As of Monday afternoon, the Legislature passed a bill which, if signed, would permanently reduce the Renters’ Credit for low- and moderate-income Minnesotans and would cut state aid to local governments.
The cuts are included as part of HF 130 the first major budget cut bill of the session, which results in a $900 million reduction in state spending. The bill passed out of conference committee Monday. Once out of conference committee, advocates opposing these cuts will rely upon Gov. Dayton to veto the bill in full, as this bill cannot be line-item vetoed.
Some of the cuts are described by the Minnesota Budget Bites blog, among them, the Renters’ Credit, cuts to Local Government Aid, and a directive to the Office of Management and Budget to make $100 million in cuts to state agencies. (Of note, in a list provided by MMB of potential areas to cut, the Minnesota Housing Finance Agency is not included.)
RENTERS CREDIT
If signed into law, cuts to the Renters’ Credit will result in an average loss of $170 per household eligible for the Renters’ Credit refund. 285,000 Minnesota low- and moderate-income renter households receive the credit. The bill would reduce the amount of the rent used in calculating the credit for a renter from 19% to 15% of gross rent, for a total savings to the state of $106 million. According to House Research, A similar provision enacted last year cut the total amount of tax refunds made to renters by 27% for 2009 from the year before, when the 19% calculation was used.
Before passing off the Senate floor, Senators from across the political spectrum weighed in during a lively discussion of the Renters’ Credit and the intent behind the policy. The HOME Line Blog has posted excerpts worth a read. For more about the Renters’ Credit, see the Minnesota Budget Project fact sheet.
LOCAL GOVERNMENT AID
The bill also cuts aid to local governments by $487 million, but only for FY 2012-13 only. While the Senate version specified permanent cuts, the conference committee the house approach of a temporary cut. However, the Legislature plans to discuss local government funding cuts for FY 2014-15 later in the session.
