Who needs a housing subsidy more?

Chuck Sheketoff

In a world in which the State of Oregon has unlimited revenue to spend addressing society's needs for education, economic development, housing, health care, child foster care, seniors’ care, and the like, it might be okay to give everyone a housing subsidy.

Of course, that’s not the world we live in.

We live in a world in which revenue is scarce and the needs are great, especially housing needs. Many Oregon families struggle to keep a roof over their heads, and some have lost that struggle.

In this difficult reality, whom should the state prioritize when it comes to subsidizing housing? The low-income family struggling to keep a roof over their head or living on the streets, or the family that can afford to purchase safe, comfortable housing?

That, in a nutshell, is what the debate around reforming the Oregon mortgage interest deduction is all about.

Totaling $1.1 billion in the next budget cycle, the mortgage interest deduction is far-and-away Oregon’s biggest housing subsidy. The deduction only benefits about three out of 10 Oregon taxpayers, and the bulk of the tax subsidy is going to those at the higher-end of the income ladder.

In short, Oregon’s biggest housing subsidy offers no help to the vast majority of Oregonians, especially those most affected by the housing crisis. Instead, it mostly helps those who can already provide safe, comfortable housing for their families.

Sadly, that’s the way the Oregon Association of Realtors wants to keep it.

At a recent legislative hearing on House Bill 2006, which would enact a common sense reform of the mortgage interest deduction, a lobbyist for the Oregon Association of Realtors offered up a scenario to defend this indefensible housing subsidy.

What was the scenario? One in which we were told it was bad that under the bill a single woman in Portland earning $99,999 a year loses $49 of her $162 monthly mortgage subsidy for her $483,000 home.

The realtors’ example illustrates just how out-of-whack their priorities are.

House Bill 2006 would allow middle-class families to continue to get up to $113 a month in subsidies on up to $15,000 per year in interest payments. With the average yearly mortgage interest payment under $9,000, the vast majority of homeowners would be unaffected. And even the realtors’ allegedly-struggling $99,999-a-year single woman would still get a housing subsidy of about $113 per month under the bill. The realtors implied that her losing out on $49 a month from the subsidy cap was enough to cost her the privilege of homeownership.

Now compare the realtors’ scenario to that of a single mom earning just $31,000 a year at her $15 per hour Portland job. She’s likely to rent, so she does not qualify for the mortgage interest deduction. And it is likely that her rent (especially in Portland) is more than 30 percent of her monthly income, putting her in a precarious financial position. Under the current system, she gets no $113 a month housing subsidy from the State of Oregon.

Or think about Oregon’s 22,900 homeless school kids and their parents. They don’t have a permanent shelter or a $113 a month subsidy.

HB 2006 addresses our subsidy’s misplaced priorities.

HB 2006 would allow the state to help many families struggling as a result of the housing crisis. The bill would take the revenue savings from the reform and invest them in helping low- and moderate-income families become homeowners, in increasing the supply of affordable rentals, and in directly addressing the state’s severe homelessness problem.

HB 2006 reflects a choice between the two worlds: Will Oregon continue to live in the realtors’ world where we prioritize subsidies for well-to-do homeowners, or will Oregon begin to help those struggling to put or keep a roof over their heads in this housing crisis?

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Chuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

By Chuck Sheketoff March 31, 2017