In its latest proposal, the White House has outlined $163 billion in reductions to nondefense discretionary spending, with housing and community development programs bearing a significant portion of the cuts. The proposed budget includes sweeping eliminations and consolidations across HUD and USDA housing initiatives, signaling a dramatic shift in the federal role in affordable housing.
Major Reductions and Eliminations
1. HUD State Rental Assistance Block Grant: -$26.7 Billion
The proposal restructures HUD’s rental assistance programs—including tenant-based, project-based, elderly, and disabled housing—into a State Rental Assistance Block Grant. States would receive lump-sum funding with broad discretion, capped at two years of rental support for able-bodied adults. This change not only reduces federal oversight but also incentivizes states to assume a greater share of responsibility, potentially resulting in service gaps and uneven access across regions.
2. Community Development Block Grant (CDBG): -$3.3 Billion
The complete elimination of the CDBG program would affect over 1,200 local governments that rely on flexible funding to support housing rehabilitation, infrastructure, and neighborhood revitalization. The proposal criticizes CDBG for lack of targeting and misallocation of funds, despite the program’s historic value in addressing low-income community needs.
3. HOME Investment Partnerships Program: -$1.25 Billion
The elimination of HOME, the largest federal block grant for affordable housing development, would directly impair the ability of localities to build and preserve affordable rental and ownership housing. Eliminating the HOME Program would also significantly impact a major source of secondary financing for LIHTC projects. The justification centers on regulatory burdens and the belief that states can address housing needs more efficiently without federal intervention.
4. Native American and Native Hawaiian Housing Grants: -$479 Million
The proposed budget cuts competitive tribal housing assistance and eliminates the Native Hawaiian Housing Block Grant, citing inefficiencies and the presence of only one grantee. This disproportionately impacts Indigenous populations already facing severe housing shortages.
5. Homeless Assistance Program Consolidations: -$532 Million
By consolidating existing homeless assistance programs into a narrower Emergency Solutions Grant (ESG) framework with a two-year cap, the proposal risks destabilizing long-term housing solutions and could roll back progress in ending chronic homelessness. The streamlined model focuses on short-term emergency aid, leaving fewer resources for permanent supportive housing.
6. Rural Development Housing Programs: -$721 Million
Reductions to USDA rural housing loans, grants, and vouchers would scale back federal engagement in underserved rural areas. The budget prioritizes infrastructure but eliminates smaller, less economically impactful programs such as self-help housing and rural business grants.
7. Additional Cuts
- Surplus Lead Hazard and Healthy Homes: -$296M – Program labeled as obsolete.
- Self-Sufficiency Programs: -$196M – Deemed duplicative and ineffective at tracking outcomes.
- Pathways to Removing Obstacles (PRO) Housing: -$100M – Cut for perceived alignment with DEI-focused policies.
- Fair Housing Grants (FHIP and Training Academy): -$60M – Eliminated in favor of retaining only enforcement through FHAP.
Implications for Housing Access and Equity
These proposed cuts reflect a strategic realignment away from federal direct assistance toward state-centered administration and privatized solutions. While proponents argue for efficiency and local control, critics warn of several adverse effects:
- Reduced Housing Availability: The elimination of HOME and CDBG will shrink the pipeline for new affordable units and rehabilitation projects.
- Increased Inequity: Block grants without federal regulation risk deepening disparities across states, especially for marginalized populations.
- Weakened Fair Housing Enforcement: Defunding FHIP undermines outreach, education, and legal advocacy needed to combat discrimination.
- Vulnerability of Rural and Tribal Communities: Rural America and indigenous populations may lose vital, otherwise inaccessible support.
- Threat to Homeless Prevention Goals: Shifting focus away from long-term housing solutions could undercut national goals to reduce homelessness.
Conclusion
If enacted, the budget proposal would represent one of the most significant federal affordable housing support retrenchments in recent history. While it promises state flexibility and fiscal discipline, the risk to vulnerable populations—already strained by high housing costs—could be severe and lasting. Should these changes advance, stakeholders in the affordable housing sector should prepare for heightened advocacy and strategic adaptation.