Washington - Housing and Urban Development Secretary Henry Cisneros surprised lawmakers yesterday by telling them HUD is planning to increase its fiscal 1995 funding request for the HOME program by $100 million, to $1.1 billion.

HUD's original 1995 funding proposal of $1.0 billion for HOME was $275 million below the 1994 allotment, and it has been roundly criticized by top lawmakers in both parties and both houses. Critics said they particularly objected to the planned funding cut for HOME because Cisneros was also proposing several billion dollars for new housing initiatives.

Yesterday, Cisneros told a House Banking subcommittee that top HUD officials "have scoured the budget" and decided to propose cutting $50 million from the Community Viability Fund and another $50 million from HUD's Economic Development Initiative to provide the additional HOME funds.

The extra $100 million brings HOME "a little closer to where the committee has made it clear it wants it to be," Cisneros told the subcommittee on housing and community development.

HUD wants to increase the funding for HOME "to show our good faith with this committee and with the Senate," Cisneros said.

Cisneros said he was not making a formal announcement of the proposed change because it has not yet been cleared with the Office of Management and Budget. "We are still in discussions with OMB," Cisneros said, adding he hoped to have OMB's approval by today.

Rep. Henry Gonzalez, D-Tex., the chairman of the subcommittee, told Cisneros he was "very glad to hear" about the planned increase, which shows "good judgment and wisdom on your part."

The HOME program requires the federal government to match contributions that state and local governments make to low-income rental and home ownership projects. Contributions that are eligible for federal matching funds include a state or locality's general obligation housing bonds as well as a portion of its multifamily and mortgage revenue bond issues.

HUD officials also plan to boost funding for the public housing modernization program by $100 million by diverting money from other areas in the housing budget. Cisneros also said they have decided to fund a new program called Leveraged Investments For Tomorrow by taking money from HUD's Annual Contribution Account, rather than from other programs.

Originally, HUD had planned to siphon off $200 million from the Community Development Block Grant program to fund the new initiative, known as LIFT, but the agency backed off from that proposal in April after a barrage of complaints from the housing industry. Those officials have not been completely mollified by HUD's about-face because the department never identified a funding source for LIFT. They have been worried HUD would look once again to the CDBG program.

But Cisneros said HUD officials are identifying the funding source now "so that there is no doubt whatsoever that CDBG will be funded at the full $4.4 billion" for 1995.

Cisneros' conciliatory approach during the hearing contrasted with remarks in his prepared testimony in which he defended his earlier decisions to divert money from long-standing HUD programs to finance new ones.

"Some people claim that HUD should not be proposing any new programs. To anyone who holds this view, we respectfully, disagree," Cisneros said. "In many cases it is absolutely vital to create new, targeted initiatives to meet particular needs that are not otherwise being met."

HUD's proposals for new programs "are carefully designed to rapidly achieve visible and meaningful results in creating more affordable housing, more job opportunities, and safer and healthier communities," he said.

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