On July 19, the Jobs and Economic Development budget agreement for FY 2012-13 was released by Governor Dayton and the Legislature. There is only one change to funding for Minnesota Housing programs in the working agreement from the conference committee budget passed in May. The agreement adopts the Governor’s recommendation for the Homeownership Education, Counseling, Training Fund (HECAT) of $1,502,000 for the biennium, as compared to the $1,200,000 passed in the conference committee agreement.

Though housing advocates feel the impact of a 7.2% cut in overall funding to MHFA programs compared to the last biennium, the general mood is one of relief considering the recent gridlock between legislators and the governor on addressing the $5 billion dollar deficit. There are also some victories to celebrate as the Housing Trust Fund is funded an additional $2 million dollars for the biennium and funding for Bridges and Family Homeless Prevention is not cut over last year’s recommendations.

This good news does not change the fact that the Challenge Program, the state’s most flexible program for much-needed rehab and housing production, will experience an additional cut of $876,000 for the biennium. The final funding level of $13.91 million for Challenge compares to $37.7 million in FY 2008-09, when Challenge benefited from $15 million in one-time money. Housing bonds are also left out of the $500 million dollar bonding package, dealing a blow to communities still in recovery from the ongoing foreclosure crisis.