The Impact of Sequestration on Homeless Services

Mark Allison of the National Low Income Housing Coalition explains sequestration and how it impacts homeless service and housing providers.

Budgets cuts, fiscal cliffs, sequestration, downsizing. These words have become a common refrain, but what exactly do they mean? Mark Allison, board chairman of the National Low Income Housing Coalition (NLIHC), project director of the HUD Technical Assistance Initiative at the Center for Social Innovation, and a former direct service provider, explains what sequestration really means, and how it has and will continue to impact homeless service and housing providers.

Sequestration is not a new idea. In 1985, the concept was first introduced in Congress, although the following year it was declared unconstitutional. In 2011, sequestration resurfaced when Congress was deadlocked on a bipartisan plan to reduce the federal deficit by $1.5 trillion. If they were unable to compromise, a set of intensive, across-the-board cuts would take place on January 1, 2013. This became known as the Fiscal Cliff crisis. In the early morning of January 1, 2013, Congress agreed to a temporary compromise to delay the sequestration of funds until March 1, 2013. However, by March 1 no deal had been made, sequestration went into effect, and approximately $85 billion was cut from the federal government budget in fiscal year 2013 alone.

Shaun Donavan, Secretary of the Department of Housing and Urban Development (HUD), testified before Congress that sequestration would result in approximately 100,000 people experiencing or at risk of homelessness. These individuals would be forced back onto the streets. And yet, included in the $85 billion cut is a 5.1% reduction to HUD and Department of Agriculture (USDA) housing program budgets.

“Programs don’t want to kick people out if they can avoid it, but because of the uncertainty of sequestration and the federal budget over the coming months and years, programs are becoming more conservative,” said Allison. For example, until recently, public housing agencies recycled their Section 8 vouchers. If the recipient of a voucher passed away or left the program, their voucher was given to someone else. Now, these vouchers are being pulled back into the system, meaning fewer households will be served, in spite of wait lists spanning multiple years.

“We have heard of instances where a voucher has been granted, but before the recipient could find a place, the voucher was rescinded by the public housing agency,” said Allison. Furthermore, because of the uncertainty of continued funding of Section 8 vouchers, some landlords are simply refusing to accept them.

“While sequestration itself is poor policy, it is even worse when put into the larger historical context,” explained Allison. “The homelessness crisis that we face is a direct result of public policy choices. There is a fundamental mismatch between those that primarily benefit from federal housing policies and spending, and those who actually have the greatest housing needs—households that are extremely low-income and are therefore more likely to rent than own a home. With the Great Recession and housing crisis, many people lost their homes, flooding the rental market and exacerbating cost pressures for renters. Current policy favors homeowners in the form of the home mortgage interest deduction, which allows homeowners to get a tax deduction for interest paid on a mortgage, currently up to $1 million, plus $100,000 in home equity loans.” It is estimated that these policies cost the federal government approximately $100 billion each year.

NLIHC, the nation’s only low-income housing policy advocacy group, believes that reforming the home mortgage interest deduction is a way to balance these policies. Currently, the home mortgage interest deduction disproportionately benefits wealthier homeowners who are able to itemize their taxes. NLIHC, with the support of Rep. Keith Ellison (D-MN), hopes to reform the home mortgage interest deduction. Their goal is to make the tax break a credit rather than a deduction. By doing so, NLIHC’s research shows that the federal government will save $200 billion over ten years, while at the same time expanding the number of homeowners who benefit.

NLIHC wants to use some of the savings to capitalize the National Housing Trust Fund (HTF), a trust that provides states with resources to build, renovate, and preserve affordable housing. National polls conducted by NLIHC show an incredibly positive response to this proposal, as funds dedicated to HTF would not only work to end homelessness, but would help to create jobs. NLIHC believes in this proposal so strongly that they are dedicating $1 million towards this campaign.

“The thing to remember is that there are 10 million extremely low-income renter households in this country (income at or below 30% of the area median), and there are only 3 million rental homes that are affordable and available—that gap is the problem we are trying to solve,” said Allison.

How can we, as service providers and engaged citizens help? Mark Allison stresses the importance of contacting Congress. He, along with fellow members of NLIHC, is in the process of speaking with every single member of Congress.

“When you have a Congressman who is sticking their neck out to propose legislation, knowing that a group like NLIHC can generate calls and letters to their caucus, that can make a huge difference. Congresspeople are hearing from other interest groups, folks that aren’t sympathetic to our aim, so if we sit this out then we don’t have anybody to blame but ourselves. We’ve got to raise our voices,” said Allison. The group is currently looking for co-sponsors in Congress and organizational endorsers all over the country.

You can also become involved with groups like NLIHC or other grassroots organizations in your own community. “Policy decisions,” Allison said, “created the homelessness crisis in this country and I believe that policy decisions can end it.”

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Melissa Cogswell
Last Updated: 07/31/2019