More About Will Fischer

Will Fischer

Fischer is a Senior Policy Analyst, focusing on federal low-income housing programs, including Section 8 vouchers, public housing, and the Low-Income Housing Tax Credit.

Full bio and recent public appearances | Research archive at CBPP.org


Tax-Credit Bill Would Help Low-Income Families Facing Higher Rents

April 17, 2014 at 2:48 pm

House Ways and Means Committee member Charles Rangel (D-NY) has introduced legislation to establish a new federal tax credit to help low-income renters afford housing.  As we’ve explained, a renters’ credit along these lines would be a valuable tool to address low-income families’ mounting housing needs.

As the graph shows, the typical or median rent has risen much faster than inflation over the last decade, while renters’ median income has fallen in inflation-adjusted terms.

In fact, in 90 cities around the country, a median-income resident would have to pay more than 30 percent of his or her income to afford the median rent, the New York Times reports.  (The federal government and many private-sector landlords and lenders consider housing unaffordable if it exceeds 30 percent of household income.)

As a result, families with incomes well below the median must pay high and growing shares of their income for rent or live in substandard, overcrowded, or unstable housing arrangements.  In 2011, 8.5 million families with incomes under half of the local median received no rental assistance and either paid more than half of their income for housing or lived in severely substandard conditions, according to the Department of Housing and Urban Development — an increase of more than 40 percent since 2007.

And Department of Education data show that 1.17 million school-age children were homeless during the 2011-2012 school year.

Despite these needs, the federal government provides much more help to higher-income homeowners, through tax subsidies like the mortgage interest deduction, than to low-income renters.  Due to funding limitations, Housing Choice Vouchers and other low-income rental assistance programs reach fewer than one in four eligible families.

The Rangel proposal would help address that imbalance by giving states about $5.8 billion in annual tax credits to distribute among low-income renters based on federal income eligibility rules and state policy priorities.  We estimated last year that a credit similar to the Rangel proposal (but with added provisions to ensure that most of its benefits go to the neediest families), capped at $5 billion, would help 1.2 million households, reducing their rent by an average of $400 a month.

The renters’ credit would complement the Low-Income Housing Tax Credit (LIHTC), which Representative Rangel helped enact in 1986.  LIHTC is an effective subsidy for building and rehabilitating affordable housing but doesn’t typically make housing affordable to the poorest Americans by itself.  A renters’ credit could help these households afford rents in developments subsidized through LIHTC and in other buildings.

If the President and Congress move forward on tax reform, they should use savings from scaling back other tax expenditures to establish a renters’ credit along the lines that Representative Rangel proposes.

Obama Plan to Raise Rents on Rural Poor is the Wrong Way to Save Money

April 11, 2014 at 12:30 pm

About 42,000 extremely poor families — 15 percent of those assisted through the Agriculture Department’s (USDA) rural rental assistance program — could face rent increases of up to $600 a year under a proposal in President Obama’s 2015 budget.

Today, families with rural rental assistance must pay 30 percent of their income for rent and utilities.  The President’s proposal would require property owners to charge families a minimum of $50 a month — even if this exceeds 30 percent of their income.  Many of those who would be affected are especially vulnerable to hardship:  64 percent of households with USDA rental assistance have a head (or the head’s spouse) who is elderly or has a disability, and 135,000 children live in low-income families receiving such assistance.

USDA budget documents say that one goal of the proposal is to “encourage financial responsibility in tenants, increasing their opportunity for success on the path to homeownership.”  But there is no evidence that requiring destitute families to pay $50 a month helps them get back on their feet.  To the contrary, a growing body of research shows that extreme poverty — which the USDA proposal would exacerbate — does long-term damage to children’s neural development and education and employment prospects.

A second goal is to save money.  USDA estimates that the policy will reduce program costs by $5 million in 2015 and $20 million annually in later years.  But policymakers could surely find better ways to save $20 million a year than raising rents on some of the most vulnerable people in rural America.

