Leave the renters' tax credit alone
Star Tribune, West Metro Edition
By Alan Arthur
June 8, 2005
One in nine Minnesota households will be directly impacted by a key budget decision before the governor and Legislature during the special session. The decision is whether to ask low- and moderate-income renter households to suck it up and absorb one-seventh of the solution to Minnesota's $466 million budget deficit.
The House majority has proposed a 44 percent reduction in the renters' credit beginning in 2007. Under their proposal, 36,000 Minnesota renters would lose their eligibility for the renters' credit, and the remaining 239,000 renter households would see an average $194 cut to their credit. The governor's proposal would cut the credit by 20 percent.
The renters' credit is an important state program that provides property tax relief and a level of housing subsidy for low- and moderate-income renters. In comparison, homeowners receive a property tax refund as well as a long list of housing subsidies through the tax system totaling more than six times the benefits received by renters.
Hennepin County has the highest percentage of renters in the state, with 30 percent of households renting compared to 23 percent statewide. Therefore, the impact on the county's economy would be more significant than other regions under the House proposal. Roughly $20 million in credits would be lost to Hennepin County renters and in turn to the county's economy.
The damage will be even greater for the unfortunate portion of the county's 81,000 renter households whose renters' credits wither or disappear. These families use their annual rent credit to pay for medical needs not covered by insurance, deferred dental work, school supplies, car repairs and squirrel some away for a down-payment on the American dream: their first home.
The Legislature previously addressed housing affordability with balanced state policies and strategic investment. Attention has shifted in different directions in recent years as tight budgets and perceived "bigger fish to fry" have become the focal points.
But ignoring (or worse, increasing) the mismatch between lower-income households' earnings and their housing costs would have negative implications for the county and our state. The best health insurance plan in the world is worthless if you don't have a roof over your head. Our education system suffers when students make multiple moves during the school year because their families can't find an affordable apartment.
Lack of affordable housing is a key contributor to our transportation problems because families are forced farther out to the exurbs to find affordable homes.
Cutting the renters' credit would be a setback to Minnesota's balanced housing policy, a setback for Hennepin County's economy and a crushing blow to so many families scraping by to meet rent and other basic needs.
Please urge our legislators and the governor to take this proposed renters' credit cut off the table.
Alan Arthur is an Orono resident and president and CEO of Central Community Housing Trust, a non-profit that provides affordable housing for Twin Cities communities. Since 1986, the trust has built or renovated 1,252 units of housing.
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