July 2022 Legislative Update
By Aaron Zappia, Senior Government Relations Manager
The Legislature approved and Governor has signed a $45.2 billion state budget for FY2022-23 that increased education spending by $1.8 billion. This budget has allocated the remainder of the Commonwealth’s American Rescue Plan funding.
This budget makes significant investments in housing totaling $375 million. An additional $140 million is being made available for direct property tax relief and over $100 million for adult mental health services.
American Rescue Plan dollars funded a Whole Home Repairs Program, a new Housing Options grant fund and Development Cost Relief for LIHTC construction cost gaps.
Whole Home Repairs Becomes Law
SB 1135 introduced by Senator Nikil Saval was enacted through the Fiscal Code legislation that makes up the state budget. $125 million in ARP funds have been allocated to the program which will be administered by DCED. Grants of up to $50,000 will be available for small landlords and homeowners to address habitability and efficiency concerns.
Senator Saval said,“This is a hard-fought victory for every Pennsylvanian who is struggling to stay in their homes. At a time of protracted hardship for people across the Commonwealth, we have seized a historic opportunity to move the needle on our housing crisis. The United States needs a model for how to preserve its aging housing stock and create new jobs, and with the Whole-Home Repairs Program, Pennsylvania has positioned itself as a leader.”
Grants would be available for homeowners whose household income does not exceed 80% of area median income. Repayable loans are provided for landlords who provide affordable units to households earning not more than 60% of area median income. These loans will be forgiven if the landlord has owned the property for at least 15 years, has no violations, and agrees to extend the tenants lease for up to three years and increase rent no more than 3% annually.
While we have cleared this major legislative hurdle, it is still important for legislators to hear that funding PHARE is a top priority as the budget is being finalized.
We thank Senator Elder Vogel, Senator Art Haywood, and State Representative Kurt Masser for sponsoring these bills and seeing them through this important step.
Thanks to all our member organizations and partners throughout the state for your advocacy and hard work to help get this initiative this far.
Housing Options Grant Program
A new program, known as Housing Options, was allocated $100 million in American Rescue Plan funding as part of the state budget. Housing Options will provide developers and non-profits grants for the construction of affordable rental units throughout the state.
The Housing Alliance will seek to stay abreast of developments and report more once information is available.
Development Cost Relief
We were successful in advocating for $150 million in American Rescue Plan funding to help close construction cost gaps that threatened to undermine LIHTC deals across the state due to rising costs and supply chain issues. The program, administered by PHFA, will be available to LIHTC developers in the same way the first round of funding was for FY 2021-22.
This funding is estimated to keep approximately 2,500 affordable units slated for construction.
Property Tax / Rent Rebate Program to provide one-time 70% bonus
This budget allocates $140 million to the Commonwealth’s popular Property Tax / Rent Rebate Program. Eligible individuals who recently received rebates will automatically receive a one-time 70% bonus rebate.
Anyone who has not yet applied for a rebate should simply fill out the application as they normally would. Importantly, the deadline to apply for rebates on rent and property taxes paid in 2021 was recently extended until Dec. 31, 2022, so eligible applicants still have plenty of time to file their applications.
To qualify for the property tax and rent rebate program, homeowners must have eligible incomes of $35,000 or less and renters $15,000 or less. Only half of Social Security income is counted in determining eligibility.
The size of the bonuses vary based on income levels. Homeowners with eligible income under $8,000 would receive an extra $455; $8,001 to $15,000, an extra $350; $15,001 to $18,000, an extra $210; and $18,001 to $35,000, an extra $175. Renters with eligible incomes up to $8,000 would receive an extra $455 and those with incomes between $8,001 and $15,000, an extra $350.
According to the House Republican Appropriations Committee, more than 444,000 claims were paid out of this program in 2020 for a total of more than $213 million. The average rebate for homeowners was $442 while the average rebate for renters was $554.
Mental Health Services Receives a Boost
For the first time in a decade, county mental health programs have received a significant bump, receiving a 5% increase of nearly $43 million. County services have been in high demand amid overlapping crises of opioid addiction, COVID, and a rise in suicide attempts and mental illness among children and teens. The funds will be used to hire and retain staff and increase bed capacity for those who need round-the-clock care.
$100 million in federal American Rescue Plan funding has been set aside for initiatives to support adult behavioral health care. Funding will be allocated by future legislation based on recommendations made by a blue-ribbon commission.
PHARE cap increase campaign will continue
A groundswell of bi-partisan support from across the Commonwealth has advanced legislation to raise the funding cap on the PHARE program—the Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund. We thank everyone for their hard work to help move this initiative forward.
A cap increase was expected to pass as part of the FY 2022-23 state budget, but lawmakers decided to rely on more than anticipated American Rescue plan funding to support housing needs in the short term.
The Housing Alliance and partners are still pursuing a cap increase with the possibility of passing either SB 1254 or HB 2665 before the end of the 2021-22 legislative session.
Both SB 1254 and HB 2665 are on second consideration in their respective chambers and have been re-referred to committees on Appropriations.
The inflow of tax revenue for the remainder of 2022 will strongly influence future state government investments.