HARRISBURG, Pa. — Governor Josh Shapiro of Pennsylvania has presented a budget proposal aimed at addressing significant funding shortages in public education and transit. The proposal, revealed on Tuesday, also includes plans to legalize marijuana and tax skill games, which are perceived as competition to casinos and state lotteries.
As a notable figure in the Democratic Party and potential contender for the 2028 presidential election, Shapiro is advocating for increased state funding to universities and offering substantial tax incentives for the development of new power plants. He intends to utilize billions in surplus funds to facilitate this spending, emphasizing the need for investment to bolster Pennsylvania’s economy and ensure its competitiveness with neighboring states. Shapiro declared, “Pennsylvania is on the rise and we are not gonna stop,” during a detailed address to both houses of the General Assembly that lasted about 90 minutes.
However, the budget proposal must navigate a divided legislature, where Democrats hold the House and Republicans control the Senate. Although Shapiro’s plan received support from Democrats — with House Speaker Joanna McClinton commending it as “bold” — there is notable apprehension among Republicans. They argue that the proposed spending increases could lead to long-term financial issues and potential tax hikes for citizens.
For the first time, Shapiro’s budget proposal surpasses the $50 billion mark, with a request of $51.5 billion for the upcoming 2025-2026 fiscal year. This request comes amid challenges, including rising costs associated with medical care for low-income residents, a sluggish economy, and a decreasing labor force, which have all contributed to disappointing tax revenue growth.
The proposed budget outlines a 9% increase in total spending through the state’s primary accounts, representing roughly $3.8 billion. Of this budget, over $2 billion is designated for human services, primarily aimed at addressing the escalating costs of healthcare for the financially disadvantaged. In addition, $800 million is allocated for K-12 education and higher education institutions, including notable universities like Penn State, Temple, and the University of Pittsburgh.
A significant component of the new education funding — approximately $526 million — is intended to respond to a court ruling that determined Pennsylvania’s public school funding system is unconstitutional for students in impoverished districts.
To strike a balance in the budget, Shapiro is not proposing changes to personal income and sales tax rates. Instead, the budget plan incorporates almost $4.5 billion from reserve funds to cover expenses, marking the second consecutive year featuring multi-billion-dollar deficits. While ongoing tax collections are forecasted to rise by about $2.3 billion, which would total $48.3 billion, much of this projection relies on the acceptance of several proposals by lawmakers, including legalizing adult-use marijuana and adjusting corporate tax regulations.
Certain advocacy groups, including the plaintiffs involved in the school funding lawsuit, are requesting much greater funding increases than what Shapiro proposed, with similar demands emanating from operators of nursing facilities and mental health service providers.
In addition to education, the budget suggests nearly $300 million in additional support — a budget increase of around 20% — for public transit agencies, working to mitigate potential reductions faced by the Southeastern Pennsylvania Transportation Authority, which is striving to recover from ridership losses linked to the pandemic.
Further recommendations in Shapiro’s budget include incentives for the expedited construction of large power plants designed to tackle an existing energy shortage that threatens to inflate electricity costs statewide, being one of the leading natural gas-producing states in the country. The proposal also seeks to reduce funding for cyber charter schools, aiming to save around $400 million in reimbursements, and to close two state prisons, which currently operate at about 82% capacity.
The Pennsylvania State Corrections Officers Association quickly opposed the proposed prison closures, claiming they would jeopardize the safety of both staff and inmates.
With around $10.5 billion in reserve cash available — a cushion created by federal COVID-19 relief funds and increased tax revenue during previous years — Shapiro’s plan aims to maintain approximately $6.4 billion of unallocated funds.
The previous year’s budget of $47.6 billion necessitated about $3 billion in surplus funding to achieve balance, prompting Republican leaders to urge caution regarding the state’s rapidly escalating spending, warning of potential depletion of reserves in the near future. They suggest that Shapiro’s proposals disregard the reality of the state’s widening deficits and lack concrete strategies for improving the persistently sluggish economy.
Senate Majority Leader Joe Pittman called for tougher decision-making, stressing that governance often requires prioritizing certain expenditures. In contrast, Democrats like House Appropriations Chairman Jordan Harris challenged Republicans to clarify what services or support they would cut if they opposed the use of the surplus funds, pointing out the need to consider the welfare of the most vulnerable populations in Pennsylvania.
