HARRISBURG — Pennsylvania’s top legislative leaders have sent their members a $50.1 billion budget deal after weeks of negotiations between themselves and Democratic Gov. Josh Shapiro.
If adopted by the state House and Senate, the deal would end the state’s four-month budget impasse. The chambers are expected to vote on Wednesday.
The proposed plan includes priorities for both Democrats and Republicans, a mix of compromises designed to thread the divided General Assembly and win enough support to reach Shapiro’s desk.
It would reduce public school districts’ reimbursements to cyber charter schools and send more than $500 million to the poorest schools to help close an “adequacy gap.”
It would also formally end Pennsylvania’s participation in a key climate program that caps carbon pollution.
The impasse has primarily been driven by deep, partisan disagreements about state spending. While Pennsylvania is flush with cash built up during the pandemic, its annual bills for services like Medicaid and education regularly outstrip the state’s annual revenues.
Some Republicans had argued that those increases should be halted in this budget to forestall future fiscal pain. Democrats pushed back, saying the state is legally obligated to increase spending because of a combination of court rulings and rising needs.
Legislative leaders pitched the deal to their respective caucuses Tuesday evening. It quickly raised concerns among some conservatives.
"If we were just going to spend $50 billion,” state Sen. Dawn Keefer (R., York) told reporters, “why didn't we do it four months ago?"
Both sides had traded private proposals — all of which require using some of the state’s reserves — and increasingly harsh rhetorical broadsides as the months of closed-door talks ebbed and flowed with no results.
All the while, the consequences of the impasse continued mounting.
Public schools across the commonwealth cut programs, spent down their reserves, or took out loans as the state failed to make billions in critical payments. Safety net programs like rape crisis centers; county-administered services, including foster care and homeless assistance; and nonprofits, like those that run early childhood intervention programs, were forced to make similar decisions.
No new revenue sources
Neither side has been able to agree on new revenue sources.
So-called “sin taxes” on marijuana or gaming tend to be the most popular options, but even passing those proposals requires navigating major ideological differences within the General Assembly and powerful special interests.
Other options, like new or increased taxes on businesses, personal income, or sales, could raise more revenue but have few champions in the legislature.
Relief for some harmed by impasse
The deal includes some aid for counties, certain educational programs, and specific nonprofits that took out a loan offered by Treasurer Stacy Garrity.
The deal allows Garrity, challenging Shapiro for governor next year, to waive interest on those loans. The language also prevents a similar program in any future budgets.
State Senate Republicans previously passed the proposal through the upper chamber, but House Democrats never took up the measure.
The end of RGGI
To kickstart discussions after months of silence, Democratic leadership offered up the Regional Greenhouse Gas Initiative as a bargaining chip to bring state Senate Republicans back to the table.
Republican lawmakers have been pushing the state to leave the program since the state first began the process of joining it in 2019.
The interstate program caps the amount of carbon that companies are allowed to emit. Then-Gov. Tom Wolf directed the state to join the initiative through an executive order, though lawsuits from Republican lawmakers and energy producers prevented the state from participating in the program.
A coalition of environmental advocates warned lawmakers in an email Tuesday night that they would “score” the votes of legislators.
The budget deal would authorize several Democratic energy priorities, including an additional $25 million for a popular grant program that provides schools with money to install solar panels. It would also authorize the spending of federal funding for solar panel construction, previously frozen money that would have expired at the end of this year.