Low-income renters worry about Pawlenty's credit cut

Gov. Tim Pawlenty's plan to cut the state renters' credit has some tenants worried about how they will make ends meet.

The credit is a refund that goes to thousands of people each year, many of them senior citizens and the disabled.

One of those renters, 70-year old Ernie McNeal, lives alone in Plymouth. Before complications from diabetes forced him to retire, McNeal worked as a printer. Now, he spends most days on the road between his home and a nursing home where his mom lives. Her health is failing fast, and McNeal said he just can't relax if he doesn't check in on her every day.

That's why he made sure to fix his car when it started acting up a few weeks ago. But the repairs really set him back. So, like most months, he's already behind.

"I'm out of money. Shoot, I'm out of money right now but I had big expenses this month. I had to give the guy $130 to fix my car. I had to buy the part. That was $240."

McNeal lives on about $1,000 a month in Social Security. His rent in the subsidized complex is about $300 a month. As the only sibling left, he shoulders the burden of his mom's needs alone.

He's looking forward to the end of summer, when he usually gets his renters' credit check. It usually comes to about a month's rent.

"Whatever I get back, it just helps out. It's food for you. There are a lot of people that live in this place here that have less than I have. At least my income is secure because I get Social Security."

McNeal is typical of people who get the renters' credit. About 28 percent of the 274,000 households are seniors or disabled. More than half survive on less than $20,000 a year.

The refund program was originally intended to offset renters' share of state property taxes. To help balance the budget, Pawlenty has proposed cutting it by more than a quarter - or about $51 million a year.

By law, he can't officially make any cuts until July 1, the start of the new fiscal year. But lawmakers are already weighing in. At a hearing last week at the Capitol, DFL state Rep. Paul Marquart of Dilworth, who chairs the House Property and Local Sales Tax Division, was livid about the proposed cut.

"I see that as a $50 million tax increase on seniors, those with disabilities and hard-working families," he said.

Marquart said if the cut goes through, low-income renters will be forced out of their homes because they will no longer be able to make ends meet. He said the governor was willing to veto the DFL tax bill during the session to protect high income taxpayers from seeing an increase, but the same no-new-taxes pledge apparently doesn't extend to those with the lowest incomes.

But administration officials say the current renters' credit goes beyond the amount tenants actually pay in property taxes - they say the governor's cut would bring it more in line with the actual portion of rent that goes to property taxes.

Phil Krinkie, who heads the Taxpayers League of Minnesota, said the current formula used to determine the credit is inflated and should be cut.

"I agree with the governor's proposal," he said. "Particularly in challenging economic times for the state, when the state needs to put forward a balanced budget, you are either going to raise taxes or you are going to reduce expenditures to get there."

But Michael Dahl, from tenant advocacy group Homeline, said it's the wrong time to make the cut. He said the renter's credit is exactly the kind of stimulus the state's economy needs now because it gets spent right away.

"You see that people are using it to buy school supplies for their kids, they have been waiting to make a repair on their car, perhaps there is some medication that they have been waiting to buy," he said. "Renters look forward to this as a time to sort of give them a little bit of breathing room in the year to pay for things that they cannot usually afford."

Eighty-year-old Korean War veteran Robert Zozaski, from Breckenridge, gets by on about $930 a month between Social Security and his pension from the VA. He saves money by eating lots of instant Ramen Noodles.

"You know, the Ramen Noodles and chicken flavor, I like," Zozaski said. "One package of that, I double the water so I make two meals out of it. What I do is I buy them by the case when they are a dime a pack. That's $2.40 a case. That's quite a few meals."

Zozaski has a heart condition and worries about all the sodium in the ramen he eats, but said it's all he can afford. He said he doubts the governor and lawmakers know what it's like to live on ramen.

He'll have to figure out a way to save even more money if he loses his renters' credit, which usually puts a few hundred dollars extra in his pocket every year. He uses it to buy new clothes and pay his home health aide, who helps him with chores and laundry.

Gallery

Fullscreen SlidePrevious Slide

1 of 1

Next Slide