agencies, was

added. The subcommittee was then known as the Subcommittee on Transportation, Treasury,

Housing and Urban Development, The Judiciary, District of Columbia, and Independent Agencies

(or TTHUD).

The Senate Committee on Appropriations reduced its number of subcommittees to 12. The Senate

also added jurisdiction over appropriations for the Departments of Housing and Urban

Development and the Judiciary to the Transportation, Treasury, and Independent Agencies

subcommittee. The Senate retained a separate District of Columbia Appropriations subcommittee.

As a result, the areas of coverage of the House and Senate subcommittees with jurisdiction over

this appropriations bill were almost, but not quite, identical; the major difference being that in the

Senate the appropriations for the District of Columbia originate in a separate bill.

At the beginning of the 110th Congress in 2007, the House and Senate Committees on

Appropriations again reorganized their subcommittee structures. The House and Senate

committees divided the responsibilities of the TTHUD subcommittees between two

subcommittees: Transportation, Housing and Urban Development, and Related Agencies

(THUD); and Financial Services and General Government, whose jurisdiction included the

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Treasury Department, the Judiciary, the Executive Office of the President, the District of

Columbia, and many of the independent agencies formerly under the jurisdiction of the TTHUD

subcommittees.

These changes make year-to-year comparisons of Transportation and Housing and Urban

Development appropriation bills complex, as their appropriations appear in different bills in

combination with various other agencies. Other factors, such as supplemental appropriations for

response to disasters (such as the damage caused by the Gulf Coast hurricanes in the fall of 2005)

and changes in the makeup of the Department of Transportation (portions of which were

transferred to the Department of Homeland Security in 2004), also complicate comparisons of

year-to-year funding. Table 3 shows funding trends over the five-year period FY2004-FY2008,

and the amounts requested for FY2009, for the Departments of Transportation and Housing and

Urban Development. The purpose of Table 3 is to indicate trends in the funding for these

agencies. Emergency supplemental appropriations are not included in the figures.

. Funding Trends for Transportation, Housing and Urban Development, and

Related Agencies, FY2004-FY2009

Table 3

(billions of current dollars)

FY2009

Department

FY2004a

FY2005b

FY2006c

FY2007

FY2008d

Title I: Transportation

Title II: Housing and

Urban Development

$58.4

$59.6

$59.5

$63.2

$64.7

$63.5

31.2

31.9

34.0

36.2

37.6

39.1

Requeste

FY2009

Enacted

United States House of Representatives, Committee on Appropriations, Comparative Statement of

Budget Authority tables from fiscal years 2004 through 2009.

a. FY2004 figures reflect a 0.59% across-the-board rescission.

b. FY2005 figures reflect a 0.83% across-the-board rescission.

c. FY2006 figures reflect a 1.0% across-the-board rescission, but do not reflect emergency supplemental

appropriations provided for DOT and HUD. DOT and HUD received emergency funding for response to

the effects of the Gulf Coast hurricanes; DOT’s total FY2006 funding, including emergency funding, was

$62.3 billion; HUD’s total FY2006 funding, including emergency funding, was $45.5 billion.

d. FY2008 figures reflect a 2.0% rescission applied to most programs that included designated earmarks, but

do not reflect emergency funding. DOT received $195 million in emergency funding; HUD received $3.0

billion.

e. FY2009 figure for Title I: Transportation reflects proposed rescission of $3.9 billion.

Source:

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Table 4. Department of Transportation Appropriations, FY2008-FY2009

(in millions of dollars; totals may not add)

Department or Agency (Selected Accounts)

FY2008

Enacted

Office of the Secretary of Transportation

Essential Air Servicea

FY2009

Request

FY2009 Sen.

Comm.

$157

$130

$189

110

8,740

2,514

9,070

2,750

3,515

2,750

3,515

147

171

Federal Aviation Administration (FAA)

Operations (trust fund & general fund)

Facilities & Equipment (F&E) (trust fund)

Grant-in-aid for Airports (AIP) (trust fund) (limit. on

oblig.)

Research, Engineering & Development (trust fund)

Subtotal, FAA

Federal Highway Administration (FHWA)

(Limitation on Obligations)

(Exempt Obligations)

Additional funds (trust fund)

Additional funds (general fund)

Rescissions of contract authority

14,524

14,643

15,431

41,216

739

—

(4,107)

39,399

739

—

(3,885)

41,200

739

—

199

(4,105)

Subtotal, FHWAb

38,068

36,253

38,033

530

541

838

851

855

1,561

1,325

1,091

800

1,816

1,503

1,569

7,768

1,621

8,361

1,809

8,261

9,492

10,135

10,226

307

313

345

154

168

169

Federal Motor Carrier Safety Administration

(FMCSA)

National Highway Traffic Safety Administration

(NHTSA)

Federal Railroad Administration (FRA)

Amtrak

Federal Transit Administration (FTA)

Capital Investment Grants (New Starts)

Formula and Bus Grants (Trust Funds)

Subtotal, FTA

St. Lawrence Seaway Development Corporation

Maritime Administration (MARAD)

Pipeline and Hazardous Materials Safety Administration (PHMSA)

Pipeline safety program

Emergency preparedness grants

Subtotal, PHMSA

Research and Innovative Technology Administration

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Department or Agency (Selected Accounts)

(RITA)

FY2008

Enacted

FY2009

Request

FY2009 Sen.

Comm.

Office of Inspector General

Surface Transportation Board

Total, Department of Transportation

$64,708

$63,494

$66,796

Source: Figures are from a budget table published by the Senate Appropriations Committee in S.Rept. 110-418.

Because of differing treatment of offsets, the figures for “FY2008 Request” will not always match the

Administration’s budget figures from other sources. The figures within this table may differ slightly from those in

the text due to supplemental appropriations, rescissions, and other funding actions. Columns may not add due to

rescissions, rounding, and exclusion of smaller program line-items.

a. The total comes from a $50 million annual authorization for the Essential Air Service program to be funded

out of overflight fee collections and an additional amount (if any) appropriated for the program.

b. FHWA was appropriated $42.2 billion for FY2008. The $38.1 billion figure represents the budgetary total

after subtraction of a $3.5 billion rescission of previously provided contract authority and the transfer of

$121 million to NHTSA. The House and Senate committees recommended $41.0 billion for FHWA for

FY2008; rescissions of contract authority resulted in those proposals being scored as $37.6 billion and $37.9

billion, respectively.

