After Lee Reed left prison in 2022, life was hard. He lived in his car. He avoided homeless shelters because he didn’t want to be around people using drugs. And he was recovering from a back operation after years of manual labor as a longshoreman before his incarceration.
“Coming out of prison, I didn’t know what to do,” said Reed, 65, who was born in Arkansas and moved to San Francisco when he was 6. “I didn’t know how to act around people. I had to learn all over again, step by step.”
Three years later, Reed’s life has taken a turn. He’s living at a permanent supportive housing site run by the nonprofit Episcopal Community Services, where he has his own room — air fryer and all.
But a budget proposal President Donald Trump announced this month could make life much harder for Reed and others like him. The proposal would gut housing funds for the city and nonprofits that depend on federal money to keep people housed.
“It’s going to be a catastrophe,” said Reed. “There’s going to be a lot of bodies.”
More than 40,000 San Franciscans rely on this federal revenue for housing, according to experts. In a worst-case scenario, tens of thousands could be at risk of landing back on the streets.
Trump’s proposal is in its early stages and will be debated by Congress. But it couldn’t come at a worse time for San Francisco, which is juggling a $782 million budget deficit and goals to reduce homelessness.
Mayor Daniel Lurie is discussing cuts at the local level for housing and homelessness services, and nonprofits and unions are expected to fight back during budget deliberations.
The potential for a one-two austerity punch tees up a nightmare funding scenario. Lurie has promised to overhaul the city’s approach to homelessness and make a serious dent in housing costs and street conditions — all while facing a federal government that could make those efforts even harder. Pressure is also coming from the state; Gov. Gavin Newsom on Monday announced model laws for municipalities that want to crack down on tent encampments.
“I feel like there’s some momentum going on in the city,” said Malcolm Yeung, who leads the Chinatown Community Development Center, which helps low-income Asian residents. “Is all the federal stuff going to lead to a rollback?”
Federal funds could vanish
Trump has proposed $163 billion in cuts to federal spending, with a large chunk, $33.5 billion, coming from the Department of Housing and Urban Development. HUD provides a smattering of funding streams to San Francisco. The money is supposed to prevent poor residents from entering into homelessness and help some exit the streets.
The city currently has $644 million in grants from the federal agency. About half of that goes toward Section 8 housing vouchers to cover rent for San Franciscans, who struggle with some of the country’s highest housing costs.
A large majority of Trump’s cuts to HUD, $27 billion, would come from reducing these subsidies. He is also trying to transfer responsibility to the states to oversee the Section 8 program, and cap recipients at two years of aid.
Democrats sharply criticized the plan.
“President Trump’s cuts to HUD are a shameful abdication of our government’s responsibility to lift up our nation’s most vulnerable communities by strengthening and protecting access to sustainable, livable, and affordable housing,” Speaker Emerita Nancy Pelosi told The Standard in a statement.
The San Francisco Housing Authority, which oversees Section 8 vouchers, said the federal government provides 96% of its funding. “While we hope to avoid significant underfunding that would impact our residents, Housing Authority staff are actively exploring measures to address various possibilities,” the agency said in a statement.
Ryan Finnigan, a researcher at UC Berkeley’s Terner Center for Housing Innovation, said the funding reductions could result in the immediate loss of housing for “large numbers” of San Franciscans. Public housing authorities might stop handing out vouchers, and families may lose them if funding dries up under the new rules.
“Unless folks want conditions they see on the street and the suffering and disruption to public life to increase, then we can’t lose ground on the kinds of programs that are so important,” he said.
In a statement, Lurie said cuts to federal resources would “seriously threaten” his administration’s efforts to help people struggling on the streets. Lurie is trying to expand the city’s shelter capacity with an additional 1,500 beds and on Thursday announced $37.5 million in private investments.
“As we tackle the historic budget deficit we inherited, alongside significant federal uncertainty, we are advocating aggressively with a broad coalition of partners for the resources San Francisco needs to build on the progress we’ve made,” the mayor said.
A HUD spokesperson pointed to comments made earlier this month by Secretary Scott Turner. “President Trump’s bold budget proposes a reimagining of how the federal government addresses affordable housing and community development,” Turner said.
‘The most vulnerable people’
The funding cuts wouldn’t stop at rental subsidies: Trump also wants to strip homelessness prevention grants by $532 million.
The reduction would affect programs like Continuum of Care, which helps with rent for permanent supportive housing residents and covers the cost of services, such as salaries for case managers. The president also plans to morph the program into one that proposes more short- and medium-term solutions, rather than permanent housing.
Randy Shaw, director of the Tenderloin Housing Clinic, said the Continuum of Care cuts could hit three of his sites: the Crown Hotel, the National Hotel, and Winton Hotel. Shaw said Trump’s efforts are counterproductive and could lead to even higher costs for taxpayers if previously housed residents end up in hospitals or jail.
“It is just a stupid move,” he said.
San Francisco is earmarked to receive more than $50 million this year through the Continuum of Care program for 35 homelessness prevention projects. On Thursday, a federal judge blocked Trump’s efforts to impose conditions on HUD grants related to diversity, equity, and inclusion, immigration, and abortion policies. Without the funding, 1,400 households would immediately lose their housing subsidies and be at risk of imminent eviction, the city estimates.
“It houses young people, veterans, families, domestic violence survivors, and the elderly,” said Marnie Regen of Larkin Street Youth Services. “The most vulnerable people.”
The president’s cuts are top of mind for RJ Sloan, who has lived since 2011 in permanent supportive housing that relies on Continuum of Care funding.
Sloan was diagnosed with AIDS in 2005, putting him in a depression. He lost his home and his dogs, started living on the streets, and began eating out of trash cans. In 2008, he was hospitalized at Napa State after a psychotic break.
He eventually was connected to Episcopal Community Services and now lives at 10th and Folsom while working at one of the organization’s other sites.
“If these draconian cuts happen, there will be hundreds of thousands of people across all HUD programs who won’t be able to afford their rent, and they’ll hit the streets,” said Sloan, 60. “We do not have enough shelter for these folks, and it makes no sense to put them out there in one of the wealthiest countries in the world.”