The number of individuals benefiting from a state program that assists with housing costs for older and disabled Pennsylvanians continues to decline, marking over a decade of diminishing support. However, Governor Josh Shapiro aims to reverse this trend through his proposed initiatives outlined in the first budget of his tenure. The governor’s plan includes augmenting rent and property tax rebate amounts, raising income limits, and making an additional 173,000 people eligible for assistance. By implementing these changes, the program’s scale would significantly expand, providing much-needed aid to a larger population. Furthermore, Shapiro aims to halt the ongoing reduction in the number of beneficiaries by adjusting the income limits to account for inflation.

Addressing a Decade-long Decline in Housing Assistance

Existing program regulations have been criticized for imposing a “weird penalty” on recipients, as stated by Uri Monson, the budget secretary, during a legislative hearing in April. Monson described the design of the program as flawed from the start. According to data from the State Department of Revenue, the number of rebates paid out has consistently decreased since 2009, resulting in a decline of nearly 27%. In 2021, approximately 160,000 fewer individuals received rebates compared to 2009. These rebates serve as partial refunds on rent or property taxes paid in the previous year.

For renters, the limits have remained unchanged for more than 35 years. This lack of adjustment exacerbates the issue, especially considering the disconnect between state and federal law. Most individuals who qualify for state rebates, primarily low-income renters and homeowners aged 65 or older or with disabilities, also receive Social Security benefits, which are annually adjusted for inflation. However, the income limits for the rebate program fail to account for these adjustments.

Consequently, recipients who have been benefiting from the housing program find that even slight cost-of-living adjustments to their Social Security payments push their income above the qualifying limit, at least on paper. However, in practice, the additional income is largely offset by increased Medicare premiums and rising prices for daily necessities due to inflation, resulting in the intended benefits of the increase being nullified.

Challenging Existing Rules and Disparity in Qualification Criteria

The governor’s projections indicate that by 2026, the threshold would increase further to $48,200. It is important to note that only half of an individual’s Social Security income is counted toward the program’s calculation.

Furthermore, Governor Shapiro proposes boosting the dollar value of the rebates across all income levels by approximately 50%. This increase in assistance would provide significant relief to eligible individuals and help alleviate the financial burden of housing costs.

While these expansions come with an estimated cost of $130 million in the first year, according to budget documents, they hold the potential to create a positive impact on the lives of many Pennsylvanians. State Representative Steve Samuelson, a long-time advocate for expanding the program, expressed his enthusiasm for Governor Shapiro’s prioritization of this issue. He emphasized that these measures should have been implemented years ago.

During budget hearings, lawmakers from both parties voiced their support for the program, highlighting the essential role it plays in providing financial stability to vulnerable individuals. State Representative Manuel Guzman shared the story of a constituent who expressed that the additional funds from an expansion would be used to cover essential expenses such as groceries, insulin, and doctor’s visits. State Senator Lynda Schlegel Culver echoed the sentiment, emphasizing that the potential expansion was a topic of great importance in her district.

Long-Term Solution and the Potential Impact on Property Tax Relief

Concerns have been expressed by certain Republicans regarding the potential consequences of an expanded housing program on funding for broader property tax relief. Currently, about half of the funding for the rebate program comes from state lottery proceeds, while the other half is derived from gaming revenues. Governor Shapiro proposes utilizing gaming revenues to finance the proposed expansion. He asserts that the establishment of new casinos and the surge in online gambling have led to a consistent increase in gaming revenues, thereby guaranteeing adequate funds for both the expanded rebate program and general property tax relief efforts.

Debate Over Funding Sources and Concerns About Automatic Spending Increases

However, skeptics, including State Representative Seth Grove, have raised concerns about reallocating funds from a larger pool of recipients to a smaller group. Grove is apprehensive that such a shift could potentially overlook the needs of homeowners in general who also require property tax relief.

Advocacy and Expectations for Negotiations on the Proposal

Moreover, concerns arise from the governor’s plan to adjust the income thresholds for the rebate program annually based on inflation. Critics argue that this commitment to automatic spending increases could be an unprecedented approach within state government. Revenue Secretary Pat Browne acknowledged the uniqueness of this proposal during a budget hearing, emphasizing its importance in maintaining the program’s relevance over time.

As the negotiations between the General Assembly and the Shapiro administration unfold over the next two months, a final agreement on the budget and program expansion is expected by June 30, the deadline for passing the state budget. Various stakeholders, including Kathy Cubit from CARIE, a nonprofit advocating for older Pennsylvanians, support Governor Shapiro’s plan but anticipate modifications to certain provisions.

One such provision likely to face scrutiny is the adjustment of income thresholds for inflation. Despite potential challenges, Governor Shapiro’s proposal offers a comprehensive, long-term solution to a persistent issue. It aims to address the declining assistance provided by the state housing program and create a fairer system that accommodates the changing needs of Pennsylvanians.