The economic and political context within which the FY2009 transportation appropriations

process is taking place is tumultuous. The significant rise in the price of fuel for cars, trucks, and

commercial jets is having a major impact on components of the transportation industry. The

commercial passenger aviation industry is projecting a loss of several billion dollars, and is

cutting the number of flights offered and even eliminating some routes, reducing and in some

cases eliminating air connections to some communities. Legislation reauthorizing the FAA’s

programs and activities continues to be debated in Congress. The authorization of the taxes and

fees that support the airport and airway trust fund—the primary source of funding for federal

aviation programs—was scheduled to lapse at the end of FY2007; these taxes and fees have been

kept in force through a series of short-term authorization extensions.

At the same time, there is widespread concern about the condition of the nation’s infrastructure, a

significant component of which is transportation infrastructure. The collapse of an Interstate

Highway bridge in Minnesota in August 2007 created concern over the conditions of the nation’s

bridges. Portions of the Interstate Highway system are reaching the end of their projected 50-year

lifespan. These factors, combined with concern over growing levels of traffic congestion, have

led to calls for significant increases in spending on transportation infrastructure. The National

Surface Transportation Policy and Revenue Study Commission has recommended that the federal

surface transportation program be extensively restructured, and that surface transportation

investment from all sources be more than doubled from its present level to $225 billion annually.3

While some in Congress are calling for greater levels of federal spending on transportation

infrastructure, the primary source of federal highway funding, the Highway Account of the

Highway Trust Fund, is projected to run short of money before the end of FY2009. This was

foreseen in SAFETEA-LU, which called for a multi-billion dollar rescission of contract authority

at the end of September 2009 to balance the account. But rising gas prices have led consumers to

Transportation for Tomorrow: Report of the National Surface Transportation Policy and Revenue Study Commission,

December 2007, available at http://www.transportationfortomorrow.org/final_report/.

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reduce their consumption of fuel,4 which is reducing the revenues coming in to the Highway

Account. Congress is considering legislation that would provide money from the general fund to

the Highway Account in order to forestall the Highway Account deficit in FY2009.

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The President’s FY2009 budget requested a total of $64.5 billion for the Department of

Transportation (DOT).5 That was $1.2 billion (-2%) below the level provided for FY2008. The

major funding changes requested from the FY2008 enacted levels were

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an increase of $644 million (7%) for transit;

•

a decrease of $1.8 billion (-4%) in highway funding;

•

a decrease of $525 million (-40%) in Amtrak funding (similar to requested

decreases in FY2007 and FY2008 that were rejected by Congress);

•

a decrease of $765 million (-22%) in the Federal Aviation Administration’s

Airport Improvement Program (similar to requested decreases in FY2007 and

FY2008 that were rejected by Congress); and

•

a decrease of $60 million (-54%) in funding for the Essential Air Service

Program (similar to requested decreases in FY2007 and FY2008 that were

rejected by Congress).

The Administration request also proposed restructuring the FAA budget, reflecting the

Administration’s reauthorization proposal for the FAA.

The Administration’s request, including as it does over $3 billion in cuts that have been

repeatedly requested and repeatedly rejected by Congress, creates a difficulty for appropriators. If

the appropriators restore the funding for those programs, even to just the level provided in

FY2008, the resulting bill will likely exceed the President’s request. Meanwhile, the President has

threatened to veto FY2009 appropriations bills that provide more than the requested level of

spending.

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The Highway Trust Fund is the funding source for most federal surface transportation programs.

The Fund receives around $38 billion annually, about 90% of which comes from federal taxes on

gasoline and diesel fuel.

The Fund has two accounts: the Highway Account and the Mass Transit Account. The Highway

Account receives about 87% of the revenues to the Fund. The Highway Account provides funds

for federal highway programs; the Mass Transit Account provides funds for federal transit

programs.

According to the FHWA, yearly cumulative vehicle miles traveled (VMT) through April 2008 has decreased 2.1%

(more than 20 billion VMT) compared to 2007 and the total figure of VMT in April 2008 marks the sixth consecutive

month that driving has declined compared to the prior year.

This total represents $68.1 billion in new appropriations and $3.9 billion in rescissions.

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The Highway Account was expected to run short on money before the end of FY2009. Nor was

this a temporary dip; the Highway Account deficit is projected to increase in subsequent years.

This was foreseen in 2005, at the passage of SAFETEA-LU, which authorized more highway

funding during the authorization period than projected revenues could support. SAFETEA-LU

provided for a rescission of highway funding at the end of FY2009 to prevent the Highway

Account from going into the red.

However, on September 5, 2008, DOT Secretary Mary Peters announced that the Highway

Account was expected to run short of funding as early as October 2008.6 Since passage of

SAFETEA-LU in 2005, expenditures from the Highway Account have exceeded the levels

initially authorized, and the revenues to the Account have not kept pace with the revenues

forecast, with a sharp drop in revenues during 2008 as record-high gas prices have led motorists

to reduce their amount of driving. These events have exacerbated the extent of the deficit

projected in 2005.

The Highway Account will still be receiving revenues in 2009, but the expenditures from the

account will exceed the level of revenues received. The Administration has announced that

beginning in September it will slow the rate at which highway funds are transferred to the states

to a level that the Highway Account can sustain.

On July 14, 2008, the Senate Committee on Appropriations reported out an FY2009 THUD

appropriations bill, which included a recommendation that $8 billion be transferred from the

general fund of the Treasury to the Highway Trust Fund to cover the shortfall.7 The House passed

separate legislation (H.R. 6532) on July 23, 2008, to do the same. The Administration threatened

to veto the House bill on the grounds that it unnecessarily increases the federal deficit, alters the

“user-fee” principle of the Highway Trust Fund, and jeopardizes any hope of constraining future

federal highway spending.8 However, in the face of the immediate shortfall in funding, the

Administration has now called on Congress to pass legislation transferring funds to the Highway

Account as soon as possible.

