Overview of the Budget and Earmarks
The most recent federal budget measure – which has passed the House and is expected to pass the Senate – makes a notable change regarding congressionally directed spending (earmarks) for the Department of Housing and Urban Development (HUD). In this proposal, the House essentially eliminates new HUD “Community Project Funding” (CPF) earmarks, which are the locally targeted grants that lawmakers can add for community development projects. For example, the House’s year-long FY2025 funding bill sets HUD’s Community Development Fund at roughly $3.43 billion, over $3.2 billion lower than the previous year, specifically because it omits the one-time earmarks that had been included last year. In other words, the budget retains base formula funding (like regular Community Development Block Grants) but drops the extra CPF grants that Congress had directed to specific local projects in prior budgets. This marks a significant shift from recent budgets. In FY2024, Congress had included a large amount of HUD earmarks – nearly $3.3 billion worth of community project grants – under HUD’s Community Development Fund. Those earmarks funded hundreds of local housing, economic development, and social service facilities through HUD programs (often via the Economic Development Initiative account). By contrast, the new House-passed budget provides no comparable pot of CPF earmark funding for HUD, effectively discontinuing those congressionally directed HUD grants for this fiscal cycle. The result is that HUD’s overall grant funding appears lower than last year’s level, entirely due to the absence of these earmarked projects
Policy Changes on Earmarks for HUD Programs
The move to eliminate HUD CPFs aligns with policy changes and concerns raised by House leadership. House Appropriations Committee Chair Tom Cole and other Republicans instituted new restrictions on earmarks for FY2025, aiming to curb what they viewed as controversial or “political” spending. One key change was banning nonprofit organizations from receiving HUD earmarks under the Community Project Funding program. In previous years, many CPF grants had gone to nonprofit-run projects – e.g. shelters, Boys & Girls Clubs, YMCAs, Habitat for Humanity builds – but going forward only state, local, or tribal government entities (and public institutions like state colleges) are eligible for HUD community project grants. This policy was a direct response to conservative concerns that certain earmarks were funding “political agendas” or social issues unrelated to HUD’s core mission. In particular, some House Republicans objected to earmarks requested by Democrats in FY2024 that would support LGBTQ+ community centers and services, viewing those as inappropriate “backdoor” funding of social programs. Chair Cole indicated he wants to eliminate such “political” earmarks and ensure CPF projects align strictly with HUD’s community development goals. Compared to previous budgets, this is a notable tightening of earmark policy. When Congress revived earmarks in FY2022, both parties and both chambers generally allowed members to request HUD CPFs for a wide range of local nonprofits and government projects. By FY2024, HUD’s Economic Development Initiative (EDI) account (within the Community Development Fund) became the single largest source of earmarks, with roughly $3.3 billion dedicated to Community Project Funding/Congressionally Directed Spending in the final FY24 appropriations. (In fact, House members alone accounted for about $2.2 billion of those HUD project funds, and around $800 million went to nonprofit-run projects.) Now, for the FY2025 cycle, the House is reversing course – first by disqualifying nonprofits from these grants, and then by omitting the HUD earmark funding altogether in its budget bill. The House’s FY25 HUD appropriations draft initially contemplated about $2.2 billion for Community Project Funding (which was already a $1.1 billion cut from the prior year), but ultimately House leadership moved to zero out these add-ons in the full-year funding measure to rein in spending.
Funding Levels and Restrictions vs. Previous Budgets
Because of this policy shift, HUD’s Community Development Fund in the new budget is much lower than last year’s. Essentially, the base Community Development Block Grant (CDBG) formula funds remain level (about $3.3 billion, same as FY2024), but the extra earmarked projects (which had driven the total to ~$6.7 billion for FY24) are not funded this time. The House proposal to extend funding cuts over $3.2 billion from the Community Development Fund line compared to FY2024 enacted levels, and “most of the funding lost…would be the result of lost ‘earmarks,’ or congressionally requested funding for community development projects”. In practical terms, scores of local housing and community development projects that previously might have received a dedicated grant via a congressional add-on will not see funding in this budget. The table below highlights how the treatment of HUD earmarks differs from the prior budget:
- FY2024 Enacted: Included roughly $3.0–$3.3 billion in HUD Community Project Funding (earmarks) under the CDBG/Community Development Fund account, funding 4,700+ local projects nationwide (across all accounts) and boosting HUD’s community grants significantly.
