Schumer Analysis: Administration Budget Proposal Shows Bush Remains Out Of Touch Even As Nation Lurches Toward Recession; Request Tragically Underfunds Vital New York Programs, Ignores Housing Crisis

WASHINGTON , DC -U.S. Senator Charles E. Schumer (DNY) today said that the Administration's budget proposal for fiscal year 2009 includes big cuts to a number of key programs that New Yorkers rely on.  The Administration has slashed funding for Medicare  by $178 billion  and Medicaid by $18 billion over five years, cut back the state Homeland Security Grant program by 67 percent, and gashed funding for vital local law enforcement programs, including the Office of Community Oriented Policing.

 

"This budget would pull the rug out from under millions of New Yorkers who depend on the vital programs this Administration wants to gut. During difficult economic times, it is hard to believe that the Administration would turn such a blind eye to the needs of Americans who are struggling to make ends meet," Schumer said. "This budget has drastic cuts to health care, housing programs, local law enforcement, and homeland security. The list goes on and on. The budget even severely underfunds No Child Left Behind, legislation that President Bush hailed just two weeks ago in his State of the Union Address as a bipartisan success story that should be strengthened. This is just further evidence that President Bush is tragically out of touch with the needs of the middle class and the American people."

 

The Administration's budget acknowledges that there will likely be an annual gap between government revenues and expenditures of over $400 billion in 2009, with approximately $150 billion of that amount is intended to be targeted toward the economic stimulus package that the Senate hopes to pass this week. Given an opportunity to offer proposals to spur on the economy and shrink this gap, President Bush instead cut back on important programs and opted to increase military spending, continuing his legacy of deficitfinanced war spending and an exploding debt. The proposed budget would increase funding for the Pentagon by 7.5 percent to $515 billon. President Bush also proposed $70 billion more be allocated for the wars in Iraq and Afghanistan.

 

Listed below are some of the most significant cuts proposed in the Administration's budget, including cuts to New York programs. 

 

 

HOMELAND SECURITY

 

• Homeland Security:  The Administration's proposed budget cuts the State Homeland Security Grant program (SHSGP) budget funding for state and local homeland security programs by $310 million , down 67 percent from the FY08 of $950 million.

 

• Urban Area Security Initiative: The Administration's proposed budget provides a slight increase from $820 million in FY08 to $825 million for FY09. The Urban Area Security Initiative provides more targeted funds to high threat, urban areas at greater risk of terrorist attacks.

 

• FEMA: The budget for disaster relief for the Federal Emergency Management Agency came in at $5.7 billion, a $3 billion decrease from FY08.

 

·         Securing the Cities : The President's budget would cut funding for the Securing the Cities nuclear detection program to $30 million, down 25% from last year's funding level of $40 million . The Securing the Cities initiative will assist regional collaborations of municipalities to set up a detection and interdiction ring around the region with the goal of preventing nuclear weapons and radioactive materials from entering densely populated areas. The New York City metro area is the first location that the Administration has selected to launch this groundbreaking program. Local law enforcement authorities in and around New York City are installing a network of stationary and mobile detection devices on highways, sea lanes, bridges and tunnels throughout the City, Long Island, the lower Hudson Valley, and New Jersey. The Securing the Cities project has the strong support of law enforcement in New York City and the surrounding counties, and it is sorely needed to combat the threat of a nuclear or radiological attack against the city.

 

 

TRANSPORTATION AND INFRASTRUCTURE

 

• AMTRAK:   The Administration is continuing to rip the rails out from under Amtrak, providing only $800 million in federal subsidies for Amtrak for the second year in a row, down 38 percent from $1.3 billion that Congress appropriated in FY08. The Department of Transportation stated that this represents "a significant cut".  More than 10 million New Yorkers ride Amtrak trains each year and ridership is growing.

 

• Airport Improvement Program: The Airport Improvement Program, which provides grants for local airports to improve facilities, was cut to $2.75 billion in the Administration's budget proposal.  This represents a cut of 21 percent from the $3.51 billion provided last year.

