The Potluck

It would cost $1.1 billion to provide rental assistance to every Minnesotan who needs it

By: - February 25, 2021 4:42 pm

Photo by Will Jacott/Minnesota Reformer.

The state’s Legislative Budget Office estimates it would cost $1.1 billion a year to provide rental assistance to every Minnesotan who needs it.

The money would help 224,207 renter households across the state with an average subsidy of $408 a month.

An ambitious housing bill introduced this year and supported by 40 Democratic lawmakers would provide assistance to Minnesota households that pay more than 30% of their income on rent and earn less than half the area median income — $36,200 for a single person or $51,700 for a four-person household in the Twin Cities.

While those households are eligible for federal housing assistance like Section 8 vouchers or public housing, the federal government has only provided enough funding for about a quarter of those families.

“The fiscal note paints a clear and sobering picture of the significant need facing Minnesotans who cannot afford their homes. It also provides a road map to ending homelessness in Minnesota if we have the political will to take bold action,” the bill’s lead author Rep. Michael Howard, DFL-Richfield, wrote in a text message to the Reformer.

If passed, the bill would more than quadruple state general fund spending on housing, which was about $255 million last year. If the bill became law, housing would comprise roughly 4.5% of the state’s budget.

With such a large increase, Howard acknowledged the need to raise new revenue, possibly through a dedicated funding stream.

“We should look at tax benefits that currently benefit the wealthy, such as the ability for someone to get a tax break through the mortgage interest deduction on a second home,” Howard wrote. “We are going to need to think outside of the box to truly address our affordable housing crisis.”

Tax increases are unlikely to pass the Republican-controlled Senate, which has pledged not to raise taxes as the state tries to close a sizable budget deficit caused by the pandemic.

The state currently provides rental assistance through a program called Housing Support, which is for people with disabilities or who have experienced long-term homelessness. Minnesota had not provided rental assistance on a large scale until last year, however, when Gov. Tim Walz directed $100 million in federal COVID-19 relief toward housing assistance for low-income Minnesotans affected by the pandemic.

The federal government approved another relief package last December which will send $375 million to Minnesota for housing assistance, although that money has yet to reach renters and their landlords.

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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.