Housing Settlement Dollars Go Toward Tax Revenue Gap, Not Homeowners

Molly Messick / StateImpact Idaho

Last fall, this Nampa neighborhood was dotted with foreclosures.

Most of the $13.5 million Idaho received as part of the multibillion-dollar mortgage settlement reached earlier this year has gone into the state’s general fund, as StateImpact recently reported.  Now, the state Division of Financial Management’s May report shows that the $13 million directed into the general fund last month helped to offset weaker-than-expected individual income tax collections.

Reports including this one from ProPublica and this one from affordable housing group Enterprise Community Partners have pointed out that many states are putting the settlement funds not toward housing programs but toward budget gaps.  As ProPublica’s Paul Kiel and Cora Currier write, “[w]hat stands out is that even states slammed by the foreclosure crisis are diverting much or all of their money to the general fund.”

With a foreclosure rate that for much of 2011 was among the highest in the nation, Idaho can certainly be described as a state that was “slammed.”  This interactive map helps put the state in context.

The Division of Financial Management report shows a slight, $3.4 million revenue shortfall for the month of May.  The shortfall was mostly due to individual income tax revenue that came in $18 million below its estimated level for the month.  The mortgage settlement payment offset a large share of those losses.