Section 8 and Rental Assistance Program Changes

Overview

• Recent budget approval fully funded Section 8 and other rental subsidy programs for fiscal year 2025.
• Proposed budget plan for 2026 by the Trump administration suggests major changes to the Section 8 program.
• Proposed changes include cutting rental assistance funding, eliminating the federal Section 8 program, and introducing new eligibility requirements.

2025 Funding Highlights

• Congress funded the Section 8 program with $32 billion for the fiscal year 2025, an increase from $28.5 billion the previous year.
• The funding provided relief amidst uncertainties with federal handling of rental subsidies.

2026 Proposed Budget Plan

• Proposal suggests transitioning Section 8 from a federal to a state-based program.
• States would manage, fund, and maintain their own programs, receiving block grants from the federal government.
  • Block grant: Fixed sum of money for specific programs.

Arguments and Challenges

• Supporters:
  • HUD Secretary Scott Turner claims it will empower states and attract private investment.
• Critics:
  • Challenges in transitioning to state-run programs could lead to disparities in aid distribution.
  • High-cost states may struggle with capped funding, potentially leading to tax increases.

Proposed Eligibility Changes

• Prioritize aid for elderly and disabled individuals.
• Introduce a 2-year cap on rental assistance for able-bodied individuals.
• Time limits aim for quicker turnover, potentially shortening waitlists but risking harm due to economic conditions.
• Work requirements not emphasized in the proposal but time limits may replace their significance.

Impact and Considerations

• Transition to state programs not expected to end Section 8 but could alter funding sources.
• Shift might not drastically change program administration as local authorities already have discretionary power.
• Concerns over less funding leading to fewer vouchers, yet many vouchers currently go unused.

Concerns for Landlords

• 2-year tenant turnover reduces incentive for landlords, risking decreased participation in the program.
• Attracting landlords is crucial to maintaining the program's effectiveness.

Wider Impacts

• Transition may lead to increased state taxes to fund programs.
• Federal tax levels likely unchanged, pressuring state budgets.

Proposal Status and Future

• Current plan is a proposal, not yet approved.
• Other proposals exist; HUD faces potential cuts to various housing programs.
• Continued updates on the situation will be provided.