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Here’s what happens to HUD if the government shuts down

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The gist: activity grinds to a near halt

The Department of Housing and Urban Development headquarters.
Getty Images

Congressional leaders are again flirting with shutdown politics. With January’s shutdown resulting in a continuing resolution to fund the government through midnight on Thursday, the House has until then to pass the budget bill that the Senate agreed to on Wednesday. President Trump tweeted his support for the bill.

The bill would increase spending on domestic programs by $300 billion over the next two years, with the military being the biggest beneficiary ($160 billion). It would also extend funding for the Children’s Health Insurance Program (CHIP) by 10 years, add $80 billion to disaster relief, and contribute $20 billion toward infrastructure projects.

But getting the bill through the House will be a challenge. “Deficit hawks” on the right have already voiced opposition to the bill, meaning Republicans likely can’t pass the bill on their own. Democrats are prepared to vote against the bill if it doesn’t include protection for immigrants known as “Dreamers,” which Minority Leader Nancy Pelosi made clear in a record-setting speech on the floor Wednesday.

If the two parties can’t come to an agreement, it has large implications for housing, as activity at the Department of Housing and Urban Development would largely be limited to functions where failure to perform would “result in an imminent threat to the safety of human life or the protection of property.” Funding that’s already been appropriated would be available for disbursement, but otherwise could come to a stop. These two conditions apply to most of HUD’s programs in the event of a shutdown, according to its 2018 contingency plan.

While political appointees such as Secretary Ben Carson won’t be affected, just 315 of HUD’s 7,797 employees qualify as “exempted,” the status that would allow an employee to keep working. Others would work only to ensure an orderly shutdown of the government and then be barred from the building and placed on unpaid leave until the government reopens.

Local Public Housing Authorities (PHAs) are not part of the federal government and would remain open, but because they receiving funding through HUD, some PHAs might not be able to operate normal hours. PHA operations would continue on a case-by-case basis.

Among the programs that would remain open are housing and emergency services for the homeless or people living with HIV/AIDs. HUD will continue to disperse Community Development Block Grant and other block grant funds where failure to do so would threaten life or property.

Section 8 vouchers and public housing would be able to draw on funds already obligated by HUD to PHAs, which but would otherwise receive funding on an “as needed basis” or if there are available funds from prior appropriations or recaptures. Rental Assistance Demonstration Program would operate pre-scheduled transactions and when failure would constitute a threat to life or property.

Disaster Recovery Assistance Programs would continue, as much of the Department of Homeland Security and FEMA are considered essential. Freddie Mac and Fannie Mae, the government-sponsored mortgage lenders, would remain open because they don’t depend on the federal budgetary process for money, but Ginnie Mae, which is wholly owned by the federal government, would be subject to the shutdown.

In the near term, HUD would be able to execute its prior obligations. But if the shutdown were to draw out, many who depend on HUD for assistance could find themselves in dire straits.

Let’s hope it doesn’t come to that.