Harrell Defunds Affordable Housing Levy, Defies 69% of voters

Cuts, Buts, No Coconuts

Cuts

Defunding the Housing Levy

The Harrell administration released its budget, and, as expected, one of the hardest hit areas was affordable housing. 

He started by massively defunding the voter-passed housing levy from last year, which had passed by a stunning 40-point margin. The levy was supposed to increase our annual spending on affordable housing by $138.5M. 

Now, while Harrell is legally prevented from diverting the specific funds from the housing levy itself, he has seized the opportunity to cut funding for affordable housing from the remaining tax sources he does control. 

Under the current law, one of those tax source is supposed to provide about $214.5M in funding for affordable housing next year. 

But Harrell is trying to change that law so he can cut it back to $133M.

That’s a $81.5M cut compared to current law.

And in the two budget cycles since the housing levy, the Mayor has cut $11M in general fund support, for a total of $92.5M in cuts. 

In other words, Harrell’s budget aims to defund the affordable housing levy spending increase by2/3, the will of the voters be damned.

It gets worse, unfortunately. 

Because of severe cost inflation in the housing and construction market, the rate of construction (about 3100 units over the life of the levy) was already flat with the previous levy, which rather obviously wasn’t keeping up with the need. Harrell’s cuts will further undermine affordable housing production. 

In fact, we need to be building about 3500 affordable units per year for the next year to catch up. The housing levy was going to support only about 450 of these per year, before Harrell took a hatchet to it.

Buts

To be fair, the Harrell administration will defend his defund by saying–yes, technically under current law it is a cut, but the relevant revenue source is growing so fast that the spending level is technically not less than last year, because the office of housing is spending more (actually about the same, inflation adjusted, but whatever).

But this ignores the fact that the voters just passed a huge increase in spending on affordable housing. Clawing it back to make spending flat is cutting, or defunding, defying the will of a supermajority. 

Changing the law to spend $100M less than you would under the current law is cutting.

It may be his legal right, but the judgment from voters should still reflect that he is taking a hatchet to money earmarked for affordable housing in one of the most unaffordable markets in the country.

Harrell’s folks have relied on some sketchy sophistry to justify this, including arbitrarily pointing to the original projections for revenue from four years ago, which were back of the envelope, and have nothing to do with how the law was left last year. 

By the way, even if you ignore the cuts under the current law, over the last two cycles the Mayor has cut the part he controls by $18M in absolute terms as well. 

One way or another, the Harrell administration clearly wanted to look nice by supporting the housing levy, but to actually treat it as a kind of piggy bank by using the increased funds as a cover to defund discretionary support for affordable housing. 

No Coconuts, Apparently

While Harrell has (thankfully!) not drifted into the nutty conservatism of some of the folks on the council (see Sara Nelson, Bob Kettle, and Tanya Woo’s embrace of Andrea Suarez, who recently said “‘Democrats are as unfair and ‘if not more or equally corrupt and evil as the right-wingers, as the MAGA party’”) - this budget does put him significantly out of step with the policy priorities national Democratic Party.

Kamala Harris has made affordability in general, and building 3 million more homes that are affordable to middle income Americans in particular, a centerpiece of her campaign.

It seems that the Harrell administration didn’t get the memo, and haven’t been taking their coconut pills. 

Appendix:

The math on this year’s JumpStart Cut: Under the law, JumpStart can provide $84M of support to the general fund, and then 62% of what is left is to go to affordable housing. This year, that means $214.5M in funding for affordable housing. But Harrell is trying to change that law so he can cut spending to $133M, a cut of $81.5M.

There’s a few different ways to characterize the cuts at the city. But one way or another, it looks like a pretty damn big defund.