Mar 04 2003

HEARING ON HUD’S FY 2004 BUDGET REQUEST
STATEMENT OF SEN. RICHARD SHELBY

 “The Committee will come to order. I am very pleased this morning to welcome Secretary Mel Martinez from the Department of Housing and Urban Development. Ranking Member Sarbanes and I asked Secretary Martinez to come before the Committee today to share the details of the Administration’s FY 2004 proposed budget for HUD and I appreciate the Secretary making the time to be with us today.”

“Let me begin by saying that I think this is a valuable opportunity for me and the other members of the Committee. In previous years, HUD’s budget hearing was many times held at the Subcommittee level. Since HUD is such an crucial and important part of this Committee’s jurisdiction, I thought it would be important to hear from Secretary Martinez myself. I’m pleased that Wayne Allard, the Subcommittee Chairman on Housing and Transportation has, for many years, made HUD oversight a priority. I’m looking forward to working with him going forward on important housing issues.”

“President Bush is proposing to fund HUD at $31.3 billion in FY 2004 – an increase of $262 million from FY 2003. It includes several important and ambitious initiatives.”

“I am particularly pleased to see the Administration’s budget submission contains many important tools to increase homeownership. On average, American families have 44 percent of their net wealth in the equity value of their home. Homeownership has shown to be an important tool to lifting low income and minority families out of poverty. Providing homeownership opportunities for these families not only provides them with an opportunity for wealth building, it also increases community pride and has a stabilizing effect on children. The President’s “American Dream Downpayment” Initiative is a great first step to meeting this goal.”

“The greatest barrier to homeownership is a lack of resources for downpayment and closing costs. “American Dream Downpayment” calls for a $200 million program to provide assistance for downpayment and closing costs to families wanting to own a home.”

“Additionally, the FY 2004 budget proposes a new mortgage insurance product within the Federal Housing Administration. It is designed to serve a sub-prime market of families, who because of a poor credit history, are unable to get mortgage insurance on the private market at a reasonable rate. This program envisions requiring families to pay a higher premium insurance rate at the outset, but offers the opportunity for reduced rates in subsequent years once a pattern of prompt payment is established.”

“Another portion of the budget submission I’d like to mention is the creation of HANF grants - Housing Assistance for Needy Families. This bold initiative would block grant funds from the Section 8 Housing Choice Voucher Program. By allocating resources to states, there is an opportunity for increased efficiency and enhanced coordination with other social service programs administered at the state level. I will be interested in learning how this change might be implemented.”

“One area of concern I’d like to mention. While this doesn’t relate directly to your budget submission, I think it’s important that it be raised in the context of HUD funding. Some sources estimate that HUD is overpaying Section 8 rental payments at an estimated rate of $2 billion a year. This is a troubling situation, but one that I know you are making every effort to rectify. Particularly in this challenging budget climate, I think it is extremely important that you focus on efficiencies within the Department. Two billion a year in misdirected funds is too high and causes me significant concern. That $2 billion is money that could be spent for serving other needy communities or meeting other budgetary priorities.”

“Mr. Secretary, we are pleased to have you with us this morning. I look forward to hearing your remarks.”