WASHINGTON -- A House appropriations subcommittee is proposing to maintain funding next year for the HOME program at current year levels and increase the allegation for the CDBG program -- moves that surprised housing industry officials who had been bracing for lower financing levels.

Legislation appoved Thursday night by the subcommittee on the Veterans Administration, Housing and urban Development Department and independent agancies would give HOME $1.275 billion and the Community Development Block Grant $4.6 billion in fiscal 1995.

Earlier in the week, subcommittee members and aides said housing industry officials should lower their expectations because the budget for next year is tight. As a result, the officials feared that the proposed HOME allotment could be as low as $1 billion and that CDBG would remain at the fiscal 1994 level of $4.4 billion. HOME received $1.275 billion in 1994.

John C. Murphy, the executive director of the association of Local Housing Agencies, said the proposal to boost CDBG was particularly surprising. "We are thrilled. This is the first time in recent memory that we have seen the House subcommittee vote and increase in CDBG" from the prior year, Murphy said.

Industry officlials said the HOME and CDBG funding levels came at the expense of $3 billion worth of new housing initiatives proposed in April by Housing Secretary Henry Cisneros. The subcommittee proposed allocating no funds in fiscal 1995 to those programs.

The allotments for both HOME and CDBG have been a source of controversy since February, when President Clinton unveiled his fiscal 1995 budget plan. Clinton sparked storms of criticism by proposing only $1 billion for HOME. His proposal for allotting $4.4 billion to CDBG also encountered opposition, because the plan included siphoning off $200 million for a new HUD neighborhood investment program, Leveraged Investments for Tommorrow, or LIFT.

In April, Cisneros told Congress that the administration was backing off on its plan to fund LIFT out of the CDBG program, and would find the money elsewhere. Last month, Cisneros announced the administration was revising its proposed allocation for HOME up to $1.275 billion.

On May 26, the House Banking Committee's subcommittee on housing and urban development approved legislation that would authorize Congress to appropriate up to $1.275 billion for HOME and $4.4 billion for CDBG in fiscal 1995.

Although appropriations figures are more crucial because they are the actual spending amounts, authorization levels are also considered important because they set an upper limit on what the appropriators are allowed to spend.

Housing industry officials were shocked by the banking subcommittee's proposal for HOME of $1.275 billion because it was a sharp drop from the $2.2 billion authorized for fiscal 1994.

Last week a group of state and local organizations wrote to House Banking Committee Chairman Henry Gonzalez, D-Tex., urging him to boost the HOME authorization level when the bill comes before the full committee.

"We implore you to continue to challenge congressional appropriators to reach the appropriate HOME funding targets you set, rather than simply authorize the amount they last appropriated," the letter said.

"Cutting the HOME authorization level as the subcommittee has proposed instead signals the appropriators that you support the administration's effort to downsize the program, and could result in an even lower appropriation," the letter said.

The letter was signed by eight organizations, including the Association of Local Housing Finance Agencies.

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