Vermont housing officials told the House Committee on General and Housing on Nov. 5 that the federal government shutdown and steep House appropriations cuts are producing immediate, measurable shortfalls in Housing Choice Voucher (Section 8) funding and threaten the ability of public housing authorities to make payments beginning in January 2026.

James Paradisis, outreach director for Sen. Bernie Sanders, told the committee the shutdown has created uncertainty at the Department of Housing and Urban Development and delayed distribution of some grant funds, including Continuum of Care awards. "At a time when 31% of homeowners and 51% of renters are paying more than 30% of their income toward housing in Vermont," Paradisis said, "we cannot allow them to become further burdened." He and other delegation staff urged the committee to monitor both the budget and bills moving in Congress that would affect housing.

Staff for Sen. Patrick Leahy and Sen. Peter Welch described the Senate appropriations outlook as comparatively less damaging than the House proposal. Miles McGurman, a constituent-services representative for Sen. Welch, said the Senate budget includes an increase for contract renewals and modest increases for project-based rental assistance but signaled cuts to public housing operating funds and reductions in community-development programs the state relies on.

On the House side, Matt Kent, senior counsel for Representative Ballant, said the House THUD (Transportation, Housing and Urban Development) bill would cut or zero out several programs important to Vermont, including the HOME program and the PRO housing program, and would sharply reduce the Department of Housing and Urban Development
nd its Office of Fair Housing and Equal Opportunity. "You're seeing about a 65% budget cut," Kent said.

State housing officials said those federal actions are already producing local shortfalls. Kathleen Burke, executive director of the Vermont State Housing Authority, told the committee the voucher program is operating without the cushion it has relied on in the past: HUD used housing authorities' reserve balances to cover 2025 needs, leaving most authorities without reserves. Burke said Vermont State Housing Authority has 4,495 authorized vouchers, expects roughly 3,860 units leased in December 2025 and projects a shortfall of about $630,000 for its own program. Aggregated across Vermont, she estimated "a little over a million dollars" in shortfalls that would affect about 943 households for December.

Burke said local housing authorities plan a one-time use of available reserves to make December payments, but warned: "Without federal appropriations bill, public housing authorities will not be able to pay housing assistance payments beginning January 2026." She and other witnesses discussed mechanisms the Legislature could consider, including directing housing authorities to use administrative-fee reserve accounts that can later be reimbursed by the state, so the voucher baseline for funding determinations would remain higher going into FY26.

Gus Stewart, director of the Vermont Housing and Conservation Board, said lost vouchers also reduce borrowing capacity for new projects. He described developments that had project-based vouchers committed and said some commitments have been lost as subsidy amounts tightened, which in turn reduces the amount of private and public capital available to build new units.

Maura Collins of the Vermont Housing Finance Agency said HR 1 includes a permanent increase to the 9% Low Income Housing Tax Credit of roughly 12%, and federal changes reduce the tax-exempt bond requirement to trigger 4% credits. She cautioned that while those changes help, rising construction and development costs mean the increase will not by itself restore the lost production capacity.

Officials from the Vermont Department of Housing and Community Development said action plans and HUD grant agreements for CDBG and CDBG-DR are in place and the state can draw funds, but they echoed the larger warning: reductions or delays in federal rental assistance will ripple through projects, owners and nonprofits that rely on consistent Section 8 payments.

Local housing authorities described operational impacts. Kevin Losa, executive director of the Rutland Housing Authority, said his authority cannot convert some transitional units to longer-term assistance or issue new vouchers because subsidy is not available, threatening sustainability for specific projects that rely on those vouchers to cash-flow.

Committee members asked whether the Legislature could provide a bridge. Witnesses suggested options (one-time state investment, reimbursement for use of administrative fee reserves, or an early-session stabilization bill) while repeatedly urging that a congressional appropriations solution would be the most sustainable fix. Several witnesses also recommended continued coordination with the congressional delegation and quick legislative consideration of targeted state measures if the shutdown or appropriation gaps persist.

The committee recessed and planned to resume additional testimony and questions later in the session.