Dalrymple’s Housing Fund Is Just An Elaborate Taxpayer Subsidy
In the last legislative session, Governor Jack Dalrymple requested and got authorization for a housing incentive fund that would have private donors putting money into a fund that, in turn, would be used to subsidize low income housing in the state. The idea was to address housing shortages caused by the oil boom in western North Dakota without directly subsidizing developers with taxpayer dollars.
“The fund was developed to operate this way to avoid out-and-out state funding of affordable housing,” wrote the Bismarck Tribune editorial board earlier this week. “It puts a buffer between the private and public sectors, using citizen participation to justify the spending. It would have been simpler to fund the program out of the general fund, or from an energy-revenue stream, but that would probably not have passed legislative muster.”
The fund, which has been a bit of a flop falling millions short of its goal, may avoid the appearance of direct taxpayer subsidy, but not necessarily the reality.
I hadn’t spent a lot of time thinking about it, but a reader yesterday emailed to ask me about the details of the tax credit private contributors to the fund get. According to this document posted on the North Dakota Housing Finance website, the program is authorized to give away up to $15 million in tax credits through this program:
Taxpayers receive a credit against their state income or financial institutions tax liability equal to their contribution to HIF. The credits are claimed in the tax year that the contribution was made. If a taxpayer cannot use the entire tax credit in the first tax year, it may be carried forward for up to 10 tax years.
This all but guarantees that the companies or individuals who contribute to this fund will see their state income taxes lowered by the exact amount of their contribution. They don’t get money back, if their contribution exceeds their single-year income tax liability they’ll have to roll it over to successive years (out to a maximum of 10), but I imagine most of the contributors were smart enough to work their contributions so that they get the maximum tax reduction.
This tax credit doesn’t increase the tax burden felt by the majority of us who didn’t contribute to this fund. Thanks to the state’s strong finances, there is extra money sitting around in the state government to cover these revenues. But that’s sort of the point, isn’t it? Money is a fungible commodity. This is a direct taxpayer subsidy, laundered through a tax credit program for private sector contributors.
These are revenues that could have been used for other things, such as tax relief, but instead were used to essentially pay back private sector companies/individuals for their contributions to this fund.
And all of this is an elaborate gimmick which will supposedly help alleviate some of the housing strain in the state. Except that it won’t, really. The best way to address the housing shortage, and bring down housing prices long term, is to build more housing. The best way for the government to do that isn’t to subsidize housing – there’s plenty of market incentive to build – but rather to clear whatever logistical or regulatory hurdles may be delaying housing.
Or, put simply, the answer is government doing less not more. But if North Dakota Republicanism means anything in the Dalrymple/Hoeven age, it is big, aggressive, government solutions to every problem.Tags: housing incentive fund, jack dalrymple, North Dakota News