February 9, 2018

New Budget Law Raises Spending Caps, Provides Nearly $90 Billion in Disaster Aid

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Early Friday morning, Congress passed and the President signed into law a sweeping $500 billion bill that includes: a six-week Continuing Resolution (CR) that funds the federal government through March 23, a budget deal that lifts defense and domestic discretionary spending caps by $300 billion over two years, and an $89.3 billion disaster aid package that will help Puerto Rico, Texas, Florida, and the U.S. Virgin Islands recover from last year’s devastating hurricanes and provides tax relief to help California recover from wildfires.

Budget Deal

The law raises the spending caps for both the defense and domestic discretionary spending accounts—domestic by $63 billion in fiscal year (FY) 2018 and by $68 billion in FY 2019. It is yet unclear how these new spending caps will affect funding for housing and community development programs.

The deal included a six-week CR to fund to give lawmakers until March 23 to write an FY 2018 Omnibus spending package under the new budget caps.  Enterprise will encourage appropriators to increase investment in vital programs like HOME Investment Partnerships, Community Development Block Grants, Project-Based Rental Assistance, and the CDFI Fund.

It is worth noting that while Congress has provided meaningful increases to domestic programs for two years, these levels are still lower than historical levels before the Budget Control Act instituted strict spending limits.

Disaster Recovery

Along with the budget deal and CR, lawmakers concurrently passed an $89.3 billion disaster supplemental aimed to helping communities in disaster-affected areas recover from devastating hurricanes and wildfires in 2017. The package provided $28 billion for the Community Development Block Grant Disaster Recovery (CBDG-DR) program at HUD, $23.5 billion for the Federal Emergency Management Agency (FEMA) Disaster Relief Fund, $17.39 billion for the U.S. Army Corps of Engineers, and $1.65 billion for the Small Business Administration disaster loan program.

CDBG-DR funds will go to repair homes, support local businesses and rebuild infrastructure in addition to mitigating future risk from natural disasters. Within the $28 billion for CDBG-DR:

  • $16 billion will be used to address unmet needs, including at least $11 billion for helping areas adversely affected by Hurricane Maria of which $2 billion is for repairing and improving the power grids in Puerto Rico and the U.S. Virgin Islands.
  • $12 billion will be used for mitigation activities that will be awarded to prior CDBG-DR grantees in proportion to the size of CDBG-DR grants awarded to those grantees for disasters occurring in 2015, 2016, and 2017.  This is a new sizeable investment in resilience measures for communities already administering recovery programs.
  • Up to $15 million of the appropriation will be used for capacity building and technical assistance to help states and local governments more effectively rebuild and administer disaster resources.  This is the first time Congress has dedicated technical assistance for recipients of CDBG-DR.

The law includes special provisions for the use of disaster funds in Puerto Rico, requiring the Governor to coordinate with the Recovery Board on the administration of recovery programs.

The disaster aid package included a provision that allows HUD to make temporary adjustments to Section 8 Housing Choice Voucher renewal funding allocations for public housing agencies (PHAs) adversely affected by disasters in 2017. Such an adjustment would need to be made at the request of a PHA in coordination with HUD.

The supplemental also provides $18.7 million to rebuild Section 515 Rental Housing properties in USDA’s portfolio that were damaged or destroyed by disasters in 2017 and extends favorable tax treatment provisions enacted for areas affected by hurricanes to also include areas in California affected by wildfires.

The package additionally extends the National Flood Insurance Program (NFIP) for another month until March 23, giving lawmakers more time to consider NFIP reform legislation.

Next Steps

Enterprise is heartened that Congress has provided a meaningful increase for domestic programs and a robust disaster recovery package.  We encourage lawmakers to continue monitoring the recovery process in disaster-affected areas to provide additional support as needed. In addition, Enterprise urges appropriators to increase funding for housing and community development programs in the FY 2018 Omnibus, given the urgent need for these investments in communities nationwide.

The Administration is expected to release its FY 2019 Budget Request on Monday, February 12. Look out next week for additional posts and analysis from Enterprise on the request and its policy proposals.