April 8, 2005
U.S. Plans New, Deep Cuts in Housing Aid
By DAVID W. CHEN
The New York City Housing Authority could lose up to $166 million, or almost a quarter of its annual federal subsidy for operating costs, under a new cost-cutting proposal by the Bush administration that could force dozens of housing agencies nationwide to fire maintenance workers, reduce services or close buildings.
If the changes sought by the administration take effect, they will result in one of the biggest cuts since Washington first began subsidizing housing: as much as $480 million, or 14 percent, of the $3.4 billion federal budget for day-to-day operations, including labor, maintenance, insurance and utilities, at the nation's 3,100 housing authorities. Housing authorities in New York State would be among the hardest hit, under a new formula that works against older urban areas.
"I've never seen anything this devastating occur in public housing," said Stephanie W. Cowart, executive director of the Niagara Falls Housing Authority, which would lose nearly half of its $3.6 million subsidy, according to an analysis of spending data by two housing authority trade groups.
The proposed changes, several officials of housing authorities said, represented a turnabout from an agreement they believed they had made with the Housing and Urban Development Department last June. The administration has for several years advocated a new formula that would redistribute billions of housing dollars toward rural and southern areas and away from older urban areas in the Northeast and Midwest. Officials in those urban areas had negotiated a compromise they believed would minimize the cuts to their programs.
But last month, while Congress was in recess, the housing department began circulating a new proposal on Capitol Hill for far deeper cuts that bore little resemblance to that agreement, according to housing advocates and Congressional aides.
Instead, the housing agencies that were supposed to gain federal subsidies will gain much less, and those that lost money will lose much more. Four of the five agencies with the deepest cuts are in upstate New York. The proposal, whose changes would take effect in 2006, comes at a time when the administration has vowed to reduce discretionary government spending for the first time since President Bush came into office. Indeed, Michael Liu, HUD's assistant secretary for public and Indian housing, said in an interview that housing agencies had been warned for months that "there was always the possibility of changes," especially "in an era of tight budgets on the domestic front."
But Mr. Liu noted that the proposal was preliminary, and subject to public comment and future adjustments. He also said that it was vital for agencies to focus on the broader goal of making public housing run more efficiently.
"For a housing authority that has been on a particular diet for, say, 40 years, facing a different kind of diet, cutting out fats and sugars and other stuff that tastes good - well, it's tough to change, and that's a natural reaction," he said. "But in the long run, it's going to make us more effective, more efficient."
The new proposal may represent a starting point for another round of negotiations, and the numbers are likely to rise after Congress weighs in. But in the meantime, housing agencies say the proposal will hamper their ability to provide even rudimentary services for many of the 3 million Americans who live in public housing.
Maintenance and repairs could be deferred for months, they say, and day-care and job-training programs could be eliminated. Buildings could be mothballed, maybe even sold.
"It would likely have a significant impact on our personnel, and that obviously has a long-term deleterious effect," said Douglas Apple, general manager of the New York City Housing Authority. "Less maintenance workers to fix the leaks is less maintenance workers, and more leaks."
The compromise formula agreed to in June would have resulted in more money for two-thirds of all agencies, and a maximum loss of 5 percent for the losers. But under the new proposal, which Mr. Liu said emerged after consultations with the White House Office of Management and Budget, the 5 percent loss cap and other provisions intended to minimize cuts would be eliminated.
With $185 million in projected annual losses to be phased in over five years, New York would be the hardest-hit state, chiefly because the formula does not fully take into account the age of its housing developments and its civil service and union costs, housing groups say.
The Syracuse Housing Authority, for instance, would see its federal operating subsidy drop from roughly $9.5 million to less than $7 million, according to Frederick R. Murphy, its executive director. The Albany Housing Authority would see a cut of roughly $1.2 million to its subsidy of $5.9 million, said Steven T. Longo, its executive director.
Both of the state's senators, Hillary Rodham Clinton and Charles E. Schumer, expressed outrage yesterday, with Mrs. Clinton sending a protest letter to Alphonso R. Jackson, the housing secretary, and Mr. Schumer confronting Mr. Jackson after a Congressional hearing.
"Of all the knives that HUD has put in New York City's back, this is the longest and deepest," Mr. Schumer said in an interview. "I've never seen anything like this in the magnitude of the cut and the sneaky way in which it was delivered."
But Mr. Liu argued that New York agencies had been "oversubsidized extensively for a long, long time," and that the New York City Housing Authority alone had $400 million in reserves, which could be used to offset the losses. And he said that the new rule allowed authorities many ways to justify an increase.
"I'm confident that those who are concerned, once they sit down, they'll get over it, and deal with it," Mr. Liu said. "You have some smart people out there, and they may not like some of the changes, but they will find a way to work with it."
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