HARRISBURG (TNS) — Achieving the American dream of homeownership can be tough these days between a shortage of housing stock and the high cost of borrowing but legislation that passed the state House of Representatives is intended to help Pennsylvanians make it a reality.

The bill, sponsored by Rep. Ryan Bizzarro, D-Erie County, would allow prospective first-time homebuyers to park money in a savings account in the state Treasury that would not be subject to the state’s 3.07% personal income tax. The money could only exclusively be used for purchasing a first home, whether to pay the down payment or closing costs.

The bill, which passed on a strong bipartisan vote of 192-10 on Friday, now goes to the Senate for consideration. It has the backing of Republican state Treasurer Stacy Garrity and won praise from her Democratic opponent Erin McClelland.

“We’re one step closer to providing this vital program to Pennsylvanians looking to buy their first home,” Bizzarro said in a statement. “It’s no secret that the current home-buying process is competitive, difficult and expensive. My bill would alleviate financial barriers for buyers and help secure a home for their families.”

His office cites statistics from the National Association of Realtors showing first time buyers made up 26% of all homebuyers in 2023, which is down from 34% the year before, and the lowest in over a decade.

Garrity said Bizzarro’s bill “will give people saving for their first home a boost with state tax benefits – much like the existing PA 529 and PA ABLE savings programs. There’s a good reason this proposal enjoys broad bipartisan support – it’s a smart way to address a real problem.”

McClelland said, “Increasing homeownership is always a win. As the increase in home prices has consistently outpaced inflation, and a poverty-level minimum wage keeps too many Pennsylvanian’s in debt, there are a number of serious barriers to homeownership. This program increases savings and provides tax exemptions; and that’s a good start. I hope the legislature continues to follow through and provides statewide property tax reform to stabilize the serious inequity and instability in this system throughout the state.”

Among the provisions in the bill, it would:

Limit annual deposits in these savings accounts to $5,000 in a tax year for an account holder who files an individual tax return or $10,000 for joint filers.

Individuals who are not account holders can contribute to an account but that would not be eligible as a tax deduction.

An account holder may claim a deduction for a maximum of 10 years for an aggregate amount of $50,000 for an individual personal income tax filer and $100,000 for a joint personal income tax filer. The maximum amount of all contributions to an account may not exceed $150,000.

Money left in the account at the end of 10 years will be considered taxable income for the account holder.

Rep. Tom Kutz, R-Cumberland County, who supported the bill, said the measure would help people plant roots in Pennsylvania, raise a family here and stay here longer.

“This is a great step to do just that,” he said. “Programs like these allow individuals and young families to save up what they need to buy a home.”

According to estimates from the state Department of Revenue, revenue loss to the commonwealth resulting from this program could range from $13.6 million to $102.9 million depending on how many homebuyers use the program and the amount that would get deposited in the savings accounts.

Rep. Perry Stambaugh, R-Perry County, considers the proposal to be unnecessary. He said he voted against the bill because it puts government in direct competition with private banks and is duplicative of other programs that can assist first-time homebuyers.

“The Pennsylvania Housing Finance Agency already delivers a bunch of homebuyer assistance programs,” Stambaugh said. “Some of those offered to first-time buyers include below-market-rate loans, down-payment assistance programs, and a network of approved lenders. Some cities and counties also offer first-time buyers the federal Mortgage Credit Certificate tax credit.”

Rep. Dawn Keefer, R-York County, said despite all those programs, “it’s not enough – never is. If these programs aren’t effective, let’s scrap them and try something new. … If we want to help first-time homebuyers, government must stop spending. Or how about eliminating the realty transfer tax? The solution of always spending more, consistently fails and yet that’s exactly what we do year after year – spend more – double down. When do the taxpayers get a break?”

“There are many laudable things that people may choose to do with their money,” said Rep. Paul Schemel, R-Franklin County, who along with Keefer was another of the no votes on this bill. “Buying a home is a personal expense for one’s personal benefit, which makes it different from a charitable contribution for the benefit of the public. Taxes should be applied fairly and should not favor one expenditure for private benefit over another.”

What’s more, he said considering these future home buyers are saving only 3.07%, “it is difficult to conceive that this can be of any substantive benefit” to them.

But a spokesman for the Pennsylvania Housing Finance Agency says it supports this program and said it complements what that agency offers.

“While PHFA isn’t directly involved with that program, it would dovetail nicely with our many programs that work to expand housing options for Pennsylvanians,” said spokesman Scott Elliott. “It’s our perspective that this homebuyer savings account program has value for people looking to own their own home, and we’re appreciative for how it would support our housing mission, as well.”

This bill is part of a four-bill package Bizzarro is offering called the Modern Access to Treasury & Housing Act, or MATH Act, that also would increase housing affordability, allow people to recover unclaimed property more easily, and increase economic development through investments in communities.

Interestingly, Garrity supports the entire package of bills offered by Bizzarro, who had an unsuccessful primary run against McClelland for the Democratic nomination for state treasurer in the spring.

“Some people may be surprised that I’m working with someone who was my political opponent very recently, but good ideas are good ideas no matter where they come from,” Garrity said. “Rep. Bizzarro also has good ideas I support on strengthening infrastructure and how to provide capital for important local projects that would benefit Pennsylvanians.”