Testimony of Secretary Mel Martinez
Senate Committee on Banking, Housing and Urban Affairs
Subcommittee on Housing and Transportation
April 25, 2001
Allard, Ranking Member Reed, and distinguished Members of the Committee,
thank you for this opportunity to discuss the Department of Housing
and Urban Development�s budget for fiscal year 2002.
am both humbled and energized by the challenges that face us, in
this Department and this nation, as we work to improve housing and
expand opportunities for families seeking to move ahead. President
Bush and I are committed to restoring the confidence of the Congress,
the Department�s constituents, and the American people in the operation
of this Agency.
budget is the first step toward restoring that confidence. It is
a compassionate and responsible budget that will allow us to serve
people more effectively, empowering individuals and communities
across this great land.
We cannot face this challenge alone. We look forward to the support
of this Congress and particularly this Subcommittee to accomplish
American Taxpayer will measure our success not by how much money
we spend, but by how many families have a better home, by how many
immigrants get the chance to buy their first house, and by how many
children grow up in the kind of neighborhood we all want to live
existing programs must operate efficiently and effectively before
we create additional programs. Over the past two decades, the Department
has grown to include more than 300 programs. Simply adding new government
programs does not necessarily improve the lives of the citizens
who need the most help.
Administration�s overall growth for federal spending of four percent
is a responsible and appropriate level. Nevertheless, the President
also recognizes that we have an obligation to increase homeownership
opportunities and serve those that cannot afford decent housing.
The Department of Housing and Urban Development�s proposed budget
requests an increases of nearly seven percent in budget authority
for fiscal year 2002.
a home is the biggest investment most families ever make. By building
equity in a home families can pass on wealth from one generation
to the next, can provide for child�s higher education, or can access
venture capital for small businesses --- all the while strengthening
their communities. All Americans should have these opportunities,
no matter the color of their skin.
Nearly 70 percent of all families have come to realize the American
Dream and own their own home. Yet, despite this record number of
homeownership, there are still communities that lag behind: less
than half of African-American and Hispanic-American families own
can do better. We need to tear down barriers to homeownership for
families that are financially able to sustain homeownership. President
Bush�s budget includes three new homeownership initiatives to expand
opportunities for hundreds of thousands of low-income and minority
"American Dream Down Payment Fund" provides $200 million to match
down payment assistance, helping more than 130,000 low-income families
overcome the single greatest obstacle to homeownership. President
Bush also proposes a tax credit to support the rehabilitation or
construction of at least 100,000 homes for low-income families over
the next five years. The Administration will seek authority to offer
low-income families new adjustable-rate mortgages that protect new
homebuyers from dramatic changes in market rates until they can
establish an economic foothold.
American Homeownership and Economic Opportunity Act of 2000 provided
low-income families the ability to use rental vouchers for down
payment on a home. President Bush proposes to make this provision
permanent and not subject to appropriations, enabling the Department
to help more low-income families become homeowners. This builds
on the existing authority to use vouchers for mortgage payments.
affordable and decent housing continues to be a problem for many
Americans. Almost five million very low-income renter households
have "worst case needs" for rental housing. While this number represents
an eight percent decline from 1997 to 1999, it is still unacceptable.
order to expand the production of affordable housing, President
Bush proposes to raise the limits for FHA multi-family insurance
by twenty-five percent. This is the first increase in nearly ten
years and will help spur the development of affordable housing in
moderate to high cost urban areas.
are strengthening our traditional obligations to public housing
by increasing the public housing operating budget by $150 million.
This money can be used by local housing authorities to fund those
programs that best meet urgent needs, including the rising costs
Bush and I are also continuing our strong commitment to helping
families with the costs of rental housing through Section 8 housing
vouchers. This budget renews all expiring Section 8 contracts at
a cost of $15.1 billion � an increase of $2.2 billion over fiscal
year 2001 � and funds an additional 34,000 Section 8 housing vouchers
at an additional cost of nearly $200 million.
budget proposal does not request as many new housing vouchers as
in previous years for two reasons. First, we cannot continue to
increase the Department�s budget each year by 12 to 16 percent.
At the previous year�s rate of increase, our budget would surpass
$100 billion by 2010. Second, there has been a serious problem with
the utilization of existing Section 8 vouchers by state and local
agencies and some vouchers do not get used as quickly as they should.
I will work with Congress to improve the utilization of Section
8 vouchers by state and local housing agencies.
are more than just a piece of paper; for many families they are
the first step in the process of greater economic opportunity and
homeownership. There are two issues regarding the voucher utilization
problem: making vouchers easier to use and improving the management
capacity of local housing agencies. First, we should take additional
steps to ensure that more families are able to use their housing
vouchers. While vouchers work well in most markets, there is growing
evidence that families are having difficulties using vouchers in
certain markets. We should resolve that.
market conditions affect the utilization of vouchers in different
areas, under-utilization is ultimately a management issue. Good
managers can overcome difficult market conditions and ensure that
all of their vouchers are used. I plan to work with housing authorities
to help them become better managers so that they can serve more
families. We can do this through a combination of management techniques:
fully employing the Section 8 Management Assessment Program (SEMAP)
that gives substantial weight to utilization rates, giving priority
in fund allocation to housing authorities with high utilization
rates, and implementing HUD�s new authority to make some vouchers
While we focus on our goal of improving housing opportunities, this
budget does not neglect the Department�s traditional role of supporting
community and economic development. Much of this support is carried
out by the Community Development Block Grant (CDBG) Program and
this Administration continues strong support of this important program.
CDBG will receive almost $4.4 billion in funding for formula grants
to meet the specific needs of local governments. CDBG funds locally
developed programs that revitalize communities and help spur economic
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