Minnesota Budget Project - Renters' Credit At Risk

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Renters' Credit At Risk

Governor Plans to Cut Renters' Credit Through Unallotment

The Renters' Credit provides a tax refund to nearly 305,000 low- and moderate-income Minnesota households whose property taxes make up a large share of their incomes. Seniors and persons with severe disabilities make up 28% of all Renters' Credit recipients.

The Governor's unallotment plan proceeds with his original budget proposal and reduces the Renters' Credit by 27%, a cut of $51 million. (Unallotment impacts Renters' Credit applications in 2010 only.) The Renters' Credit is a critical tool to offset the impact of property taxes paid by renters, already one of the most regressive taxes in the state. The Minnesota Department of Revenue estimates the average Renters’ Credit cut will be $129 in 2010 under unallotment.

This year, 126 organizations united to preserve property tax fairness in Minnesota and oppose the proposed cut. The Legislature did not enact any changes to the Renters' Credit. But because the legislative session ended without a complete budget agreement, the Governor pledged to use his unallotment authority to balance the budget, including by cutting the Renters' Credit.

While this outcome is disappointing, it's important to keep talking to lawmakers about the importance of the Renters' Credit to Minnesotans. The Legislature could vote to reverse the Governor's cut to the Renters' Credit when they come back to the state capitol in January 2010. And it is important for the Legislature to continue to oppose any future proposals to make additional cuts to the Renters' Credit.

Additional information about the Renters' Credit:

Comparison of current law versus the Governor's plan to cut the Renters' Credit for sample families -- Compares the impacts of the cut for sample families, from House Fiscal Analysis
Who Receives the Renters' Credit? - information by county on the number of persons receiving the credit, total amounts of Renters' Credit received by county residents, and more
What is the Renters' Credit/Circuit Breaker Property Tax Refund? - an overview of the Renters' Credit
Governor Proposes Tax Increase for Renters - this analysis by Minnesota 2020 finds that from 2004 to 2009, rental property taxes have grown three times faster than the Renters' Credit. As a result, rental property taxes have become much more regressive.
Statewide map of the percentage of seniors and/or persons with disabilities who receive the Renters' Credit (by county)
Statewide map of the average amount received for recipients of the Renters' Credit.

2008 Proposal by Governor to Cut Renters' Credit is Defeated

In his budget proposal released to the 2008 Legislature, the Governor proposed cutting the Renters' Credit by 21%, which would not only have a significant impact on low-income households, but also would have increased the regressivity of the property tax. The Minnesota Budget Project and many other nonprofits quickly organized to defeat this proposal. The Senate and House Tax Committees did not make any cuts to the Renters' Credit in their omnibus tax bills. The final omnibus tax bill (HF 3149) signed into law by the Governor made no changes to the Renters' Credit.

For more information on the Renters' Credit and efforts to defeat the proposed cuts to the Credit, see:

An open letter to Minnesota policymakers opposing cuts to the Renters' Credit signed by over 100 organizations.
What is the Renters' Credit/Circuit Breaker Property Tax Refund? - an overview of the Renters' Credit
Who Receives the Renters' Credit? - information by county on the number of persons receiving the credit, total amounts of Renters' Credit received by county residents, and more. Some of this data has been made into maps by Minnesota 2020.
Testimony on the Renters' Credit - The Minnesota Budget Project testified on behalf of the Renters' Credit in both the House and Senate Tax Committees in mid-March.
Governor Proposes $34 million Tax Increase on Low-Income Renters, an issue brief by Minnesota 2020.

Renters' Credit Threatened in 2005 Legislative Session

In the 2005 Legislative Session, Governor Pawlenty proposed cutting the Renters' Credit by 20%. The Minnesota House of Representatives proposed cutting the credit by 44% in Fiscal Year 2007, while the Senate made no cuts.

Over 160 Minnesota organizations joined the Renters' Credit Coalition, which strongly opposed any cuts to the Renters' Credit. The coalition argued that Minnesota's low- and moderate-income renters should not be expected to shoulder such a large share of the cost of balancing the budget.

Analysis and other materials used in the coalition's successful efforts to defeat cuts to the Renters' Credit in 2005 include:

Cuts to Renters' Credit Would Increase Unfairness of Property Taxes - finds that rental property taxes would become one of the most regressive taxes in the state if proposed cuts to the Renters' Credit are enacted
House Omnibus Tax Bill Would Hurt Minnesota Renters - describes the House proposal to cut the Renters' Credit by 44% and the impact it would have on Minnesotans
Governor's Proposal to Cut Renters' Credit Would Hurt Minnesotans - describes the Governor's proposal to cut the Renters' Credit by 25%
Legislative testimony - forward your browser to approximately 32 minutes into the hearing
Written testimony by the Minnesota Budget Project
Talking points developed by the Minnesota Coalition for the Homeless

Updated June 23, 2009

2314 University Ave W. #20
St. Paul, MN 55114
Phone: 651.642.1904
Greater Minnesota: 1.800.289.1904
Fax: 651.642.1517
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This document is for general information only - we are unable to answer specific questions about your renters' credit. To check on the status of your credit or to find out how to get tax forms, see the Department of Revenue web site or call (651) 296-3781. If you need help applying for the credit, see the AccountAbility Minnesota web site or call (651) 287-0187.