The budget news for housing is mixed in the wake of the Governor’s budget proposal released yesterday for the 2012-13 biennium. The proposed $77.19 million in state funds represents a 6% cut compared to actual funding for the 2010-11 period, and a 5% cut compared to proposed funding in budget recommendations made last year.

Overall, the Minnesota Housing Finance Agency’s budget prioritizes funding for programs that serve the homeless and very vulnerable, programs that leverage non-state resources, and programs not served well by other sources. However, housing production and rehab take a big hit, even though these activities create jobs and leverage investment.

Here’s the painful news:

• The Challenge Fund (Economic Development and Housing Challenge) gets the deepest cuts in this proposed budget.  The Challenge Program is the state’s most flexible source of funding for affordable housing development or rehabilitation. A budget of $14.3 million is recommended, representing a 24% cut from the original forecasted budget and 3% cut from actual 2010-11 funding.  By comparison, funding for Challenge was nearly $38 million in 2008-9. Of note, $2 million originally slated for Challenge is shifted to the Housing Trust Fund in this budget.  Challenge fares worse than other programs, but according to the narrative accompanying the budget, the intention is to preserve enough funds to leverage federal tax credits and make progress on foreclosure recovery.
• There are five additional reductions to Minnesota Housing programs in the proposed housing budget, as compared to proposals last biennium. These include the Homeownership Assistance Fund, PARIF (rental preservation), Housing Counseling (HECAT), and Capacity Building. (See MHP’s 1-page budget comparison table for details.)
• The state’s budget document identifies service reductions as a result of these proposed budget reductions: 55 fewer rental housing will be rehabbed, 13 fewer first-time homebuyers will receive down payment and closing cost assistance, and 900 fewer households will receive counseling. Impact of the cuts to Challenge, PARIF, and Capacity Building are not described.

And better news:

• The effective Family Homeless Prevention (FHPAP) Program is funded at $14.9 million, the figure recommended (and funded) last biennium. This program supports county, regional, or local innovatons to prevent homelessness, shorten shelter stays, and to assist people in securing transitonal or permanent affordable housing. 
• The Housing Trust Fund, part of the Minnesota Plan to End Long Term Homelessness, receives $19.1 million in funding in the Governor’s budget. This amounts to $2 million more than the budget recommended for 2012-13 at the end of last session due to a transfer of funds from the Challenge Fund, but $2 million less than the amount appropriated for 2010-11.

If you want additional budget detail for the Minnesota Housing budget, this 1-page table is for you. 

And don’t miss the Minnesota Coalition for the Homeless posting with information about homelessness programs.

Stay tuned for more.