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The FAA budget provides both capital and operating funding for the nation’s air traffic control

system, and also provides federal grants to airports for airport planning, development, and

expansion of the capacity of the nation’s air traffic infrastructure. The President’s budget requests

$14.6 billion in new funding for FY2009. This is $152 million (-1%) less than the amount of new

funding provided in FY2008.9

Mary Peters, Secretary, Department of Transportation, “Trust Fund Solvency Media Briefing,” September 5, 2008,

available at http://www.dot.gov/affairs/highwaytrustfund/secretarysremarks.htm.

The $8 billion figure comes from an arrangement reached in 1998, when highway authorizers agreed to transfer $8

billion in Highway Trust Fund monies (derived from interest received on the balance in the Fund) to the general fund in

exchange for the creation of a budget “firewall” and other mechanisms that made possible higher levels of highway

spending. “Ten Questions and Answers on the Highway Trust Fund Default,” Transportation Weekly, v. 9, no. 26, July

10, 2008, p. 4.

Office of Management and Budget, Executive Office of the President, Statement of Administration Policy on H.R.

6532, July 23, 2008, available at http://www.whitehouse.gov/omb/legislative/sap/110-2/saphr6532-h.pdf.

The net new funding for FY2008 appears to be $118 million less than the FY2009 request, due to a rescission of

contract authority in the FY2008 appropriation. However, that rescission did not actually reduce the amount of new

funding provided in FY2008.

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The Senate Committee on Appropriations recommended $15.4 billion for FY2009, an increase of

$788 million over the amount requested. Most of that increase is for the Airport Improvement

grant program.

It is difficult to compare the requested funding level for operations (the largest FAA account) and

facilities & equipment with the previous year’s funding, because the budget request categorizes

the FAA funding differently than the FY2008 appropriation, reflecting the Administration’s FAA

reauthorization proposal. The Administration request does include a cut to the Airport

Improvement grant program.

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The President’s budget proposed a cut of $764 million to AIP funding, from $3.51 billion in

FY2008 to $2.75 billion for FY2008. A similar cut was proposed by the Administration for

FY2007 and for FY2008; neither cut was supported by Congress. AIP funds are used to provide

grants for airport planning and development, and for projects to increase airport capacity (such as

construction of new runways) and other facility improvements.

The Senate Committee on Appropriations rejected the proposed cut, recommending $3.5 billion,

the same amount as provided in FY2008.

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The President’s budget requested $50 million for the Essential Air Service program, a $60 million

(54%) reduction from the $110 million provided for FY2008. A similar decrease was proposed by

the Administration for FY2007 and FY2008; both were rejected by Congress. The Senate

Committee on Appropriations recommended $110 million, the same amount provided for

FY2008.

This program seeks to preserve air service to small airports in rural communities by subsidizing

the cost of that service. Supporters of the Essential Air Service program contend that preserving

airline service to rural communities was part of the deal Congress made in exchange for

deregulating airline service in 1978, which was expected to reduce air service to rural areas.

Some Members of Congress have expressed concern that the proposed cut in funding for the

Essential Air Service program could lead to a reduction in the transportation connections of rural

communities. Previous budget requests from the current Administration, as well as budget

requests from previous Administrations, have proposed reducing funding to this program.

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The President’s budget requested $40.1 billion in new funding for federal highway programs for

FY2009, a cut of $1.8 billion (-4%) below the comparable level of $42.0 billion provided in

FY2008.10 This is also $800 million below the $41.2 billion authorized funding level for FY2009

that is “guaranteed” by SAFETEA-LU (P.L. 109-59).

The FY2008 enacted figure and FY2009 request were reduced, for accounting purposes, by rescissions of contract

authority, resulting in net budgetary totals of $38.1 billion for FY2008 and $36.3 billion for the FY2009 request. An

additional $195 million in emergency funding was provided in FY2008.

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The $1.8 billion proposed reduction is made up of two components. First, SAFETEA-LU

provides a mechanism, known as RABA (‘Revenue Aligned Budget Authority’), for adjusting the

authorized highway funding level up or down to reflect the level of income received by the

Highway Trust Account. In FY2008, the authorized level was increased by $631 million as a

result of the RABA adjustment. The Administration estimates that RABA calls for a $1.0 billion

reduction in the authorized level for FY2009, reflecting declining receipts to the Account.

Second, based on the FHWA Administrator’s overview, it appears that $800 million of the

difference was FHWA’s share of a $1 billion reduction to adjust for the extra $1 billion in

Highway Bridge Program obligations provided by appropriators in FY2008.11 The overview

argues that without the reduction, the total obligation level provided over the full life of

SAFETEA-LU would have exceeded the $286.4 billion grand total of guaranteed funding

provided for in the act and agreed to by the Administration.

The Senate Committee on Appropriations rejected both the $1.0 billion called for by the RABA

mechanism in SAFETEA and the $800 million cut requested by the Administration,

recommending $42.1 billion for FY2009. The committee also rejected the Administration

proposal to cover the projected FY2009 Highway Account deficit by transferring funds from the

Mass Transit Account; instead, the committee recommended $8 billion from the general fund to

the Highway Account.12

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The Administration requested the authorized level of funding for FMCSA, $541 million. This is

$11 million (2%) over the amount provided for FY2008.13 $307 million of the request is for

grants to states to enforce commercial truck and bus safety regulations. The Senate Committee on

Appropriations recommended the same level.

