A new Minnesota bill proposes a 0.25% sales tax increase in seven counties that will fund affordable housing programs. Everyone is in agreement and no one is complaining. Just kidding!
Here’s Five Fast Facts on the Twin Cities Sales Tax Increase:
- 🏘️ Billion Boost - The increase is part of a $1B boost to housing programs across the state. However, most of that is money from the surplus that’s one-time use.
- 🏠 Home Run - The bill allocates money for affordable housing development and preservation, homeownership opportunities, homelessness programs, and public housing.
- 🏡 Housing Possibilities - About 5,000 families will be eligible for a statewide rental voucher system that reduces waiting times for subsidized housing. It also creates an aid program for more than 5,000 first-generation homebuyers. Half of the $1B would go toward increasing the statewide housing supply.
- 🏚️ What About the Surplus? - Opponents feel the programs should be completely funded by the colossal tax surplus, rather than a sales tax. They also say that it doesn’t reduce the cost of regulatory compliance for builders.
- 🧱 Pricey Projection - The sales tax is expected to raise around $300M in its first two years. Gov. Walz is expected to sign the bill as-is.
🔥Bottom line: While the economics and intent of the bill are sound, you have to wonder why they’re not digging into the existing stash they’ve been sitting on. That said, anything that can help first-time homebuyers get started in this economic reality is a good thing.
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