Milwaukee County residents face a number of acute housing affordability challenges. The widening gap between home prices and household incomes has made homeownership increasingly difficult to achieve, particularly for first-time buyers, while renters face similar pressures. Meanwhile, the number of homeless individuals in Milwaukee County has remained above 800 for many years.
While Milwaukee leaders work to address these challenges, their efforts often depend heavily on federal housing resources that have faced significant uncertainty over the last year. In this report, which was commissioned by the Community Development Alliance, we seek to shed light on how federal funding has flowed into the city and county for housing and homelessness services in recent years and the potential implications of recent federal housing policy developments.
Signed on February 3, 2026, the federal fiscal year 2026 Appropriations Act determined annual funding levels for many of the nation’s largest housing and homelessness programs administered by the U.S. Department of Housing and Urban Development (HUD). We examine how 2026 budget proposals from the president, U.S. House of Representatives, and U.S. Senate compare to the enacted 2025 and 2026 budgets for HUD programs in three key areas: homeless assistance, community development, and rental assistance.
We also assess federal changes to the Low-Income Housing Tax Credit program that were enacted in July 2025 under the One Big Beautiful Bill Act. Federal housing tax credits are the nation’s primary public tool for financing construction and rehabilitation of affordable rental housing.
To understand what the potential local implications of these proposed and enacted federal changes, we examined data on Milwaukee County’s housing system using local budget documents, federal allocation data, and reports from local governments, the Milwaukee Coalition on Housing and Homelessness, and the Housing Authority of the City of Milwaukee (HACM). We also analyzed data from the Wisconsin Housing and Economic Development Authority (WHEDA), which allocates federal housing tax credits throughout the state, including in Milwaukee County. This report was also informed by interviews with local officials and housing service providers.
Major takeaways from our analysis include the following:
Housing services in Milwaukee County rely heavily on federal funding, making them vulnerable to federal budget and policy changes. Many housing and homeless assistance programs that provide critical support to thousands of seniors, veterans, people with disabilities, and low-income families in Milwaukee County are primarily financed through federal allocations. During the fiscal year 2026 federal appropriations process, the president – and in some cases Congress – proposed eliminating or consolidating several major housing programs and making significant policy shifts – such as new eligibility requirements or time limits on assistance. Although the enacted FY2026 budget largely maintained existing funding streams, these proposals created uncertainty for local governments and service providers, which depend not only on federal funding levels but also on the stability and predictability of those funds.
Ongoing uncertainty surrounding federal homeless assistance funding could affect local services. A recent federal budget proposal and related administrative actions — including the executive order Ending Crime and Disorder on America’s Streets HUD’s attempt to reissue an existing funding opportunity with new criteria – would mark a major departure from longstanding federal policy centered on permanent housing solutions. This includes a shift away from permanent supportive housing, which combines affordable housing with wraparound services for people experiencing homelessness. Although the enacted 2026 budget ultimately increased funding for the Continuum of Care program — the largest federal homeless assistance program — the longer-term direction of the program is uncertain and subject to ongoing litigation.
These proposed shifts have already complicated ongoing planning and budgeting efforts for local providers that prioritize permanent supportive housing, which accounts for roughly three-quarters of the available beds for the homeless in Milwaukee County (see chart). Because most local funding historically supports renewing existing housing programs, any shift away from that approach could have significant implications for local providers and the individuals and families who use these programs.
Even before the president proposed eliminating funding for major community development programs, funding for Milwaukee County had experienced long-term declines. Federal funding from the Community Development Block Grant and HOME Investment Partnerships programs plays an important but increasingly constrained role in supporting housing programs across Milwaukee County. These programs provide flexible grant funding aimed at benefiting low-income individuals and communities and support a wide range of housing-related activities, such as affordable housing construction and rehabilitation, code enforcement, homebuyer counseling, and more. Local allocation trends show erosion in inflation-adjusted federal funding over time (see chart), which has already required local governments to scale back or reprioritize certain activities.
