Don’t Fret (Yet) About Trump’s Proposed HUD Cuts, Lawyers Say

President Trump’s proposed budget for the Department of Housing and Urban Development may seem alarming, but a pair of prominent housing lawyers say that the fight is far from over — and it’s up to the movers and shakers in industries that benefit from HUD’s programs to lobby for funding by touting the results.

“When your representative is back in the district, invite them to the ribbon cuttings,” said Amy McClain, a partner who helms Ballard Spahr’s government assisted housing practice from the firm’s office in Baltimore. “You have to get them to [see] the things are the product of of that funding source.”

Bigger-picture issues 

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McClain acknowledged that the proposed HUD cuts — which would amount to a 13.2% drop in funding from fiscal 2017 if President Trump and budget director Mick Mulvaney get everything on their wish list — were striking, but also pointed out that funding for housing grants and other benefit programs has been steadily drying up for some time, even under the Obama administration.

“It’s been a progressively worsening state of affairs when it comes to the funding of federal housing programs,” McClain said.

Federal involvement in housing began in the 1930s and 1940s with an emphasis on providing government funding for the construction of homes and apartments, with a subsequent budget from Washington to maintain and improve the properties, McClain said. Over the decades, the philosophy has shifted from government stewardship to public-private partnerships, with a substantial decline in the amount of federal funding available for ongoing upkeep: McClain said that America’s public housing stock faces a $30 billion deferred-maintenance bill — and that, of course, is before Trump and the current Congress take even a single dollar away from the HUD budget.

“So while the administration’s blueprint is disheartening, in some ways, we’ve seen suffering from an ongoing reduction in funding over time,” McClain said, ”and we’re at a critical point where we need to decide: Are we going to let people be stranded living in these isolated communities…or are we going to identify a model that’s going to work in a way that’s more sustainable for the long term?”

When asked if Trump’s budget is likely to pass as is, McClain responded with a flat no, adding that both houses of Congress would need to agree on any substantive slashes to HUD and the other departments facing cuts.

“One thing I take solace in is that it takes 60 votes in the Senate to pass a budget resolution, which means that some Democrats have to vote for it, which means that the parties have to work together,” McClain said.

The current United States Senate has 52 Republicans and 46 Democrats, along with two Independents — Bernie Sanders of Vermont and Angus King of Maine — who caucus and generally vote with the Democrats. While bills only technically only need a majority of 51 votes to pass the upper chamber, parliamentary filibuster rules have effectively made a 60-vote supermajority the de facto threshold for clearing various types of bills through the Senate, including all budget measures.

By comparison, the GOP’s American Health Care Act was deliberately framed as a budget reconciliation bill, a different type of legislation that cannot be filibustered.

Details still scarce

John D. Socknat, a Ballard Spahr partner who runs the firm’s mortgage banking group in Washington, D.C., emphasized what many commentators have urged in the days since the budget proposal was released.

“There was no mention of the HECM program,” Socknat told RMD in an e-mail. “We also know that a more detailed program-by-program budget proposal is supposed to be announced in May, so we really won’t have any insight into how Trump’s proposed budget might impact the HECM program until then.”

Like McClain, Socknat pointed to Capitol Hill’s importance to the process. “Of course, ultimately it is Congress that will determine the final budget, and we know that there already is opposition to the proposed budget from members of both parties.”

However, bipartisan opposition to Trump’s budgetary slashes has largely been constrained to popular benefit programs that were fairly obvious targets for public outrage, such as the widespread scorn for the proposed elimination of Meals on Wheels — which provides food and companionship to elderly, homebound Americans — and the Low-Income Home Energy Assistance Program. How HUD plans to handle the HECM program, which is relatively little-known outside of the reverse mortgage, financial planning, and elder care communities, remains to be seen.

Call to action

That’s where McClain’s warning comes in. While it’s not necessarily the ultimate fate of the HECM program, McClain said that smaller, less-prominent initiatives are far easier for politicians to trim or excise entirely, as it wouldn’t raise the same kind of political and popular outcry as larger initiatives that touch more lives and produce immediate, tangible results.

“If it’s a small program, you really need to have folks rallying around and telling the stories,” she said.

Written by Alex Spanko

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