Message from the Secretary

President Clinton's second-term urban agenda began with the understanding that while the mission of HUD was more vital than ever, the Department itself faced a competence gap that compromised its ability to fulfill its mission. Decades of neglect left HUD with the dubious distinction of being the only federal agency designated as "high risk" by the General Accounting Office. One of HUD's Congressional chairmen called the Department "dysfunctional." HUD's own Inspector General reported that "prospects for further improvement (at HUD) were dim." What's more, HUD's main rent subsidy program for the poor, known as Section 8, was on the brink of becoming the next savings and loan scandal, with grave consequences for more than four million low-income Americans who depended on the program for a place to live.

At the President's direction, and with the Vice President's guidance, we didn't set out to defend the problems, we set out to fix them. Our efforts focused on closing the competence gap by eliminating waste, fraud, and abuse. We partnered with the Justice Department to crack down on bad landlords. We partnered with the FBI to create a new Enforcement Center. We created an Assessment Center that will inspect all HUD properties nationwide for the first time. And drawing on the lessons of the private sector, we consulted with reinvention gurus James Champy and David Osborne to implement the most sweeping reform plan in HUD's history. In conjunction with our unions, we enacted a plan that clarifies HUD's mission, streamlines its operations, improves customer service, harnesses new technology, and infuses a new generation of talent called "community builders." In the process, the plan sets a glide path to integrate 89 separate financial management systems that can't talk to each other into one, and downsize the HUD workforce to 7,500 employees by the year 2002. As a result of these efforts, by year's end, the competence gap was replaced by legislative success - Congress passed the first major housing bill in five years, voting to fundamentally reform the Section 8 program.

With this budget, HUD turns the corner. The 1999 HUD budget is the smartest and strongest HUD budget in ten years and reflects the President's belief that HUD today is smaller, faster, and better than it was a year ago. Building on the theme of reinvention undertaken in 1997, this budget includes no new programs or new bureaucracies. Instead, the $1.8 billion program increase proposed in this budget enhances existing programs that have been retooled and improved for the 21st century. Individually, this budget reflects increases to 20 different programs. Taken as a whole, it reflects two very clear themes that reinforce the twin missions of the Department of Housing and Urban Development.

The first theme is jobs and economic opportunity. Why? Because nothing empowers an individual, develops a community, or builds a stable tax base like a job. The challenges of the global economy combined with the implementation of welfare reform have placed new demands on communities across America, and made HUD's economic development mission more vital than ever. This budget reinvents several HUD programs to meet that challenge in an innovative way, proposing vouchers to help people move from welfare to work, a Community Empowerment Fund to get businesses the start-up capital they need to create jobs, and funding for a second round of Empowerment Zones to bring opportunity back into the inner city. It also builds on successful core programs, doubling funding to convert old brownfields into thriving businesses, and streamlining the Community Development Block Grant program to provide communities with more resources and more flexibility to turn their plans into reality.

The second theme is housing and homeownership. Why? Because housing is the foundation on which everything else is built. For the past two years, tight budgets have reduced America's net increase of rental assistance to zero. The 1999 HUD budget gets America back into the housing business, not by creating new programs but reinventing and investing in old ones. It proposes new vouchers to help people find affordable housing, a new "bank" to allow communities to leverage up to five times their HOME allocations to build housing, and the largest level of funding ever to end the tragedy of homelessness. It also makes clear that all of HUD's separate housing roads should ultimately lead to one place: homeownership. Our goal is to help more people become homeowners, and this budget does so in innovative ways: by raising the FHA loan limits to help more middle class families buy homes, and by increasing HUD's campaign to weed out housing discrimination once and for all.

All told, the 1999 HUD budget represents not just a shift in policy, but a shift in philosophy. This budget seeks to change HUD's role from Washington dictates to community empowerment. Not with federal mandates, but with a federal menu of opportunity. Not with solutions driven from the top-down, but from the bottom-up. Not with a one-size-fits-all mentality, but with action plans written by and tailored to local communities. HUD's goal is not to tell communities what to do, but to help communities do what they want to do. In the process, it takes partnership to a new level - by setting aside part of the CDBG program to encourage cities and counties to work together on a regional level to solve problems.

In the end, this budget is critical not just because HUD has closed its competence gap, but because America still has an opportunity gap. Our nation has created over 14 million new jobs, but only 13 percent are in cities. We have more homeowners than ever, but over five million Americans either live in substandard housing or pay 50 percent or more of their income in rent. We have more millionaires than any time in our history, but an estimated 600,000 Americans still sleep on our streets every night. That's why HUD's mission is more vital than ever. We closed the competence gap so we could close the opportunity gap. That is both our challenge and our continuing commitment today. This budget says we can do it - but only if we work together.

Andrew Cuomo