Although not enacted, proposed cuts and eliminations included in 2026 federal budget proposals raised further concerns about the sustainability of these services. Cuts to CDBG would increase pressure on housing programs, but city and county leaders also influence how much of these funds are used for housing services as the program can be used for a broad range of housing and non-housing activities. By contrast, any reduction to the HOME program would fall entirely on housing initiatives. Community organizations may be particularly vulnerable to those cuts, as they would not only reduce direct program funding but also weaken their ability to leverage matching funds.
Rental assistance funding will be sustained for current recipients but will not expand to additional households or to address long-term public housing needs. Federal assistance for rental housing is primarily provided through HUD’s rental assistance and public housing programs. Locally, these programs are administered by the Housing Authority of the City of Milwaukee (HACM) and Milwaukee County, allowing thousands of low-income households to rent in the private market or in designated affordable units while only paying 30% of their income toward housing.
After facing proposed cuts, the enacted FY2026 budget increased funding for certain rental assistance programs to prevent the loss of assistance for current participants as rents rise. However, demand for rental assistance in Milwaukee far exceeds available supply, and waitlists of households eligible to receive assistance remain long. Without funding increases that outpace inflation, assistance cannot be expanded to more households. Additionally, continued shortfall funding for public housing may exacerbate financial pressures for local housing authorities, including HACM, which already faces fiscal and operational challenges. Although federal shortfall programs provide targeted support, they require significant federal oversight capacity from HUD and may not fully offset existing structural funding gaps.
Expanding federal housing tax credits could support more affordable housing, but local outcomes will depend on economic conditions, state allocations, and additional funding availability. Housing tax credits are the main way affordable rental housing gets built in Milwaukee County. Annual award amounts vary widely, but at least 100 units have been supported each year in Milwaukee County through WHEDA’s competitive tax credit programs, including the federal 9% credit and paired state and 4% federal credits (see chart). Developers can sell the federal and state tax credits to private investors to raise money upfront. In exchange, the housing must keep rents affordable for at least 30 years and serve households with lower incomes.
Recent changes under the One Big Beautiful Bill Act expanded both the 9% and 4% federal tax credit programs, which could increase the number of affordable homes built nationwide. Wisconsin has already begun implementing these changes. Early signs show more units moving forward under the 4% non-competitive program in particular, which offers less of a subsidy but was made more accessible for developers through changes to bond financing requirements.
However, the share of the state’s credits awarded to Milwaukee County fluctuates significantly each year, making local outcomes dependent on state allocation decisions and project competitiveness. Since tax credit equity rarely covers total project costs, the impact of these changes will also depend on construction costs, interest rates, and other market conditions that affect project feasibility, as well as the availability of additional funding sources.
Federal housing programs operate as an interconnected system, meaning changes to one program can affect others. Affordable housing developments and housing services in Milwaukee County frequently rely on support from multiple federal programs. For example, developments supported by housing tax credits often also rely on rental assistance to keep units affordable for low-income households, while community development programs often fill financing gaps or provide matching funds for other federal programs. Because these programs are layered together, changes to one program could have ripple effects across the broader housing ecosystem.
Federal funding changes could also have broader local consequences. If federal funding for housing programs declines, local governments may face difficult choices between reducing services or raising revenues from other sources such as increased property taxes or tax incremental financing, which have their own limitations. Housing instability can also lead to indirect costs such as by increasing demand on law enforcement and emergency services. Reduced funding for home maintenance programs could not only affect low-income residents but also worsen housing conditions and lower property values.
Given the scale of federal investment in Milwaukee’s housing activities, continued monitoring of federal policy changes will be critical. Future federal appropriations and administrative actions will be critical to assessing risks to housing services in Milwaukee County. Many housing programs fall within the federal government’s discretionary spending category, requiring annual congressional approval. While cuts were avoided this year, these programs could face reductions or changes in future cycles. Current uncertainty also stems from administrative actions and executive orders and the litigation surrounding them. This complicates long-term planning for housing services in Milwaukee County.
Taken together, these findings highlight how closely housing services and activities in Milwaukee County are tied to federal policy decisions. We hope this report serves policymakers and local leaders as they seek to adapt to a changing federal housing landscape.