The FY2008 THUD appropriations act included a provision (Section 136) that prohibited any

funds in the act from being used to “establish” a cross-border trucking demonstration program

allowing Mexican trucking companies to operate beyond the commercial zone (a zone extending

20 miles into the United States from the U.S.-Mexico border). The DOT had implemented such a

program on September 7, 2007, shortly before the beginning of the 2008 fiscal year. DOT

continued to operate the program after passage of the FY2008 act, contending that FY2008

funding used for the program would not be used to establish the program, but to continue its

operation. The Sierra Club and the Teamsters Union have sued to stop the pilot program; the case

is under consideration. Congress has reiterated its opposition to the program; the Senate

Committee on Appropriations recommended language that would terminate funding for the

program. The DOT has announced that so far Mexican trucks and drivers participating in the

program have safety compliance rates equal to or better than U.S. commercial truckers, and that it

intends to continue the program for two more years, as allowed under law.14 The DOT notes that

The remaining $200 million of the reduction is to be taken from the proposed Federal Transit Administration funding

for FY2009.

The $8 billion figure reflects the amount that was transferred from the Highway Account to the general fund in 1998

as part of an agreement that created the “guaranteed funding” structure of the highway program and established the

RABA mechanism.

The net total for FY2008 was reduced, for budgetary purposes, to $479 million, as a result of $50 million in

rescissions of contract authority.

Federal Motor Carrier Safety Administration, “Demonstration Project on NAFTA Trucking Provisions,” Federal

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participation in the program has been less than expected, due to the reluctance of trucking

companies to make the necessary investments in the face of uncertainty about the pilot program’s

length, and expects that the extension will encourage more companies to participate.

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The Administration requested $851 million for NHTSA, the amount authorized for FY2009. This

is an increase of $13 million (2%) over the amount provided for FY2008.15 $600 million of this

amount is for grants to states for highway safety programs to reduce deaths and injuries from

motor vehicle crashes. The Senate Committee on Appropriations recommended $855 million,

adding $4 million to the Administration request for the operations and research account.

NHTSA’s primary mission is to improve highway safety. Highway fatalities are the leading cause

of death for Americans between the ages of 3 and 34. There were 42,642 highway fatalities in

2006, but since the number of drivers and the number of miles driven increases almost every year,

the standard measure for highway safety is the fatality rate—the number of fatalities per 100

million vehicle miles traveled (VMT). The committee noted that NHTSA does not appear to be

on track to achieve its goal of reducing the rate of highway fatalities to 1.0 fatality per 100

million VMT by 2011. The rate has gone down, from 1.51 fatalities per 100 million VMT in 2001

to 1.41 in 2006, but remains above NHTSA’s target for each year.

One category of highway fatality—motorcycle fatalities—has been increasing, rather than

decreasing, since 2001. The most effective motorcycle safety policy is requiring that all

motorcyclists wear helmets meeting safety standards. Some motorcyclists are strongly opposed to

being required to wear helmets. At times Congress has penalized states that did not have

mandatory helmet laws by withholding or restricting the use of some of their federal highway

funding, which resulted in near-universal adoption of mandatory helmet laws by states. Congress

repealed such a provision in 1995; now about twenty states have universal mandatory helmet

laws.16 In 1998 Congress also forbade DOT from lobbying states to adopt traffic safety laws.17

The Senate Committee on Appropriations recommended that an exception be made to this

prohibition for the purpose of reducing motorcycle fatalities (Section 104).

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The Administration requested $1.091 billion for FRA for FY2009. This is a cut of $471 million

(-30%) from the $1.561 billion provided for FY2008. The Senate Committee on Appropriations

recommended $1.816 billion.

The largest portion of FRA’s budget goes to support Amtrak. Amtrak funding was also the source

of almost all the variance in the Administration’s proposal and the Senate committee’s

recommendation. The Administration requested $800 million for Amtrak, a cut of 40% ($525

million) from FY2008. The Senate committee recommended $1.5 billion for Amtrak, plus another

The $838 million in new funding for FY2008 was reduced, for budgetary purposes, to $815 million by rescissions of

contract authority.

Universal mandatory helmet laws require all motorcyclists to wear a helmet. Most of the other states require minors

to wear a helmet when riding a motorcycle.

P.L. 105-178, Section 7104 (“Restrictions on Lobbying Activities”).

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$100 million for an incentive grant program to encourage states to make investments in

improving passenger rail service (Congress provided $30 million for this program in FY2008, its

first year of funding; the Administration did not request any funding for this program for

FY2009).

Congress is also considering reauthorization of Amtrak; reauthorization legislation has been

passed by both the House and the Senate. Both bills would authorize considerably more funding

for Amtrak and intercity passenger rail activities than Congress has provided in recent years—

between $2 and $3 billion annually, compared to $1.3 billion. Authorizing funding is not the same

as appropriating the money, however, and it is not clear that additional funding on that scale

would be available. Most DOT funding comes from the aviation and highway trust funds; within

the THUD bill, Amtrak has to compete with a few other transportation programs and with the

HUD programs for general funds, and these programs are also seeking increased funding.

The next largest portion of FRA’s budget is for safety programs intended to reduce railroad

accidents. The Administration requested $157 million, $7 million (4%) more than provided for in

FY2008; the Senate committee recommended $159 million. The other component of the FRA

budget is research and development of rail safety improvements. The Administration requested

$34 million for this, $2 million (6%) less than the $36 million provided for in FY2008; the Senate

committee also recommended $34 million.

In FY2008 Congress also provided $20 million for a rail line relocation and improvement

program established in SAFETEA-LU that had not previously been funded. The Administration

did not request any money for this program in FY2008 or in FY2009. The Senate committee

recommended $25 million for FY2009.

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The Administration requested $10.135 billion for FTA for FY2009. This is an increase of $644

million (7%) over the amount provided for FY2008,18 but is $203 million below the authorized

FY2009 funding level of $10.338 billion. The Senate Committee on Appropriations

recommended $10.226 billion.

Virtually all of FTA’s funding goes to state and local transportation authorities to support bus,

commuter rail, subway, and light rail transit services; most of this goes out through formula grant

programs. The Senate committee recommended $100 million less than the requested level for the

formula grant programs and the bus grant program (the largest transit discretionary grant

program), and $188 million more than requested for the New Starts program, which funds new

fixed-guideway transit systems and extensions to existing systems.