 

• Essential Air Service: For the second year in a row, the Administration proposes no appropriated funds for the Essential Air Service (EAS) program, which was created to continue air service to communities that had received federally mandated air service prior to deregulation of commercial aviation in 1978.  It currently provides subsidies to air carrier serving small communities that meet certain criteria including Watertown, Ogdensburg, Massena, Plattsburgh, Saranac Lake and Jamestown. The proposed budget includes $50 million for the EAS program to be funded by overflight fees collected by the FAA, still $10 million below the level Congress appropriated for the EAS program in FY08.

 

• Federal Aviation Administration : The President's budget proposal once again introduces cuts to Federal Aviation Administration (FAA). In FY08, the FAA baseline was $14.92 billion. In the President's proposal, the FAA would be allocated $14.64 billion, a decrease of almost $275 million.  Airport grants (the Airport Improvement Program) were also cut by $750 million.

 

• Federal Highways Administration and FederalAid Highways: The Administration's budget proposal for the Federal Highways Administration and FederalAid Highways slightly decreased funding for programs providing financial support to states and localities for development, construction, and repair of highways and bridges through grants.  FY08 budget request was just over $ 39.59 billion. Congress increased funding to over $40.22 billion.  The President's FY09 budget would decrease funding from the FY08 appropriation by two percent to $41.49 billion.

 

• New York Liberty Zone:   For the fourth consecutive year, the Bush Administration has included in its budget proposal the $2 billion in tax credits for New York State and New York City for expenditures relating to the construction or improvement of transportation infrastructure in (or connecting to) the New York Liberty Zone.  Senator Schumer has succeeded in getting these credits through the Finance Committee and full Senate, but they have not yet been signed into law.  The credits are currently contained in the bill to restructure the FAA, which was passed out of the Finance Committee in November 2007.

 

  LOCAL LAW ENFORCEMENT/FIRE PROGRAMS

 

• Office of Justice Programs and Office of Community Oriented Policing : In the President's budget, the Office of Justice Programs, including the Office on Violence against Women, was cut from $2.3 billion to $813 million, a 64 percent decrease. Funding for the Office of Community Oriented Policing Services (COPS) has been rolled into the Byrne Public Safety and Protection Program, along with the Weed and Seed program.  The total funding for all three of these programs is only $200 million. COPS programs help law enforcement agencies hire police officers, enhance crime fighting technology, and support crime prevention initiatives.  Programs include funding for methamphetamine prevention and prosecution, violent gang and gun crime reduction, and law enforcement technologies and equipment. Total funding for local and state law enforcement programs have been gutted from $908,136,000 to a mere $404,000,000.

 

• Terminated State and Local Law Enforcement Assistance Programs:   The State Criminal Alien Assistance Program (SCAAP), the federal program that helps states with the costs of incarcerating undocumented aliens who are convicted of crimes, and the Justice Assistance Grant program, which provides funding assistance for state and local law enforcement, are eliminated in the budget proposal. Under SCAAP, New York received $53 million and $54.76 million in FY07 and FY08 respectively.  Through the Justice Assistance Grant program, New York received $11.28 million in FY06, $16.78 million in FY07, and $5.49 million in FY08 - after the Administration recommended cutting the program.

 

• FIRE Grants: Once again the Administration is calling for significant cuts to the FIRE program. In FY 08 $750 million was allocated for firefighter assistance. Of this amount, $190 million was setaside for staffing grants under the SAFER program.  The Administration's budget lowers firefighter assistance to $300 million and eliminates the specific setaside for SAFER staffing grants.  FIRE grants provide funding for our city and volunteer fire departments and nonaffiliated emergency medical services. These grants are aimed at helping communities enhance their first responder capabilities, including protecting the health and safety of the public and our nation's first responders.  The funds go to specialized emergency response training, hiring additional firefighting personnel, the creation of wellness and fitness programs for firefighters, equipment acquisition and facility upgrades, and fire prevention and safety programs.

