Pa.’s top leaders reach $50.1B budget deal

The deal ends a four-month budget impasse that stopped the flow of billions of state dollars to schools, counties, and nonprofits that provide critical public services.

Pennsylvania lawmakers passed a $50.1 billion budget that makes additional investments in public schools, creates a new tax credit for lower-income people, and ends the state’s participation in a climate program.

The bills that made up the final package won bipartisan approval in the state House and Senate.

Democratic Gov. Josh Shapiro signed the legislation Wednesday afternoon.

“I could have stood here on June 30 and brought you a budget that looked really different, that didn’t have education funding, that didn’t focus on our workforce development, didn’t have a tax credit for working families,” Shapiro said at a press conference. “I think the key when you’re in these positions — I know the leaders feel the same way — is staying at the table.”

The votes arrived weeks after counties, school districts and social service agencies warned of mounting layoffs, borrowing costs and growing damage to the state’s safety net, with many agencies and services going without state aid since July 1.

Lawmakers approved key elements of a roughly $50 billion spending plan to break the state’s budget impasse, and Shapiro planned to sign key budget bills by the end of the day Wednesday.

Under the $50.1 billion no-new-taxes budget deal, new authorized spending would rise by about $2.4 billion, or 5%, including some cash going onto last year’s books.

A concession means Democrats would agree with the Republican demand to undo a regulation aimed at making Pennsylvania the only major fossil fuel-producing state to force power plant owners to pay for their planet-warming greenhouse gas emissions.

Republicans called it “a major policy victory” for the energy economy in the nation’s No. 2 natural gas-producing state, and Democrats won’t get the amount of money they were looking for in the original proposal, but there are more sums to schools, and an earned income tax credit for lower earners.

Pennsylvania’s plan is projected to cost nearly $200 million a year. Almost all of the overall spending increase would go toward Medicaid and public schools.

The budget plan holds the line on tax rates and fees, lawmakers say. But it uses billions in surplus cash to achieve balance, the second straight year that Pennsylvania is running a multibillion-dollar budget deficit, reflecting a slow-growing economy and a shrinking workforce that delivers relatively meager gains in tax collections.

School districts, rape crisis agencies and county-run social services have gone without state aid since July 1, when the state lost some of its spending authority without a signed state budget in force.

Backers of the carbon dioxide cap-and-trade regulation included environmental advocates as well as solar, wind and nuclear power producers who had called it the biggest step ever taken in Pennsylvania to fight climate change.

It was opposed by Republicans, fossil fuel interests and the labor unions that work on pipelines, refineries and power plants who warned that the cost was sending energy companies to other states to build new gas-fired power plants.

“The closing of the 2025-26 state budget process marks a new beginning for this commonwealth, filled with economic growth and opportunity,” Senate Majority Leader Joe Pittman said. “This budget moves, monumentally, to increase the promise of Pennsylvania.

How local lawmakers voted

Mon Valley state representatives Eric Davanzo, Andrew Kuzma, Tim O’Neal, Bud Cook, Dan Goughnour and John Inglis voted yes to the budget along with state senators Camera Bartolotta, Nick Pisciottano, Kim Ward and Pat Stefano. Rep. Ryan Warner, R-Perryopolis, voted no.

Davanzo, R-Smithton, said in a statement that this budget changes Pennsylvania’s environmental permitting system, which he states makes it easier to get new projects moving sooner and there will be more “family-sustaining” for young people.

Programs like the Supplemental Nutrition Assistance Program also are getting improvements, according to Davanzo, who said the budget removes “applicants who are taking advantage of the system,” and is excited for the reforms in the Economically Disadvantaged Schools tax credit.

“These important objectives were met without touching Pennsylvania’s Rainy Day Fund,” Davanzo said. “Since the impasse began in July, I have fought consistently for a responsible budget that sets us up for economic growth and appropriates funds with the same focus on fiscal responsibility that Pennsylvania families use when handling their household budgets.”

O’Neal, R-South Strabane Township, is also excited for the Commonwealth to be removing the Regional Greenhouse Gas Initiative – stating that the carbon tax has driven up energy prices on residents and businesses along with allowing Pennsylvania’s energy industry to revitalize.

He added on the topic of education that students in economically disadvantaged schools cannot wait for education reforms to work, and the financial assistance will help families ensure students get a quality education “This state budget will grow Pennsylvania’s economy for years to come and prevent tax increases across the board,” O’Neal said. “It embodies what we have been advocating for over the past year – the PA Prosperity Plan, which unleashes Pennsylvanian’s energy industry, supports efficient government and supports student-centered education.”

Goughnour, D-McKeesport, said it was his first budget in the House, it was “a really unique” budgeting process and one that was long overdue.