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The Administration requested $313 million for MARAD for FY2009, $7 million (2%) above the

$307 million enacted for FY2008. The Senate Committee on Appropriations recommended $345

million.

The net FY2008 total was reduced, for budgetary purposes, to $9.4 billion by a $133 million rescission of contract

authority.

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The primary change from the requested level was the Senate committee’s recommendation of $20

million for assistance to small shipyards; Congress provided $10 million for this in FY2008—its

first year of funding, after being authorized in 2006—and the Administration did not request any

funding for this program for FY2009. The program provides grants and loans to small shipyards

for capital improvements.

MARAD supports the maritime transportation sector. The largest components of its budget are

the Maritime Security Program and Operations and Training. The Administration requested $174

million for the Maritime Security Program, an $18 million (12%) increase over FY2008. This

program provides payments of roughly $2.6 million per ship to retain a fleet of 60 active,

militarily useful, privately owned vessels to be available to the federal government in the event

they are needed for security purposes. A total of $118 million was requested for Operations and

Training, $4 million (-3%) less than provided for FY2008. This program funds the U.S. Merchant

Marine Academy, State Maritime Schools, and MARAD’s operations.

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Most of the funding for the activities of the Department of Housing and Urban Development

(HUD) comes from discretionary appropriations provided each year in the annual appropriations

acts enacted by Congress. HUD’s programs are primarily designed to address housing problems

faced by households with very low incomes or other special housing needs. These include several

programs of rental assistance for the poor, elderly, and/or disabled. Three rental assistance

programs—Public Housing, Section 8 Vouchers, and Section 8 project-based rental assistance—

account for the majority of the Department’s non-emergency funding (more than 75% in

FY2008). Two flexible block grant programs, HOME and Community Development Block

Grants, help communities finance a variety of housing and community development activities

designed to serve low-income families. Other, more specialized, block grants help communities

meet the needs of homeless persons, including those with AIDS. In recent years, HUD has also

focused more attention on efforts to increase the homeownership rates for lower-income and

minority households, with programs providing funding for downpayment assistance and housing

counseling. HUD’s Federal Housing Administration (FHA) insures mortgages made by lenders to

lower-income home buyers, many with below-average credit records, and to developers of

multifamily rental buildings containing relatively affordable units. FHA collects fees from insured

borrowers, which are used to sustain the insurance fund and offset its administrative costs.

Surplus FHA fees have been used to offset the cost of the HUD budget.

HUD’s budget is comprised of several types of funding. Regular, annual appropriations fund the

activities of the Department. Offsetting collections and receipts (such as those from FHA) and

rescissions of unobligated balances from prior years’ funding offset the cost to Congress of the

appropriations. In some years, Congress also provides emergency appropriations (such as in

response to disasters) through HUD. The total of appropriations, offsetting receipts and

collections, rescissions, and emergency appropriations determine HUD’s net budget authority.

This section of the report provides an overview of FY2009 funding for HUD. It is largely

summarized from a more detailed report, CRS Report RL34504, The Department of Housing and

Urban Development: FY2009 Appropriations. Readers seeking an expanded discussion of HUD

funding issues, including an overview of recent trends, should see CRS Report RL34504.

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Table 5 presents the President’s FY2009 budget request for HUD compared to the prior year’s

enacted budget authority and the Senate Appropriations Committee-reported funding levels.

(Housing Appropriations Subcommittee-passed figures are not currently publicly available and

are therefore not included in Table 5.) Four totals are given in Table 5: “budget authority

provided” and “available budget authority,” both including and excluding emergency

appropriations. Total budget authority provided includes current year appropriations, plus advance

appropriations provided in the current fiscal year for use in the next fiscal year; total available

budget authority includes current year appropriations, plus advance appropriations provided in the

prior fiscal year for use in the current fiscal year. Congress is scored by the Congressional Budget

Office (CBO) for the amount of available budget authority in an appropriations bill; however, the

Appropriations Committees’ documents often discuss budget authority provided.

The President’s FY2009 Budget requested $39,075 million, a less than 4% increase in total,

regular (non-emergency) budget authority for HUD. Following recent trends, the requested

increase in budget authority is largely driven by declines in the amount available for rescission

(88% decline from FY2008) and projected to be available in offsetting receipts (23% decline

from FY2008). The FY2009 request for regular (non-emergency) appropriations—which is the

amount available for HUD’s programs and activities—represents a slight decline (1.4%) from

FY2008.

Table 5. Appropriations: Housing and Urban Development, FY2008-FY2009

(budget authority in billions of dollars)

Account

FY2008

Enacted

FY2009

Request

FY2009 Senate

Comm.

Appropriations

Management and Administrationa

Tenant Based Rental Assistance (Sec. 8 vouchers) (includes

advance for subsequent year)

Project Based Rental Assistance (Sec.8) (includes advance

for subsequent year)

Public Housing Capital Fund

Public Housing Operating Fund

HOPE VI

Native American Housing Block Grants

Indian housing loan guarantees

Native Hawaiian Housing Block Grant

Native Hawaiian housing loan guarantees

Housing for Persons with AIDS (HOPWA)

Rural Housing Economic Development

Community Development Fund (including CDBG)

Sec.108 loan guarantee; subsidy

Brownfields redevelopment

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1.212

1.290

1.304

16.391

15.881

16.703

6.382

2.439

4.200

0.100

0.630

0.007

0.009

0.001

0.300

0.017

3.866

0.005

0.010

7.400

2.024

4.300

0.000

0.627

0.009

0.006

0.000

0.300

0.000

3.000

0.000

8.450

2.444

4.400

0.100

0.650

0.009

0.010

0.001

0.315

0.030

3.889

0.006

0.000

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Account

HOME Investment Partnerships

Self-help Homeownership

Homeless Assistance Grants

Housing for the Elderly (Sec. 202)

Housing for Persons with Disabilities (Sec. 811)

Manufactured Housing Fees Trust Fundc

Housing Counseling Assistance

Rental Housing Assistancec

Research and Technology

Federal Housing Administration (FHA) Expensesc

Fair housing activities

Lead Hazard Reduction

Working capital fund

Inspector General

Office of Federal Housing Enterprise Oversightc

FY2008

Enacted

FY2009

Request

1.704a

0.060

1.586

0.735

0.237

0.016

0.028

0.051

0.169

0.050

0.145

0.155

0.112

0.066

1.967a

0.040

1.636

0.540

0.160

0.021

0.065b

0.028

0.055

0.187

0.051

0.116

0.224

0.115

0.067

FY2009 Senate

Comm.