 

• Sex Offender Grants: In FY 08, $15,608,000 was provided for a national grant program to assist State and local law enforcement locate, arrest and prosecute child sexual predators and exploiters, and to enforce State offender registration laws.  This program, a part of the COPS Office, has been eliminated in the President's proposed budget, further reducing overall COPS funding.

 

 

EDUCATION

 

·                     Individuals with Disabilities Education Act (IDEA): The Administration's FY09 budget falls short of Congressional commitment, calling for levelfunding of grants to states. Through the Administration's budget, the federal government would again provide a smaller share of states' total costs for special education.  The funding would provide 17 percent of the national average perpupil expenditure toward meeting the excess costs of education students with disabilities - less than half of the 40 percent "full funding" level that Congress committed to paying when the IDEA was first adopted 33 years ago.  While funding for New York is increased from $721.5 million to $741.5 million, an increase of 2.8%, the proposed nationwide level of $11.3 billion falls $10.2 billion short of the FY09 authorized level of $21.5 billion. 

 

·                     NCLB/Title I: Title I Grants to local educational agencies are the largest component of the NCLB legislation and are designed to help raise student achievement in the most impoverished communities. Under the Administration's proposal, Schumer estimates that New York's share of the program would increase by nearly $13 million over the estimated FY08 level from $1.225 billion in FY08 to $1.238 billion in FY09. This increase falls far short of fully funding the No Child Left Behind Act.  While No Child Left Behind stands to be reauthorized this year, the President's budget request shortchanges New York State by nearly $955 million compared to the level set in the law for FY09 and fails to each all students who are eligible for the program. Under the Administration's plan, 263,627 children in New York State will not receive promised Title I services.

 

·                     After School Programs:   The Bush budget leaves behind millions of students who would receive after school services if the 21 ^st Century Community Learning Centers program were funded at the level promised in NCLB.  21 ^st Century funding would decrease from $1.08 billion in FY08 levels, to $800 million.  While the 21 ^st Century Community Learning Centers program is up for reauthorization as part of No Child Left Behind Act this year, the President's FY09 funding level falls $1.7 billion below the $2.5 billion authorized level for FY07.  NY State would receive only $65.8 million$162.6 million below the authorized level of $228 million.  This will lead to a 33.3 percent cut in funding for New York State.

 

·                     Terminated programs: The Bush budget eliminates 48 Education programs, for a total of $3,283 billion. They include Perkins Basic and Tech Prep Grants ($64.8 million for NYS alone, $1.22 billion nationwide); Educational Technology State grants (267million), Javits Gifted and Talented Program ($7.5 million), and Even Start ($66.5 million).

 

·                     Other Education Programs that will be Terminated in the FY 2009 Budget: Foundations for Learning; Close Up Fellowships; Excellence in Economic Education; Women's Educational Equity; Mental Health Integration in Schools; Mentoring; Comprehensive School Reform; Exchanges with Historic Whaling and Trading Partners; Javits Gifted and Talented Program; Education for Native Hawaiians; Alaska Native Education Equity; Ready to Teach; Advanced Credentialing; Civic Education; School Leadership; National Writing Project; SDFS Alcohol Abuse Reduction; Elementary School Counseling; Physical Education Program; Reading is Fundamental; Arts in Education; Parental Information and Resource Centers; Special Olympics Education Programs; Smaller Learning Communities; Even Start; Educational Technology State Grants; Academies for American history and civics; Career and Technical Education State Grants; Career and Technical Education National Programs; TechPrep State Grants; B.J. Stupak Olympic Scholarships; Underground Railroad Program; Thurgood Marshall Legal Educational Opportunity Program; Demonstration Projects for Students with Disabilities; Byrd Honors Scholarships; Supplemental Educational Opportunity Grants; Teacher Quality Enhancement; Leveraging Educational Assistance Partnership; Federal Perkins Loans Cancellations; Strengthening Tribally Controlled Colleges and Universities; Strengthening AK Native and HI Serving Institutions; Tribally Controlled Postsecondary Career and Technical Institutions; Teachers for a competitive tomorrow/STEM programs; VR Migrant and Seasonal Farmworkers; VR Recreational Programs; VR Projects with Industry; State Grants for Incarcerated Youth Offenders; VR Supported Employment State Grants