USDA points out that some households with rental assistance through the Department of Housing and Urban Development (HUD) must pay $50 minimum rents.  But no major HUD program imposes a program-wide $50 minimum rent like USDA has proposed.  HUD’s supportive housing programs for the elderly and people with disabilities do not charge a minimum, while the Section 8 Project-Based Rental Assistance program has a $25 minimum rent and state and local agencies administering Housing Choice Vouchers and Public Housing can set the minimum below $50 or have no minimum at all.

USDA has also claimed that a proposed exemption for families who would face hardship from minimum rents — modeled on similar exemptions in HUD programs — would minimize any adverse consequences.  Tony Hernandez, the Administrator of USDA’s Rural Housing Service, told a House Appropriations subcommittee that households with incomes of $2,000 a year “probably would not have to pay because they would be exempted because of the hardship clause.”

But experience in the HUD programs indicates that very few would likely be exempted.  As we’ve noted, the HUD hardship policies have had little impact, partly because they require tenants — many of whom have physical or mental disabilities or very low education levels — to seek out exemptions.  A 2010 HUD study found that 82 percent of state and local housing agencies that chose to impose minimum rents exempted less than 1 percent of affected households.  (Moreover, the minimum rent proposed by USDA would fall almost exclusively on families with incomes close to or below $2,000, so if most of those families were exempted, the policy’s savings would largely disappear.)

Families facing hardship might have an even harder time obtaining exemptions in the USDA rental assistance program, where small rural property owners with limited administrative capacity would be responsible for implementing the hardship policy.  The best way to protect these families would be to reject the President’s proposal.

Ryan Budget Mischaracterizes Housing Vouchers, Then Sets the Stage to Cut Them

April 4, 2014 at 11:02 am

House Budget Committee Chairman Paul Ryan used a faulty number to argue that “Section 8” Housing Choice Voucher program costs have risen excessively.  His budget documents also float a proposed expansion of the Moving to Work (MTW) demonstration that could lay the groundwork for deep, harmful cuts in the voucher program in years to come.  That program, which helps 2.1 million low-income families rent modest units of their choice in the private market, is just beginning to recover from the loss of 70,000 vouchers due to sequestration budget cuts last year.

Rental vouchers sharply reduce homelessness (see chart) and other hardships, lift more than a million people out of poverty, and help families move to safer, less poor neighborhoods, research shows.  These effects, in turn, are closely linked to educational, developmental, and health benefits that can improve children’s long-term outcomes.

Ryan’s budget claims that voucher spending grew by an “explosive” 80 percent from 2005 to 2013.  That’s simply incorrect.  Voucher expenditures rose by 20 to 30 percent over this period, driven largely by rising market rents and congressional decisions to add vouchers to assist homeless veterans and to replace other rental assistance (such as public housing that was demolished, which was funded through a different budget account).  The average inflation-adjusted cost of a voucher is lower today than it was in 2005.

The Ryan budget calls for changes in housing assistance and says that such changes could include expanding MTW, a deregulation demonstration project that now includes 39 of the nearly 4,000 state and local agencies that administer vouchers or public housing.  MTW allows waivers of most laws and regulations governing the voucher and public housing programs and converts voucher funding — and sometimes public housing operating subsidies — to a block grant.

MTW expansion could weaken protections for vulnerable families and cause fewer needy households to receive assistance.  (These risks would be lower if Congress added new safeguards to MTW, but the Ryan budget documents make no mention of such safeguards.)  The Government Accountability Office and the Department of Housing and Urban Development’s (HUD) Inspector General have raised serious doubts about expansion, based on concerns that HUD has not adequately evaluated and monitored the existing demonstration.

Most significantly, a major expansion of MTW block grants would raise the odds of future voucher and public housing funding reductions.  Congress has cut funding deeply over time for housing block grant programs such as HOME, Community Development Block Grants, and the Public Housing Capital Fund, as well as many block grants in other areas.