1.967

0.066

1.667

0.765

0.250

0.021

0.065b

0.028

0.060

0.145

0.056

0.200

0.211

0.115

0.067

Appropriations Subtotal

Rescissions

40.683

40.108

43.994

Economic Developments Initiative rescission

Rental housing assistance rescission

Tenant-Based Rental Assistance (Sec. 8 voucher) rescission

0.000

-0.038

-0.723

-0.180

-0.028

0.000

-0.038

-0.800

Rescissions Subtotal

-2.011

-0.233

-0.838

-0.016

-0.066

-0.250

-0.163

-0.540

-0.016

-0.067

-0.140

-0.170

-0.407

-0.016

-0.067

-0.140

-0.170

-0.400

Offsetting Collections and Receipts

Manufactured Housing Fees Trust Fund

Office of Federal Housing Enterprise Oversight

FHA

Government National Mortgage Association (GNMA)

Legislative Proposals

Offsets Subtotal

Emergency Funding

CDBG Appropriations for the Gulf Coast

Emergency Funding Subtotal

1.035

-0.800

-0.793

3.000

0.000

3.000d

Totals

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Account

FY2008

Enacted

FY2009

Request

FY2009 Senate

Comm.

Total Budget Authority Provided, excluding

Emergency Appropriations

37.637

39.075

42.364

Total Available Budget Authority, excluding

Emergency Appropriations

37.672

38.833

40.572

Total Budget Authority Provided, including

Emergency Appropriations

40.637

39.075

42.364

Total Available Budget Authority, including

Emergency Appropriations

40.672

38.833

40.572

Source: Prepared by CRS on the basis of tables provided by the Appropriations Committee, the President’s

FY2009 Budget documents, HUD Congressional Budget Justifications, S. 3261 and S.Rept. 110-418.

Note: The Transportation-HUD subcommittee of the House Committee on Appropriations approved its

version of the FY2009 HUD appropriations bill on June 20, 2008. The subcommittee has not made the bill

publicly available at this time. This table will be updated to reflect House action once the legislation is available.

Note: Total budget authority provided includes advance appropriations provided in the current fiscal year for use

in the subsequent fiscal year; available budget authority includes the advance appropriations that were provided

in the prior fiscal year for use in the current fiscal year.

a. Includes funding for several management, personnel, and administrative accounts, including Executive

Direction, Administration and Operations Management, and Personnel Compensation and Benefits for the

Offices of Public and Indian Housing, Community Planning and Development, Housing, GNMA, Policy

Development and Research, Fair Housing and Equal Opportunity, Healthy Homes, and Lead Hazard

Reduction.

b. In FY2008, funding for housing counseling assistance was provided as a set-aside within the HOME account;

for FY2009, the President’s budget requested that funding for housing counseling assistance be provided in a

separate account.

c. Funding for this account is generally offset through collections, receipts, or rescissions shown later in Table

d. An additional $300 million in CDBG disaster assistance was appropriated in FY2008 by P.L. 110-252 for the

Midwest floods of 2008 and other disaster relief activities. Those funds were not reflected in the

committees’ estimates of FY2008 enacted funding that were used to develop this table.

¢ȱ ȱ

The following section of the report provides a summary of key issues in HUD’s FY2009 budget.

For a more detailed examination, readers should see CRS Report RL34504, The Department of

Housing and Urban Development: FY2009 Appropriations.

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The tenant-based rental assistance account funds the Section 8 Housing Choice Voucher program.

The Section 8 voucher program funds rental assistance for low-income families that they can use

to reduce their housing costs in the private market. The program is funded by HUD, but

administered at the local level by quasi-governmental local public housing authorities (PHAs).

This account funds the annual renewal of the roughly 2 million vouchers authorized by Congress,

as well as their associated administrative costs, and, in some years, new vouchers. (For more

information on the Section 8 voucher program, see CRS Report RL32284, An Overview of the

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Section 8 Housing Programs and CRS Report RL34002, Section 8 Housing Choice Voucher

Program: Issues and Reform Proposals in the 110th Congress, by (name redacted).)

The tenant-based rental assistance account is the largest in HUD’s budget. In recent years, it has

also been the source of the most contention in HUD’s budget. Primarily, attention has been

focused on whether the amount of funding provided for voucher renewals is sufficient to fund all

of the vouchers authorized by Congress and/or in use by families, and how that renewal funding

is to be allocated to PHAs. (While there is a statutory formula for allocating voucher funds to

PHAs, it has been overridden in recent years by formulas adopted by Congress in the

appropriations acts.)

The amount available for voucher renewals each year is made up of two parts: current year

appropriations, and advance appropriations provided in the prior year that become available in the

current year. For FY2009, the President requested $11,881 million in current year funding for

voucher renewals as well as $4,000 million in advance appropriations for use in FY2010. This

request represents a decrease from the $12,233 million in current year funding provided in

FY2008 and a decrease from the $4,158 million in advance appropriations provided in FY2008

for use in FY2009.

Combined, the President’s request would result in $16,039 million in available budget authority

for FY2009 (current year funding plus prior year advance) and $15,881 million in budget

authority provided for FY2009 (current year funding plus advance for subsequent year). This

represents an increase from the $15,703 million available in FY2008, but a decrease from the

$16,391 million provided in FY2008. HUD’s FY2009 budget documents estimate that the amount

of funding requested would be sufficient to renew all of the vouchers in use. (For a more detailed

discussion, see CRS Report RL34504, The Department of Housing and Urban Development:

FY2009 Appropriations.)

