Comprehensive Affordable Housing Policies include tax and fee restraint

Guest Correspondence

Lack of available affordable or attainable housing is a complaint that is widespread from employees to employers. In recent years, it has begun to include middle income retirees as they get pushed out of rentals due to the increase in rents due to increased market demand. Locally, this has been exacerbated by the demand from Hurricane Ian and the COVID migration from northern states. Local governments are now feeling the pinch as well; they can’t fill positions because prospective hires can’t find housing.

Affordable housing is a market issue, so you can’t outright control it. You can incentivize it and encourage it with land use tools and deregulation of costly rules that automatically increase the cost of building. We see a focus on this aspect locally. We applaud local governments for taking these steps to try to tackle the issue, but it must be done in conjunction with government fiscal self-control.

In the upcoming year, the public will need to pay close attention to government fees and encourage government to exercise self-restraint, or even offset fee increases with lower millage rates to make the impact financially neutral on our residents.

The reality is a fee increase is no different than a tax increase in terms of effects. You will even hear the words “user fees” used, making it seem as though the fees are not universally paid by every property owner, when in reality they are. Think about solid waste fees or fire fees as examples. Fees should not be increased without examining the effects of those increases on vulnerable populations, who are already struggling to stay in their homes.

The economics of fees impact affordable housing. Landlords will pass those fee increases on to renters, homeowners will directly absorb the fees, and governments may claim that they have not raised the millage rate.

Some governments have backed themselves into corners with fee increases. These governments spent time-limited, one-time federal money on recurring expenditures that will make it extremely difficult to offset fee increases with millage rate reductions. Basically, the items are budgeted with no plan as to how to fund the item after the federal dollars run out.

Local governments need to step back, take their time to consider all the potential fiscal impacts, and determine if a dollar they spend is a dollar contributing to the affordable housing crisis. In the next six months, governments will be getting to the meat of their budgets and having separate public hearings on fees. 

The Argus Foundation encourages local governments to examine every increase in spending against the cost to housing, it should be a part of every budget workshop and fee public hearing. The overall increase to property owners with both increases in property values and fees should be transparently examined if governments are serious about their stated priority of housing.

The time of excess spending has come to a close. We cannot rely on the unusual influx of Federal dollars going forward. It is time to seriously consider the ramifications of new taxes and fees in relation to their effects on affordable housing. We look forward to the affordable housing conversation being integrated into budget and fee discussions by local governments.

Christine Robinson is the executive director of The Argus Foundation.

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