How would a 44% cut to HUD funding in FY2026 change rental assistance waitlists and homelessness programs by state?
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Executive summary
A proposed 44% cut to HUD in FY2026 would collapse current federal rental-subsidy architecture—eliminating or consolidating Housing Choice Vouchers, Public Housing, Project-Based Rental Assistance, Section 202 and Section 811—into a much smaller state block grant and slash homelessness funding, putting millions at heightened risk of losing assistance and lengthening waitlists dramatically [1] [2] [3]. The practical state-level outcomes would vary depending on local housing markets, state capacity to administer a block grant, and whether Congress modifies or rejects the administration’s proposal [4] [2].
1. What the 44% cut would do nationally: program eliminations and blunt replacements
The FY2026 request would reduce HUD’s budget by roughly 44% from FY2025 levels through program eliminations and consolidation, replacing the five largest federal rental-assistance programs with a single State Rental Assistance Block Grant (SRABG) at far lower funding levels and reducing direct federal homelessness-program lines—changes that advocacy groups and analyses say would remove federal guarantees that currently support about 4.4 million households [1] [5] [2].
2. How the block grant model magnifies state differences
Moving from centrally administered voucher and project-based programs to a formula block grant hands states discretion over eligibility, duration, and targeting; the administration’s design reportedly prioritizes elderly and disabled households and allows time-limited assistance, which means states with constrained budgets or sparse safety nets would likely cut caseloads and tighten eligibility faster than wealthier states with robust rent-relief capacity [2] [6].
3. Expected effects on rental assistance waitlists by state
Because Housing Choice Voucher funding is tied to rent growth, flat or reduced funding effectively serves fewer households; analyses estimate loss of hundreds of thousands of voucher slots under various proposals and warn that states would see significantly longer waitlists or closure of waitlists as renewals are unaffordable—urban high-rent states and places with large existing voucher rolls face the steepest increases in unmet need [7] [8] [6].
4. Homelessness programs: continuity threatened and CoC disruption
The budget proposes eliminating the Continuum of Care (CoC) program and folding homeless assistance into Emergency Solutions Grants (ESG), a change that would curtail funds for long-term permanent supportive housing—HUD and advocates warn this threatens housing for more than 170,000 formerly homeless people and could end Emergency Housing Voucher supports for tens of thousands if Congress does not act [1] [9] [10].
5. Quantities at risk and immediate cliffs
Specific program cliffs are already identified: Emergency Housing Vouchers are running out of funding and could leave roughly 58,000 people without support absent congressional action, and combined reductions across rental assistance lines represent tens of billions less than FY2025 levels—outcomes characterized by the National Alliance to End Homelessness and NLIHC as likely to return people to homelessness and remove assistance for hundreds of thousands [10] [3] [5].
6. State-by-state heterogeneity: who will be hit hardest
States with large low-income renter populations, tight rental markets, and dependence on HUD contracts—examples shown by advocacy briefs for New York, California, and other high-cost regions—would see the largest absolute increases in waitlist length, voucher attrition, and risk of eviction; conversely, states with smaller HUD caseloads or better-funded state/local programs could partially cushion the shock, but no state avoids trade-offs because federal funding underpins private capital decisions and affordable housing preservation nationwide [6] [11].
7. Political and timing caveats that matter for outcomes
The president’s budget is a proposal; Congress has substantial power to alter appropriations, and both House and Senate bills have differed from the administration’s request—meaning actual state impacts hinge on the appropriations process, any emergency supplemental funding, and whether HUD reissues grant notices or technical corrections that would delay or change program implementation [4] [1].
8. Bottom line: more demand, less supply, and deeper inequalities by state
If enacted as proposed, a 44% HUD cut would drive longer waitlists, fewer renewals of existing vouchers, loss of permanent-supportive housing funding, and larger rolls of people experiencing homelessness—effects concentrated in high-cost and high-need states but visible everywhere because federal rental subsidies and CoC grants form the backbone of the national homelessness response [5] [10] [7].