HARRISBURG, Pa. — Governor Josh Shapiro of Pennsylvania is set to present his third budget proposal to state lawmakers on Tuesday, aiming to secure increased funding for public schools and public transportation. He is also likely to reiterate his support for the legalization of marijuana and the taxation of skill games, which are viewed as competitors to both casinos and state lottery systems.
The upcoming budget proposal may reach nearly $50 billion for the fiscal year 2025-26, which begins on July 1. Shapiro is expected to address a joint session of the General Assembly at 11:30 a.m. in the House of Representatives, where he will submit this comprehensive budget document to the legislators.
For the budget to pass, it requires approval from the Pennsylvania House, which is controlled by Democrats, as well as the Republican-dominated Senate. The governor finds himself under considerable pressure from education advocates and Democratic legislators to secure billions more for public school funding in light of a recent court ruling. This ruling determined that Pennsylvania’s school funding system infringes upon the constitutional rights of students in underprivileged districts.
Last year, Shapiro’s budget proposal included a significant increase in funding for schools. However, legal representatives for the schools that initiated the lawsuit are requesting an additional $1.3 billion for the upcoming fiscal cycle, representing a nearly 13% increase.
In addition, Shapiro plans to advocate for tax incentives designed to support the construction of new power plants and additional funding for health services in rural areas. He is expected to make another attempt to convince Republican lawmakers to legalize marijuana, despite their previous skepticism.
On another front, Shapiro is determined to avoid service cutbacks at the Southeastern Pennsylvania Transportation Authority, which is the primary public transit agency for the Philadelphia area, as it works to recover ridership lost during the pandemic. Last year, Republicans were hesitant to fully accommodate Shapiro’s funding requests, leading him to allocate one-time federal highway funds to prevent potential service reductions and fare hikes. One potential funding solution that has been proposed includes taxing skill games popular across various local venues, including bars and convenience stores throughout the state.
Shapiro faces numerous challenges as he prepares his budget proposal. He has received calls to enhance compensation for workers who care for the elderly and disabled, all while dealing with mounting deficit predictions, sluggish economic growth, and a declining workforce.
Counties have expressed concerns that their mental health services are on the brink of collapse, while nursing home operators are reducing bed availability due to staffing affordability issues. Moreover, home care agencies report increasing difficulties in recruiting and retaining staff, which further complicates access to necessary services for those in need.
Despite these challenges, Shapiro has a financial buffer of around $10.5 billion in reserve, attributed to federal COVID-19 relief funds and increased tax revenues driven by inflation over recent years. Nevertheless, the current year’s spending plan of $47.6 billion required approximately $3 billion in surplus cash for balance, prompting warnings from Republican lawmakers that the state needs to temper its spending growth to avoid depleting the surplus in the coming years.
Forecasts suggest that tax revenue for the 2025-26 fiscal year will fall short of $47 billion, potentially resulting in funding levels significantly lower than what Shapiro is proposing, especially after considering state-issued refunds.
