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HUD Shortfall Leaves ARHA Scrambling

A quarter-billion-dollar shortfall in the budget of the U.S. Department of Housing and Urban Development could result in a $600,000 reduction of federal funds for Alexandria Redevelopment and Housing Authority (ARHA) in their public housing budget for FY ‘03.

"This came as a real shock and will necessitate our re-evaluation of our overall budget," said William M. Dearman, ARHA executive director. "It will mean tightening our belt. But, we do not intend to cut any services to our residents."

One of the possibilities in that belt-tightening evaluation, according to Dearman, "is looking at not filling positions that are now open." He also noted, "Most of our services’ funds come through grants and would not be impacted by this shortfall."

HUD recently announced that its fiscal crisis means that it plans to cut the money it provides to public housing authorities nationwide by as much as 30 percent. ARHA's public housing budget for 2003 is just over $2 million, as adopted at its Dec. 19 meeting.

During ARHA's Community Service Awards Program in December, Dearman announced that ARHA would be looking for more contributions from local nonprofit groups and a greater reliance on volunteers. "There were rumors this might be coming," he verified.

ANOTHER CRITICAL PROGRAM caught up in HUD's fiscal avalanche is the Section 8 Voucher Program. This program provides housing subsidy vouchers to local authorities to be disbursed to their residents for use in supplementing their rent payments.

Section 8 is a major element of the nation's low-income public housing program to help the elderly, disabled, low-income families, and the working poor who have suffered income loss through loss of jobs, catastrophic illness, injury, or other unexpected circumstances and occurrences.

Coupled with the shortfall are proposed congressional budget cuts, recently passed by the U.S. House of Representatives as part of a 2003 appropriations bill, which would slash another $938 million from the Section 8 Housing Program. That could result in the loss of approximately 150,000 housing vouchers nationwide, according to the Washington-based Center on Budget and Policy Priorities.

The actual impact of this on ARHA's Section 8 program is unclear at this time, according to Dearman. ARHA has been in a running battle with HUD not to make deep cuts in the vouchers allotted to it.

ARHA has experienced difficulty in using its quota due to the tight local housing market. HUD has threatened to divert ARHA vouchers to other jurisdictions with more available affordable housing stock.

Ninety percent of ARHA's public housing units are federally funded. This compares with only 60 percent in Massachusetts, which also has a state housing program that supplies substantial moneys to its program, according to Dearman. Virginia does not have a state program, he explained.

HUD'S BUDGET SHORTFALL is being blamed on "years of shoddy accounting practices" by officials in that agency. HUD has expressed the hope to local authorities that it may be able to restore funding to normal levels next year.

A statement released by HUD noted that the $250 million deficit grew out of years of faulty projections of the amount of money needed for local public housing authorities. There is a fear at the local level that there will be continued cutbacks for public housing in FY ‘04 as well.

HUD sent letters on Jan. 7 to housing authorities across the nation notifying them of the cutback. It informed them they would be receiving only 70 percent of their normal allotment for public housing.

This was criticized in a letter from the National Association of Housing and Redevelopment Officials. They chastised HUD for not taking responsibility for the crisis saying the shortfall was caused by "inaccurate estimates, incomplete data and other problems" in HUD's budget request to Congress.

The HUD correspondence caused a fiscal quake of varying degrees in agencies in all portions of the country. In the Tidewater area of Virginia, housing officials predicted a negative impact of as much as $7 million if the 30-percent cut stands. One official in that area compared the reduction in federal funds to "a warehousing of the poor."

U.S. Rep. James P. Moran (D-8th) was much more blunt in his analysis. "This was a deliberate strategy on the part of the Bush administration to cut housing funds to the poor. If they had told us (Congress) of this shortfall just a week ago, we could have restored it. But they never told Congress," Moran insisted.

"Their statement that this was caused by a malfunction in the system is just untrue. This borders on the criminal, to cut such a critical program and then turn around and try to blame it on a malfunctioning data system," he said.

"I'd like to believe it was ineptitude. But it was too blatant for that. This is going to have a significant impact on ARHA which relies on these funds to a major extent," Moran added. "It's one more example of hunting for money to fund the war [with Iraq]."

Dearman stated that he was sending a comprehensive package to ARHA's Board of Commissioners for its information but that "it will probably not be a major item of discussion at the January meeting."

He explained, "I would prefer that a thorough analysis of the potential impact be made before any action is taken."

ARHA's next board meeting is scheduled for Jan. 27.