How Would Cuts Proposed in President Trump’s Recently Released Budget Blueprint Affect California?

Last week, all eyes were on the effort to “repeal and replace” the Affordable Care Act (ACA), which could have dramatically impacted federal funding for health insurance for low-income Americans. That effort failed (at least for now), but other cuts are likely on the horizon. A week earlier, President Trump released his preliminary proposal for a different part of the federal budget, federal “discretionary” spending, with the ambitious subtitle, “A Budget Blueprint to Make America Great Again.” While short on important details, this so-called “skinny budget” is clear on a central point: It proposes significant cuts to a vast range of government programs, including many housing and human services programs that assist low- and moderate-income households. How would these cuts impact California?

Many of the funding reductions outlined in the President’s budget blueprint lack specifics about which programs would be impacted or how much funding would be cut. But the document does identify a number of specific housing and human services programs that are targeted for complete elimination. California receives millions of dollars in funding each year from many of these programs, which support activities ranging from development of affordable rental housing, to assistance with utilities payments, to meals for homebound seniors, to weatherization improvements for low-income homeowners. The table below highlights what several of the major cuts would mean for California.

* Amount for FFY 2017, the federal fiscal year that began on October 1, 2016.
Source: Budget Center analysis of US Department of Housing and Urban Development, Department of Health and Human Services, and Department of Energy data as well as of “America First: A Budget Blueprint to Make America Great Again” (Office of Management and Budget)

Combined, the federal programs highlighted above provide more than $700 million annually to help low- and moderate-income Californians. Further, low-income Californians also benefit from programs targeted for elimination that do not provide annual state-level funding allocations, including the Department of Housing and Urban Development’s (HUD’s) Choice Neighborhoods program, which has provided more than $62 million in competitive grants for specific projects in California to improve struggling neighborhoods; HUD’s Self-Help Homeownership Opportunity Program (SHOP), which supports organizations that develop “sweat equity” low-income homeownership housing (e.g., Habitat for Humanity); and the Neighborhood Reinvestment Corporation (or NeighborWorks America), which provided $8 million last fiscal year to organizations in California that develop and repair affordable housing and provide homeownership and foreclosure counseling.

All these federal programs combined represent a relatively small amount of money for California when compared to, for example, the overall size of the state budget (at $284.5 billion proposed by Governor Brown for 2017-18). But they are critical sources of funding for community-based service providers that work with vulnerable populations, housing developers assembling complex financing packages to construct affordable homes, and households struggling to pay utility bills and maintain stable housing.

Moreover, these cuts are just the tip of the iceberg in terms of the potential impact of President Trump’s proposed budget on California’s lower-income residents. Other programs outside of housing and human services that largely benefit low-income households are also targeted for elimination in this budget blueprint, including programs that fund affordable legal services, employment assistance for low-income seniors, and education (the focus of a forthcoming California Budget & Policy Center blog post). The budget blueprint does not include details about proposed funding reductions in discretionary programs that are not earmarked for complete elimination, and these could easily total more than the cuts identified here. In addition, the President’s preliminary budget does not even address potential cuts to nondiscretionary federal programs that serve low-income individuals like food assistance through the Supplemental Nutrition Assistance Program (SNAP, known as CalFresh in California), Supplemental Security Income (SSI), or Medicaid (the federal financing source for Medi-Cal). While the ACA “repeal and replace” effort did not succeed, the Medicaid cuts proposed through that bill, which had President Trump’s strong support, would have blown a multi-billion dollar hole in California’s state budget.

Like all public budgets, the President’s proposed blueprint is not just about dollars, but rather represents an expression of values and priorities for the government and the country. And although the President’s “skinny budget” is unlikely to be enacted in anything close to its current form, it reflects values and priorities that are in conflict with some core needs and values of Californians. California has the highest poverty rate of the 50 states after accounting for the cost of housing, but the President’s budget blueprint proposes cutting programs that support affordable housing and community services for economically struggling Californians. The President’s budget presents these cuts as necessary in order to increase funding for defense and border security and removal of unauthorized immigrants (even those who are working and have strong community ties). Yet an overwhelming majority of Californians believe that undocumented immigrants living in the US should be allowed to stay if certain conditions are met.

While the President has set out his initial vision for the federal budget, ultimately members of Congress have the larger role in deciding which programs receive support and how federal funds are spent. If Congress chooses to follow the President’s lead, California’s lower-income residents will face cuts to federal programs that help them meet their most basic needs, in the service of values and priorities that they largely do not share.

— Sara Kimberlin