Transportation, Housing and Urban Development, and Related Agencies (THUD): FY2014 Appropriations
Released: 2013-12-27T00:00:00

Introduction to Transportation, HUD, and Related Agencies (THUD)

The Transportation, Housing and Urban Development, and Related Agencies (THUD) appropriations subcommittees are charged with drafting bills to provide annual appropriations for the Department of Transportation (DOT), Department of Housing and Urban Development (HUD), and related agencies. Typically, these bills are reported out by the appropriations committees and passed by the House and Senate, which then produce a conference agreement.

Title I of the annual THUD appropriations bill funds the Department of Transportation. DOT is primarily a grant-making and regulatory organization. Its programs are organized roughly by mode, providing grants to state and local government agencies to support the construction of highways, transit, and intercity passenger rail infrastructure, while providing regulatory oversight to promote safety for the rail, transit, commercial trucking and intercity bus, and maritime industries. The exception is aviation; the Federal Aviation Administration (FAA) not only administers grants for airport development and regulates the safety of aviation operations, but also operates the U.S. air traffic control system. It accounts for the majority of the employees of DOT.

Title II of the annual THUD appropriations bill funds the Department of Housing and Urban Development. HUD's programs are primarily designed to address housing problems faced by households with very low incomes or other special housing needs. These include several programs of rental assistance for persons who are poor, elderly, and/or have disabilities. Three rental assistance programs—Public Housing, Section 8 Vouchers, and Section 8 project-based rental assistance—account for the majority of the department's nonemergency funding. Two flexible block grant programs—HOME and Community Development Block Grants (CDBG)—help communities finance a variety of housing and community development activities designed to serve low-income families. Other, more specialized grant programs help communities meet the needs of homeless persons, including those with AIDS. HUD's Federal Housing Administration (FHA) insures mortgages made by lenders to home buyers with low downpayments and to developers of multifamily rental buildings containing relatively affordable units.

Title III of the THUD appropriations bill funds a collection of related agencies. The agencies under the jurisdiction of the subcommittees are a mix of transportation-related agencies and housing and community development-related agencies. They include the Access Board, the Federal Maritime Commission, the National Transportation Safety Board, the Amtrak Office of Inspector General (IG), the Neighborhood Reinvestment Corporation (often referred to as NeighborWorks), the United States Interagency Council on Homelessness, and the costs associated with the government conservatorship of the housing-related government-sponsored enterprises, Fannie Mae and Freddie Mac.

For more about the composition of the THUD funding bill, see Appendix B .

Status of the FY2014 THUD Appropriations Bill

Table 1 provides a timeline of legislative action on the FY2014 THUD appropriations bill, and Table 2 lists the total funding provided for each of the titles in the bill for FY2013 and the amount requested for that title for FY2014. As is discussed in the next section, much of the funding for this bill is in the form of contract authority, a type of mandatory budget authority. Thus, the discretionary funding provided in the bill (often referred to as the bill's 302(b) allocation) is only around half of the total funding provided by this bill. For more information about the composition of THUD funding, see Appendix B .

FY2013 THUD Funding and Sequestration

The congressional appropriations process for FY2013 funding for THUD (and other federal agencies) was unusually complex. Funding for the first half of FY2013 was provided through a continuing resolution at roughly the same level as in FY2012. Midway through the year Congress passed P.L. 113-6 , a consolidated appropriations act; this bill included several appropriations acts and a continuing resolution providing funding for the remaining federal agencies and departments (including all those typically funded by the THUD appropriations bill) for the rest of FY2013. This act generally funded THUD agencies at their FY2012 levels, with several exceptions (anomalies). It also included a 0.2% across-the-board rescission to the funding provided to federal agencies in the bill.

However, final FY2013 funding was further reduced by an across-the-board reduction, or sequestration, required by the Budget Control Act of 2011 (BCA, P.L. 112-25 ), as amended by the American Taxpayer Relief Act (ATRA, P.L. 112-240 ). When Congress failed to take action to reduce future deficits as required by the BCA, automatic cuts required by that act went into effect. On March 1, 2013, President Obama ordered the BCA-mandated sequestration. It required a 7.8% reduction in non-exempt defense discretionary funding, a 5.0% reduction in non-exempt nondefense discretionary funding, a 5.1% reduction for most non-exempt nondefense mandatory funding, and a 7.9% reduction for non-exempt defense mandatory funding. These percentages were then applied to the funding levels in place at the time (the six-month CR) in order to calculate dollar amount reductions for each non-exempt program, project, or activity.

