HARRISBURG — Senate Republican leaders see something for everyone in Gov. Josh Shapiro’s $51.5 billion budget proposal, but they don’t see how Pennsylvania can afford it all.
Resolute in his delivery Tuesday of a budget address steeped in optimism for a commonwealth “on the rise,” Shapiro presented the third and costliest spending plan yet of his administration.
It’s scope is broad and ambitious — proposing investments in Pennsylvania’s nursing and education workforce, introducing economic development initiatives, continuing to increase spending on public schools, expanding funding for health care and behavioral health, introducing a plan to restore aging housing stock, hiring hundreds of state troopers, supporting tourism initiatives including America’s 250th anniversary in 2026, FIFA World Cup in Philadelphia and the NFL Draft in Pittsburgh that same year, dedicating funds to help improve pay for child care and direct care workers, and instituting the ever elusive raise to take Pennsylvania’s $7.25 hourly minimum wage to $15.
That’s a portion of the spending plan, one that falls short of projected revenues.
“So here’s what I want us to do together: Ensure we have good schools for our kids in every zip code. Grow our economy and cut costs for people in rural, urban, and suburban communities. Slash taxes to spur economic growth. Make health care and energy accessible and affordable for all Pennsylvanians,” Shapiro said Tuesday during his budget address on the floor of the state House of Representatives.
“Ensure our kids can walk down the street safely. Stop giving our neighboring states a competitive advantage. These are commonsense Pennsylvania priorities that I know we all share. I recognize some may have a different approach to these objectives, but we’ve got to work at it together,” Shapiro said.
Pennsylvania House Speaker Rep. Joanna McClinton, D-Philadelphia/Delaware, spoke of budget wins during Shapiro’s first two years including more spending on public education and property tax and rent rebate expansions for senior citizens and persons with disabilities.
“We will build off of what we started. What you saw in the 2024 budget is going to continue in the 2025 budget because we have a momentum and record of accomplishments for the people,” McClinton said.
While spending would grow by approximately 7% under the governor’s plan — budget proposals serve more as a wishlist before negotiations begin — revenue growth falls short of 5% and wouldn’t cover all expenditures.
The resulting deficit in the executive budget totals about $4.5 billion. Shapiro seeks to use all of the nearly $2.9 billion that remains in Pennsylvania’s budgetary reserves along with another $1.6 billion from the Rainy Day Fund which is limited to certain emergency uses.
Following Shapiro’s address, Senate President Pro Tempore Kim Ward, R-Westmoreland, said there were a lot of possibilities in the governor’s vision but expressed there was at least one overriding factor: affordability.
To adopt a budget plan, Shapiro will have to find agreement between the Democrat-controlled House and Republican-controlled Senate.
“Without a doubt, Governor Shapiro has a real appetite for spending,” Ward said. “This is the third year in a row we’re going to spend a lot more, billions more dollars, than what we have. We can’t spend money we don’t have. We can’t spend down our Rainy Day Fund. We can’t spend down all of our reserves. Where does that leave Pennsylvanians? There’s something in that budget for everyone and there’s no way to pay for it.”
The policy mechanisms necessary to generate all of the projected $48.4 billion in revenue aren’t in place.
Shapiro proposes the legalization of recreational marijuana and regulation of electronic “skill games,” and adding hefty taxes to both — 20% on wholesale marijuana products, 52% on video gaming terminal revenue for skill games. The combined estimated revenue including massive license fees for marijuana are about $905 million.
To set either into law would be a historic achievement in terms of state governance let alone achieving both ahead of July 1, hollow as that statutory budget deadline has become. And that’s separate from the tax credit initiatives on energy and manufacturing, varied tax reforms, the proposed closure of two yet-to-be-identified state corrections facilities plus internal efficiency measures to save on building lease costs, for example.
“When I saw media coverage of what the governor’s proposed budget was supposed to be, someone in that administration used the word ‘frugality’ as a theme. That is the last f-word I could think of when it came to thinking about it. I look at this as being fantasy,” Sen. Scott Martin, R-Berks/Lancaster, majority chair of the Senate Appropriations Committee, said.
Martin referred to out-year budget projections which continues to reflect a structural deficit in Pennsylvania’s finances and the eventual emptying of the Rainy Day Fund which currently stands at about $7 billion. He was especially critical of revenue projections by the Shapiro administration that outpace that of the Independent Fiscal Office, a nonpartisan bicameral legislative agency, by more than $5 billion.
“We are going to drive off the fiscal cliff,” Martin said, accusing the administration of inflated revenues and underreported spending. “If they’re serious on some of their priorities that are important to them that we might be able to find common ground on, for the love of God, work on closing our structural deficit and we’ll work with you on different things.”