Dalrymple’s Housing Fund Is Just An Elaborate Taxpayer Subsidy

jack-dalrymple

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.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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  • borborygmi

    Shocker: Rob Port against businesses paying less tax>

    • http://sayanythingblog.com Rob

      Actually, Rob Port has always been for a tax code that’s flat, simple and broad.

      I don’t like these sort of carve outs, and I never have. I’m for a flat tax with no exceptions, and I’m for stopping politicians from using the tax code for this sort of nonsense.

  • camsaure

    Dullrumple seems to be really impressing the liberal/progressives I bet.

  • nimrod

    Subsidized housing has been such a huge success in the inner cities, that we should try it here.

  • Jeremiah Glosenger

    There are plenty of low-income elderly or genuinely disabled individuals that need some form of help to have a place to live that they can afford. I wish “de-regulation” would result in tons of housing going up that would be affordable; however, that is not realistic if you see how much these people are actually able to pay in rent. Developers are targeting oil-related businesses and workers, not old people in wheelchairs without legs. I wish the Federal government would stick to its enumerated powers, but it is certainly within the purview of state government to consider addressing this issue (constitutionally speaking), and it should be seriously considered if private charitable organizations are unable to fulfill the need. I know some of these people (that are very deserving) and kicking them out on the street when it is 10 below to wait until de-regulation solves all our problems seems a little to idealistic. Maybe those who are against any sort of STATE assistance should put their name on a volunteer list to house these individuals just in case the deregulation thing doesn’t work out for them. Anyone willing to put their own home where their mouth is? Don’t forget about the swimming pool blue trailer that might move into the empty lot in your neighborhood. FYI: the private donors get a tax credit for what they donated; this essentially means that they had the opportunity to direct how their state tax dollars were spent; somewhat of a conservative notion if you think about it. When was the last time you had that much control over where your tax dollars went?

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