Around two-thirds of total DOT spending comes from the highway trust fund and is exempt from sequestration under Section 255 of P.L. 99-177 as amended, so the overall reduction in DOT funding was closer to 2%. According to a report accompanying the order, funding for DOT's programs and activities for FY2013 was reduced by about $1.6 billion as a result of the sequester. The largest DOT programs subject to the cuts were the Federal Aviation Administration, the Federal Transit Administration's New Starts Program (which provides funding to local governments for new subway and light rail transit lines), and the Federal Railroad Administration's grants to Amtrak. Because the cuts to FAA's funding could have led to disruptions in air travel due to furloughs of air traffic controllers, Congress enacted P.L. 113-9 in April 2013 to allow the DOT to transfer funding from other accounts to avoid controller furloughs.

Nearly all of HUD's budget is non-exempt nondefense discretionary funding, and was thus subject to a 5.1% reduction in funding under the sequestration order. In total, funding for HUD's programs and activities for FY2013 was reduced by about $3 billion as a result of sequestration.

FY2014 THUD Funding and Sequestration

The President's FY2014 budget requested $76.9 billion in new budget resources for DOT. The requested funding was $5.6 billion more than the amount enacted for FY2013 (not counting $13.7 billion in FY2013 emergency funding). The biggest change in the FY2014 request was a request for an additional $5 billion for passenger rail facilities. Both the House and Senate bills declined to support that request. The Senate bill proposed $73.0 billion, $1.7 billion (2%) more than the enacted FY2013 amount. The House bill proposed $70.3 billion, $1.4 billion (2%) less than the enacted FY2013 amount, and $2.75 billion less than the Senate bill. The major differences between the House and Senate bills are that the House bill proposed to zero out the Transportation Investments Generating Economic Recovery (TIGER) grant program (and rescind $237 million of FY2013 funding for that program), would have provided roughly $800 million less for the Federal Aviation Administration's Operations and Facilities & Equipment accounts, would have provided $500 million less for bridge repairs funded by the Federal Highway Administration, would have provided roughly $500 million less for Amtrak and $100 million less for passenger rail grants, and would have provided roughly $350 million less for Federal Transit Administration programs.

The President's FY2014 budget requested nearly $35 billion in net new budget authority for HUD in FY2014. Congress enacted $33.4 billion for HUD in FY2013, pre-sequester, or $31.4 billion post-sequester. The House bill ( H.R. 2610 ) would have provided $28 billion in net new budget authority, while the Senate bill ( S. 1243 ) would have provided just over $35 billion.

In addition to requiring the sequestration discussed earlier in this report, the BCA, as amended by ATRA, also established discretionary spending limits for FY2012-FY2021. Through FY2014, separate caps are established for defense and nondefense spending. If the caps are violated, another sequestration would be ordered in order to bring spending within the caps. For FY2014, both the House and Senate appropriations bills, if enacted, would violate the spending caps and trigger a sequestration. In the House, the overall spending total is in line with the overall BCA cap, but the House's division of spending between defense and non-defense accounts violates the BCA terms, with the defense portion of the budget exceeding its cap. In the Senate, the overall budget total exceeds the overall BCA cap. If either were to become law, without other changes, a budget enforcement sequestration would likely take place. In the case of the House level, the sequestration would only affect defense spending; in the case of the Senate level, both defense and non-defense spending would be affected.

THUD Funding Trends

Table 3 shows funding trends for DOT and HUD over the period FY2008-FY2013, omitting emergency funding and other supplemental funding, and the amounts requested for FY2014. The purpose of Table 3 is to indicate trends in regular funding for these agencies, which is why emergency supplemental appropriations are not included in the figures.

Detailed Tables and Selected Key Issues

Title I: Department of Transportation

Table 4 presents a selected account-by-account summary of FY2014 appropriations for DOT, compared to FY2013.

