Surcharge would help affordable housing
CCHT has been involved in the process of crafting the Housing Solutions Act.
Even in softer market, prices far outstrip lower wages.
It's important that Minnesotans "mind the gap," as urged by last year's worrisome report on the Twin Cities by the Brookings Institution. Just beneath the gloss of a successful economy and high quality of life lies a growing and potentially destructive disparity between rich and poor, white and nonwhite, suburban and urban, the report said. Unless the gap is narrowed, Minnesota will lose the competitive advantage that has led its remarkable ascent.
One big trouble spot is housing. Even in the current softer market, the cost of renting or owning a home continues to far outstrip the wages paid to low-income Minnesotans, leaving them unable to afford suitable shelter for their families.
We're not talking about a few thousand people. By 2010, 330,000 Minnesotans, about one in every 16, will be paying more than one-third of income for housing, meaning technically that they can't afford homes in which they are living. The poorest of these have the most desperate needs. Housing experts estimate that, despite heroic public and private efforts, Minnesota will be short 33,000 affordable units in 2010. The resulting instability will further complicate the disorganized lives of many poor people, harming especially children, who cannot learn much while shuttling from apartment to apartment and school to school.
Recent funding cuts from the federal and state governments make matters worse.
One option that the Minnesota Senate is considering -- and the House should revive -- is to add a small surcharge to the current deed transfer tax to help fund affordable housing, as 10 states already have done. Adding 0.17 percent to the existing 0.33 percent tax would raise $69 million per year. The deed tax is paid by sellers at closing. The seller would pay $600 extra on an average home sale, which occurs once every seven to 10 years. The money would go to three state/local funds, both for building new homes and for helping low-income buyers and renters afford existing homes. Forty percent of the money in two of the funds would be targeted to outstate communities.
Normally we do not favor dedicated taxes because they hinder legislative flexibility. But an exception may be required in this case, considering Minnesota's "mind the gap" challenge.
While the Minnesota Association of Realtors opposes the surcharge, we agree with Monica Williams, a Bloomington agent who points out that sellers have taken huge profits in recent years, and might consider the societal benefit of aiding the less fortunate. Recent prosperity has mostly benefited those with assets (homes and stocks) while the incomes of ordinary wage earners have stagnated.
That picture doesn't make for a healthy social or economic climate in a state with high aspirations.
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