Searching for Better Solutions
Today’s budget forecast brings bittersweet news, with the projected deficit coming in about $1 billion less than expected. However, a giant $5 billion dollar hole leaves us little to cheer about. So where does this leave the housing budget?
Capitol Connect’s recent posting described Governor Dayton’s budget proposal for Minnesota Housing Finance Agency, which takes a 5% hit compared to last year’s recommended budget. This budget holds harmless, with no budget cuts, programs needed to keep families in their homes, but includes substantial reduction in programs that preserve or expand the supply of affordable housing, such as the Challenge program. These cuts come at a time when the bottom has fallen out on residential construction work, and communities reliant on other funding sources for housing, such as the federal community block grant program, are facing large reductions.
With Republican lawmakers discussing funding cuts four times larger than those proposed by Dayton, however, the Governor’s budget for Minnesota Housing is probably the best we’ll see this year. This underscores the importance of finding other sources of capital funding for housing, especially for rehab and preservation work. The HousingJobs Campaign seeks to do just this, by investing in housing construction and rehab using non-appropriated funds. Each of the HousingJobs proposals would bring tangible benefits to workers, the economy, and residents far beyond the cost to the state.
- State housing tax credits for affordable housing and historic preservation leverage private sector dollars for housing to help provide low- and moderate-income people access to housing that they can afford. This housing gives families a leg up to succeed, when nearly HALF of Minnesota renters can’t find places to rent that they can afford, according to HUD standards. This state housing tax credit authorizes Minnesota Housing to provide tax credits, which developers can leverage to raise investor capital to build much-needed rental and other housing. Employed workers earn needed income and also help replenish state coffers with their economic activity.
- At least three types of bonding for housing can restore crumbling public housing units, create community land trusts, and/or address foreclosures and supportive housing for the homeless. Habitat for Humanity homes and rental housing that takes advantage of the successful federal housing tax credit program are examples of projects that can be developed with the help of bonding.
- Capturing future increases in existing deed and mortgage revenues would also help build housing. In the current weak housing market, deed and mortgage tax revenues for the state are low. As the market recovers, allocating any growth in deed and mortgage revenues for additional needed housing units would help provide a stable source of funding for housing into the future.
Stay tuned for more about what we can do to make sure people have safe homes, jobs, and opportunity.