Two features make block grant programs especially vulnerable to cuts.  First, unlike the current voucher and public housing operating fund formulas, block grants typically don’t account for factors such as the number of families assisted or the cost of assistance.  As a result, it’s more difficult to make a compelling case that policymakers should maintain current nominal funding levels, let alone ensure that funding at least keeps pace with inflation.  Second, because block grants provide broad flexibility in how state or local officials use the funds, federal policymakers can cut funding and claim no harm will ensue, while leaving the tough decisions about how to actually make the cuts to state and local agencies.

The Ryan budget cuts $791 billion over the next ten years from non-defense discretionary programs, the budget category that includes most low-income housing programs.  The budget does not specify which discretionary programs would lose funding, but if policymakers expand MTW to the point that block grants provide the bulk of voucher and public housing funds, it would increase the likelihood of sizable cuts to the voucher and public housing programs — an outcome that would likely lead to more homelessness and housing instability among the most vulnerable Americans.

5 Proven Benefits of Housing Vouchers — and How Vouchers Help Your State

March 11, 2014 at 11:53 am

A key question for next fiscal year is whether policymakers will adequately fund the Housing Choice Voucher Program, which helps more than 2 million low-income families rent modest units of their choice in the private market but has been hit hard by the sequestration budget cuts.  Some 70,000 fewer families have vouchers than a year ago.  To show what’s at stake, we’ve prepared state-by-state fact sheets on the impact of vouchers and the sequestration cuts.

We’ve also issued a report reviewing research findings on vouchers’ impact on poor and vulnerable households.  In brief, studies show that vouchers:

  1. Reduce crowding, housing instability, and homelessness.  Low-income families with children that received vouchers are much less likely than families without vouchers to be homeless or doubled up with friends and family, to live in crowded conditions, or to move frequently.
  2. Reduce poverty.  Vouchers and other rental assistance lifted 2.8 million people — including 1 million children — above the poverty line in 2012 under the federal government’s Supplemental Poverty Measure, which counts non-cash benefits.  Vouchers alone likely produced at least half of that effect.
  3. Help low-wage workers make ends meet.  About two-thirds of voucher holders who aren’t elderly or disabled either work or worked recently.  Vouchers are critical to enabling low-income working families to make ends meet.  For a mother of two renting an apartment for $700 and working 30 hours a week at the minimum wage, a voucher is worth about $440 a month.
  4. Give families access to neighborhoods with better opportunities.  By allowing families to rent a unit of their choice in the private market, vouchers enable them to move to safer neighborhoods.  A growing body of evidence indicates that growing up in neighborhoods of concentrated poverty can adversely affect children’s health, education, and long-term economic prospects.
  5. Reduce costs in health care and other public services.  In addition to improving the lives of vulnerable low-income people, vouchers and other rental assistance can produce savings in other program areas that offset part (in some circumstances all) of the cost of the rental assistance.  For example, rental assistance combined with supportive services for homeless people with serious health problems can achieve savings in the health care, corrections, and emergency shelter systems that are close to or above the cost of the rental assistance and services.

Charting a Mismatch in Housing Spending

December 18, 2013 at 11:32 am

Federal housing expenditures are unbalanced in two respects, as our new chartbook shows: they target a disproportionate share of subsidies on higher-income households and they favor homeownership over renting.  Low-income renters are far more likely than homeowners or higher-income renters to pay very high shares of their income for housing and to experience problems such as homelessness, housing instability, and overcrowding.

Federal rental assistance programs help these highly vulnerable families, but they are deeply underfunded and as a result reach fewer than one in four eligible households.  Families with children and non-elderly households without children or a disabled member face particularly severe shortages (see chart).

Moreover, budget cuts due to sequestration have forced reductions in the number of families that rental assistance can serve, and those cuts could grow deeper in the coming years.  Fortunately, the Murray-Ryan budget agreement that the House has passed and the Senate is expected to approve later today would make it possible to discontinue some of the sequester cuts planned in 2014 and 2015.

It’s critical that Congress use those resources to increase funding for housing programs targeted on the neediest families — especially for vouchers, the public housing operating fund, and homelessness assistance.  If policymakers don’t provide additional funding, unmet needs among poor renters will grow substantially and the imbalance in federal housing policy will become even more severe.

Click here for the chartbook.