Proposed sales tax for housing funding dead in the Legislature

Some housing affordability advocates this year pushed for a constitutional amendment for housing, which would raise the state sales tax by three-eighths of 1% — about 38 cents for every $100 spent — to fund housing and homelessness initiatives.

Four DFL senators and 26 DFL representatives co-authored the bill, including the chairs of the two housing committees, Rep. Michael Howard, DFL-Richfield, and Sen. Lindsey Port, DFL-Burnsville. 

If passed by the Legislature, voters statewide would ultimately go to the ballot box to decide whether to approve the new tax.

From the start, the bill faced a steep climb in the Legislature, where DFL leaders — including Senate Taxes Committee chair Sen. Ann Rest of New Hope — cautioned colleagues against new taxes or major spending on the heels of historic investments in last year’s budget session.

The bill did not receive a hearing in time to meet the deadline to be included in any of the omnibus bills. It may still receive a hearing in committee for discussion purposes but will not be able to move forward this year.

The proposal mirrors the Legacy Amendment, a 2008 constitutional amendment that 56% of Minnesota voters approved: a three-eighths of 1% sales tax hike to fund environmental initiatives and arts and culture programs.

The proposed tax revenue would be split into three funds geared towards supporting homebuyers, renters and people facing homelessness and housing insecurity. Those funds would be administered by three 24-member council appointed by lawmakers.

The purpose of the proposal was to secure ongoing, stable funding for housing. While lawmakers spent $1 billion on housing investment last session, the majority of the dollars were one-time spending. 

“We’re still convincing lawmakers that housing truly is the foundation — that housing is connected to every other facet of life,” said Libby Murphy, director of policy for Minnesota Housing Partnership,* one of the members of the coalition that backed the bill. 

*An earlier version of this article misstated the name of a Minnesota Housing Partnership staff member.