HARRISBURG — Pennsylvania lawmakers finalized the commonwealth’s budget Sunday, adopting a $50.8 billion spending plan that includes no tax increases and avoids eating into the Rainy Day Fund.
A broad consensus was reached through separate votes in both the House and Senate on the general fund budget, the commonwealth’s primary operating account.
Six dissenting votes were cast in the 50-member Senate — two by Democrats and four by Republicans. The 35 votes in opposition cast among 202 House members were from Republicans alone.
Lead negotiators settled on a budget deal ahead of a rare weekend session for both chambers of the Pennsylvania General Assembly. The legislative action on the budget bill and related code bills settled the 2026-27 fiscal year spending plan 12 days beyond the deadline, marking it late for the fifth straight year.
Comparatively, the $50.1 billion budget for 2025-26 wasn’t finished until November, 135 days beyond the annual deadline of June 30. The delay created myriad fiscal issues for school districts, county governments and contracted service providers.
The total spend this fiscal year falls below the $53.2 billion initially proposed by Gov. Josh Shapiro; however, legislators acknowledged an accounting maneuver — delaying two end-of-year payments due to managed care organizations within Pennsylvania’s Medicaid program — masks that the actual total spend approaches that mark.
Surplus revenues exceeding $1 billion in 2025-26 combined with the use of lapsed appropriations from other funding accounts and the delayed MCO payments, helped lawmakers balance projected spending and revenues, avoiding having to use any of Pennsylvania’s estimated $8 billion saved in its rainy day fund.
And, seven tax cuts enacted during Shapiro’s entire first term of office continue, including the continued phase-down of the Corporate Net Income Tax and tax credit programs like the Working Pennsylvanians and Child and Dependent Care Enhancement programs.
“This is the fourth budget in a row where we’ve cut taxes and never raised them,” Shapiro said at the State Capitol prior to signing the budget legislation.
Shapiro championed how the budget continues a third straight influx of $565 million in additional adequacy and tax equity funds for hundreds of poorer school districts. It also boosts funding for student teacher stipends, enacts a pension boost that had been stymied for eligible state employees who retired prior to fiscal 2021, raises pension payments for retired police officers and firefighters, adds money to basic education funding, special education, career and technology education, school building repairs, early childhood education and the Grow PA Scholarship program.
The educational tax credit program, a Republican priority, was left unchanged despite a Democratic push to revamp the initiative.
“I believe this budget is more than just a whole bunch of numbers on a spreadsheet. It also delivers commonsense solutions to real problems Pennsylvanians have faced for years and years and years,” Shapiro said, citing a requirement that at least $10 million be directed to fruit farmers who experienced at least 30% losses in a devastating April freeze.
Lawmakers haven’t settled on a push to regulate data centers, rescind a sales tax break for data center equipment, or institute an optional moratorium for local governments to enact on future developments. But, budget-enabling legislation will require that data center operators annually report on energy and water usage, with that information made public.
Senate Republican Majority Leader Joe Pittman spoke of identifying and transferring money allocated but left unspent in other state funds. He gave the example of PennDOT, which he said was sitting on $3.3 billion. Of that, $775 million will be used to repair highway infrastructure statewide, including in rural areas.
He estimated that about $1.5 billion was pulled “out of the couch cushions of the bureaucracy,” and about $4.5 billion combined in the last two budget cycles.
“I’d like to say we flattened them like a pancake, but I actually think there’s more there and we’re going to go after it in the years ahead,” Pittman said.
There was wide agreement that this year’s budget will do a lot of good, and that agreement extends to musings on priorities cut in the name of compromise.
But there were those left “disappointed,” such as House Republican Policy Chair David Rowe. He voted against the budget, saying it spends too much and defers the MCO payments, estimated at $1.3 billion.
“That’s not responsible budgeting, that’s pushing today’s problems onto tomorrow,” Rowe said.
Sen. Wayne Langerholc, Senate Republican Majority Whip, spoke of the compromise necessary to reach a budget deal. Both sides had to settle, he said.
“This budget still invests in the commonwealth in a responsible manner,” citing increased funding for nursing homes, rape crisis centers, law enforcement and local road projects.
“As Pennsylvanians are dealing with the affordability crisis, this budget does not raise taxes, preserves the rainy day fund, and is significantly less than what the governor proposed in February,” Langerholc said.