 

·                     Child Support Enforcement:  The Administration's budget cuts the federal share of state and local administrative costs and incentives by $239 million nationwide.  Child support enforcement is one of the most effective and efficient programs in the federal government, and in 2004, for every federal dollar spent, families collected $4.38 in child support.  The Administration's budget would decrease funding nationwide from $3.998 billion to $3.759 billion.  These cuts will seriously undermine the dramatic progress that New York State has made in its Child Support Enforcement program.  In the last twelve years, New York State improved its child support collection rate from 12% to 50%.  With the proposed federal funding cuts, NYS' collection rates will likely drop.  

 

·                     Head Start : Head Start, a national program that readies young children to enter the public school system, was increased of $149 million in the President's budget, for a total of $7.03 billion.   

 

·                     Americorps and Job Corps : The President's budget increases Americorps funding by $27 million, to $274 million. Job Corps, a highly successful program that helps young people from age 1624 to turn their lives around and find a career path was funded $1.6 billion, the same level as last year.

 

 

HEALTH CARE

 

• More than $200 billion in cuts to Medicare and Medicaid over 5 years: The Administration's budget cuts funding for Medicare  by $178 billion and Medicaid by $18 billion over 5 years.  The lion's share of these cuts will come out of health care providers such as hospitals, nursing homes, home care and hospice.  New York State's hospitals have been operating at a loss for the last nine years in a row, but are targeted for drastic reductions in payments. 

 

• State Children's Health Insurance Program (SCHIP): The President proposes an increase of $19.7 billion over the next five years to continue covering the children already enrolled in the Children's Health Insurance Program, which is called Child Health Plus in New York.  He reaffirms the Administration "CrowdOut" policy that limits eligibility requirements to 250% of the federal poverty level.  This policy was used as the basis to deny New York's expansion of Child Health Plus.

 

• Ryan White CARE Act:   With a $1 million increase over FY 2008 which amounts to 0.004%, the Administration's budget barely increases funding levels overall for the Ryan White CARE Act programs, which provide vital assistance for those living with HIV/AIDS.  The budget adds $14 million for Part B - the Comprehensive Care section of Ryan White (of which $6 million is for the AIDS Drug Assistance program), but offsets that increase with a $7.7 million cut in Part A - around 20% of which will be taken from NY and a $5 million or 16% cut to the AIDS Education Training Centers.  

 

• HIV/AIDS:   HIV/AIDS prevention and testing funding is flat in the President's 2009 budget.  However, the budget proposes to divert $40 million from HIV/AIDS prevention ($24 million from national programs and $16 million from State and local prevention) to other activities - $10 million for rapid testing and $30 million to early diagnosis testing. Testing overall would total of $93 million.

 

• Health Professions and Nursing Shortage: The President proposes $557 million less than is needed to fully fund key programs to reduce the shortage of health professionals serving throughout the United States.  The Health Professions account includes scholarships and loans for nursing and other key areas of the health workforce.  These cuts include $59 million from Nursing Workforce Development, $46 million for Scholarships for Disadvantaged Students, $48 for Training Grants in Primary Care Medicine and Dentistry, $28 million for Area Health Education Centers.

 

• Bioterrorism - The President's budget cuts $137 million for grants to states to upgrade state and local public health capacity.  The President is proposing to "shortfund" the states, covering only 9 months and 3 weeks of the coming year.  The Bioterrorism Hospital Preparedness Program, which enhances the ability of hospitals and health care systems to prepare for and respond to bioterrorism and other public health emergencies, is cut by $62 million, and research activities at NIH are basically flatfunded at $1.7 billion. 

