Transcript: HUD Secretary Shaun Donovan’s testimony on impacts of sequestration before the Senate Appropriations Committee

Transcript of testimony by Housing and Urban Development Secretary Shaun Donovan on the impacts of sequestration on the housing recovery, homelessness, and Hurricane Sandy recovery. The Senate Appropriations Committee hearing was held on Feb. 14, 2013:

Thank you for the opportunity to testify today regarding the impacts of sequestration on the Department of Housing and Urban Development and our programs.

Should sequestration go into effect on March 1, the cuts would be deeply destructive to HUD programs and those who rely on them, including hundreds of thousands of middle-class and low-income individuals.

It would also cause significant damage to our nation’s housing market at a time when it’s helping to lead our economic recovery.

More specifically, sequestration would mean about 125,000 individuals and families – more than half of whom are elderly or disabled – losing assistance provided through the Housing Choice Voucher Program and becoming at risk of homelessness.

Sequestration would also result in more than 100,000 homeless and formerly homeless people – the majority of whom are families, disabled adults, or veterans – being removed from their current housing or emergency shelter programs, putting them at substantial risk of returning to the streets.

Cuts to the Housing Opportunity for Persons with AIDS or HOPA program would result in 7,300 fewer low-income households receiving supportive housing assistance and threaten to add even further to the population of homeless Americans.

Cuts to our office at healthy homes and lead hazard control and related programs would result in 3,000 of the most vulnerable children not being protected from lead poisoning or other hazards in their homes.

Cuts to housing counseling grants would result in 75,000 fewer households receiving vital foreclosure protection, pre-purchase, rental or other counseling. This means fewer families making responsible, informed choices, and greater risk throughout the housing market.

Sequestration will also have a broader, more damaging effect – economic impact – on our still fragile local economies. While sequestration cuts $212 million from our home and community development block grant programs, communities lose nearly half a billion dollars in additional funding from private and other sources because they can no longer leverage those critical federal dollars.

Cuts to public housing authority budgets would mean more deferred maintenance and capital repairs on top of an existing capital needs backlog of over $25.6 billion nationwide, endangering the future of these apartments, the families, and their neighborhoods.

In 2012, CDBG created and retained almost 22,000 permanent jobs and more 32.5 million people benefitted from the community development block grant. Sequestration will jeopardize those jobs and services as well.

Indeed, across all HUD’s programs, sequestration will likely result in the loss of tens of thousands of jobs at a time when continued recovery depends on a stable job market, especially in our hard-hit construction industry.

HUD initiatives and programs have been central to the recent recovery in the housing market but our agency’s ability to perform critical activities that support the recovery will be severely hampered by sequestration as a result of furloughs that we’d be required for agency staff.

Sequestration would jeopardize the FHA’s ability to process loans at a time when FHA represents a substantial portion of all loan origination for single-family market, including almost half of all first-time homebuyers across the country as well as 25% of all new multi-family constructions. That risks destabilizing the market and slowing our economic recovery.

Finally, sequestration seriously threatens our Hurricane Sandy recovery efforts. A 5% cuts amounts to $3 billion from the Sandy supplemental just passed by Congress, taking away crucial funding for repair and recovery from housing, transportation, and other areas. Just as an example: The funding that would be cut from CDBG would help make necessary repairs to more than 10,000 homes and small businesses in the region.

Whether it’s the man-made disaster of the recession or the natural disaster of Hurricane Sandy, HUD has been central to recovery efforts and we cannot afford to threaten them.

As the President said on Tuesday, we know that broad-based economic growth requires a balanced approach to deficit reduction with everybody doing their fair share – not an approach that clearly harms the middle-class and the poor and comes at the expense of our nation’s economy.

Sequestration is a blunt and indiscriminate instrument that was intended to ensure more measured and deliberate cuts would be made.

It is my hope and all of our hope in the administration that Congress can find a bipartisan solution to our budget and deficit concerns without risking our economic recovery and imposing the kind of serious damage that the sequester makes inevitable.


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