White House Reportedly Plans Public Housing Funds Cut : Budget: About $2 billion would be diverted to other programs with higher priorities in the Clinton Administration, sources say.

The Clinton Administration is planning to cut more than $2 billion from several longstanding federal public housing programs in an effort to free more funds for higher-priority initiatives endorsed by the White House, sources here said Friday.

Given the tight fiscal constraints it is facing, the White House has been forced to reduce funding for an array of programs in the 1995 budget that it will present to Congress next month. But one Administration source acknowledged that slashing outlays for public housing could have a devastating impact because it would “hurt the most needy” Americans.

Some of the money likely would be redirected toward other programs that provide rental assistance for the poor and housing for the homeless.

As negotiations continue over the shape of the 1995 budget, sources in Congress and the Administration said Clinton is likely to cut funding to $2.6 billion from $4.6 billion for the primary federal programs that create new public housing units and renovate old ones.

“It’s a very serious and significant setback for the programs and for the people who use the programs,” the Administration official said.

The official, who asked not to be named, conceded he was disclosing the information before the proposal becomes final in hopes that pressure from the public will persuade the Administration and Congress to leave the funding intact.

In exchange for some of the proposed cuts, the Administration is expected to request increases for programs that create housing for homeless people to $1.2 billion from $823 million, sources said. And it wants to almost double money spent on vouchers used by low-income people to rent privately owned housing units.

But the official warned that, by decreasing the number of public housing units available, the Administration could end up confounding its efforts to decrease the number of homeless.

“There is no doubt that one of the main problems leading to homelessness is the lack of affordable housing,” the official said. “These cuts would decrease the number of affordable housing units available, thereby creating more homeless. It makes a bad situation worse.”

The proposals would be part of the President’s $1.5-trillion budget for fiscal 1995, which begins next Oct. 1. Although Clinton is not expected to unveil the budget until Feb. 7, details involving specific programs targeted for cuts or increases are already emerging.

The Office of Management and Budget had planned to eliminate funding for one public housing program, and signficantly reduce another. But the proposal created “high anxiety” within the Department of Housing and Urban Development, the official said.

HUD Secretary Henry G. Cisneros appealed to the White House and was able to win assurances that the cuts would not be as large as originally planned.