Selected Budget Issues

Overall, the FY2014 request totaled $76.9 billion in new budget resources for DOT. The requested funding was $5.6 billion more than enacted for FY2013, and $6.3 billion more than actually received (not counting emergency funding provided in FY2013). The biggest change in the request from current funding is a request for an additional $5 billion for passenger rail grants.

Over and above the $76.9 billion, the Administration also proposed an additional $50 billion for immediate transportation investments; similar proposals have been included in previous years' requests. The House and Senate bills do not support this proposal.

The House bill would provide $70.3 billion for FY2014. The largest source of the difference between the amount requested and the House bill is the Administration's request for almost $5 billion in additional resources for passenger rail development, which the House bill does not provide. Also, the House bill would not only zero out the $500 million TIGER grant program request, but would also rescind $237 million from the TIGER funding provided for FY2013, a $737 million difference from the budget request.

The Senate bill would provide $73.0 billion for FY2014. As with the House bill, the primary difference (in dollar terms) between the Senate bill and the Administration's request is the almost $5 billion in additional funding for passenger rail development, which the Senate bill also omits.

Highway Trust Fund Solvency

Virtually all federal highway funding, and most transit funding, comes from the highway trust fund, whose revenues come largely from the federal motor fuels excise tax ("gas tax"). For several years, expenditures from the fund have exceeded revenues; for example, in FY2010, revenues were approximately $35 billion, while authorized expenditures were approximately $50 billion. Congress transferred a total of $34.5 billion from the general fund of the Treasury to the highway trust fund during the period FY2008-FY2010 to keep the trust fund solvent. In January 2012 the Congressional Budget Office projected that the trust fund would become insolvent around the end of FY2013, given current revenue and expenditure levels. The Moving Ahead for Progress in the 21 st Century Act, or MAP-21 ( P.L. 112-141 ), enacted in 2012, authorized additional transfers from the general fund to the highway trust fund to keep the fund solvent through FY2014.

One reason for the shortfall in funding in the highway trust fund is that the federal gas tax has not been raised since 1993, while improved fuel efficiency and inflation have reduced the amount of fuel consumed and the value of the tax revenues. The tax is a fixed amount assessed per gallon of fuel sold, not a percentage of the cost of the fuel sold: whether a gallon of gas costs $1 or $4, the highway trust fund receives 18.3 cents for each gallon of gasoline and 24.3 cents for each gallon of diesel. Meanwhile, the capacity of the federal gas tax to support transportation infrastructure has been diminished by inflation (which has reduced the purchasing power of the revenue raised by the tax) and increasing automobile fuel efficiency (as more efficient vehicles are able to travel farther on a gallon of fuel). The Congressional Budget Office has forecast that gasoline consumption will be relatively flat through 2022, as continued increases in the fuel efficiency of the U.S. passenger fleet will offset increases in the number of miles people will drive. It forecasts highway trust fund revenues of $41 billion in FY2022, well short of even the current annual level of authorized expenditures from the fund.

A host of reports produced by the Department of Transportation, congressionally created commissions, and nongovernmental groups generally assert that the nation is not spending enough to maintain its existing transportation infrastructure, let alone to make desired improvements. These reports call for considerably higher levels of spending on transportation infrastructure, by both the federal government and the states.

When the authorization provided by MAP-21 expires at the end of FY2014, Congress will again face policy choices concerning surface transportation. Its options are to reduce the scope of federal highway and transit programs, to increase federal taxes on motor fuels to support the programs as currently authorized, or to obtain funding from other sources, such as the general fund. Over the longer term, increases in vehicle fuel efficiency resulting from previously enacted legislation and greater use of electric vehicles are likely to constrain motor fuel consumption, leaving in question the viability of motor fuel taxes as the principal source of surface transportation funding.

TIGER Grant Program

The Transportation Investments Generating Economic Recovery (TIGER) grant program originated in the American Recovery and Reinvestment Act ( P.L. 111-5 ), where it was referred to as "national infrastructure investment." It is a discretionary grant program intended to address two criticisms of the current structure of federal transportation funding: that virtually all of the funding is distributed to state and local governments which select projects based on their individual priorities, making it difficult to fund projects that have national or regional impacts but whose costs fall largely on one or two states; and that federal transportation funding is divided according to mode of transportation, making it difficult for major projects in different modes to compete for the limited amount of discretionary funding. The TIGER program provides grants to projects of regional or national significance in various modes on a competitive basis, with recipients selected by the federal DOT.