 

• Centers for Disease Control and Prevention (CDC):   The President proposes a $433 million reduction to CDC, the primary Federal agency for conducting and supporting public health protection and research.  The President's budget provides no funding for the Preventive Health and Health Services Block Grant program, which the Congress funded at $97 million in 2008, a $29 million reduction to Chronic Disease Prevention and Health Promotion, and a $27 million reduction to the detection of infectious diseases.

 

• Veteran's Health Care: With a growing number of returning veterans from the wars in Iraq and Afghanistan, more than 333,275 have applied for medical benefits, out of the roughly 750,000 veterans from these wars. However, troops returning from Iraq and Afghanistan are expected to draw even more heavily on medical and psychological health care services, and the VA continues to be seriously underfunded, as roughly 1 in 8 veterans lack healthcare coverage. Total omnibus funding was $37.2 billion while the President only requested $36.5 billion in the FY09 budget.

 

• Eliminated Health Programs: Rural Outreach grants, Rural Hospital Flexibility Grants, Rural and Community AED program, Prevention Health Services Block grant, Preventive Health Medicine training program, Community Services Block Grant, Advanced Education Nursing program,  Patient Navigator program, Children's Hospitals Graduate Medical Education, Traumatic Brain Injury, Every program authorized in Title VII Health Professions which are currently being reauthorized in the HELP Committee, Emergency Medical Services for Children, Newborn Hearing Screening, Pioneering Healthier Communities program, Preventive Health Block Grants, Funding to prevent underage drinking, Funding for activities related to Methicillinresistant Staphylococcus Aureus (MRSA), Community Services Block Grant, Alzheimer's Demonstration grants and the Preventive Health Services program in the Administration on Aging.

 

 

ECONOMIC DEVELOPMENT/JOBS

 

• Community Development Block Grant Program: After being saved by Democrats in Congress three years in a row, the Community Development Block Grant Program (CDBG) is once again on the President's chopping block.  If the current formula were maintained, Administration's budget proposal would reduce New York 's CDBG funding by almost $65 million, to only $287 million in FY09.  However, the Administration is proposing to revise the CDBG funding formula, which would almost certainly further reduce New York's CDBG allocation. The CDBG program is a signature program for New York's cities, counties and local communities to create jobs, spur economic development and small business opportunities and expand homeownership .  It is also a crucial resource for communities dealing with foreclosed and vacant properties, one of the many ripple effects of the current subprime mortgage crisis.

 

• Community Development Financial Institutions (CDFI): The Administration has requested $28 million for the CDFI Fund in the FY09 budget, a cut of 70% from the FY08 funding level of $94 million. Financial support for the CDFI Fund has dropped precipitously since FY 2001 when the agency was funded at $118 million. This request is significantly lower than the amount needed for the Fund to provide equity investments, grants, loans, and technical assistance to new and existing community development banks and credit unions, community development loan and venture capital funds and microenterprise loan funds.  In the last 12 years, the CDFI Fund has invested over $123.2 million in New York banks and CDFIs.

 

• Manufacturing Extension Partnership Program : The proposed budget funds the Manufacturing Extension Partnership Program at only $4 million, down from $89.6 million in FY2008 and $93 million in FY2007. The MEP program has helped over 1,400 manufacturing companies in upstate New York stay afloat by providing consulting and training services for small to medium size manufacturing companies. 

 

• Trade Adjustment Assistance: The Administration's budget proposal would increase funding for the Trade Adjustment Assistance (TAA) from $889 million to $959 million. TAA provides aid to workers who lose their jobs or whose hours of work and wages are reduced as a result of increased imports. Developed in response to expanding globalization, TAA provides training for employment in another job or career; weekly cash payments called trade readjustment allowances (TRA) as well as job search and relocation allowances.

