Hochul Opposes Rental Voucher Program On Basis of Inflated Cost Estimate, Sources Say

In private budget negotiations with the legislature, Governor Kathy Hochul is opposing a rental voucher program aimed at combating homelessness—in part because she says it’ll cost more than twenty times as much as the legislature says it will, multiple sources told New York Focus. 

Supporters say her numbers don’t make sense.

In their March budget proposals, both the state Senate and Assembly allocated $250 million towards the Housing Access Voucher Program (HAVP), which would distribute vouchers to low-income households experiencing homelessness or at risk of eviction. The program would not require the state to offer benefits to everyone who’s eligible. Instead, it would distribute only as many vouchers as could be funded by the money allocated in the budget. 

Hochul has claimed it could end up costing taxpayers up to $6 billion a year, sources said, despite the fact that the legislature has only proposed allocating about four percent of that figure.

“We're all hearing that number. Six billion was the number that came up during our meeting today,” Stanley Davis, a spokesperson for Senate Housing Committee Chair Brian Kavanagh, said on Tuesday. Kavanagh is the lead Senate sponsor of the legislation to create HAVP.

“I am not sure where the Division of Budget is getting that $6 billion figure from,” Davis said. “We don't think it's ever going to get to that point, or even come close to that number.”

The state budget division and the governor’s office did not respond to questions about how they arrived at the $6 billion estimate.

HAVP is modeled on the federal Section 8 voucher program. Massachusetts and Connecticut have operated similar voucher programs for years. The bill limits eligibility to households making half their area’s median income: about $60,000 for a family of four in New York City, but closer to $40,000 in Rochester. Recipients would pay up to 30% of their income towards their rent, with the rest covered by the voucher. The $250 million proposed this year would fund about 20,000 vouchers, supporters estimate.

Last year, the Senate proposed allocating $200 million to HAVP, but the program did not make it into the final budget. This year is the first time both legislative chambers have supported it.

The program is supported both by anti-homelessness advocates, for whom it is a top priority, and by landlord groups, whose members would be the direct recipients of the funds.

Jay Martin, executive director of the landlord group Community Housing Improvement Program, said that it would be “unconscionable” to exclude HAVP from the budget. “It seems like a missed opportunity that the state wouldn’t at least start the program at $250 million, make sure that it works, and then determine whether or not it needs more funding before throwing our hands up and saying it costs too much money,” he said.

Sean Campion, research associate at the fiscally conservative Citizens Budget Commission, said that housing voucher programs are “probably among the most effective interventions” that the state can make to assist renters in financial straits. The Citizens Budget Commission does not have an official position on HAVP, and Campion noted that the program would need to “fit within a budget that's sustainable and affordable” given New York State’s resources.

Unlike New York’s primary existing rental voucher program, HAVP would allow renters to continue using vouchers when they move to new apartments. Supporters say this would increase renters’ leverage in negotiations with landlords over rent or repairs. HAVP would also include undocumented people, unlike existing voucher programs.

Supporters say they’re bewildered by Hochul’s cost estimate. “It’s up to the state how many vouchers they want to create and how many they want to fund,” said Joseph Loonam, housing organizer with the advocacy group VOCAL-NY, which has been pushing for the program for several years.

Several sources speculated that the Hochul administration may be assuming that every household that is eligible under the bill’s income requirements would receive a voucher. 

“I think the number is coming from if you took all the low-income people in the state who are rent burdened and gave them this, that will be the cost. But that’s just not what the program is,” said Ellen Davidson, a tenant attorney at the Legal Aid Society, which supports HAVP. 

Supporters say that even a much more ambitious version of the program than the one they’re proposing this year would be far cheaper than Hochul envisions. Samuel Stein, a senior policy analyst at the Community Service Society of New York, an anti-poverty think tank, wrote in a memo last week that “we have already modeled what it might cost to fund an HAVP program large enough to cover every homeless household who needs a voucher, and we found the cost to be closer to $1 billion, not $6 billion.”

Stein added that the program would ultimately save the state money, given that localities currently bill the state $2 billion each year to pay for homeless shelters.

This isn’t the first time that the governor has come up with cost estimates that legislators and independent experts say are outlandish. In its budget proposals, the legislature included a bill to expand state-funded health insurance to cover undocumented New Yorkers, and put its cost at $345 million per year. That number was based on a joint report by the Citizens Budget Commission and the Community Service Society. 

The Hochul administration puts the price tag over five times higher, estimating the annual cost of the expansion at $1.9 billion, New York Focus reported last week. The administration has not made the source of that estimate public and did not respond to New York Focus’ questions about how it arrived at the figure. Whether or not the health insurance expansion will be included in the final budget is still under consideration, a source said on Tuesday.

Kavanagh is still attempting to “persuade the governor that this program will not be ballooning out of control,” Davis, his spokesperson, said. But Davidson, of Legal Aid, was pessimistic that Hochul will change her mind.

“The executive is blocking this policy because the executive has decided that it's a more expensive program than it is,” she said.