Congress has continued to support the TIGER program through the annual DOT appropriations acts. There have been four rounds of TIGER grants (from ARRA funding, and from FY2010-FY2012 annual appropriations), with the fifth round (FY2013) in process. The Administration requested $500 million for FY2014, the same amount enacted by Congress in previous years.

The House bill would not provide any funding for the program for FY2014, noting that while "the Nation is in desperate need for infrastructure investment," the Administration has not defined the selection criteria by which recipients are selected (the House also proposed no funding for the program in FY2013). The House bill would also rescind $237 million from the FY2013 funding.

The Senate bill would provide $550 million.

Essential Air Service (EAS)

The EAS program seeks to preserve commercial air service to small communities, whose level of ridership makes air service unprofitable, by subsidizing the cost of that service. The costs of the program have more than doubled since FY2008, in part because route reductions by airlines have resulted in an average of six new communities being added to the program each year.

Supporters of the EAS program contend that preserving airline service to small communities was a commitment Congress made when it deregulated airline service in 1978, anticipating that airlines would reduce or eliminate service to many communities that were too small to make such service economically viable. Supporters also contend that subsidizing air service to smaller communities promotes economic development in rural areas. Critics of the program note that the subsidy cost per passenger is relatively high, that many of the airports in the program have very few passengers, and that some of the airports receiving EAS subsidies are little more than an hour's drive from major airports.

In addition to the annual discretionary appropriation for the program, there is a mandatory annual authorization of $100 million financed by overflight fees collected from commercial airlines by the FAA. This funding does not appear in the appropriation budget tables.

The Administration requested $146 million for the EAS program in FY2014. This appears comparable to the $143 million enacted for FY2013, but would actually represent a significant increase, as the mandatory funding portion of the program was $50 million in FY2013. Thus, the total funding provided for the EAS program in FY2013 was $193 million (the $143 million appropriation plus the $50 million mandatory funding). The Administration's FY2014 request would provide a total of $246 million, including the mandatory funding.

Both the House and Senate bills support the Administration request. The bills also supported the request to eliminate a requirement that airlines use, at a minimum, 15-passenger aircraft to service EAS communities, even though many of these communities typically have fewer than 15 passengers per flight. Eliminating the minimum 15-passenger aircraft requirement is seen as a way to reduce EAS program costs. The same provision has been included in recent appropriations acts. The House bill also includes a provision prohibiting EAS funding to communities whose rate of subsidy per passenger is greater than $500.

The current FAA authorization act ( P.L. 112-95 , enacted February 14, 2012) included reforms intended to limit EAS program costs, some of which were included in the FY2012 appropriations act. These include limiting funding to those communities which received subsidies in FY2011 and limiting coverage to airports that average at least 10 passengers per day (unless they are more than 175 miles from the nearest hub airport). The legislation also repealed the local participation program, a pilot program established in 2003 under which some communities assumed a portion of the cost of their EAS subsidies.

High Speed and Intercity Passenger Rail

The budget proposed a total of $6.4 billion for a new National High Performance Rail System program with two grant programs: $2.7 billion for a Current Passenger Rail Service grant program (which would primarily fund maintenance and improvement of existing intercity passenger rail service, i.e., Amtrak) and $3.7 billion for a Rail Service Improvement grant program (which would fund new intercity passenger rail projects as well as some improvements to freight rail). Neither the House nor the Senate bill supported this realignment and funding increase. The Senate bill would provide $100 million to support improvements to existing passenger rail service and multistate planning efforts.

The 111 th Congress (2009-2010) provided $10.5 billion for DOT's high speed and intercity passenger rail grant program, beginning with $8 billion in the American Recovery and Reinvestment Act of 2009. Since then, Congress has provided no additional funding for this program, and in FY2011 rescinded $400 million of the unobligated portion of the $10.5 billion already appropriated.

