City agency braces for budget cuts by HUD

Housing authority faces layoffs, service changes

January 21, 2003|By Laura Vozzella | Laura Vozzella,SUN STAFF

Public housing officials in Baltimore and across the country are scrambling to figure out how a budget shortfall at the U.S. Department of Housing and Urban Development will affect their agencies and the 3 million tenants they serve.

HUD announced early this month that it was cutting funding to the agencies by 30 percent to make up for a $250 million deficit it blamed on its "unacceptable and irresponsible" accounting practices.

HUD tried to soften the blow last week, announcing that the 30 percent cuts were temporary. By the end of the fiscal year, HUD said, it expects to be able to fund the agencies at or near 90 percent of last year's budgets.

But some housing authorities question the 90 percent projection as being too rosy. And even if that level of funding is obtained, agencies say they might have to dip into reserves, lay off workers or take other measures to stay afloat in the meantime.

The cuts will take effect immediately for about 25 percent of the nation's 3,200 public housing agencies because their fiscal years began Jan. 1, said HUD spokeswoman Donna White.

Funding to the Housing Authority of Baltimore City has not been affected yet because its fiscal year begins July 1.

HABC had expected to receive about $52 million of its $78 million budget from HUD next fiscal year, with rental payments from tenants making up the difference, officials with the authority said.

A 30 percent cut would cost HABC more than $15 million. That could force the agency to eliminate up to 300 jobs and reduce maintenance, security and other services for the city's 12,000 public housing residents, Baltimore Housing Commissioner Paul T. Graziano said Friday.

"If HUD follows through on these cuts, it will be devastating for the Housing Authority of Baltimore City," he said. "We cannot express strongly enough how much this will damage our agency and the clients we represent."

Some layoffs and other cuts would be necessary even if the budget shrinks by 10 percent, Graziano said. He said the extent of job losses and other changes under those circumstances has not been determined.

Public housing officials in Baltimore and elsewhere said they were frustrated by the uncertainty and the prospect of any budget cuts at a time when utility, insurance and maintenance costs are climbing.

HABC recently lost $3.6 million when HUD eliminated an anti-drug initiative that paid for extra security and youth programs, Graziano said.

HUD also cut capital funding to the Baltimore authority by several million dollars this year.

"Imagine your own personal situation, if your employer told you, `You're only going to get 70 percent of what you got last year, but we're going to try to make it up to you later,'" said Timothy Kaiser, executive director of the Public Housing Authorities Directors Association in Washington.

"At a minimum, this creates planning chaos for more than 3,000 housing authorities nationwide."

In recent years, HUD has allocated about $3.5 billion a year to public housing agencies across the country, Kaiser said. But funding will fall because the agency experienced a $250 million shortfall in 2002.

In a letter sent recently to housing authority directors nationwide, HUD partly blames the deficit on changes made to funding formulas under the Clinton administration.

"The department learned this summer that there was a shortfall in 2001 that carried over into 2002," wrote Michael Liu, HUD's assistant secretary for public and Indian housing.

"Over the past decade, HUD's practice has been to automatically dip into future years' appropriations to compensate for any shortfalls. This is an unacceptable and irresponsible practice."

In the letter, Liu said funding will be cut up to 70 percent until Congress passes the budget for the 2003 fiscal year and HUD has evaluated financial requests from public housing agencies nationwide, White said.

She expects that process to be completed by spring.

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