The President’s FY2009 budget also requested that Congress change the way that it provides

renewal funding to PHAs. Specifically, it requested that PHAs be provided funding based on the

amount of funding they received in the previous year. This would be a change from the FY2008

funding formula, which funded PHAs based on their costs and voucher usage (referred to as

utilization) over the prior year. This debate—over whether to fund PHAs based on the budget

they received in the prior year or based on their expenses—has gone back and forth since

FY2003. For a detailed discussion of this issue, see CRS Report RL33929, Recent Changes to the

Section 8 Voucher Renewal Funding Formula.

Finally, the President’s budget requested $39 million to fund new incremental vouchers for

elderly and disabled families who were displaced by the 2005 hurricanes and whose FEMAfunded rental assistance will be ending in March 2009. The budget also requested $75 million for

new incremental vouchers for homeless veterans. The combined total for new vouchers ($114

million) would be less than the amount provided in FY2008 ($125 million).

S. 3261, as reported by the Senate Appropriations Committee, would provide $12,503 million in

current year funding for the tenant-based rental assistance account and $4,200 million in advance

appropriations for use in FY2010. S. 3261 would also rescind $800 million from the advance

appropriation provided in FY2008 for use in FY2009. Combined, the Senate bill would result in

$15,861 million in available budget authority for FY2009 (current year funding plus prior year

advance, less rescission) and $16,703 million in budget authority provided for FY2009 (current

year funding plus advance for subsequent year). This represents an increase from the $15,703

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million available in FY2008 and an increase from the $16,391 million provided in FY2008. It

represents a decrease from the $16,309 million in available budget authority requested by the

President for FY2009, but an increase from the $15,881 billion in budget authority that would be

provided by the President’s FY2009 budget request.

S. 3261 would allocate renewal funding using a formula similar to the one in place in FY2008,

rather than the formula requested by the President. It also includes $134 million in funding for

new incremental vouchers, more than requested by the President and provided in FY2008.

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The project-based rental assistance account provides funding to renew, amend, and cover

administrative expenses for the more than one million rental assistance contracts between private

property owners and HUD. These contracts allow low-income tenants that live in the assisted

properties to pay reduced rents. The program under which these contracts are authorized is

commonly referred to as project-based Section 8.

In July 2007, HUD stopped making payments to property owners with project-based contracts.

Due to a change in interpretation regarding how HUD was to provide renewal funding, HUD

determined it did not have sufficient funding to meet its contractual obligations. A negotiation

with the Office of Management and Budget, and revisions to the contract language between HUD

and property owners, allowed HUD to resume payments (including retroactive payments).

However, this “shortfall” raised concerns among some Members of Congress—several

committees held hearings on the topic—and industry groups representing property owners.

For FY2009, the President’s budget requested $7,000 million for the project-based rental

assistance account, an increase from the $6,382 million provided in FY2008. Further, the budget

requested $400 million in advance appropriations to be provided in FY2009 for use in FY2010. If

approved, it would be the first time an advance appropriation was to be used in this account.

HUD’s budget documents indicate that the Department believes that its request ($7,400 million)

would be sufficient to meet the Department’s contractual obligations; industry groups contend

that in order to “fully fund” its contractual obligations, HUD would need another roughly $2,000

million in FY2009.

S. 3261, as reported by the Senate Appropriations Committee, included $6,700 million in current

year appropriations for the project-based rental assistance account (less than the President’s

request; more than FY2008) and $1,750 million in advance appropriations to become available in

FY2010 (more than four times the amount requested by the President). The Senate committee

report (S.Rept. 110-415) noted that the increased funding would not be sufficient to fund all

contracts for 12 months, but would “restore some stability to the program by allowing the

Department to enter into longer-term contracts with owners.” For an expanded discussion of this

issue, see CRS Report RL34504, The Department of Housing and Urban Development: FY2009

Appropriations.

ȱ Ǳȱȱ ȱȱ

Each year since FY2003, the President has requested no new funding for the HOPE VI public

housing revitalization program. In response, each year, Congress has continued to fund the

program. Up until FY2003, the program was generally funded at just under $600 million,

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although in recent years its funding level has generally been around $100 million. HUD’s

Congressional Budget Justifications criticize the program for a slow expenditure of grant funds

and also note that PHAs are able to use their capital fund grants to leverage resources in much the

same way HOPE VI grants are used to leverage additional resources, making HOPE VI less

necessary. Proponents of HOPE VI cite the program’s transformative effects on severely

distressed communities.

S. 3261, as reported by the Senate Appropriations Committee, rejects the President’s proposal to

eliminate funding and would provide $100 million for HOPE VI in FY2009. The bill would also

extend the statutory authorization for the program through the end of FY2009; it is currently

slated to sunset at the end of FY2008. (For additional information, see CRS Report RL32236,

HOPE VI Public Housing Revitalization Program: Background, Funding, and Issues.)

¢ȱȱȱȱ¢ȱȱȱ

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The Community Development Fund (CDF) account funds the Community Development Block

Grant (CDBG) program, a formula grant to states and localities that funds community

development activities. In addition, the CDF has funded other community development-related

programs in past years, including the Economic Development Initiatives and Neighborhood

Initiative demonstrations.

The President’s FY2009 budget recommendation of $2,927 million for the formula portion of

CDBG is $659 million (18.4%) less than the $3,586 million appropriated for distribution to

communities and states in FY2008. In addition, the President’s FY2009 budget request stated that

the Administration would seek to reform the CDBG program during the 110th Congress by again

offering Congress a proposal that was first unveiled during the 109th Congress, namely, the

Community Development Block Grant Reform Act.

S. 3261, as reported by the Senate Appropriations Committee, would provide $3,586 million for

CDBG formula grants, more than the President’s request and the same as the FY2008 funding

level.

In addition to requesting reduced funding for CDBG formula grants, the Administration’s

FY2009 budget proposed eliminating funding for several other community development related

programs, including Rural Housing and Economic Development Grants, Community

Development Block Grant Section 108 loan guarantees, and Brownfields Economic Development

Initiatives. The budget characterized these programs as duplicative of the activities funded by the

CDBG formula grant program. The President’s budget also requested no new funding for the

Economic Development Initiatives (EDIs) and Neighborhood Initiatives (NIs) demonstration

programs—which Congress has used to fund congressionally-directed projects in recent years—

and asked that Congress rescind the funding provided to these projects in FY2008.