The $10.1 billion went to the High Speed and Intercity Passenger Rail Grant Program. Despite its name, this program has provided funding mainly to develop intercity passenger rail service with top speeds of 90 or 110 miles per hour. There is only one state, California, that is actively pursuing development of a high speed rail line that would provide dedicated tracks for passenger trains traveling at speeds greater than 150 miles per hour. California has received $3.6 billion in federal funding for this project, but the total cost of constructing the line is estimated at more than $70 billion, and the financing prospects are uncertain.

Amtrak

The Administration budget proposed to place Amtrak funding into a new Federal Railroad Administration account—Current Passenger Rail Service—for which $2.7 billion was requested. This account would fund publicly owned passenger rail asset development and maintenance, primarily Amtrak. Congress enacted $1.415 billion in capital, operating, and debt service grants for Amtrak in FY2013; after sequestration, Amtrak received $1.344 billion.

Amtrak also submits a grant request to Congress each year, separate from the Administration's budget request. Amtrak requested $2.65 billion for FY2014. Most of the difference between Amtrak's request and the amount it received in FY2013 is additional funding for capital improvements and purchase of new rolling stock.

The House bill would provide $950 million for Amtrak for FY2014. The Senate bill would provide $1.45 billion. The difference between the two bills lies primarily in the amount of capital funding they would provide for Amtrak. For operating assistance, the House bill would provide $350 million, the Senate bill up to $390 million; Amtrak requested $373 million. But for capital assistance grants (not including funding for service of Amtrak debts, around $200 million), the House bill would provide roughly $400 million, and Senate bill roughly $860 million; Amtrak requested roughly $2 billion.

Table 5 shows the amount of funding appropriated for Amtrak grants in FY2013, requested by the Administration for FY2014, and recommended by the House and Senate Committees on Appropriations.

Federal Transit Administration New Starts and Small Starts (Capital Investment Grants)

The majority of FTA's $10 billion funding is funneled to transit agencies through several formula programs. The largest discretionary grant program is the Capital Investment Grants programs (commonly referred to as the New Starts program). This program funds new fixed-guideway transit lines and extensions to existing lines. There have been two primary components to the program, based on project cost. The New Starts component funds capital projects with total costs over $250 million which are seeking more than $75 million in federal funding; the Small Starts component funds capital projects with total costs under $250 million which are seeking less than $75 million in federal funding. In the transit program reauthorization enacted in 2012, Congress added a third component, Core Capacity. This component will fund expansions to existing fixed-guideway systems that are at or near capacity.

Congress enacted appropriated $1.95 billion for the Capital Investment Grants program in FY2013; after sequestration, the program received $1.85 billion. The Capital Investment Grants program provides funding to large projects over a period of years, meaning that in each year the majority of Capital Investment Grant funding is already committed to existing projects. FTA reports that as a result of the funding reduction in FY2013, it was unable to make any new grants for the first time in 20 years, and was forced to reduce the amount paid to grantees under existing grant agreements.

For FY2014, the Administration requested $1.98 billion for the program. The House bill would provide $1.82 billion; the Senate bill would $1.94 billion. FTA reports that existing grant agreements will account for $1.71 billion.

New Starts Funding Share

The federal share for New Starts projects, by statute, can be up to 80%. Since FY2002, DOT appropriations acts have included a provision directing FTA not to sign any full funding grant agreements that provide a federal share of more than 60%. This provision is in the FY2013 House bill, but not the Senate bill.

Critics of this provision note that the federal share for highway projects is typically 80% and in some cases is higher. They contend that, by providing a lower share of federal funding (and thus requiring a higher share of local funding), this provision tilts the playing field toward highway projects when communities are considering how to address transportation problems. Advocates of this provision note that the demand for New Starts funding greatly exceeds the amount that is available, so requiring a higher local match allows FTA to support more projects with the available funding. They also assert that requiring a higher local match likely encourages communities to scrutinize the costs and benefits of major proposed transit projects more closely.