- FY2025 House-Passed Budget: $0 for new HUD CPF earmarks. Funding for HUD community development grants reverts to base programs only, causing a multi-billion dollar drop in that account. The House committee’s draft had penciled in $2.2B for CPFs (House’s share), but the final House bill strips out these earmarks entirely to meet tighter spending targets.
- Earmark Recipient Eligibility: In prior budgets, nonprofits and local governments alike could benefit from HUD-directed spending. Under the new rules, nonprofit-led projects are ineligible for House-requested HUD earmarks. (In FY24, about $800 million of HUD’s earmarked funds went to nonprofit-run services like shelters and community centers; those would not be permitted under the House’s FY25 guidelines.)
- Policy Riders: Previous appropriations didn’t specifically limit types of community projects beyond general transparency rules. The FY25 House bill reflects a philosophical shift – with leaders openly aiming to “root out” earmarks they see as politically driven, such as those related to LGBTQ+ initiatives, even at the cost of forgoing popular community investments. This is part of a broader effort by the House majority to ensure federal housing dollars aren’t steered toward what they consider social policy objectives outside HUD’s scope.
Senate Outlook and Key Takeaways
The budget’s treatment of HUD earmarks also had to be squared with the Senate. In the previous cycle, the Senate (then under Democratic leadership) continued to allow earmarks, including for nonprofit projects, in both its HUD and other spending bills. That difference set up a negotiation clash last year – one reason the FY2024 THUD bill was delayed was disagreement over these community project funds. However, for the current budget, Senate dynamics have shifted. With the Senate now closely divided (and Republicans holding a narrow majority), the expectation is that the Senate will concur with a leaner spending package to avoid a funding lapse, even if that means accepting the House’s elimination of HUD earmarks. In fact, leaders in both chambers signaled support for a streamlined full-year continuing resolution that maintains essential services but omits most add-ons. This suggests that no new HUD earmarks will be funded in the final budget – a break from the past two years. (Notably, this change comes after earmarks had only recently been reintroduced in 2022 following a decade-long ban. Now the trend may be reversing again, at least for certain accounts.)
Key takeaways: Congress’s latest budget agreement discontinues dedicated HUD Community Project Funding grants for now. The House-driven policy to rein in earmarks results in a several-billion-dollar cut to HUD’s community development funding relative to last year, purely because those one-time local projects are not included. This represents a policy reversal from FY2022–FY2024, when lawmakers of both parties enthusiastically sponsored housing and community development earmarks in their districts. The new restrictions – like barring nonprofit recipients and labeling some projects as overly “political” – reflect the House majority’s intent to tighten control over earmarks and focus funds on core programs. Compared to previous budgets, HUD programs will rely solely on regular appropriations and formula grants without the boost of special member-directed projects. Lawmakers and communities that counted on these CPF earmarks will need to seek funding through competitive grants or other channels instead. As Congress moves forward, this development will be important to watch: it highlights shifting attitudes toward earmarks, and any final compromise (or future budget) could revisit whether congressionally directed HUD funding is restored or remains on the chopping block.
Sources
- House Appropriations Committee, FY2025 THUD Appropriations Summary & Reports – detailing HUD program funding levels and noting the removal of ~$3.29 billion in community project earmarks from HUD’s Community Development Fund.
- National Low Income Housing Coalition – Analysis of House FY25 HUD Funding Bill (July 2024) and budget alerts (March 2025) confirming that the House proposal omits congressionally directed community project funds, cutting HUD community grants by billions compared to FY24.
- Roll Call – Reporting on House earmark rule changes (Apr. 2024) describing the new ban on nonprofit recipients in HUD’s Economic Development Initiative earmarks and Republicans’ intent to eliminate “political” earmarks (e.g. LGBTQ+ community projects) in THUD programs.
- Housing Assistance Council (RuralHome)* – Summary of Final FY2024 HUD Budget (Mar. 2024) noting that Congress added nearly $3 billion in “Community Project” earmarks in FY23 and a similar amount in FY24’s HUD budget. This provides context on how the new budget’s lack of earmarks contrasts with recent years’ funding.
- NAHRO (Nat’l Assoc. of Housing and Redevelopment Officials) – Legislative insights on FY25 appropriations, highlighting that Transportation-HUD had by far the largest share of earmarks (~$4 billion) in FY24 and explaining the House’s internal debates that led to stricter earmark limits for FY25. These insights underscore the scale of HUD earmarks previously and the rationale for cutting them back now.