HARRISBURG — State lawmakers are haggling over what to do with Pennsylvania's $14 billion budget surplus, with an increase in funding for an affordable housing program a leading contender for a piece of the pie.

The Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE) provides grants to municipalities to, among other things, build and repair housing and provide rental subsidies to low-income families.

Currently, available funds are capped at $60 million per year, but in his budget proposal to the state legislature, Democratic Governor Josh Shapiro proposed raising the cap to $100 million.

“As Governor Shapiro has made clear, we need to make housing more affordable in our Commonwealth – and one of the most effective tools we have at our disposal to do so is the PHARE fund,” Shapiro spokesman Manuel Bonder wrote in an email.

According to a study by the Pennsylvania Housing Finance Agency, which administers PHARE grants, Pennsylvania does not have enough affordable housing for people living at least 20 percent below the median income in a given region. Real estate prices and rents have risen steadily over the past decade, the study says.

The proposal has already garnered bipartisan support. Two Republican-backed bills that would raise the cap on PHARE deposits to $100 million passed a state Senate committee unanimously in the last two legislative sessions, although the measures never reached a final vote in the floor. The state House of Representatives passed an identical bill last June with the votes of all Democrats and 26 Republicans.

“If you look at the issues in your county that revolve around housing need, there is something this program can do for you,” said Aaron Zappia, director of government affairs for the Housing Alliance of Pennsylvania. Zappia cited preventing homelessness and eliminating blight as benefits of the program that both parties could get behind.

Shapiro's proposal does not call for increasing PHARE funding to $100 million overnight, but rather raising the cap by $10 million each year through 2028. He also proposed increasing the Whole-Home Repairs Program by $50 million, a separate grant for low-income homeowners to fix problems such as leaky roofs, unsafe electrical wiring and broken boilers.

Shapiro also proposed scrapping PHARE's current funding formula and instead introducing what his budget proposal calls a “guaranteed” transfer. Bonder said the current formula sometimes results in PHARE receiving less money than the cap allows. The guaranteed transfer would mean that funds would reliably reach the cap every year.

That higher amount would be funded largely through the state's land transfer tax, one of several sources of funding for PHARE, along with natural gas royalties and money from the National Housing Trust Fund. Money from the land transfer tax goes to several areas of the budget, including the general fund, and Bonder said the state's current surplus means there is room to spend.

The Democrats in the state House of Representatives support Shapiro's proposal in its current form, said their spokeswoman Beth Rementer. However, the Republicans in the state Senate would have to be convinced in the budget negotiations.

The state budget was due on June 30, but parliamentarians are still haggling over the final package.

When asked for comment, a spokesman for Senate Budget Committee Chairman Scott Martin (R-Lancaster) said, “We have no update to share on this issue at this time.”

State Senator Elder Vogel Jr. (R-Beaver), who sponsored the bill for the last two legislative sessions, is somewhat optimistic.

“We are hopeful that we will see an increase in the cap,” said Vogel's communications director Abby Chiumento. “Since negotiations are still ongoing, we do not yet know what will be in the final budget.”

PHARE was enshrined in law in 2010. The legislation establishing the programme received almost unanimous support in both houses.

The Pennsylvania Housing Finance Agency, which is affiliated with the state but not run by it, selects the recipients of the PHARE grants, which include both nonprofit organizations and county governments.

The program “allows communities, municipalities and counties to figure out how to best use the funds,” said Sara Innamorato, Allegheny County executive and a former Democratic state legislator. “For us, it's about addressing homelessness, but if there's a community that wants to attract more first-time home buyers, they can design a program to do that.”

Innamorato, who sponsored the bill to increase the PHARE cap during her tenure in the state House of Representatives, argues that increased funding is long overdue.

“There are many projects that are worthy but go unfunded every year,” she said. “We could always use more money to invest in meeting housing needs.”

BEFORE YOU GO: If you learned something from this article, please pass it on and donate to Spotlight PA at spotlightpa.org/donateSpotlight PA is sponsored by Foundations and readers like you who are committed to responsible journalism that achieves results.