Title II: Department of Housing and Urban Development

Table 6 presents an account-by-account summary of FY2014 appropriations proposals for HUD, compared to FY2013 enacted levels, both including and excluding the sequester reductions. Pre-sequester FY2013 enacted funding levels are taken from the Senate Appropriations Committee report for FY2014 HUD appropriations ( S.Rept. 113-45 ), which reflect the FY2013 across-the-board rescission, but not the sequestration reduction. Post-sequester funding levels are also provided, taken from estimates prepared by HUD.

Selected Budget Issues

FHA Mutual Mortgage Insurance Fund (MMIF)

The Federal Housing Administration's (FHA's) single-family mortgage insurance program is financed through the Mutual Mortgage Insurance Fund (MMI Fund), which is intended to be supported through fees paid by borrowers rather than through appropriations. However, like all federal credit programs, the MMI Fund has permanent and indefinite budget authority to draw funds from Treasury without further congressional action if it ever needs additional funds to pay for higher-than-expected claims.

In recent years, increased mortgage default rates and falling house prices have increased the amount of losses expected in the future on mortgages that are currently insured under the MMI Fund. This has increased the amount of funds that FHA must hold in reserve to pay for expected future losses, and reduced the amount of additional funds that FHA has available to pay for additional, unexpected increases in future losses.

The FY2014 budget request includes $943 million in mandatory funding for the MMI Fund. These funds might be needed to make a required transfer of funds to the MMI Fund's primary reserve account (which holds funds to pay for expected future losses) from its secondary reserve account (which holds additional funds to pay for unanticipated future losses) in order to cover an increase in the losses that are expected in the future on the loans that are currently insured. If these funds from Treasury are needed, they would not be spent immediately; they would only be spent in the future if the existing funds held in reserve to pay for expected future losses were exhausted.

FHA had until the end of FY2013 to transfer funds from the secondary reserve account to the primary reserve account. FHA did use its permanent and indefinite budget authority to draw $1.7 billion from Treasury at the end of FY2013 in order to make its required transfer of funds between reserve accounts in that year. This marked the first time that the MMI Fund has had to draw funds from Treasury for this purpose.

Eminent Domain Proposals

Some localities throughout the country have begun to explore the possibility of using the power of eminent domain to purchase mortgages with negative equity at current market values (but for an amount less than what the borrower still owes on the mortgage), and then providing a new mortgage to the borrower for a lower principal amount. While some policy makers argue that this would be a way to help borrowers regain equity in their homes and stabilize local housing markets, others have argued that such a proposal undermines private contracts and could have unwelcome consequences for future mortgage lending. Several policy makers who have been concerned about this use of eminent domain have called on government agencies, such as FHA, to explain what kind of policies they might adopt if a local jurisdiction adopted such a program.

The House committee report ( H.Rept. 113-136 ) expressed concern over the possible use of eminent domain to purchase negative equity mortgages, and included instructions to HUD to submit a study on the effects that this possibility could have on housing and mortgage markets. The Senate committee report ( S.Rept. 113-45 ) indicated that the committee would "continue to monitor developments" related to the use of eminent domain, and that it expects FHA to keep the committee informed of any policies it would pursue if an eminent domain proposal moved forward.

Funding for the Community Development Fund

The Community Development Fund (CDF) funds several community development-related activities, including the Community Development Block Grant (CDBG) program, the federal government's largest and most widely available source of financial assistance supporting state and local government-directed neighborhood revitalization, housing rehabilitation, and economic development activities.

For FY2014, the Administration requested $3.143 billion for Community Development Fund (CDF) activities, including $2.798 billion for CDBG formula grants to states, entitlement communities, and insular areas and $70 million for Indian tribes. The Administration also requested $75 million for Regional Integration Planning Grants. In FY2013, the total amount available for CDF after application of the 0.2% across-the-board rescission and sequestration was approximately $3.135 billion. The $3.143 billion requested by the Administration is $8 million more than the $3.135 billion appropriated for FY2013, $152 million less than the amount recommended in S. 1243 as reported by the Senate Appropriations Committee, but $1.446 billion more than recommended in H.R. 2610 , as reported by the House Appropriations Committee.

