Happy May. Spring has sprung, baseball season is in full swing (as a Red Sox fan I thank you LA Dodger fans for Justin Turner) and in Washington we are getting excited about the introduction of the new version of the Affordable Housing Credit Improvement Act. For those of you attending the HAG/AHTCC Housing Forum on May 17th, it is possible the introduction will be announced at the meeting.
There may be some new provisions in the AHCIA, but I will get to that in a moment. First, let’s discuss the issue of most urgency in DC, the debt ceiling. As of this posting, Treasury Secretary Yellen has informed Congress that the extraordinary measures Treasury has been exercising to pay the debt may expire as soon as June 1st, a month earlier than previously expected. President Biden has requested a meeting of the House and Senate leadership and it appears that meeting may take place on May 9th.
The House Republican’s recently passed the Limit, Save, Grow Act of 2023, a bill designed to reduce discretionary spending, claw back COVID relief money and defund the IRS and large parts of the Inflation Reduction Act. It passed the House by two votes with five Republican’s voting against the bill.
The bill would set the FY 2024 Budget at FY 2022 levels and limit future increases to 1% thereafter, lower than the rate of inflation. IF enacted, it would slash the HUD budget by around $6.5 billion alone and cripple the voucher programs while eliminating most other spending. Needless to say, this is a non-starter for the administration and Senate Democrats and with the accelerated timeline laid out by Secretary Yellen, it would be very difficult to bring any legislative package that significant to the floor of the Senate and back to the House before June 1. (Ironically, the extension on federal tax filing granted residents of the California may be what moved up the date on the debt ceiling.)
It is likely negotiations may go beyond June 1 and thus Congress will need to pass a temporary debt ceiling increase, something expected by House Republicans and thus included as part of their deficit reduction plan. The White House is still insisting on a clean debt ceiling vote and then negotiations on future spending as part of the regular budget process. Both sides will likely have to blink somewhat but the big issue is what this process will mean for the economy, inflation and a recession. It is a game of chicken only those is DC look forward to.
I was going to discuss what this might all mean for the FY 2024 budget, but I will save that for our next update. As for the new version of the AHCIA, there MAY be some new language on data collection and zoning for affordable housing. Nothing drastic or (unfortunately) to assertive when it comes to zoning but a sense of the Congress on what is needed. There may also be some changes in the calculation of an increase in the 9% allocation in our favor and yes, the reduction of the 50% test will be at the forefront of the legislation. Nothing is set just yet but a little intel to whet your appetite in case these are included. We will have a lot of work to do getting cosponsors and we are counting on CHC and your colleagues around the state and country to help build support for our marquis legislation.
Despite the pending battle over the debt ceiling and budget, I remain optimistic regarding action on parts of our agenda this year and opportunities will present themselves. We are discussing some of these now with our Hill champions and Leadership so stay tuned.
Thank you and be well.
David