Minnesota Democrats renew push to provide rental assistance to all low-income residents

The proposal would cost an estimated $2 billion per year, more than 6% of the state budget

By: - February 7, 2023 8:16 pm

The Minnesota State Capitol building in winter, St. Paul, Minnesota. Photo by Tony Webster.

Minnesota could become the first state in the country to guarantee rental assistance to all low-income residents under a proposal backed by 40 Democratic state lawmakers. 

Housing advocates and Democratic lawmakers have introduced the bill (HF11) every year for the past three years, but the proposal stalled with a Republican-controlled Senate. The bill now has its best shot at passage, with Democrats empowered by a trifecta and feeling rich with a historic $17.6 billion surplus. The bill’s companion in the Senate (SF11) also includes a Republican co-author: Jim Abeler of Anoka.

“No single policy initiative can do more to directly eliminate homelessness than this one,” said Rep. Michael Howard, a Democrat from Richfield and lead author of the bill, during a committee hearing on Tuesday. 

Under the proposal, the state would subsidize rent for residents earning less than 50% of the area median income — $58,650 for a family of four in the Twin Cities metro area. Recipients would pay 30% of their income toward rent and the state would cover the rest in direct payments to landlords. 

The program mirrors the federal Section 8 housing voucher program, which historically has only had enough money to help one out of every four eligible households. People lucky enough to receive a Section 8 voucher typically wait years to receive the help. 

As rents have increased faster than wages, a growing share of Minnesota households have become “cost-burdened,” spending more than 30% of their income on housing. Forty-three percent of renter households in Minnesota were considered “cost-burdened” in 2021, according to the Minnesota Housing Partnership, an affordable housing advocacy group. 

The total cost of the benefit would be $2 billion a year, according to an estimate by state officials. That estimate assumes about 212,000 eligible Minnesota households would receive an average subsidy of $700 per month. 

The program would dramatically increase the share of the state budget committed to housing, from about .5% to more than 6%. 

Howard defended the cost and pointed out state and local governments would save on expensive band-aid solutions like emergency shelter. He also said the benefits of widespread housing stability would ripple out into the economy in the form of better student performance, worker productivity and health outcomes. 

Rental assistance could also greatly reduce evictions in the state, which can be ruinous for low-income households. Being behind on rent has historically been the most common reason for evictions. A 2016 study of evictions in Minneapolis, for example, found 93% of eviction filings were for non-payment of rent, with people owing $2,000 on average.

“Having a housing voucher means that I can give back to my community. It means that I can get an education. It means that I can grow. And there are thousands of other Minnesotans who could have that same opportunity,” Jurline Bryant, a renter advocate who received a Section 8 voucher, told the committee.   

The estimated $2 billion cost is nearly twice what the Legislative Budget Office estimated the program would cost two years ago, signaling the cost of entitlement could quickly swell with rent prices. 

The state has been running a budget surplus in recent years, which could cover the program without raising taxes. During an economic downturn, however, the state could see rising need for rental assistance while tax revenue declines. That would force state lawmakers to make difficult cuts to the program or to other state services. 

Republicans commended the sentiment behind the bill but questioned if the state could afford such a costly program and noted it would not address the state’s housing shortage that’s causing rents to rise. 

“We still have a housing crisis. We’re not building enough starter homes. We’re not building enough apartment buildings,” said Rep. Jim Nash, R-Waconia. “This does nothing to take away our inventory issues.” 

Howard acknowledged the bill doesn’t increase supply and noted that Democrats hope to direct tens of millions of dollars in state funding and financing toward new affordable housing development. 

“If all we did this session was just this bill, that wouldn’t address the full scope of our vertical housing crisis,” Howard said. “So we absolutely do need to produce more units of affordable housing.” 

And, in practice, when the government subsidizes something, private actors tend to produce more of it. 

The committee laid the bill over for possible inclusion in a larger spending bill. 

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Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Most recently he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.