On July 13, 2025, the House Appropriations Subcommittee on Transportation, Housing and Urban Development (THUD) released its draft FY 2026 appropriations bill. The proposal provides $67.751 billion in net discretionary funding for HUD, a $939 million decrease from FY 2025 enacted levels.
The bill maintains funding for several core rental assistance programs, including flat funding for Housing Assistance Payments (HAP). However, it also proposes a 28% reduction in administrative fees for the Housing Choice Voucher (HCV) program. While HAP funding remains level, the reduction in administrative support may affect the ability of Public Housing Agencies (PHAs) to fully administer and lease vouchers, particularly in the context of rising rents and inflation.
The bill includes modest increases for Project-Based Rental Assistance (PBRA), Section 202 housing for the elderly, and Section 811 housing for persons with disabilities, as well as a $107 million increase for Homeless Assistance Grants. These are offset by reductions to the Public Housing Operating and Capital Funds, and the elimination of the HOME Investment Partnerships Program. The bill also proposes to rescind unobligated FY 2025 funds from several programs, including public housing, CDBG, and Choice Neighborhoods.
In addition to funding changes, the bill includes policy provisions allowing PHAs to adopt alternative rent structures for Public Housing and Section 8 programs.
While the bill includes reductions and rescissions, it is significantly less disruptive than the President’s FY 2026 budget request, which proposed converting rental assistance into a state block grant and sharply reducing overall HUD funding.
Overall, the bill reflects a modest reshuffling of HUD priorities: while some programs see targeted increases, the overall HUD budget is slightly reduced, and the HCV program may face operational constraints due to flat renewals and reduced administrative support.
Funding Overview: Key Changes to HUD Programs
Policy Changes
- Alternative Rent Structures: The bill includes language allowing PHAs to voluntarily adopt alternative rent structures for Public Housing and Section 8 programs. This could provide flexibility in setting tenant contributions but may require new administrative procedures.
- Rescission of Un-Obligated Funds: The bill proposes rescinding unobligated FY 2025 funds from the Public Housing Capital Fund, Choice Neighborhoods, and CDBG. This could impact agencies or jurisdictions with delayed project timelines or multi-year planning cycles.
- No Block Grant Conversion: The bill does not include the administration’s proposal to consolidate tenant-based rental assistance into a state block grant.
Implications for PHAs and Local Jurisdictions
- Voucher Administration: The 28% reduction in HCV administrative fees may limit PHAs’ ability to maintain staffing levels, conduct inspections, and support voucher holders. Combined with flat HAP funding, this could reduce voucher utilization in high-cost markets.
- Public Housing Operations and Maintenance: Reductions to the Operating and Capital Funds may constrain PHAs’ ability to address maintenance backlogs, safety upgrades, and modernization efforts.
- Development and Revitalization: The elimination of HOME and Choice Neighborhoods removes two key sources of flexible funding for affordable housing development and neighborhood transformation.
- Program Planning: The proposed rescission of un-obligated FY 2025 funds may disrupt multi-year planning and delay projects that rely on carryover balances.
- Policy Implementation: PHAs may need to evaluate their readiness to implement alternative rent structures, including potential impacts on tenants, IT systems, and staff training.
Recommendations for PHAs
- Model Operational Scenarios: Assess how reduced administrative fees and flat HAP funding could affect lease-up rates, staffing, and service delivery.
- Review Capital Needs: Revisit capital planning priorities in light of potential reductions to the Public Housing Capital Fund and rescinded prior-year funds.
- Monitor Senate Action: Track the forthcoming Senate THUD bill for potential restoration of funding or alternative policy language.
- Prepare for Flexibility: Begin internal discussions on the feasibility and implications of adopting alternative rent structures, should the policy be enacted.
Next Steps
The full House Appropriations Committee is scheduled to conduct its markup of the FY26 THUD bill today, July 17, 2025.
The Senate Appropriations Committee has not yet released or scheduled markup of its FY26 THUD bill.
Once both chambers pass their respective THUD bills, differences will need to be resolved through a conference committee. Final HUD funding levels and policy changes will depend on this reconciliation process.
If Congress does not finalize appropriations by the start of FY 2026 (October 1, 2025), a continuing resolution (CR) may be enacted to maintain current funding levels temporarily.
About AMA Consulting Group
At AMA Consulting Group, we partner with PHAs to navigate shifting funding landscapes and regulatory changes—like those in the FY 2026 THUD bill—so you can keep serving your communities without missing a beat.
Whether you’re adjusting staffing levels, needing back office support, or updating your administrative procedures, our team brings deep HUD expertise, proven tools, and hands‐on support to help your PHA thrive in “this season” and beyond.
To learn more, visit www.amaconsultinggroup.com or email us at sales@amaconsultinggroup.com.