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Testimony of The Honorable Mel Martinez
before the VA, HUD, and
Independent Agencies Subcommittee
of the House Appropriations Committee

May 23, 2001

Chairman Walsh, Ranking Member Mollohan 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. If the Members are agreeable, I will submit my entire statement for the Record, and devote the bulk of my time this afternoon to summarizing the budget and answering any questions the Committee may have.

The Department of Housing and Urban Development faces great challenges as we work to improve the Nation's housing and expand opportunities for America's families. President Bush and I are committed to restoring the confidence of the Congress and the American people in the operation of this Agency. Our fiscal year 2002 budget is the first step toward restoring that confidence.

Let me say this at the start. Even though we are focused today on the budget, our ultimate success will not be measured by how much money we spend. I want this Department to be judged on numbers that are far more important: how many families get the chance to buy their first house, and how many children grow up in the kinds of neighborhoods we all want to grow up in.

The Administration has set the overall growth of Federal discretionary spending at 4 percent, a level that is responsible and appropriate. But the President recognizes that this Department's mission of improving housing and community development opportunities brings with it special obligations. That is why the Department of Housing and Urban Development's proposed budget increases nearly 7 percent for fiscal year 2002.

I am very pleased that President Bush has made increasing homeownership, and the freedom that comes with it, a top priority of his Administration.

Homeownership plays a vital role in creating strong communities by giving families a stake in their neighborhoods, while helping them to build wealth. Yet even though almost 70 percent of all families have realized the American Dream of owning their own home, minorities and low-income families lag far behind. That must change, and this Department is firmly committed to reducing the gap.

The cost of downpayments remains the biggest single barrier to homeownership. The American Dream Downpayment Fund provides $200 million in matching assistance to help more than 130,000 low-income families purchase homes. And under soon-to-be-published regulations, voucher-holders will be able to use up to one year's worth of Section 8 assistance for the downpayment on a home because of the good work of Congress - this committee - in passing the American Homeownership and Economic Opportunity Act.

Another of our proposals is the $1.7 billion Renewing the Dream Tax Credit that will support the rehabilitation or new construction of some 100,000 homes for purchase in low-income neighborhoods. A fourth initiative will expand access to homeownership by reducing payments in the first years of a mortgage.

Each of these efforts will complement HUD's existing homeownership programs.

Of course, we recognize that homeownership is not an option for everyone. Today, more than 4 million households rely on a variety of HUD programs to help them meet the high costs of rental housing. This budget preserves - and expands - our commitment to every American seeking the "freedom" to live decently and affordably.

I want to specifically note the President's proposal to increase the limits for FHA multi-family insurance by 25 percent. We need to spur the construction and rehabilitation of affordable rental housing in high-cost areas, and increasing the limits is a critical step.

Building stronger communities means helping low-income working families increase their skills and earnings... helping families become self-sufficient. The Community Technology Centers program delivers on both counts. For fiscal year 2002, HUD will provide $80 million in competitive grants to help communities create or expand computer technology centers in low-income areas.

Unfortunately, too many Americans looking for a home instead find themselves victimized by housing discrimination and outright fraud. The people of HUD are committed to vigorously enforcing our fair-housing laws to help ensure that all Americans have equal access to rental housing and homeownership opportunities. For the coming fiscal year, the Department plans to increase - by 16 percent over current levels - the amount of funding available for fair-housing enforcement and education activities.

We are also taking additional steps to crack down on predatory lending...for example, the abusive practice of "property flipping" that destroys neighborhoods and the dreams of American families. We intend to eliminate this practice so far as HUD is concerned by denying FHA insurance on properties resold within a certain period of time.

I have not touched on many of our other notable efforts - among them our work to improve the quality of life for the elderly, assist those with disabilities, reduce lead-based paint hazards, and aid the homeless. But perhaps we will have the chance to discuss them during your questions.

As you know, last year's HUD budget increased 16 percent, and we cannot continue at that rate of growth. If we did, our budget would be over $180 billion by 2010. While most of our programs are being funded at last year's record high - or even slightly higher - levels, I will mention two important reductions.

This budget provides nearly $2.3 billion for the Public Housing Capital Fund. Let me make this clear - the Capital Fund will still have over a year's funding in reserve to address backlog needs, and this budget funds 100 percent of the money necessary to cover the modernization and maintenance needs for fiscal year 2002. The PHAs have over $8 billion in backlog funding if you include those funds already released for FY 2001.

HUD has proposed terminating the Public Housing Drug Elimination Grant Program. While a well-intentioned effort, it ultimately suffered from a large number of abuses... duplicated the efforts of many other Cabinet Departments... and required the Department of Housing and Urban Development to take on a law enforcement role that is clearly outside its core mission.

I have met with Attorney General Ashcroft to determine how federal law enforcement resources can be used to fight crime in public housing.

I have spoken often, and quite candidly, about the need to resolve HUD's serious management challenges. Throughout the years, Congress has repeatedly told the Department to improve its management and restore its focus - in other words, get its own house in order. This Administration is listening, and we have dedicated ourselves during this first year to righting the ship.

We cannot do this alone, however, and so I want to work with the Nation's mayors and encourage them to take on a greater oversight role. No one is in a better position to help us identify housing problems in their communities... and work with us to better their neighborhoods.

This Administration is strongly committed to focused programs and an efficient government that works. And my approach to the task will focus on four governing principles.

First, our mission will be to serve people, not programs.

Second, we will have the discipline to stick to our mission. Mission creep is mission death.

Third, we will be good stewards of our resources.

Fourth, we will observe the highest ethical standards. This means more than prosecuting graft. It means rejecting the subtler corruption of settling for good appearances rather than insisting on good results.

As we seek to fulfill our mission, this Department is committed to continuing a strong relationship with Congress so that together we can make the Department of Housing and Urban Development an efficient and effective fighter on behalf of America's housing and community development needs.

Thank you.

Full text version of testimony

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