Governor Poised Again to Raid Affordable Housing Trust Fund

Housing advocates learned earlier this month that Gov. Rod Blagojevich will once again “sweep” various dedicated funds, including the Illinois Housing Trust Fund, to fund the governor’s new $140 million school endowment fund. The Housing Trust Fund, which is the only dedicated source of state funding for affordable housing, is desperately needed to curb Illinois’s severe shortage of affordable housing. Yet it could face the largest raid of any other dedicated fund.

With a rise in the amount of real estate transfer taxes over the last two years, the fund currently contains approximately $31 million, although advocates note that many of the dollars are earmarked for affordable-housing projects. Advocates were able to avoid a proposed $3.8 million cut in the fund last year but could not avoid a $5 million sweep the year before, when the legislation allowing the governor to take such action became law. This year’s projected raid could be up to $10 million.

Even education advocates are not supportive of the school endowment fund. They note that the $140 million would not be enough to raise the state’s minimum amount currently spent per pupil.

The courts, however, may ultimately decide if the governor has the power to raid the trust fund or other special-purpose funds. Two separate court actions have been filed challenging the constitutionality of the law allowing the governor to raid dedicated funding sources and put them into general revenue. In an action brought in Cook County Chancery Court last fall, Judge Patrick McGann ruled that the law violated the uniformity clause and the due process clause of the Illinois Constitution. The case is on appeal.

Since its creation in 1989, the Housing Trust Fund has helped finance nearly 13,505 housing units in addition to furthering state economic growth and stability through new high-wage construction jobs, increased public safety, and educational security.

For more information, contact Kate Walz at 312.263.3830 ext. 232.