 

• Social Security Administration: The President has requested $10.46 billion for the Social Security Administration (SSA), only a 6% increase over the FY08 appropriation.  The President has consistently put in low budget requests for SSA, despite the fact that the agency is facing a major case backlog for SSDI claims.  The Social Security Disability backlog in New York State is more than 50,000 cases, and the average waiting time for a decision statewide is nearly 500 days - more than 600 days in Buffalo and Queens. Additionally, SSA has been tasked with assisting the Department of Homeland Security verify that employees have a valid Social Security number and are authorized to work in the United States - an added workload without added resources.

 

• Social Security Privatization:   The President has once again snuck a Social Security privatization plan into the budget, which would cost taxpayers $647 billion over 5 years to create private personal accounts and subject retirement benefits to the fluctuations of the stock market.  Under the President's proposal, middle income workers who retired 50 years from now could see their annual benefits slashed by about 35 percent.  (In New York, there are approximately 2.1 million retirees receiving Social Security benefits.)

 

• IRS Funding and Tax Enforcement: The President has requested $7.5 billion for the Internal Revenue Service for tax enforcement, a 7% increase over the FY08 budget request. The President should be commended for including a number of provisions to improve tax compliance - yet many of the provisions appeared in last year's budget and the Administration made no effort to push for them.  With an annual net "tax gap" - the difference between taxes owed and taxed collected - of $300 billion a year, for the President to propose legislative initiatives that would close only 1 percent of the gap ($36 billion over 10 years) is an embarrassment.  A tax system with both low tax rates and lax enforcement is not sustainable, and it shows a triumph of rigid ideology over practical policy.

 

• Retirement Savings Accounts:   While the President should be commended for recommending that the many different types of retirement savings accounts be consolidated and made more portable, he continues to include the discredited idea for Retirement Savings Accounts (RSAs) and Lifetime Savings Accounts (LSAs) in his annual budget proposal.  While these accounts bring in revenue in the short term as highincome Americans convert traditional IRAs to the new accounts, they will cost the government hundreds of billions of dollars in the longer term as the revenue baseline is lowered permanently.  Moreover, the benefits of these plans will accrue almost exclusively to highincome Americans who have the extra money to set aside in savings.

 

 

HOUSING 

 

• Housing Counseling: The Administration is continuing its daylate and dollarshort response to the subprime mortgage crisis. The FY09 budget proposal calls for only $65 million for the HUD Housing Counseling program and $25 million for NeighborWorks to do foreclosure mitigation counseling. This represents an cut of $155 million for NeighborWorks and only a modest $15 million increase for the HUD counseling programs over the FY08 Omnibus levels.  This reduced commitment to counseling comes at a time when this country is in the midst of one the worst housing crises it has ever faced. The Administration, Congress and outside experts have all agreed that nonprofit housing counselors are a key component to solving the subprime mortgage crisis. These organizations serve as the crucial link between struggling homeowners scared to face up to their unaffordable debts and lenders and servicers who can help borrowers modify or refinance their loans. Congress recognized the dire need for more funding and provided $180 million to NeighborWorks in the FY08 Omnibus bill. The Administration's inadequate funding request makes additional emergency spending more likely as members were already discussing the possibility of providing as much as $500 million in additional emergency funding this year.

 

• Supportive Housing for Persons with Disabilities (Section 811):  The Administration's budget proposal would cut the Housing for Person with Disabilities by over 30 percent, from an FY08 appropriation of $237 million to a proposed $160 million in FY09.  Nationally, the Disabled Housing program is responsible for developing approximately 1,400 new units of rental housing and funds approximately 1,600 fiveyear tenant based rental assistance vouchers for persons with disabilities each year.  New York State public housing authorities (PHAs) and nonprofit organizations operate 1,200 programs.  Under the new proposal, New York organizations are expected to receive at most twothirds of their FY07 allocation. It is unclear if that amount will be enough to renew all existing rental assistance vouchers.  But it is certain that under the new proposal, organizations would not be able to develop any new units of rental.  

