Montana’s federal housing and homelessness funding could face significant budget cuts in the next Congress

Feb 07, 2025

By Aubrey Godbey

In recent years, Montana has received federal funding annually to support affordable housing and homelessness programs. Even the current level of federal housing funding is drastically inadequate to meet the needs in our communities – for example, federal underfunding results in only one out of four people who need rental assistance receiving help. However, the already limited housing and homelessness program funding that our state receives risks severe potential funding cuts in the future.

Based on past administration proposals, Montana could be at risk of losing our federal funding for:

• Ninety-five million dollars for federal rental assistance programs, including Housing Choice Vouchers and public housing, which helps 24,200 low-income people afford housing. A past draft budget proposal to cut voucher funding would have resulted in 514 people losing assistance in Montana and reduced public housing funding by almost 30 percent.
• There are 73 Emergency Housing Vouchers funded through the American Rescue Plan to provide rental assistance for people experiencing or at risk of homelessness. The Emergency Housing Vouchers expire in 2026, and if not renewed, all 73 households could lose housing assistance and face imminent risk of homelessness.
• $4,731,872 in Continuum of Care funding that supports housing, shelter, and services to address homelessness.
• $741,200 in Emergency Solutions Grants that fund outreach, shelter, rapid rehousing, homelessness prevention assistance, and data systems capacity for people experiencing homelessness.
• $4,525,542 in HOME Investments, which fund building, buying, and/or rehabilitating affordable housing for rent or homeownership and rental assistance to low-income people. A past draft budget completely eliminated the HOME program.
• $8,502,640 in Community Development Block Grants (CBDG), which fund a variety of housing and economic development programs across the state. A past draft budget completely eliminated the CBDG program.
• $3,066,413 from the National Housing Trust Fund, which funds the production and preservation of affordable housing for extremely low- and very low-income households.
  Funding cuts could occur through reductions in these programs, or through more indirect means like converting programs to “block grants” or implementing policies that will result in many people losing assistance.

Potential tax system changes, like further corporate tax cuts, could also undermine key affordable housing financing mechanisms. Lower corporate tax rates reduce demand for low-income housing tax credits (LIHTCs) as financial institutions have less tax liability to offset, which disincentivizes the desire for them. Some developers also rely on federally set tax-exempt bonds to access LIHTCs, increasing the potential harm. Between 2017 and 2021, tax credit pricing fell, reducing the value of LIHTCs and making affordable housing projects harder to fund. 

Anticipated legislative and administrative proposals could threaten access to programs and services for many Montanans

We also anticipate the potential of harmful proposals to restrict or limit access to programs through both legislative and administrative actions:

• Ramping up incentives to fine, arrest, and otherwise punish people because they are experiencing unsheltered homelessness.
• Raising rents on people with rental assistance to unaffordable levels. For example, a 2018 Administration proposal would have raised rent by an average of $700 on households for 21,600 people in Montana.
• Exclusionary changes to housing vouchers and homelessness programs, which could include:
• Exclusion of families that have people with mixed immigration status;
  • i. Time limits on assistance;
  • ii. Evictions and termination of subsidies for people who don’t meet work registration requirements;
  • iii. Mandating treatment or sobriety as a condition of receiving shelter or housing; and
  • iv. Rollbacks of anti-discrimination protections for LGBTQ+ people seeking shelter and housing assistance.

• Effectively converting vouchers and public housing to block grants through expansion of the Moving to Work initiative, which allows rent increases and work requirements. “Block-granting” federal housing assistance would pave the way for deep funding cuts in the future.
• Rollbacks or non-renewals of Section 1115 Medicaid demonstration waivers that allow Medicaid to pay for certain housing related services
• Rollbacks of fair housing protections.
• Cuts or restructuring to the Department of Housing and Urban Development that would likely limit the agency’s ability to provide technical assistance, issue timely funding notices and guidance, and maintain field offices across the country.

It will be important for Montana leaders to defend these critical federal investments and guard against policy changes that seek to exclude our most marginalized neighbors from accessing housing and care.

We urge the leaders of Montana to prepare to take strong stances against any proposed cuts to critical federal housing and other economic security programs. We further recommend that you consider proactive state policies:

• Explore pathways to increase state and local investments in affordable housing and rental assistance programs, including through new dedicated funding sources, to continue to make progress on reducing housing costs and promoting fair housing for Montana households.
• Implement the Affordable Housing Credit Improvement Act, which expands the Low Income Housing Tax Credit and has several reforms to boost rural and tribal housing programs.
• Reauthorize the Native American Housing Assistance and Self-Determination Reauthorization Act, which provides continued funding and support for tribal housing projects and addresses the critical need for affordable housing in these communities.