Grim Outlook for Local Homelessness Programs Under Trump's Slash-and-Burn Cuts

A new city council committee gets an earful about the impact cuts to vital services will have at the local level, from housing construction to Medicaid.

KCRHA deputy CEO Simon Foster[

By Erica C. Barnett

During the second meeting of the City Council's special committee on the impact of federal funding cuts last week, housing and homeless service providers laid out in stark terms what will happen when, not if, cuts to federal funding for housing development and services for people experiencing homelessness or housing insecurity kick in.

The housing impacts alone will be broad and widespread across every kind of affordable housing, from buildings financed privately through federal tax credits to permanent supportive housing that relies heavily on federal support.

Services that help keep people housed, such as health care, will also become harder to access, as the Trump administration targets Medicaid recipients—cutting funds and imposing work requirements on the state's poorest residents, including many with disabilities that make it impossible to work.

Meanwhile, the region's homelessness agency stands to lose the federal funding that is the agency's third-largest funding source, and is now facing a choice about whether to comply with the administration's new mandate to verify their clients' immigration status and provide that information to ICE.

"We know that immigration verification requirements have a chilling effect that extends throughout the community, and that even documented individuals are less likely to seek help," King County Regional Homelessness Authority deputy CEO Simon Foster said, because "they are afraid of the repercussions to themselves, their friends and their families."

The meeting offered a first look at the impacts federal cuts will have on the housing and homelessness system locally. The speakers—who, in addition to Foster, included Naomi See from Hunt Capital Partners, Jess Blanch from Enterprise Community Partners, interim Chief Seattle Club director James Lovell, and Downtown Emergency Service Center director Daniel Malone—described a bleak cascade of consequences.

– KCRHA, which received $66 million directly and indirectly, through King County, from HUD's Continuum of Care program last year, is bracing for cuts that could impact ongoing contracts with housing providers and direct subsidies to help people stay in their housing. Overall, nearly 2,200 formerly homeless people could be at risk of losing their housing from federal cuts, along with another 2,300 in transitional housing and other programs. More than 240 people in programs funded through KCRHA could lose their jobs if the programs they operate are eliminated.

– The federal Low Income Housing Tax Credit program, which helps fund most affordable housing projects, could drop in value dramatically, limiting its effectiveness. LIHTC is complicated to explain, but basically, states award federal tax credits to developers who sell them to investors at a discounted rate—say, 90 cents on the dollar. If that rate gets too low for the developers to build their projects, they have to seek funding from "gap funders," like the city and county, or forego building.

The reasons this is happening, See said, are at least twofold: Corporate tax rates are likely to increase soon, which makes investors place a lower value on housing tax credits, and tariffs on Canada and Mexico are likely to increase the cost of materials used in construction, including drywall and lumber, making it harder for new housing to pencil out.

– The state's Low-Income Home Energy Assistance Program (LIHEAP), which helps low-income people pay their utility bills and weatherize their homes, could be cut. Earlier this month, the Trump administration eliminated the entire federal LIHEAP program as part of the mass firings at the Department of Health and Human Services, throwing the future of state-level programs in question.

According to Jess Blanch, from the affordable housing funder Enterprise Community Partners, Washington received $66 million from the federal government for LIHEAP last year, providing utility assistance to households with an average income of 150 percent of the federal poverty rate— $22,590 for a one-person household or $46,800 for a household of four.

– Cuts to two federal programs that help house people and keep them housed, Section 8 and the less-known Section 4, which helps community-based housing providers build capacity to increase their effectiveness, could dramatically increase homelessness, Blanch said. Enterprise and one of its partners recently received notice from DOGE that "due to our supposed non compliance with the DEI executive order," HUD is freezing their funds, impacting providers like DESC that were set to receive grants.

– Individual organizations that rely on federal funding, including DESC, stand to lose huge chunks of their operating budgets thanks to slash-and-burn cuts at HUD, HHD, and Medicaid. Malone noted that DESC gets about a quarter of its funding from federal sources. In late March, DESC learned that a federal grant that funds outreach and engagement with opioid users had been eliminated (along with the entire federal agency that oversees substance use and mental health treatment across the country), forcing DESC to "scramble to figure out what to do about how to manage the loss of those funds," Malone said.

– Funding for opioid addiction treatment through Medicaid could also be at risk, since Trump seems determined to go after states that expanded Medicaid. "Reductions in federal cost share of Medicaid expansion would result in a huge hit to the state, and the state would have to figure out how they were going to continue people on health insurance if that were to happen," Malone said.

These are state and federal issues, not merely local ones, but the city could make funding decisions that help offset the current and future cuts. Revenue is one option, although the council has not shown much appetite for new taxes—a modest capital gains tax, proposed by Rinck and her colleague Cathy Moore during last year's budget, could provide some funding, but the council majority rejected this option, arguing that there wasn't enough data about the need for funding rent and food assistance.

Lovell, from the Chief Seattle Club, noted that "no matter what we do, that level of federal funding that's at risk cannot simply just be absorbed without something having to go away. And the only way to prevent that, I think, is with a different revenue source" from the state, King County, or the city. Lovell said the council would "probably have to have a special budget session just to kind of brush up on what the federal impacts have been and how they've passed through to the city."

So far, the committee has focused on surfacing problems, rather than identifying solutions that the council can advocate and implement. That has value in itself—but only if the rest of the council chooses to listen and take action based on the flood of, yes, data they're receiving about people who will be directly impacted by the cuts.