Press Releases

Bachus Cautions HUD to Watch Spending, Calls for Top-Down Review of Agency

WASHINGTON, March 17, 2010 -

- Financial Services Committee Ranking Member Spencer Bachus made the following statement during a Full Committee hearing entitled "The Administration's Proposal to Revitalize Severely Distressed Public and Assisted Housing: The Choice Neighborhoods Initiative."

"Mr. Chairman, I would like to welcome Secretary Donovan to the Committee again today to testify on the Administration's Choice Neighborhoods Initiative. 

"Secretary Donovan, I appreciate your willingness to work with both sides of the aisle.   On more than one occasion you have proposed constructive changes to HUD programs.  Having said that, I do have some concerns about HUD's programs - some that may date back to before your time - and I want to express those.

"The Choice Neighborhoods Initiative is a newly constructed government-funded grant program designed to replace the existing HOPE VI program.  Like HOPE VI, Choice Neighborhoods' stated goal is to transform neighborhoods of extreme poverty into sustainable mixed-income neighborhoods.  While Choice Neighborhoods is, in my opinion, an improvement over Hope VI, at the same time it increases expenditures and I would find it difficult to justify that at a time of already unsustainable Federal budget deficits and a multi-trillion dollar national debt.  

"One particular concern is that HUD has not done enough to stretch the taxpayer's current housing investments, and must address significant questions surrounding the accuracy of HUD's budget offset projections.  Just last week, the Congressional Budget Office (CBO) found that FHA and Ginnie Mae receipts would be $4.4 billion less than the Administration's $6.9 billion projection.  As you know, HUD claimed that the $6.9 billion was to offset a $48.5 billion HUD budget, reducing the HUD budget to $41.5 billion.        

"Before we consider additional spending projects, HUD, along with other executive branch agencies, should be required to justify current programs and their budget allocation.  The FY 2011 budget requests an additional $250 million for Choice Neighborhoods, on top of the $65 million Congress provided in HUD's FY 2010 budget.  Yet the Choice Neighborhood Initiative has yet to be authorized. 

"Mr. Chairman, during the presidential campaign in 2008, President Obama committed to performing a top-down review of every government agency and program.  HUD has, for some time, been notorious for slow spend-out rates in many of its programs and large unspent balances sitting in HUD accounts.   How can we be assured that this new government program will be any more effective than HOPE VI when there are already millions of dollars sitting in an account waiting for some action or decision?  Before we create a new government-run program, a better course of action would be to perform the top-down review that the President promised in order to identify the types of reforms necessary to ensure HUD programs are administered in a cost effective and efficient manner.    

"Secretary Donovan, thank you again for being here today to testify on the Choice Neighborhoods and for sharing your views on how Congress and the Administration should address the funding issue, specifically the shortfall created by the lower than expected FHA and Ginnie Mae receipts. 

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