This article is shared with LebTown by content partner Spotlight PA.

By Charlotte Keith of Spotlight PA

HARRISBURG — The number of people getting help from a state program that offsets some housing costs for older and disabled Pennsylvanians will drop again this year, continuing more than a decade of decline.

Gov. Josh Shapiro wants to fix that.

In his first budget, the Democratic governor has proposed increasing rent and property tax rebate amounts and raising the income limits to make an additional 173,000 people eligible, an expansion that would significantly increase the size of the program. Shapiro also wants to stop the steady decrease in the number of people receiving rebates by allowing the income limits to rise with inflation.

The existing rules impose a “weird penalty” on recipients, budget secretary Uri Monson said at a legislative hearing in April, adding that it “seemed just like a terrible way to design a program to begin with.”

The number of rebates paid out has declined every year since 2009, according to the state Department of Revenue, a drop of almost 27%. By 2021, the most recent year for which data are available, roughly 160,000 fewer people received rebates compared to 2009. The payments provide a partial refund on rent or property taxes paid the previous year.

Despite the dwindling numbers, state lawmakers haven’t updated the income limits for homeowners to qualify in more than 15 years. For renters, it’s been more than 35 years.

A disconnect between state and federal law makes the problem worse. Most people who qualify for state rebates — lower-income renters and homeowners who are 65 or over, or disabled — also receive Social Security benefits, which are adjusted each year to keep pace with inflation. The income limits for the rebate program, however, don’t factor this in.

As a result, people who have received a rebate for years find that modest cost-of-living increases to their Social Security payments push their income just over the limit to qualify — at least on paper. In practice, much of the extra money someone receives from a Social Security increase is eaten up by rising Medicare premiums, as well as higher costs for everyday items caused by the inflation that prompts the increase in the first place, experts say.

Even if lawmakers agree to Shapiro’s plan, the expansion wouldn’t go into effect until the start of 2024. Thousands of people would still lose out on rebates this year, after soaring inflation led to one of the largest cost-of-living increases in decades.

The governor’s proposal offers a long-term solution to a problem that lawmakers have previously addressed only in a piecemeal fashion.

In 2014, the General Assembly passed legislation ensuring no one would be disqualified from receiving a rebate because of an increase in their Social Security income; that law expired in 2016. Since then, lawmakers from both parties have introduced dozens of bills to address the issue, but none have gained traction in Harrisburg.

Under current law, the income cap to qualify is $15,000 for renters but $35,000 for homeowners. Shapiro’s plan would eliminate this disparity, raising the income limit for both to $45,000 per year. (Under the program’s rules, only half of someone’s Social Security income is counted.) By 2026, that threshold would increase to $48,200, according to the administration’s projections. The governor also wants to boost the dollar value of the rebates across income levels by about 50%.

The expansion would cost an estimated $130 million in the first year, budget documents show.

“I’m thrilled that Gov. Shapiro has made this a priority,” state Rep. Steve Samuelson (D., Northampton), chair of the House Finance Committee and a longtime advocate for expanding the program, told Spotlight PA. “We should have done this years ago.”

During budget hearings in March and April, lawmakers from both parties praised the program. State Rep. Manuel Guzman (D., Berks) said one of his constituents told him that if the expansion were approved, she would use the extra money to pay for groceries, insulin, and doctor’s visits.

State Sen. Lynda Schlegel Culver (R., Columbia) said the possibility of an expansion was “an issue my district cannot stop talking about.”

Like other Republicans, however, Schlegel Culver also raised concerns about whether the cost of an expansion could jeopardize funding for broader property tax relief.

Roughly half of the money for the rebate program comes from state lottery proceeds; the other half comes from gaming revenues, which Shapiro wants to tap to pay for the increase. This money also pays for another, less targeted form of property tax relief that is available to any homeowner looking to lower the property tax bill on their primary residence, regardless of income.

The Shapiro administration says there will be enough money to pay for both tax relief measures, as the opening of new casinos and the rise of online gambling has led to a steady increase in gaming revenues in recent years.

But if those revenues fall short of the administration’s projections, an expanded rebate program could leave less money for general property tax relief, said state Rep. Seth Grove (R., York), minority chair of the House Appropriations Committee.

“The proposal wants to take money from everyone that gets it and give it to the few — that’s the overall concern,” Grove said. “It’s not just seniors, it’s homeowners in general that want property tax relief.”

Grove also said he was wary of Shapiro’s plan to adjust the income thresholds for the rebate program for inflation, which he said would commit the state to automatic spending increases each year.

Such a policy would be unusual in state government, revenue secretary Pat Browne acknowledged during a budget hearing in April, calling it “very unique but very important.”

“This is something that will keep the program relevant for the same number of people over a period of time,” he told lawmakers at a previous hearing in March.

Even so, lawmakers may balk at the prospect, said Kathy Cubit, advocacy manager at CARIE, a nonprofit that represents older Pennsylvanians. Cubit said she supports Shapiro’s plan, but added: “I wouldn’t be surprised if you see the base of the proposal go through, but not that particular provision.”

A final agreement is likely to be hashed out in negotiations between the General Assembly and the Shapiro administration over the next two months. The deadline for passing the state budget is June 30.

Eddy Zalinski III, who rents an apartment in State College, stands to receive an extra $270 next year if lawmakers agree to the proposed increase.

The current income threshold of $15,000 for renters is “just way too low,” said Zalinski, 51, who receives federal disability benefits and works part-time as a librarian. One year, he said, picking up a few extra shifts put him $137 over the limit to qualify, which cost him the full $500 rebate.

“I’m really hoping this goes through,” Zalinski said. “Having that little extra cushion is a big deal for me.”

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