[Congressional Record Volume 140, Number 137 (Tuesday, September 27, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: September 27, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                           SECTION 8 HOUSING

  Mr. DOMENICI. Mr. President, the appropriations bill on VA-HUD 
appropriations raises a serious question about truth in budgeting. For 
years, we have anticipated the high cost associated with the renewal of 
section 8 housing contracts and for years we have procrastinated facing 
some very difficult policy choices.
  Section 8 housing is the privately financed housing for the poor in 
the United States which we handle by subsidizing their rental contracts 
with those who build section 8 housing. It is the most significant 
program for low-income housing; 2.8 million of the low-income 
households that we help with as a nation are section 8 housing.
  This assistance program, I repeat, subsidizes 2.8 million low-income 
households through contracts with local housing agencies, State housing 
finance agencies, and private owners.
  Congress must provide discretionary budget authority at one time to 
cover the anticipated cost for the life of a section 8 contract. Before 
1989, section 8 contracts ranged in length from 5 to 40 years. 
Beginning in 1989, HUD began issuing 5-year contracts. However, as 
budgetary pressures increased, HUD has increasingly renewed section 8 
housing for less than 5 years with unknown consequences to the program 
and the effect of postponing the inevitable need to pay the true cost 
of these renewals.
  In August 1993, using HUD data, the General Accounting Office 
estimated that total section 8 renewal costs for the years 1994 through 
1998 would be $59 billion. That means, Mr. President, if we are to 
continue the same level of units and the same subsidy program, which I 
think we are saying almost uniformly is probably the best program we 
have for low-income housing, if we were going to continue it at the 
same pace, we would need $59 billion as the cost of contracts for years 
1994 through 1998 with each year's renewal costs subject to the cap on 
discretionary spending and in competition with other discretionary 
programs.
  Let me repeat. That $59 billion in additional new budget authority to 
continue this level of housing will be competing with all of the other 
discretionary program funding for the United States. And we now have 
severe caps imposed on discretionary spending. In fact, the General 
Accounting Office predicted the largest increase in renewal costs would 
occur between 1995 and 1998 when costs are expected to double to an 
estimated $14 billion in 1996.
  This appropriation bill again defers action on the cost of section 8 
renewals. While the General Accounting Office has estimated the 1995 
section 8 renewal costs to be $7 billion, and the CBO baseline, the 
Congressional Budget Office starting point, has $6.5 billion in 
renewals for 1995, this bill provides a nominal $2.5 billion in budget 
authority.
  The significance of that is that we have no way of knowing what this 
is going to do to the section 8 housing that we have committed to. We 
only put $2.5 billion in this budget in this appropriation bill where 
both expert agencies say we should have between $6.5 and $7 billion in 
budget authority to keep the program intact.
  For several years, administration budget requests have fallen short 
of actual section 8 renewal costs, in part because of HUD's inability 
to accurately track expiring contracts, but also because of what 
appears to be an attempt to obscure the true cost of the program. For 
example, the administration requested $4.3 billion for section 8 
renewals for 1995, assuming 5-year contracts. Using HUD data, GAO 
estimated the 1995 renewals should be closer to $7 billion. However, to 
ensure that funds would be adequate to renew all expiring contracts, 
the administration requested authority to transfer funds as needed from 
the annual contributions to assisted housing and allowed for contracts 
of less than 5 years in order to temporarily save budget authority. 
That is program authority.
  Mr. President, this also has become a shell game. How much longer can 
we avoid facing the costs of this program? Just look ahead to 1996, 
when renewal costs are expected to more than double in 1 year. The 
Congressional Budget Office estimates the 1996 renewal costs to exceed 
$12 billion. To keep the program intact, to fund the renewals in an 
ordinary way that assures that we are providing this, it will cost in 
excess of $12 billion in 1996.
  With the discretionary spending cap imposing extraordinary 
limitations over the next few years, that is 4 to be exact, how likely 
does it appear that Congress will increase funding for section 8 
renewals by some $10 billion in 1 year, effectively raising total HUD 
spending by 40 percent from 1995 to 1996?
  The administration's housing reauthorization bill was silent on this 
question. I appreciate that in the Senate-reported authorization bill, 
we have attempted to impose some measure of cost control over the 
process of project-based section 8 renewals. However, we must recognize 
that it represents only the beginning steps of addressing this serious 
funding shortfall. There will be no painless way to fix this problem.
  I intend to offer an amendment to the housing reauthorization bill, 
which I believe will be accepted on both sides, to impose much stricter 
reporting requirements on HUD in terms of illustrating the costs of 
section 8 renewals. My amendment requires HUD to provide to both the 
Senate Banking and Budget Committees, in conjunction with the 
President's annual budget submission, a detailed analysis of section 8 
costs for the coming year and the subsequent 5 years, an analysis of 
the programmatic effects of shorter-term contracts. We still do not 
even have any idea of what these shorter-term contracts are going to be 
to the supply and to the liability to the entire program for low-income 
housing, and recommendations should be included for meeting projected 
renewal costs. That will be part of the amendment which I intend to 
offer. I do not think the Senate can turn it down.
  Clearly, we are walking some kind of very, very tight tightrope in 
terms of whether we are going to be able to continue this program, and 
if not, it is obvious that we ought to know the results. If we are to 
continue, it is going to require larger injections of program authority 
into a tight budget, and we have put ourselves in that bind.
  Shortening the length of contracts and granting broad authority to 
divert funds from other housing programs, in my opinion, will not be 
adequate to address the renewal costs in 1996 and beyond. Members of 
Congress and the public need to clearly see the cost of section 8 
renewals if we are to ultimately reach consensus on modifications to 
the program, and it may very well be that we should approach 
modifications, but we should do that with full understanding of how we 
got where we are and where we want to end up.
  Mr. President, I yield the floor and I thank the Senate for yielding 
me 5 minutes.
  I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. BINGAMAN. Mr. President, I ask unanimous consent that I be 
allowed to proceed for up to 10 minutes as in morning business.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.

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