S. 3261, as reported by the Senate Appropriations Committee, would reject most of the

President’s proposals to eliminate funding for community and economic development programs.

It would fund Rural Housing and Economic Development Grants, Section 108 loan guarantees,

and EDI and NI earmarks. However, S. 3261 would not provide any new funding for the

Brownfields Economic Development Initiatives program.

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The HOME Investment Partnerships Program provides formula-based block grant funding to

states, units of local government, Indian tribes, and insular areas to fund affordable housing

initiatives. The President’s FY2009 budget requested a $275 million increase in funding for

HOME formula grants. HUD’s Congressional Budget Justifications identify the HOME program

as key to the President’s goal of increasing homeownership opportunities, especially for

minorities. They also cite the program’s relatively strong rating from the Office of Management

and Budget’s (OMB) Program Assessment and Rating Tool evaluation. According to HUD’s

Congressional Budget Justifications, OMB found that the program “has a clear purpose, strong

management, and can demonstrate results.”

S. 3261, as reported by the Senate Appropriations Committee, would provide $34 million more

for HOME formula grants than the President’s request.

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Formerly known together as Housing for Special Populations, the Section 202 Housing for the

Elderly program and the Section 811 Housing for Persons with Disabilities program provide

capital grants and ongoing project rental assistance contracts (PRAC) to developers of new

subsidized housing for these populations. In FY2009, the Administration’s budget recommended

reducing the overall funding level for the programs that provide housing and services for elderly

households (defined by HUD as those with a head of household or spouse age 62 or older). The

President’s request would cut funding for these programs by nearly $200 million, from $735

million in FY2008, to $540 million in FY2009. The President’s budget also proposed to reduce

funding for the Section 811 Housing for Persons with Disabilities program in FY2009 to $160

million, down from $237 million in FY2008.

S. 3261, as reported by the Senate Appropriations Committee, rejected the President’s proposed

funding cuts and would provide $765 million for Section 202 and $250 million for Section 811.

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The FHA administers a variety of mortgage insurance programs that insure lenders against loss

from loan defaults by borrowers. Through FHA insurance, lenders make loans that otherwise may

not be available, and enable borrowers to obtain loans for home purchase and home improvement,

as well as for the purchase, repair, or construction of apartments, hospitals, and nursing homes.

The programs are administered through two program accounts: the Mutual Mortgage

Insurance/Cooperative Management Housing Insurance fund account (MMI/CMHI) and the

General Insurance/Special Risk Insurance fund account (GI/SRI). The MMI/CMHI fund provides

insurance for home mortgages. The GI/SRI fund provides insurance for more risky home

mortgages, for multifamily rental housing, and for an assortment of special-purpose loans such as

hospitals and nursing homes. (For more information, see CRS Report RS20530, FHA-Insured

Home Loans: An Overview.)

In past years, receipts to the MMI fund have exceeded expenses, so the MMI fund did not need

appropriations for a credit subsidy, and had excess receipts that were used to offset the cost of the

HUD budget. The FY2009 Budget estimates that, if no programmatic changes are made, the MMI

fund would need either a credit subsidy or increases in insurance premiums to continue operation.

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The Budget proposes to permit FHA to set insurance premiums based on the risk that the

borrowers pose to the insurance fund, and it proposes to set the rate at a level that would avoid the

need for subsidy appropriations. Barring the authority to establish risk-based premiums, the

President’s budget proposed that FHA would use its existing authority to increase the insurance

premiums charged to borrowers. The budget assumes that the increased premiums coupled with

legislative and programmatic changes would avoid the need for credit subsidy appropriations.

(For an expanded discussion, see CRS Report RL34504, The Department of Housing and Urban

Development: FY2009 Appropriations.)

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(name redacted), Coordinator

Analyst in Transportation Policy

/redacted/@crs.loc.gov, 7-....

(name redacted), Coordinator

Specialist in Transportation Policy

/redacted/@crs.loc.gov

, 7-....

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Area of Expertise

Name

Department of Transportation

Aviation Safety, Federal Aviation

Administration

Airport Improvement Program,

Transportation Infrastructure Policy,

Transportation Trust Funds

Federal Railroad Administration,

Maritime Administration, Surface

Transportation Board

Airport Improvement Program,

Federal Highway Administration

Surface transportation policy, transit

policy

Amtrak, Federal Motor Carrier Safety

Administration, Federal Transit

Administration, National Highway

Traffic Safety Administration, Surface

Transportation Safety, Surface

Transportation Security

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Phone

name redacted

E-mail

7-....

name redacted

7-....

redacted@crs.loc.gov

name redacted

7-....

redacted@crs.loc.gov

name redacted

7-....

redacted@crs.loc.gov

name redacted

7-....

redacted@crs.loc.gov

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Area of Expertise

Name

Department of Housing and Urban Development

Low-income housing programs and

issues and general HUD: Section 8,

Public Housing, HOPE VI, HOME

Community Development programs

and issues: Community Development

Block Grants (CDBG), EZ/EC,

Brownfields redevelopment

Housing programs and issues for

special populations: Elderly (202),

Disabled (811), Homeless, AIDS

housing

Homeownership and other housing

issues: FHA, Rural, Indian housing, Fair

Housing

(name redacted)

Phone

7-....

(name redacted)

redacted@crs.loc.gov

7-....

(name redacted)

E-mail

7-....

redacted@crs.loc.gov

Related Agencies

Architectural and Transportation

Barriers Compliance Board

Federal Maritime Commission

National Transportation Safety Board

Neighborhood Reinvestment

Corporation

United States Interagency Council on

Homelessness

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name redacted

7-....

redacted@crs.loc.gov

name redacted

7-....

redacted@crs.loc.gov

7-....

redacted@crs.loc.gov

name redacted

7-....

name redacted

7-....

redacted@crs.loc.gov

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