GENERAL STATEMENT

The Committee recommends new budget authority of $57,109,970,000 in new budget (obligational) authority for the Department of Housing and Urban Development, the Veterans Administration, the National Aeronautics and Space Administration, the Environmental Protection Agency, the National Science Foundation, and other agencies, commissions, boards, corporations, institutes, and offices. This amount is $5,513,640,687 above the budget request, $828,286,000 below the House allowance, and $472,018,300 more than the appropriation for fiscal year 1987.

HIGHLIGHTS

The Committee has recommended a number of changes in the House bill. The most significant are:

One, a reduction of $400,850,000 below the House-approved amount for assisted housing with increases in public housing modernization funding and section 202 elderly housing support more than offset by the elimination of funding for housing development action grant and moderate rehabilitation units.

Two, a reduction of $240,808,000 in the veterans medical care program. This will allow the Veterans Administration to keep staffing levels constant but will not fund any pay increases that may take place in January.

Three, a reduction of $208,337,000 in funding for the space station. Four, an increase of $129,487,000 for research funded through the National Science Foundation.

Five, an increase of $50,000,000 for the public housing operating subsidy program.

REPROGRAMMING AND INITIATION OF NEW PROGRAMS

The Committee continues to have a particular interest in being informed of reprogrammings which, although they may not change either the total amount available in an account or any of the purposes for which the appropriation is legally available, represent a significant departure from budget plans presented to the Committee in an agency's budget justifications.

Consequently, the Committee directs that the Department of Housing and Urban Development and the agencies funded through this bill no

tify the chairman of the Committee prior to reprogramming of funds in excess of $250,000 between programs, activities, or elements. The Committee desires to be notified of reprogramming actions which involve less than the above-mentioned amounts if such actions would have the effect of changing an agency's funding requirements in future years or if programs or projects specifically cited in the Committee's reports are affected. Finally, the Committee wishes to be notified regarding reorganizations of offices, programs, or activities prior to the planned implementation of such reorganizations.

Currently, the Department's assisted housing efforts principally consist of a low-income public housing program and the section 8 lower income rental housing assistance program. Under the Public Housing Program, local public housing agencies develop, own, and operate low-income public housing projects, with HUD entering into a commitment to pay construction and modernization costs to help assure low rents and adequate services. Financial assistance is also provided to Indian housing authorities to plan, build, own, and operate low-income public housing projects. Under the section 8 rent subsidy certificate program, the Department pays the difference between what an eligible lower-income household can afford (30 percent of income for most programs), and the fair market rent for an adequate housing unit. This rental assistance may be used for existing housing, for new construction of units for elderly and handicapped individuals and for rehabilitated units. Under the section 8 housing voucher programs the Department provides a fixed amount for eligible lower-income households regardless of the rent actually paid.

COMMITTEE RECOMMENDATION

The Committee recommends $7,523,250,000 in new budget authority for the Department's assisted housing program within this account. The total program level resulting from the Committee's recommendations is $7,684,850,000. This compares to a $4,699,015,853 program level proposed by the administration and $8,085,700,000 proposed by the House and represents a reduction of $400,850,000 in the House-approved

amount.

The Committee recommends a total of 77,646 incremental subsidized housing units, an increase of 898 over the House-passed level. In addition, the Committee has shifted the focus of the House approach somewhat by placing a special emphasis on the modernization of existing

public housing and more than doubling the number of existing units that can be supported through the use of section 8 certificates.

More specifically, the Committee agrees with the House Committee recommendation that funding be provided for the construction of new section 202 elderly/handicapped units under the section 8 program and has augmented the House level with an additional 898 units for a total of 11,796. Furthermore, the Committee recommends concurrence with the provision of 2,000 new Indian housing units under the public housing program. However, the Committee has proposed the deletion of funding approved by the House for 6,000 moderate rehabilitation units and has recommended no funding for the rental development [HoDAG] program while the House provided sufficient funding for approximately 5,200 rental development units.

In accordance with its emphasis on public housing modernization, the Committee recommends that the funds freed up by the deletion of moderate rehabilitation and HODAG units be shifted into the modernization program. The Committee also proposes that the public housing major reconstruction/development program be folded into the traditional modernization program and that 20 percent of this total modernization budget be used for the major reconstruction of obsolete public housing projects-projects with design or marketability problems resulting in vacancies of 15 percent or more of the units available for occupancy, the reconstruction of which will cost more than 60 percent of the total published cost guidelines for new construction of similar units in this area. This recommendation would make $2,365,280,500 available for modernization activities with $473,056,100 of the total to be devoted to the major reconstruction of obsolete public housing projects.

The Committee notes that a recently completed multiyear study has estimated that the cost of modernizing the existing public housing stock exceeds $20,000,000,000, exclusive of modernization needs that may accrue over the next few years. The modernization funding recommended would begin to attack this problem and thus minimize the loss of existing public housing units to deterioration and neglect.

The Committee recommends an increase in the number of section 8 existing certificate units from 10,000 as provided for in the Housepassed bill to 21,000. This increase is made possible in part by a reduction in the contract term for these units from 15 years to 5 years. This contract term adjustment allows section 8 units to compete on an equal budget footing with 5-year vouchers. Heretofore, a section 8 unit has consumed over three times as much budget authority as a comparable voucher unit, primarily because the contract term for section 8 units has been three times as long.

The Committee concurs with the House in providing funds for 46,850 housing voucher units. The Committee is concerned over the distinct possibility that the voucher program, which pays a fixed subsidy regardless of the rent paid by the low-income voucher holder, will increase the rental burden on low-income families without reducing Federal costs. In fact, a recent report commissioned by the Department seems

to indicate that over one-half of the tenants under the voucher program are paying more than 30 percent of their income for rent without a greater success rate than is achieved under the certificate program and that the program is costing the taxpayer more money.

The Committee concurs with the House in proposing $200,000,000 in budget authority for 52,600 rental rehabilitation units.

The Committee recommends the inclusion of language in the bill waiving the fair share provisions of the Community Development Act of 1974, continuing the policy of the last few years. The fair share provisions would require the Department to allocate housing assistance among different areas and communities on the basis of a complex, sophisticated formula. The provisions were enacted at a time when the Federal Government was allocating three to four times as much housing assistance funding as the current bill makes available for distribution. Without a continuation of the waiver, the application of the formula would result in the distribution of such small numbers of housing units to localities under some programs as to make the use of the allocated units impractical, if not impossible. The House-passed bill does not include such a waiver.

The Committee recommends bill language to extend to September 30, 1988, the period during which funds appropriated in the fiscal year 1985 HUD-Independent Agencies Appropriations Act for housing development grants could be reobligated. It is expected by HUD that approximately $25,000,000 will be subject to recapture on November 29, 1987, because construction will not begin on some projects previously selected for funding within the 3-year statutory period ending on November 29. The Committee expects that any recaptured funds will be reallocated to projects meeting threshold requirements in the fiscal year 1987 competition for grants.

The following table sets forth the details of the Committee's proposals: