What FY 25 Earmark Guidance Could Mean for T-HUD Funding Requests
By: Gabriel Smith, Legislative Affairs Analyst
Over recent months, Biden Administration officials have kicked off the Fiscal Year 2025 (FY 25) appropriations process by presenting the President’s budget proposal before Congress and the public. During last year’s FY 24 negotiations, Community Project Funding for the Dept. of Housing and Urban Development’s (HUD) Economic Development Initiative account (earmarks) became a source of major concern for some conservative House lawmakers, alleging that some Democrat earmark requests were a backdoor to fund personal projects and causes related to social issues—namely LGBTQ+ representation. The concerns created an impasse between House members that delayed passage of the FY 24 Transportation-HUD bill.
In response, newly appointed Appropriations Chair Tom Cole (R-OK) has acted to try and prevent similar delays for FY 25 funding. Chair Cole released annual guidance for FY 25 earmarks in April with two distinct changes from FY 24: an accelerated timeline for earmark requests, and more notably a ban nonprofit eligibility for earmark funding. Interestingly, most applications for earmarks in FY 24 came from Republican offices. In FY 24, House Republican appropriators were responsible for dividing $7.4 billion in total earmarks among 4,714 individual projects despite banning earmarks entirely a decade ago. Out of the subcommittee allocations, Transportation-HUD received over half of the total amount, which amounted to nearly $4 billion.
Back in the 117th Congress (2021-2022), former Appropriations Chair Kay Granger (R-TX) banned nonprofits from receiving earmark funding from the Appropriations Labor-Health and Human Services, and Education Subcommittee (L-HHS-E). With this avenue for community changing funding closed off, Members of Congress from both sides of the aisle flooded T-HUD with requests in FY 24, resulting in the largest round of awarded funding in years. For Members of Congress in more vulnerable seats, earmarked funding can provide a lifeline by directing spending towards their districts and providing members with tangible wins, particularly during an unproductive session of Congress.
Despite Chair Cole’s proactiveness, a fight over earmarks could still be inevitable as the Senate has not imposed a similar ban on funding applications from nonprofits. With the Senate currently under Democrat control, it is expected that their budget proposal will look very different from the proposal put forward by the Republican-controlled House. A clash over earmark funding between the House and Senate could help prompt Congressional leaders to agree to a Continuing Resolution (CR) agreement to continue to fund federal programs until after the election. With the November General Election nearly 5 months away, Members of Congress are balancing governing in Washington with campaigning for their jobs and fundraising on behalf of their colleagues in vulnerable seats.
With control of the White House and Congress both up for grabs this November, it is unclear when Congress will finalize FY 25 appropriations. Federal funding negotiations will likely be impacted by the election results, particularly if control of the White House and chamber(s) of Congress are flipped. As of now, appropriators are working on a budget that honors the Fiscal Responsibility Act of 2023 (FRA) agreed to by President Biden and former Speaker Kevin McCarthy. The FRA imposes budget caps for non-defense spending in exchange for lifting the debt ceiling against a default on the U.S. national debt. Although negotiations on FY 25 funding are ongoing, Congressional offices are responding to this directive in how they advise on applications for earmark funding. Offices have advised applicants to submit proposals that do not exceed $1.5 million while some projects awarded funding in FY 24 went up to $4 million.
HUD Economic Development Initiative projects that will be prioritized and considered “strong submissions” by the Transportation-HUD committee are:
- Water or sewer infrastructure projects
- Local road infrastructure
- Streetscape improvements
- Housing Rehabilitation or Construction, residential conversions, and neighborhood revitalization projects that will increase/improve housing supply and affordability in the local community
- Projects with clear economic development benefit for a community such as workforce training center
- Projects that meet a compelling local need consistent with statutory purposes (I.E. foodbanks, youth and senior center, multipurpose community centers
Public Housing Agencies (PHAs) can apply for earmark funding. In FY 24, several NAHRO members received earmarks, including: Chicago Housing Authority, Housing Authority of the City of Los Angeles, Cook Inlet Housing Authority to name a few. While the deadline for earmark applications for FY 25 has already passed, NAHRO members can start working with their members of Congress to explore the possibility of funding in FY 26.