Regarding CDBG formula grants, S. 1243 , the Senate Appropriations Committee-passed bill, recommended $3.150 billion, which exceeds the President's request of $2.798 billion by $352 million. H.R. 2610 , as reported by the House Appropriations Committee, recommended $1.637 billion for CDBG formula grants, which is $1.161 billion less than the amount requested by the President and $1.513 billion less than the amount recommended in the Senate Appropriations Committee bill. S. 1243 , consistent with the Administration's request, included $75 million for Regional Integration Planning Grants. The House bill did not include funding for the program.

Community Development Block Grant Minimum Allocations

The Administration's FY2014 budget request included a proposal that would limit CDBG formula grants to communities meeting a minimum grant allocation. CDBG formula grants are awarded to "entitlement communities," which are defined as metropolitan cities or urban counties that meet certain population criteria. Under the proposal, which has not been formally introduced, a community qualifying for CDBG entitlement status based on the population threshold must also be eligible to receive a minimum grant amount equal to or greater than 0.125% of the amount made available to all entitlement communities in order to qualify for funds. The President's proposal for a minimum allocation would eliminate 239 communities as CDBG entitlement communities based on proposed FY2014 funding of $2.798 billion. The proposal, as outlined in the Administration's FY2014 budget justification, would be phased in over a number of years starting in FY2014 and ending in FY2018. HUD also proposed to eliminate the grandfathering provisions of the CDBG program, which extend entitlement status to communities that no longer meet the minimum population threshold. HUD estimates that an additional 57 communities would no longer meet the population threshold if the proposal to end granfathering were adopted.

According to HUD, some communities that fail to meet the minimum allocation threshold would have the option of entering into a joint agreement with the urban county in which it is located. If an affected local government is not in an urban county, it would have the option of participating in the state-administered CDBG program. The report ( S.Rept. 113-45 ) accompanying the Senate Appropriations Committee-passed bill, S. 1243 , included language that rejects the Administration's proposal.

Title III: Related Agencies

Table 7 presents appropriations levels for the various related agencies funded within the Transportation, HUD, and Related Agencies appropriations bill.

Selected Budget Issues

NeighborWorks America and the National Foreclosure Mitigation Counseling Program

The Neighborhood Reinvestment Corporation, commonly known as NeighborWorks America, is a government-chartered non-profit corporation that supports a national network of local organizations that engage in a variety of community revitalization and affordable housing activities by providing those local organizations with grants, training, and technical assistance. In addition to receiving an annual appropriation for these activities, since 2008 NeighborWorks has also received additional funding to distribute to housing counseling organizations to use solely for foreclosure prevention counseling. This program is known as the National Foreclosure Mitigation Counseling Program (NFMCP), and was intended to be a temporary program to address high residential foreclosure rates in recent years.

The President's FY2014 budget requested $127 million for NeighborWorks to support its traditional activities and $77 million for the NFMCP, for a total of $204 million. This is compared to a FY2013 post-sequestration funding level of $128 million for its traditional activities and nearly $76 million for the NFMCP, for a total of $204 million.

The House committee-passed bill proposed $127 million for the regular NeighborWorks appropriation and $58 million for the NFMCP, for a total of $185 million. The Senate committee-passed bill proposed $138 million for the regular NeighborWorks appropriation and $77 million for the NFMCP, for a total of $215 million. The House committee-explained the proposed reduction by noting that the NFMCP funding was not intended to be permanent, and that data show that the rate of foreclosures has begun to decrease ( H.Rept. 113-136 ). The Senate committee proposed to continue funding the NFMCP at a similar level as the prior year. The Senate committee report noted that the NFMCP is not a permanent program, but indicates that it still believes that funding for the program is warranted because foreclosure rates, while falling from their peak, remain high by historical levels ( S.Rept. 113-45 ).

Appendix A. FY2014 Funding Lapse

FY2014 Funding Lapse and Partial Government Shutdown

The federal government experienced a funding lapse beginning on October 1, 2013, which ended when the Continuing Appropriations Act ( P.L. 113-46 ) was signed into law on October 17, 2013. This funding lapse resulted in a partial "government shutdown" which included the suspension on non-essential government services and the furlough of federal employees who were not excepted. P.L. 113-46 provided funding through January 15, 2014; further appropriations acts would need to be enacted before then to avoid another funding gap. P.L. 113-46 also provided for all federal employees to be retroactively paid as if they had been at work for the shutdown period.

