Hawaii state lawmakers have agreed to set aside nearly $62 million of this year’s budget to subsidize the construction of rental housing units and $35 million to repair aging public housing units.
But Sen. Jill Tokuda and Rep. Sylvia Luke, who lead each chamber’s money committees, said they don’t plan to hold a hearing for a proposal to increase a tax credit for renters, even though Hawaii renters are among the most cost-burdened in the nation.
There’s only a week left in Hawaii’s 2016 legislative session, and housing advocates have been urging lawmakers for months to put substantial money behind their promises to address the affordable housing crisis.
The median home price in Honolulu is now $725,000, and Hawaii has the highest rate of homelessness in the nation.
Betty Lou Larson, an affordable housing advocate at Catholic Charities Hawaii, said Thursday that she was very pleased with how much lawmakers decided to allocate to housing production even though it fell short of Gov. David Ige’s budget request.
She noted in addition to the budget, lawmakers greenlighted a separate bill that will transfer an additional $9 million from one housing fund to the Rental Housing Revolving Fund, which is the state’s primary money pool for subsidizing affordable housing development.
“We really needed a commitment this year for new affordable rental housing,” she said, noting that the appropriations announced Thursday are part of a long-term solution to Hawaii’s housing crisis.
But Gavin Thornton, from the Hawaii Appleseed Center for Law and Economic Justice, said he was devastated that legislators are deciding against increasing a tax credit for low-income renters.
Luke said that she was dissuaded by the cost of the measure and by reports that the national economy may enter a recession next year or the following year.
“The last thing we want to do is give a huge tax break just to take it back one year from now or two years from now,” she said.
Thornton said a potential recession provides even more reason to offer tax relief for low-income renters, who pay nearly twice as much of their income in taxes compared to wealthier residents.
“If the concern is that the economy is going to struggle in the coming years, then it just makes the argument even stronger for ensuring that we aren’t overburdening people, that we aren’t taxing people into poverty and into homelessness, because that’s exactly what’s happening,” he said.
Hawaii’s tax credit for low-income renters has been stuck at $50 annually per dependent for 35 years. But Luke said the proposal to increase the housing tax credit would be too expensive at an estimated $15 million.
“This one has a large price tag and we don’t want to get in a situation where we end up hurting a lot more other people because we’re going to have to increase taxes and fees,” she said.
Tokuda pointed out that last year, the state boosted the earned income tax credit, which helps low-income people, and that just two days ago, lawmakers agreed to pass another tax credit for child care.
“Every year we have been trying to really target support to those individuals who need the help while understanding that we can’t pass everything because the impact to the overall general fund is quite significant when you aggregate it all together,” she said.
Still, Thornton noted that the Appleseed Center’s recent survey found 48 percent of Hawaii residents say they live paycheck-to-paycheck.
In the same survey, about one in four respondents said they’ve worried about how they’re going to pay the rent within the last month.
“Our residents are struggling with the highest housing costs in the nation, they’re struggling with the lowest wages in the nation, they’re struggling to make ends meet,” he said. “To be making it harder for people who are struggling, by having a tax system that heavily taxes the people who are struggling the most, is just unforgivable to me.”
In his budget proposal this year, Ige requested $75 million for the Rental Housing Revolving Fund, formerly known as the Rental Housing Trust Fund. The fund provides low-interest loans to developers who are building housing in which at least half of the units help low-income people.
Ige also sought $25 million for the Dwelling Unit Revolving Fund, which subsidizes construction of residential units; and $35 million for public-housing repairs.
Tokuda and Luke announced Thursday that they’ve agreed to give $36.6 million to the Rental Housing Revolving Fund, $25 million to the Dwelling Unit Revolving Fund, and $35 million for public housing repairs.
About $6 million of that funding for public housing is specifically set aside to repair vacant units.
The budget also includes $4.23 million for low-income housing tax credit loans, nearly half of Ige’s request for nearly $8.5 million.
Last year, the Legislature didn’t set aside any money for low-income housing tax credit loans or for the Dwelling Unit Revolving Fund.
Lawmakers infused more funding — $40 million — into the Rental Housing Revolving Fund, but only gave $4.1 million for public-housing repairs.
But although the increased funding this year is good news for affordable housing advocates, the high cost of housing construction may not produce very many units compared with the high demand.
Including the $9 million that is expected to be transferred to the Rental Housing Revolving Fund, the total $45 million for that fund is projected to produce 364 units.
A state study found Hawaii needs nearly 66,000 units over the next 10 years.
Earlier this week, lawmakers agreed to give $12 million for homelessness initiatives, and to set a goal of developing 22,500 affordable rental housing units over the next decade.