Exploring State-Level Subsidies in Illinois, Wisconsin, and Minnesota
In recent years, the Upper Midwestern states of Illinois, Wisconsin and Minnesota have marketed themselves as inclusive, low-cost and “climate-proof” havens for growth. And between 2010–2020, the populations of Wisconsin and Minnesota grew apace: Wisconsin’s population increased by 3.6% between the 2010 and 2020 Census counts, and Minnesota’s population increased by 7.6% in the same period. In both Wisconsin and Minnesota, a once-plentiful housing supply has dwindled to a shortage.
On the basis of population growth, shifts in Illinois’ population — and the corresponding need for affordable housing supply — are more checkered. The Prairie State experienced a slight decline of 0.1% in population from 2010–2020, with the decline most pronounced from 2019–2020. Even as Illinois experiences this slight dip, however, intrastate demographic shifts and wage stagnation have invigorated policy initiatives to expand the state’s affordable housing stock.
Affordable housing advocates in these states have developed new tools at the state level to bolster (and, in some cases, mirror) the federal Low Income Housing Tax Credit (LIHTC) program, in hopes that growth can continue in a sustainable and affordable manner. The three states are socioeconomically interconnected, with multiple combined Metropolitan and Micropolitan Statistical Areas straddling state lines.
These state-level developments have played out against a backdrop of conflicting narratives and policy aims in a divided Washington. While the federal budget reconciliation bill expanded LIHTC while lowering the private-activity bond threshold from 50 percent to 25 percent, other supportive housing initiatives are continually under threat — and, in states that do not comply with the immigration policies of the Trump administration, affordability advocates are wary of federal funds being withheld in retaliation. With the continued government shutdown, many low-income residents will also face significant instability in the near term, with SNAP payments delayed, supportive housing initiatives threatened, and household budgets stretched even further beyond capacity.
