What's Ahead in Pennsylvania's State Budget Fight

Pennsylvania's budget process is a byzantine effort that is critical to the functioning of the Commonwealth but largely ignored by the public. 

The news that does slip out ranges from depressing to infuriating as legislators and the administration often struggle to find consensus on issues with high public agreement. 

We all agree that we need strong schools, but there are knock-down, drag-out fights year after year about how to spend education money. 

We agree, moreover, that communities need safe roads, bridges, and transportation infrastructure that gets people to their jobs and homes. But how to pay for it and where to send the money muddles the process. 

Over the years, there have been delays, disagreements, and deficits every summer as decisionmakers careen toward the budget deadline of June 30. 

If they miss the budget deadline, it doesn't really matter for a time. 

A series of court decisions mean that state workers still show up to work and get paid.

But eventually, as the leaves change, schools and service providers start to get squeezed, and lawmakers arrive at an unhappy conclusion, ready to start over next year. 

With that backdrop, we're now less than a month away from this year's budget deadline. 

Pennsylvania has been in a strong budget position for the last few years, but the persistent budget deficits faced by the Commonwealth in the 2010s are resurfacing as the federal dollars that propped up recent budgets go away. The Commonwealth is facing a projected $4.5 billion deficit this year, setting a more difficult fiscal backdrop for negotiators. 

At the same time, several key issues linger for lawmakers to solve: the legalization of regulated skill games in bars and convenience stores; funding public transit agencies across the Commonwealth; legalization of recreational marijuana; and a potpourri of education issues, including higher education reform, K-12 funding, school vouchers, and health care. 

Senate Republicans are emphasizing fiscal restraint, while the Democratic-controlled House and Gov. Shapiro are looking to build on the progress they've made to invest in schools and economic development.

From what news has slipped into the public, it appears that legislative leaders and the administration have had some conversations, mostly between staff, focused on topline issues and code bills. 

In the next few weeks, these meetings will intensify. High-ranking staffers in leadership offices and the governor's office will outline their priorities, establish a spending number, and hammer out the details. 

And by the end of June, we'll either have a budget or enter a budget impasse, a common scenario in Pennsylvania. 

How are key decision-makers viewing the next few weeks, and how does each caucus come to the table with a different view of what this year's budget should accomplish?

This year, lawmakers face several obstacles to navigate before reaching a final budget. 

Gov. Josh Shapiro is widely popular. He has achieved significant legislative victories, including school funding increases and economic development programs that will help create jobs and boost the economy. 

After a year that saw him elevated to the top of the national political conversation, he has diligently focused on local issues, recently luring a massive investment from Amazon in the Commonwealth and traveling statewide to discuss issues like student-teacher stipends and funding priorities, including life sciences, that federal funding cuts have left behind. 

In his budget, Shapiro proposed an additional $290 million toward public transit, with agencies like SEPTA facing looming funding cliffs. His plan would shift a greater share of the state's sales tax revenue to transit. He's also pushing for the legalization of adult-use marijuana to generate new revenue. Shapiro also continues to make the case for large-scale investments in K-12 education, including increased basic education funding and reforms to cyber charter tuition.

Senate Republicans have been skeptical of Shapiro's budget from the start. Their message is all about spending restraint. They're sounding the alarm about the state's long-term fiscal outlook, warning that draining the Rainy Day Fund now could mean higher taxes or steep cuts later. With some exceptions, the Senate Republican caucus has been skeptical of marijuana legalization, even though it promises to help ease the budget crunch. They also have their own outstanding priorities, including school vouchers and regulation of skill games. 

In recent weeks, some Senate Republicans have aggressively opposed transit funding, and those who have expressed openness to new funding want any new money for public transportation tied to additional investment in roads and bridges.

House Democrats, meanwhile, are focused on protecting and expanding on recent progress. With their narrow majority, they're committed to defending public education, opposing voucher expansion, and moving Pennsylvania toward a more equitable school funding system following the 2023 court ruling. They've embraced Shapiro's transit funding proposal and see the recreational marijuana legalization as a common-sense step forward. 

With a few weeks to go before the budget deadline, there are large, competing priorities on the chessboard, giving lawmakers enough pieces to make some significant trades. 

Often, as the budget deadline approaches, big issues fall aside as negotiators feel the pressure of the deadline. 

Trades that sometimes seem obvious to outside observers can be extremely difficult to land. You win a vote on one side of the trade by swapping marijuana legalization for transit funding but lose two on the other side of the ledger. 

As the big issues fall away, pay attention to the code bills where energy, health, or education policy changes can be incorporated into the final budget, providing the caucuses or administration with quiet wins. 

Fiscal uncertainty may create opportunities for policy trades with limited budget impact versus programs with substantial dollar figures attached. A policy change, like increasing the minimum wage without budget implications, might even be attractive to negotiators. The House recently passed a tiered minimum wage bill by county and there's been some cross chamber talks about the issue. 

It's all a lot for legislators to consider – and we didn't even dive into the impact of federal funding cuts and policy

With fiscal conditions tightening and an array of unsolved issues with increasing urgency, this year's budget is more complex than those of the past few years. The path to a final product will not be easy.