All agencies typically funded by the THUD appropriations act were affected, to varying degrees. Federal agencies were required to submit contingency plans that detail the specific impacts anticipated as a result of the shutdown and which services would be continued and which employees would be exempted.

The Department of Transportation's shutdown contingency plan can be accessed at http://www.dot.gov/mission/budget/dot-2014-plan-appropriation-lapse . The Department of Housing and Urban Development's shutdown contingency plan can be accessed http://portal.hud.gov/hudportal/documents/huddoc?id=HUDContingencyPlan2013.pdf .

Appendix B. Composition of the THUD Funding Bill

Budget Concepts Relevant for THUD

The numbers cited in discussions of the THUD appropriations bills can be confusing. Different totals may be published by the committees in their tables and press releases, reported in the press or by advocates, and even presented in this report, all of which may be technically correct. This is possible because the THUD appropriations bills include different types of funding mechanisms and savings mechanisms, which can result in different figures being reported for the same programs, depending on how the numbers are presented. The following section of this report explains the different types of funding often included in the THUD appropriations bill.

Most of the programs and activities in the THUD bill are funded through regular annual appropriations , also referred to as discretionary appropriations. This is the amount of new funding allocated each year by the appropriations committees. Appropriations are drawn from the general fund of the Treasury. For some accounts, the appropriations committees provide advance appropriations , or regular appropriations that are not available until the next fiscal year.

In some years, Congress will also provide emergency appropriations , usually in response to disasters. These funds are sometimes provided outside of the regular appropriations acts—often in emergency supplemental spending bills—and are generally provided in addition to regular annual appropriations. Although emergency appropriations typically come from the general fund, they may not be included in the discretionary appropriation total reported for an agency.

Most of the Department of Transportation's budget is derived from contract authority . Contract authority is a form of budget authority based on federal trust fund resources, in contrast to "regular" (or discretionary) budget authority, which is based on the resources of the general fund of the Treasury. Contract authority for DOT is generally derived from the highway trust fund and the airport and airways trust fund.

Congressional appropriators are generally subject to limits on the amount of new non-emergency discretionary funding they can provide in a year. One way to stay within these limits is to appropriate no more than the allocated amount of discretionary funding in the regular annual appropriation act. Another way is to find ways to offset a higher level of discretionary funding. A portion of the cost of providing regular annual appropriations for the THUD bill is generally offset in two ways. The first is through rescissions , or cancellations of unobligated or recaptured balances from previous years' funding. The second is through offsetting receipts and collections , generally derived from fees collected by federal agencies.

When the Appropriations Committee subcommittees are given their "302(b) allocations"—that is, when the total amount that the Appropriations Committee has to spend for a fiscal year is divided among the subcommittees—that figure includes only net discretionary budget authority (non-emergency appropriations, less any offsets and rescissions); contract authority from trust funds is not included. This can lead to confusion, as the annual discretionary budget authority allocations for THUD are typically around half of the total funding provided in the bill, with the remainder made up of contract authority, offset in some way.

Allocation across Agencies

Once the THUD subcommittees receive their 302(b) allocations, they must decide how to allocate the funds across the different agencies within their jurisdiction. As shown in Figure B-1 , when it comes to net discretionary budget authority (appropriations, less any offsets), the majority of funding allocated by the appropriations subcommittees generally goes to HUD (about two-thirds in FY2013). However, as shown in Figure B-2 , when taking into account contract authority—which, as noted earlier, is not allocated by the appropriations committees—the total resources available to DOT are greater than the resources available to HUD.

Impact of Offsets

Besides the level of the 302(b) allocation, one of the most important factors in determining how much in new appropriations the THUD subcommittees will provide in each year is the amount of savings available from rescissions and offsets. Each dollar available to the subcommittee in rescissions and offsets serves to reduce the "cost" of providing another dollar in appropriations. As shown in Table B-1 , in FY2012, without rescissions and offsets, it would have "cost" the THUD Subcommittee an additional $6 billion to provide the same amount of appropriations.

The amount of these "budget savings" can vary from year to year, meaning that the "cost" of providing the same level of appropriations may vary as well.