Bush Administration proposes $28.5 billion HUD budget - spending plan continues commitment to homeownership and homeless assistance - Increases proposed for Section 8 and programs designed to end chronic homelessness

WASHINGTON - The Bush Administration's proposed budget for fiscal year 2006 includes $28.5 billion for programs administered through the Department of Housing and Urban Development. While the President's spending plan proposes needed reforms and consolidation in some housing and development areas, HUD Secretary Alphonso Jackson said the budget signals a continued commitment to increasing record homeownership and ending the most chronic forms of homelessness.

The 2006 HUD Budget also proposes a $1 billion increase in funding for the Housing Choice Voucher Program, commonly referred to as Section 8. This significant increase brings HUD's total commitment to helping lower income families find affordable rental housing to approximately $18.4 billion or 65 percent of the Department's overall budget.

"This budget reflects some of the tough choices we must make to continue meeting our nation's key priorities," said Jackson. "Our commitment to expanding economic opportunity through homeownership continues and we will make certain we house and serve those who are most vulnerable."

In releasing details of next year's spending blueprint, Jackson said the President's budget "will launch needed reforms, consolidate duplicative programs, and improve accountability in an effort to boost the effectiveness of HUD's commitment to our nation's cities, counties and smaller communities." To read more about HUD's 2006 Budget, visit HUD's website.

Promoting Economic Opportunity and Ownership

Today, more Americans own their own homes than ever before yet minority families continue to lag behind the rest of the nation when it comes to homeownership. To close this gap, President Bush challenged the nation in June 2002 to create 5.5 million minority homeowners by the end of this decade. Since the President issued his challenge, 2.2 million minority families have joined the ranks of homeowners. In FY 2006, HUD will pursue a number of initiatives to narrow the minority homeownership gap and to achieve the Administration's new goal of creating seven million affordable homes over the next decade. The Budget includes several programs designed to advance the President's homeownership agenda:

The American Dream Downpayment Initiative (ADDI). The 2006 Budget provides $200 million to fully fund this Initiative. ADDI helps first-time homebuyers with the biggest obstacles to homeownership - the downpayment and closing costs. Since President Bush signed this initiative into law, ADDI has helped more than 3,500 families to purchase their first home - of which more than half were minorities.

Zero Percent Downpayment Option. The Administration proposes a zero downpayment mortgage option in the Federal Housing Administration (FHA) that would allow first-time buyers with a strong credit record to finance 100 percent of their home purchase including closing costs. The Budget also proposes a program called Payment Incentives, which would allow borrowers with limited or weak credit histories to purchase homes by initially paying higher mortgage insurance premiums that would gradually be reduced after a period of timely payments. In 2006, these new mortgage programs will help more than 250,000 families to buy a home of their own.

Self-Help Homeownership Opportunity Program (SHOP). The Budget proposes $30 million for HUD's SHOP Program which taps into the power of volunteerism, the experience of tradesmen and the hard work of the families themselves to increase homeownership. Those who benefit from SHOP funds contribute at least 100 hours of their own "sweat equity" to help make a house their home. By contributing time and their own labor, families join volunteers and contractors to construct or rehabilitate their homes.

Single-Family Affordable Housing Tax Credit. To stimulate the production of affordable homes in distressed communities where such housing is scare, the Administration will again propose a tax credit of up to 50 percent of the cost of new construction or rehabilitation. This tax credit targets low-income households earning less than 80 percent of an area's median income.

Serving Society's Most Vulnerable

Continuum of Care. The President is proposing record levels of funding to house and serve homeless persons and families. The 2006 Budget provides $1.44 billion through HUD's Continuum of Care homeless assistance grants, $200 million more than in 2005. The funding, along with greater coordination at the federal level, will help meet the Administration's goal of ending the most chronic forms of homelessness for those living with a mental illness, addiction or disability.

Consolidation of Homeless Programs. The Administration intends to propose consolidating HUD's homeless assistance programs, each with their own rules and eligibility requirements, into a single program. This will greatly simplify the grant application process; streamline local planning; and, speed delivery of resources to those who need it most. In addition, the proposed consolidation will satisfy requests from local "continuums of care" for a more flexible program that would allow them greater discretion and control in meeting the needs of homeless persons in their community.

Housing for Returning Ex-Offenders. In his State of the Union address, the President proposed a four-year, $300 million Prisoner Re-entry Initiative to help ex-offenders make a successful transition to community life and long-term employment. The Budget provides $75 million for this joint initiative in 2006, including $25 million from HUD. In cooperation with the Departments of Justice and Labor, this is an important prevention program, offering transitional housing to ex-offenders who are at high risk of becoming homeless.

Reforming HUD Programs to Make Government More Effective

Reforming Low-Income Housing Assistance. HUD's Section 8 Housing Certificate Fund provides rental subsidies to more than three million families nationwide. In 2001, the Section 8 programs consumed 43 percent of HUD's annual Budget. This year, that figure had risen to 57 percent, and will surpass 65 percent in the Department's 2006 Budget. This rate of increase, combined with an extremely complicated set of laws and rules that govern the voucher program, limits the program's effectiveness to help families, many of whom must wait years to receive any help from their local housing authorities. HUD's 2006 Budget for Section 8 programs will continue to promote self-sufficiency and provide significantly more flexibility to allow local housing authorities to help even more families seeking affordable housing.

Reforming Community and Economic Development Programs. The Budget proposes a new $3.7 billion program within the Department of Commerce called Strengthening America's Communities Program to support local communities' efforts to improve their economies and their quality of life. This initiative will consolidate HUD's Community Development Block Grants and several other federal development programs into a more targeted, unified program that sets stronger accountability standards in exchange for flexible use of the funds. Strengthening America's Communities Program will target funding to high poverty areas, offer greater incentives and increase accountability so federal development dollars actually make a concrete difference in distressed areas.

Housing for the Elderly. The Administration's 2006 Budget calls for a comprehensive review of HUD's Section 202 program that suffers from several performance shortcomings including construction delays and cost overruns. The Administration will investigate ways that this elderly housing program can be reformed to deliver critically needed housing to senior citizens in a more effective and timely way.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

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NOTE: For a detailed summary of HUD's proposed FY 2006 budget, visit HUD's website.