Proposed constitutional amendment would lock in affordable housing dollars via sales tax boost

With 650,000 Minnesotans spending more than 30% of their income on housing, Rep. Michael Howard (DFL-Richfield) says the state needs a new approach that’s large enough to match the scale of the crisis.

His proposal HF3279, laid over Wednesday by the House Housing Finance and Policy Committee, would place a constitutional amendment on the ballot asking voters to raise the sales tax by three-eighths of a 1% for the next 25 years.

Modeled on the 2008 Legacy Amendment, the Our Future Starts at Home Amendment would create long-term, dedicated funding streams for affordable housing.

Minnesota currently allocates only 0.3% of its state budget to housing, Howard said. “What we’re doing is not working,” he said, arguing that deeply affordable housing requires “dependable, sustained public investment.”

The amendment would generate an estimated $400 million per year, deposited into three constitutionally created funds, each overseen by its own council:

• Community and Household Stability Fund would provide money for emergency assistance and shelters, outreach services, and construction of permanent supportive housing.
• Homeownership Opportunity Fund would go toward development of affordable homes and support for down payment or loan assistance.
• Rental Opportunity Fund would help build new rental units, preserve existing units, and provide rental assistance.

Supporters say the investments could help 50,000 new home buyers, stabilize 600,000 households through emergency assistance, preserve 200,000 rental homes, and provide ongoing rental aid to 8,300 families over 25 years.  

Rep. Huldah Momanyi-Hiltsley (DFL–Brooklyn Park) said the current system amounts to “a Band-Aid,” and called the amendment a “predictable, accountable model Minnesota needs.”

Howard acknowledged concerns about sales tax fairness, calling it regressive, but noted housing costs themselves disproportionately burden lower-income residents. The proposal would add $3.80 per $1,000 spent, he said.

If enacted, Minnesota’s sales tax would increase to 7.25% and tie California for the highest in the country, said Rep. Spencer Igo (R-Wabana Township). 

Noting a 2023 law increased metro-area sales tax by 0.25% to support affordable housing, critics say looking at fees and regulations would be more productive than a new tax.

Rep. Shane Mekeland (R–Clear Lake) said regulations and fees mean houses cost thousands more in Minnesota than similar states, notwithstanding the administrative costs associated with earned sick and safe time, paid family and medical leave and misclassification reports.

Rep. Jim Nash (R–Waconia) will continue to fight for more affordable housing but won’t step on this battlefield. “We used to be the Land of 10,000 Lakes; now we’re the land of 10,000 taxes.”