 

• HOPE VI:  The Administration has once again proposed to terminate the HOPE VI program that rehabilitates and restores severely distressed public housing projects.  For the past six years the Administration has proposed to eliminate HOPE VI.  In the FY08 omnibus, Congress funded the program at a $100 million level making available roughly five grants for the entire United States. The Niagara Falls Public Housing Authority broke ground last year on its recent HOPE VI grant project, which will replace a 65 year old obsolete public housing development with over 280 new housing units, as well as significant expansions to social services and case management.

 

• Elderly Housing Assistance:  The Administration has proposed slashing Section 202 grants for housing funding for the elderly by over 25% from the FY08 omnibus funding levels.  In FY05 Section 202 was funded by over $1 billion, in FY0608, the program averaged only $740 million per year. The Administration now proposes an additional cut of almost $200 million dollars.   Section 202 funds are used to house the elderly in supportive housing with services and support from service coordinators.  If enacted, these proposed budgetary cuts would slash New York's Section 202 funding by approximately $15 million, leaving many New York Seniors without the adequate services they need.

 

• Housing Opportunities for Persons with AIDS (HOPWA): The Administration proposes to hold funding for the HOPWA program at last year's level of $300 million. The National AIDS Housing Coalition (NAHC) estimates that a bare minimum of $470 million is needed in FY08 to maintain existing programs, provide funding for up to four additional jurisdictions that became eligible for HOPWA in FY09 and expand access to HIV/AIDS patients stuck on waiting lists for housing and services. HOPWA funds are used to provide safe, secure housing for people living with HIV/AIDS. Several studies have demonstrated the importance of stable housing in effective treatment of HIV/AIDS and shown that HIV/AIDS patients with stable housing are less likely to engage in behaviors associated with the spread of the disease. New York is the largest recipient of HOPWA funding but will likely receive less funding due to the Administration's budget as new jurisdictions become eligible for the same amount of money. If funded at the recommended level of $470 million, New York would receive an additional $40 million for HOPWA in FY09.

 

• Public Housing Capital Fund: The Administration has proposed cutting funding for the Public Housing Capital Fund by over $430 million to $2.02 billion in FY09. This cut follows cuts of $252 million in FY06 and $140 million in FY 07. If this cut is enacted, New York State's Housing authorities will lose over $90 million in funding from the Capital Fund this year. New York City alone would lose $73.5 million.  These cuts demonstrate the Administration's continuing effort to reduce the resources available to the nation's public housing stock. The Public Housing Capital Fund is designed to respond to the capital and management improvement requirements of public housing. The New York Housing Authorities have specifically used capital funds to modernize the physical stock of their public housing developments, which includes providing new roofs, new windows, new heating and cooling units and new security systems for their many buildings.

 

• Rural Rental Housing: The Administration has again proposed zero funding for the Section 515 Rural Rental Housing program after forcing a $30 million cut in the FY08 omnibus. Congress has rescued this program and funded it for the past several years despite the Administration's repeated attempts to kill the program. Additionally, the Administration is proposing to rescind $175 million in program authority for the preservation of existing Section 515 properties. This is especially important for New York, which has one of the largest stocks of Section 515 in the country with over 13,000 units. The Section 515 is multipurpose, providing funding for rehabilitation of existing projects and construction of new affordable rural rental housing. New York's housing projects are some of the oldest in the nation and are in dire need of the rehabilitation funding provided by Section 515. New York is one of the largest overall recipients of Section 515 funding, with over $20 million received since 2000. Almost $3 million in funding for rehabilitation of New York's existing housing stock as well as construction of additional units would be lost under the Administration's plan.

