Global Courant 2023-05-11 01:39:19
Sales taxes in the Twin Cities metropolitan area will receive a 0.25% increase to fund affordable housing under a bill pending signature by Governor Tim Walz.
The bill gives a record $1 billion boost to housing programs overall, but most of it is one-time money from the state’s $17.5 billion budget surplus.
The legislation will create a new statewide rent voucher system for about 5,000 families each year, reducing wait times for Section 8 subsidized housing and providing assistance to more than 5,000 first-generation homebuyers. About half of the $1 billion total would go toward increasing the state’s housing supply.
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The Senate voted 34 to 32 on Tuesday to approve the agreement, which was worked out by a conference committee. The House supported it by a vote of 70 to 61 on Monday. Walz supports it.
A bill awaiting the signature of Democratic Minnesota Gov. Tim Walz would raise sales taxes in the Minneapolis-St. Paul metropolitan area with 0.25% to fund state affordable housing initiatives. (AP Photo/Steve Karnowski)
“This is a transformational investment that will improve housing stability for tens of thousands of people in the state by helping them afford their first home or pay their rent,” said Democratic Senator Lindsey Port, of Burnsville, the Senate’s lead author.
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The metro sales tax increase equates to $1 on every $400 spent on taxable items. Proponents say it is necessary to generate additional income on an ongoing basis to fund affordable housing in the future. But Republican lawmakers criticized raising taxes when the state already runs a huge budget surplus.
“A sales tax increase will hurt those who hurt the most,” said GOP Senator Eric Lucero of St. Michael. He also said that over-regulation is driving up house prices.
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The legislature is also considering another increase in the metro area’s sales tax to provide ongoing additional funding for public transit and roads. The House version of the transportation budget bill calls for a 0.75% increase. The Senate version calls for a half-point bump. The statewide base rate is 6.875%.
