HARRISBURG — Gov. Josh Shapiro has signed a $50.8 billion budget that includes major new investments in education but does not address skill game regulation or other pressing policy issues.
The deal was struck behind closed doors and its details were in flux until late Saturday, when committees in both chambers introduced bills during a rare weekend session. On Sunday, almost two weeks after the legal deadline of June 30, the entire legislative session took its final vote.
More than $900 million will go to education; Providing a pension increase for thousands of retired school, government and emergency responders, many of whom retired before 2001; and require data centers to report their annual energy and water usage to the state. The plan also protects the state’s nearly $8 billion rainy day fund, a key priority for Republicans who control the state Senate.
The latter is done by siphoning more than $500 million from off-budget “special” funds, withdrawing unused funds from agency bank accounts, and employing accounting maneuvers such as delaying $1.3 billion in payments to state Medicaid managed care organizations.
“This budget allows the commonwealth to fight another day,” Senate Appropriations Chairman Scott Martin (R., Lancaster) said on the floor of the House Sunday before passage of the main spending bill in a 44-6 vote. The House of Representatives approved the bill a few hours later by a vote of 167 to 35.
House Speaker Jordan Harris (D., Philadelphia) told reporters after a committee vote Saturday night that the plan would ensure people with Medicaid plans receive their health care.
“At the end of the day, people get paid. Bills get paid,” Harris said. “Whether it’s paid today or tomorrow, the bills get paid.”
The budget does not change the state’s fiscal reality – that it spends more money than it takes in. It also does not include new revenue-generating policy changes, such as new taxes on tech companies, that are supported by lawmakers from both major parties.
Fiscal conservatives denounced the budget’s fiscal maneuvers. State Rep. Marc Anderson (R., York) cited the arrest of bootlegger Al Capone on tax evasion charges. “He cooked the books,” Anderson said. “Citizens of the Commonwealth, what we are doing today … is voting on a budget that will kill the books.”
This year marks the Commonwealth’s fifth consecutive delayed budget. They ranged from minor delays that left policymakers spending a few extra days finalizing details to more than 100-day standoffs that stretched county, school and nonprofit finances to the limit. While this year’s delay is comparatively short, the pattern of missed deadlines has frustrated local politicians grappling with the fallout from cuts in state funding.
Ahead of the agreement, MPs said negotiations were going smoothly as they did not make major political changes as in the past. The slim end product reflects this.
This does not eliminate a sales tax break for data centers over a certain size, which has increasingly met with cross-party resistance in recent weeks. It also does not legalize recreational marijuana, provide recurring funding for mass transit or increase the state’s minimum wage, as Shapiro and other Democrats had called for.
Shapiro acknowledged in his remarks before the signing that the package lacked many of his most ambitious policy proposals.
“I want to and will do much more, like raising the minimum wage, funding mass transit and expanding access to affordable housing across Pennsylvania,” Shapiro said. “But we have proven once again that we can bring people together here in Pennsylvania to solve problems, get things done and build on this foundation that we have laid.”
The agreement also lacks a regulatory framework and a tax on games of skill. A state Supreme Court ruling in October gave lawmakers a deadline to act before the devices could be seized. Shapiro and other lawmakers support taxing skill games that have spread across the state and have floated plans they say could raise up to $2 billion in annual revenue.
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After the court’s ruling, Senate Republicans called addressing skill games a “critical part” of resolving this year’s budget. However, in an interview with WCCS Radio late last month, Senate Majority Leader Joe Pittman (R., Ind.) said lawmakers were not required to act “from a legal perspective.”
“The challenge now is that, given the Supreme Court’s decision, this is clearly gambling. We have to approach this from the perspective of some kind of age-restricted environment,” Pittman said, adding: “Finding that balance, I think, is going to be one of the biggest challenges we have.”
In February, Shapiro unveiled a $53.3 billion budget plan that included $1 billion in borrowing to finance housing, energy and school infrastructure projects, and created a $100 million fund to respond to potential federal government changes. Neither made it into the final deal.
Still, the budget includes an “Innovate in PA 2.0” program proposed by the governor that will allow the state to sell $125 million in tax credits to insurers. These dollars then subsidize venture capital firms and fund grants for the life sciences and biotechnology industries.
The budget’s enabling legislation also limits the spread of food waste on agricultural land. creates several new special tax zones, including one at a shipyard in Philadelphia; switches federal SNAP benefits to chip cards; and gives drillers the green light to expand wells targeting gas deep underground.
Some rank-and-file Democrats did not support the deal.
During the debate, state Sen. Nikil Saval (D., Philadelphia) said the budget “postpones” debates on “certain critical issues that are at stake for many, many voters.” He said he opposed the budget because it did not take into account the rising costs of energy, housing or public transport and did not provide for significant sources of revenue.
“I believe that these are issues that we cannot postpone at this time and that our constituents do not want us to postpone them,” Saval told his colleagues.
In the educational plan
The budget will provide an additional $58 million for basic education and $55 million for special education, bringing their respective totals to $8.3 billion and $1.6 billion, respectively. It will also transfer $125 million from the Commonwealth Financing Authority to a program to improve school facilities.
That will send an additional $565 million to school districts that lawmakers say are historically underfunded or have high property tax burdens, consistent with Shapiro’s proposal from earlier this year.
In 2023, the Commonwealth Court found the state’s education funding system unconstitutional after a group of advocates, including the Education Law Center and the Public Interest Law Center, sued the state. The Legislature then passed a fiscal year 2024-25 budget that identified a $4.5 billion adequacy gap. With this year’s investment, which matches the amount lawmakers allocated in the last budget deal, lawmakers have committed $1.9 billion to close that disparity.
Deborah Gordon Klehr, executive director of the Education Law Center, said in a statement that the budget is another step toward “constitutional compliance” and will make a difference in students’ lives.
“But our schools are still billions of dollars short of meeting the funding identified as needed by the General Assembly,” Gordon Klehr said. “And until every child – wherever they live – has access to a well-funded public school, Pennsylvania’s constitutional obligation remains unfulfilled.”
Dan Urevick-Ackelsberg, senior attorney at the Public Interest Law Center, added that lawmakers need to “accelerate” their plan to comply with the state constitution, noting in a statement that some historically underfunded schools have had to make cuts this year.
“The warning signs are clear,” said Urevick-Ackelsberg. “To provide children with the education the Constitution requires, we need more teachers and more programs.”
The legislature also passed several non-financial education policies.
Public and private schools must provide students in full-day kindergarten through fifth grade with at least 30 minutes of recess and maintain confidentiality when measuring students’ body mass index.
Public schools must conduct weekly health checks for students participating in virtual classes. Cyber charters are already required to do the same, and the provision will tighten guidance on how cyber counselors must conduct these checks and add new reporting requirements if a student does not attend.
Lawmakers are adjusting a policy passed as part of last year’s budget that prevents regularly truant students from switching to a cyber charter during the school year. It is now necessary that the parents of these students be informed that they can request an “educational welfare hearing” from a district judge. This judge may approve a student’s transfer to a cyber charter if he or she determines it is the best educational option.
Additionally, school districts have until the end of 2027 to provide the state Department of Education with an inventory of their facilities — including information about the age, size and purpose of the properties they own or rent, as well as the grade levels those properties serve.
The budget does not include funding for a private school voucher program that has been at the center of a debate that led to a major budget crisis in 2023.
Also missing – for the first time in years – is an increase in funding for several related programs in which the state provides tax breaks to companies and individuals who donate to scholarships that allow students to attend private schools.
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