 

• USDA Rural Single Family Direct Homeownership Loans: The Administration has once again proposed eliminating the Section 502 direct homeownership loan, a cut of over $1.2 billion in lending authority. These loans are one of the most effective government loan programs, providing an affordable singlefamily home at a cost to the government of only $10,000 per unit. There is a backlog of over 300 applications from New York families seeking housing assistance. Under the Administration's plan, these families won't receive this assistance and will be forced into highercost homes that many of them will not be able to afford. At a time when we're seeing the effect of widespread subprime and predatory lending, slashing government funding for affordable homeownership programs is unacceptable and shortsighted.

 

• Rural Housing and Economic Development (RHED) Grants: The Administration has again eliminated the RHED program in its budget request. These grants are used to develop affordable housing in rural areas, through direct funding for housing and for support services through local nonprofits. Since the program's inception, New York has received at least seven grants, totaling over $1.1 million dollars.

 

• Mortgage Revenue Bonds:  The Bush Administration has proposed a $15 billion increase in private activity bond (PAB) cap over three years as part of the solution to the subprime mortgage crisis.  The proposal calls for increasing the bond cap available to States and allowing state housing finance agencies (HFAs) to use the bonds to refinance troubled singlefamily mortgages for the first time.  The Administration's plan, however, falls short in a number of ways:  (1) It doesn't offer nearly enough money in the short term to address current needs; (2) The entire increase in the cap is temporary, whereas in most states the demand for new bonds far exceeds the annual supply, making it long past time for a permanent increase; and (3) By limiting the cap increase to singlefamily housing, the proposal fails to recognize that the current crisis also significantly increases the need for multifamily rental housing.

ENVIRONMENT/ENERGY

 

• Clean Water : Clean Water State Revolving Fund (CWSRF) programs fund water quality protection projects for wastewater treatment, nonpoint source pollution control, and watershed and estuary management. The President's budget slashes this program to $555 million, from $689 million last year.

 

• LIHEAP : The FY 2009 budget proposes to cut energy assistance for lowincome families (LIHEAP) program by $280 million to $1.7 billion. The Low Income Home Energy Assistance Program (LIHEAP) helps pay the winter heating bills or summer cooling bills of lowincome and elderly people. During extreme weather conditions, people living in poverty and lowincome elderly should not have to choose between buying fuel to heat or cool their homes and buying food for themselves and their families. Roughly twothirds of the families receiving LIHEAP assistance have incomes of less than $8,000 a year. New York received $237 million in LIHEAP funding in FY08, not including contingency funding. New York can expect to receive $212 million this year, a cut of nearly 11 percent.

 

·         Weatherization Assistance Program : Weatherization Assistance Program (WAP) helps lowincome families, the elderly, and the disabled by improving the energy efficiency of lowincome housing. Each year the program has exceeded its target and weatherized approximately 100,000 homes. Funding for WAP allows the program to reduce energy usage by roughly 25% for each assisted home. Significant programmatic changes in 2009 include the elimination of the Weatherization Assistance Program and the Renewable Energy Production Incentive program. In FY08 $227.2 million was allocated for WAP.

 

(The Secretary is directed to make fiscal year 2008 weatherization funding available from October 1, 2007, through March 31, 2009, for States that submit plans requesting allocations for all or part of this period.)

 

 

TAX POLICY AND ALTERNATIVE MINIMUM TAX

 

• Taxes and AMT:  Everyone expects the President to propose making his tax cuts permanent, but the cost of doing so grows every year and it is often overlooked.  Making all of the 2001 and 2003 tax cuts permanent will cost more than $250 billion a year by 2013 and $2.2 trillion over the 10year budget period.  The President also only includes in his budget a oneyear fix of the Alternative Minimum Tax at a cost of $47 billion, even though the President supports a permanent repeal of the AMT.  Conveniently, the graphics showing an improving fiscal outlook in 2012 and 2013 (e.g., page 15 of the Budget) end after the "sweet spot," and fail to show exploding deficits once again after 2013 due to the permanent tax cuts and the retirement of the baby boom.