At the end of the day, he added that they have a $7.5 billion writing fund balance in the budget that invests in the places that he thinks where they need to put money in, like school and public safety. Since he is a former McKeesport Area School Board member, he said he understands they have come down to the wire to get funding to schools.

“I’m happy with the overall budget,” Goughnour said. “It’s a good product that is going to make life more affordable. It is a good, working budget that will be good for the working people of the Mon Valley. I’m very happy with it.”

Inglis, D-West Mifflin, said he has been committed to finding a budget that invests in education while protecting Pennsylvanian’s pocketbooks. He added in a statement that there is millions of dollars going into education, small businesses and seniors.

While he also thought the budget was “well overdue,” he said he wanted to make sure the Commonwealth is investing in children, families, businesses and infrastructure to ensure the state is a “growing economic force,” in the country.

“This budget invests in the future of Pennsylvania,” Inglis added. “Through the continued historic investments in education, the new PA Earned Income Tax Credit, the BusinessPA program to help small businesses, investments in food security, and the savings for tax payers (just to name a few highlights), this budget creates real opportunities for everyone to thrive. I’m proud to have cast my vote for moving the Commonwealth of Pennsylvania forward.”

Bartolotta, R-Carroll Township, said the child care recruitment and retention program in this budget supports quality child care providers, alleviates the waiting list, and helps families return to work.

She also stated in a statement that there is historic investment in education, funding for area agencies and ensures funding for the property tax/state rebate program. There is also excitement for state agencies to be required to approve permits within a set timeframe.

“This budget provides historic permit reform, which has been a top priority of mine,” Bartolotta said. “This budget helps our citizens in every stage of life. While it is not everything we wanted, it funds the government, gives us historic policy wins and puts Pennsylvania on a path for economic growth.”

Pisciottano, D-West Mifflin, said the new budget helps shield Pennsylvanians from economic instability fueled by national dysfunction, and this is “meaningful progress” for working families, public schools and community safety across Pennsylvania.

According to Pisciottano, he is happy to support a state budget today and that while there is “chaos and division” in Washington with the federal government shutdown – making it harder for “everyday people.” He added that Pennsylvania is choosing to invest in stability, opportunity, and the future of communities.

“While this budget took longer than it should have, I’m proud that the final product delivers programs that will make life more affordable, invest in our schools, and create jobs,” Pisciottano said. “This is a responsible, balanced plan that prioritizes the needs of working families.”

Senate President Pro Tempore Ward, R-Hempfield Township, said while the budget took longer than expected, that the Senate Republicans held a promise to Pennsylvanians to not raise taxes and that the Rainy Day Fund was not “attacked.”

According to Ward, while Senate Republicans had to “compromise by spending more than we would have preferred,” they achieved “some significant policy wins” that she said will give Pennsylvania families more certainty with their electricity rates, boosting job creation and putting money back into the pockets of low-income working Pennsylvanians.

“It is important for Pennsylvanians to know this budget is the direct result of a divided government and two very different approaches to how we govern our state and partner with the federal government,” Ward said in a press conference Wednesday.

Stefano, R-Bullskin Township, Fayette County, also voted for the budget. He was also a proponent of not entering the Regional Greenhouse Gas Initiative, expanding the Educational Improvement Tax Credit, reforming Pennsylvania’s SPEED program and protecting the Rainy Day Fund to protect tax payer dollars.

He also stated that it utilizes billions in lapsed funding in state agencies/special funds in the best interests of taxpayers, protects Pennsylvanians from “the devastating consequences” of Shapiro’s proposed electricity tax, and incentivizes job growth across the commonwealth by implementing key reforms to the permitting process and maintaining important tax cuts.

“Though this budget was a challenging and contentious process, I’m glad to see an end result where we’ve protected taxpayers, strengthened our energy future and made smart investments in education and childcare,” Stefano said. “By focusing on fiscal discipline, we’re empowering families, employers and communities across our commonwealth to thrive for years to come.”

Warner, R-Perryopolis, issued this statement after voting against the budget and said that Pennsylvanians cannot simply afford this budget, even though it is a lower amount from the $51.5 billion the governor proposed back in February.

Additionally, Warner voted against Senate Bill 160, the General Appropriations bill, and he cast a vote in favor of removing the barrier on energy development. He also stated that since the 202627 budget will be talked about soon, he wants to fight against more spending and advocating for policies that help grow jobs and opportunity for communities.

“Spending beyond our means like this means a future tax hike is almost certain,” Warner said. “With costs rising on food, utilities and other necessities, we should be helping hardworking Pennsylvanians keep their hard-earned money rather than spending it on government programs. This budget is irresponsible, and I could not support it.”