WASHINGTON - Top Senate housing lawmakers yesterday strongly urged HUD Secretary Henry Cisneros to drop his plan for cutting HOME funds in fiscal 1995, saying he should scale back proposals for new housing initiatives instead.

The Department of Housing and Urban Development "is pulling back on your commitment to this joint enterprise" by proposing to cut HOME funds by $275 million in fiscal 1995, Sen. Paul Sarbanes, D-Md., told Cisneros, who was testifying to the Senate Banking Committee on housing reauthorization issues.

Committee Chairman Donald Riegle, D-Mich., said the Clinton Administration "should do all it can to make the [HOME] program work efficiently before proposing any cuts, and I would ask the secretary to explore this proposal."

Sarbanes and Riegle are the latest in a long line of representatives and senators who have criticized HUD's plan for reducing the HOME allocation to $1 billion in fiscal 1995. But they are the first to call on the Clinton Administration to rethink its proposals for new housing programs.

"The department needs to make sure it is carrying through" on the HOME program, Sarbanes, who chairs the committee's subcommittee on housing and urban affairs, told

Cisneros. "To do that, you might have to give up or cut back on these new initiatives."

The new proposals include Leveraged Investments for Tomorrow, a program designed to aid neighborhood-based development through federal grants and loans, and a program to permit local authorities to borrow from the federal government to finance the replacement of dilapidated public housing projects.

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.

Although the hearing was supposed to cover a broad range of housing issues, HOME turned out to be the main topic. Cisneros came in for more than an hour of intense questioning on HOME from Sarbanes, who helped author the program four years ago.

Cisneros has repeatedly said that the cutback was proposed because there is a substantial amount of HOME money from prior years that has not been spent. The cut would merely allow for that backlog to be used up, he said at yesterday's hearing.

HOME was a victim of tough budget choices HUD had to make, Cisneros said. "I would not cut the HOME program in an ideal world. We will make it up to the HOME program in next year's budget," he said.

But Sarbanes said the cut would come just as state and local governments are beginning to accelerate their HOME spending. "We've had problems with them gearing up, but those are clearing up markedly," he said.

Sarbanes also said a cut in HOME now would send a signal to state and local governments that the federal government is less than enthusiastic about the program.

"The message being sent by this cutback is a very bad message," Sarbanes said. State and local governments have developed a spirit of cooperation with HUD on the HOME program, he said, and "some of that spirit is going to be undercut" if the funds are decreased. "I'm afraid we're going to lose some of the momentum we've built up if we're not careful."

Sarbanes said it seemed reasonable for part of the money HUD is allocating for new programs to be used to increase the proposed allocation for HOME.

"I could do the new initiatives at half the rate you're doing them and restore HOME," Sarbanes told Cisneros.

Although Cisneros defended the HOME cut and the proposed new programs, he said he would be willing to listen to lawmaker's suggestions for shifting allocations. "I'm all ears," he said.

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