The President’s “skinny budget”: has been released and, as anticipated, makes deep cuts to non-defense discretionary spending by $163 billion, representing a cut of 22.6% from FY25 budget levels. The President’s budget makes devastating cuts to HUD and housing programs in other agencies. A list of spending cuts and other spending proposals, including to HUD, are here. The President’s full budget proposal will be released in the coming weeks.
President Trump’s budget proposal includes a 44 percent reduction to HUD’s housing programs. The proposal calls for eliminating vital programs, such as the HOME Investment Partnership program (HOME), Community Development Block Grant program (CDBG), Low Income Home Energy Assistance Program (LIHEAP), Fair Housing programs, the Neighborhood Reinvestment Corporation (NeighborWorks America) and the United States Interagency Council on Homelessness (USICH). It also includes significant cuts for homelessness prevention, Native American programs, resilience and utility efficiency, and rural development programs, and the Community Development Financial Institutions Fund (CDFI Fund).
Rental Assistance
The President’s budget proposal would slash rental assistance by more than 40%, or $26.72 billion, and combine all remaining funds and block grant them into one program, State Rental Assistance Block Grants. It would be up to states to continue to provide housing assistance to the millions of people who rely on it. The programs eliminated and replace with the block grant would include Housing Choice Vouchers (HCVs), Public Housing, Project-Based Rental Assistance (PBRA), Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities. In addition, the President’s budget would impose a two-year time limit on receiving rental assistance for “able-bodied adults.”
Supportive Housing
The President’s proposal would eliminate the Continuum of Care Program and Housing Opportunities for Persons with AIDS (HOPWA) and move them into the Emergency Solutions Grant Program, with a cut of $532 million. The ESG program cannot be used for long term housing, but rather only funds short-term shelters and housing limited to two years. See NYTimes coverage – impacts to supportive housing
USDA Rural Housing Programs
President’s preliminary budget would eliminate U.S. Department of Agriculture single-family housing direct loans (section 502), self-help housing grants, and rural housing vouchers, arguing these programs “are duplicative, too small to have macro-economic impact, costly to deliver, in limited demand, available through the private sector, or conceived as temporary.“
House Reconciliation Bill and Tax Provisions
The House of Representatives is expected to review all or portions of the reconciliation bill during the week of May 12. Republican goals for a reconciliation bill, which can avoid the Senate’s 60-vote filibuster threshold, including extending tax cuts, expanding border security and defense, and cutting federal spending. The Ways and Means, Energy and Commerce, and Agriculture Committees are responsible for determining key provisions of the bill, including tax cuts and extensions, cuts to Medicaid and healthcare assistance, and cuts to food assistance.
While housing assistance has not been identified as a potential target for cuts, cuts to anti-poverty programs such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP), both named as targets for potentially large cuts, would negatively impact economic stability and housing stability for families and people with low incomes.
House Tax Bill Expands Tax Credit
The House Ways and Means Committee, on May 12, released legislative text for the House tax reconciliation bill, which includes an expansion of the Low-Income Housing Tax Credit (Housing Credit), and expanding the Opportunity Zone tax credit. The bill would:
- Increase the Housing Credit volume cap for 9 percent properties by 12.5 percent from 2026-29;
- Lower the bond financing threshold to 25 percent for 4 percent Housing Credit properties placed in service after December 31, 2025; and
- Provide a basis boost of up to 30 percent for properties located in rural and Native American areas.
Take Action:
The House Ways and Means Committee, on May 12, released legislative text for the House tax reconciliation bill, which includes an expansion of the Low-Income Housing Tax Credit (Housing Credit), and expanding the Opportunity Zone tax credit. The bill would:
- Use NLIHC’s toolkits and resources to take action on FY26 funding to urge Congress to pass a FY26 spending bill with increased funding for HUD’s affordable housing programs. You can use NLIHC’s Take Action page to look up your member offices or call/send an email directly.
- Minnesota NAHRO has shared a one-pager of the impacts of HUD funding in Minnesota, here, You can use the NAHRO Action Alert to contact your Member of Congress about the devastating impact of the President’s proposed FY26 budget on rental assistance and public housing.
