Treasury transfers money between states as pandemic housing assistance dries up

WASHINGTON — The Biden administration clawed back $377 million in federal emergency housing assistance from states and counties, most of them Republican-controlled, and redirected the money to states that were asking for more help , including New York, California and New Jersey.

The $46 billion emergency rent relief package, first enacted by Congress in 2020, has successfully staved off a wave of evictions resulting from the downturn caused by the pandemic. But Treasury Department officials, increasingly concerned that deportations could increase after the program ends, have tried to ensure that none of the remaining funds are spent while pushing states to find other sources. funding to help poor tenants.

In recent months, White House officials have pressured state governors with unspent funds to return the money to local governments in their states. Now they’re going even further by pulling money from states with relatively few tenants — like Montana, Nebraska, South Dakota, and Wyoming — or localities that have failed to effectively distribute money. help, including Alabama, Arkansas and several counties in Texas.

The money, in turn, is being diverted to four states that have used up their allocated amounts – with $136 million in additional aid going to California, $119 million to New York, $47 million to New Jersey and $15 million to Illinois, according to a spreadsheet provided by a senior administration official. North Carolina, Washington and other locations will receive smaller amounts.

New York officials were happy with their windfall, but said it fell well short of the $1.6 billion in additional aid requested by the state.

“It’s better,” said Rep. Ritchie Torres, a Democrat whose district includes the South Bronx, which has some of the highest eviction and poverty rates in the nation. “But it’s a pitiful drop in the bucket compared to what we need.”

The four states, home to about a third of the country’s low-income tenants, have already spent billions in emergency aid to pay rent for tenants at risk of eviction, and they have asked for more funding, citing the shortage affordable housing and rising rents. In January, their governors – Gavin Newsom of California, Kathy Hochul of New York, Philip D. Murphy of New Jersey and JB Pritzker of Illinois, all Democrats – called on Treasury Secretary Janet L. Yellen to transfer funds from Low-spending states to their accounts, saying tenants “now face an immediate need.”

Treasury officials responded with the reallocation — but made it clear that the well was running out and states would soon have to make tough choices using their own revenues, or other federal pandemic relief funds, to fund anti-eviction initiatives that could have been bolstered by President Biden’s stalled social spending bill.

“The Emergency Rental Program has helped keep millions of families in their homes, reduced the economic costs of the pandemic, and established a national eviction prevention system that did not exist before,” said Deputy Treasury Secretary Wally Adeyemo, who oversaw the implementation of the program, said in an interview.

“As these funds run out, the Treasury encourages state and local governments to invest in long-term strategies to prevent evictions and build affordable housing, using other resources,” he added. .

The program, launched under the Trump administration and accelerated by Mr Biden’s team, got off to a slow start as state governments struggled to create new systems to process applications, determine eligibility and distribute funding. ‘money.

But by the end of 2021, most local systems were up and running, thanks in part to White House guidelines relaxing verification requirements.

The huge cash injection, coupled with federal and local eviction bans, helped prevent or delay an estimated 1.35 million evictions in 2021, according to analysis released last week by Princeton’s. Expulsion Lab. Evictions have increased in recent months in some cities but remain below levels predicted when the pandemic first hit.

Most of the aid the Treasury Department collects comes from Western, Midwestern, and New England states with relatively high per capita incomes and low percentages of renters per capita. But some of the money is being withdrawn from some of the country’s poorest states, where local authorities have been unable, for various political and logistical reasons, to disburse the funds.

Alabama, for example, is losing $42 million out of a total allocation of about $263 million. A spokesperson for the state housing agency provided a memo from state housing officials saying the Treasury Department “did not consider Alabama to have a lower proportion of renters versus landlords” in its aid decisions, and that an overall lack of need put “downward pressure” on applications.

But applicants and housing groups have complained that the state has made it difficult to access the money and that a company has been hired to run the scheme. rejected a large percentage of low-income tenants.

West Virginia, which was slow to distribute a range of federal food, housing and poverty relief aid during the pandemic, was forced to return $39 million despite recent efforts by state officials to encourage more renters to apply. A spokesman for Governor Jim Justice of West Virginia, a Republican, said the state was “simply not a tenant state,” adding that the program “was clearly designed with Manhattan in mind — not Manhattan.” ‘Rural America’.

And Arkansas, which took months to organize its efforts, is returning $9 million, according to the tally provided by the senior administration official.

The Biden administration had hoped to avoid transferring funds between states, opting instead to negotiate with governors to send unspent aid to counties and cities in their own states. Late last year, the White House persuaded Arizona, Georgia, Louisiana, Wisconsin and other states to voluntarily transfer about $875 million to cities and counties in their states that had the most need money.

Yet administration officials are less concerned with offending state officials who have lost funds than with lowering expectations of Democratic governors who want them to claw back even more.

Gene Sperling, who oversees the Biden administration’s pandemic relief programs, said the program was on track to help about five million renters, and the biggest complaint now was that “funds move so quickly that there is very little left to do. reassigned.

Comments are closed.