HARRISBURG — Gov. Josh Shapiro is asking Pennsylvania’s divided legislature to send more money to the state’s poorest schools, bump funding for struggling public transit systems, and raise the minimum wage as part of a $53.3 billion budget.

To help pay for the proposed 5% increase in spending, Shapiro again called on lawmakers to tax and regulate slot-like skill games and legalize recreational marijuana. He also wants them to close a corporate tax loophole that allows national companies to reduce their in-state liability.

Shapiro delivered his address Tuesday at the state Capitol, just four months after lawmakers ended a 135-day budget impasse driven by disputes over many persistent issues — particularly, how to pay for new spending amid a structural deficit.

“We all recognize it took too long last year, and that had real impacts on Pennsylvanians,” Shapiro told lawmakers. “But we learned some valuable lessons through that process.”

Tuesday’s speech formally kicks off budget negotiations ahead of the June 30 deadline, and Shapiro said that a meeting between all four caucus leaders is planned for Wednesday. After lawmakers failed to meet last year’s budget deadline, Shapiro and the majority and minority leaders from the state House and Senate did not meet in person until late October, Spotlight PA reported at the time.

In recent years, lawmakers have used cash reserves built up during the COVID-19 pandemic to make up the difference in revenue and spending. Even if lawmakers embrace all three of Shapiro’s ideas to generate more money — which is unlikely, considering all failed last year amid heavy lobbying — it wouldn’t be enough to cover new spending. As proposed, Shapiro’s budget pitch would still require the state to use $4.6 billion from savings.

Legislative Republicans pushed back against Shapiro’s plan, saying it would spend down too much of the state’s savings.

“This is our fourth budget from the governor that spends way too much, a lot more than what we are bringing in in revenue,” state Senate President Pro Tempore Kim Ward (R., Westmoreland) told reporters following the address.

Democratic lawmakers, meanwhile, said they fully support the governor’s plan. Pennsylvania voters will not support Republican legislators who obstruct an “unbelievably popular governor,” lest they “get run over” by Shapiro,” state House Majority Leader Matt Bradford (D., Montgomery) said.

“It would be the political imperative, regardless of the policy implications, that [Republicans] start working with this governor, ” told reporters.

About half of the proposed new spending would go to the state’s human services budget, which includes health care and food assistance for low-income Pennsylvanians, as well as funding for rape crisis and domestic violence centers, and homeless assistance programs.

Shapiro is also proposing an additional $565 million for school districts with an “adequacy gap” and $300 million more for public transit agencies starting in 2027.

To support continued economic development, he’s asking for the legislature to approve a $1 billion infrastructure program, funded by debt, to fund housing, energy, and other capital projects.

He’s also asking for $100 million from the rainy day fund to create a “federal response fund” to mitigate “actions or inactions” by the federal government and $100 million for a state innovation fund to subsidize venture capital firms, clinical trials, and university research. The latter would be funded by the sale of tax credits to insurance companies.

But not all of Shapiro’s pitches came with a hefty price tag. Some would rewrite existing law to create more efficient and effective programs and protections.

For instance, Shapiro called for the legislature to rewrite the state’s child protective and elder abuse statutes, redesign a slate of underused tax credits, slim down the state’s professional licensing laws, and adopt tighter rules on cell phone and AI access for kids.

To address two major drivers of affordability fears — energy and housing costs — Shapiro pitched more than new spending.

On housing, he called for policymakers to cap rent increases on manufactured homes’ lots, seal eviction records, and modernize the state’s planning code, among other changes. To address utility issues, he called on the legislature to regulate data centers and negotiate a new consumer protection regime for ratepayers after an older version expired in 2024.

“Pennsylvanians can’t afford another delay from Harrisburg,” Shapiro said.

And amid criticism from survivors that he hasn’t done enough, Shapiro is asking lawmakers to open a long-awaited window so adult survivors of childhood sexual abuse can file lawsuits.

Groundhog Day

in Harrisburg

A handful of Shapiro’s major goals carried over from his 2025 budget addresses. While many of the issues have some bipartisan support, lawmakers have not been able to come to an agreement on how to enact the legislation.

For example, Shapiro called on the legislature to raise the minimum wage to $15 an hour. While some legislative Republicans agree it should be increased, there’s disagreement about the amount. (The legislature last voted to raise the state’s minimum wage in 2006, and it is currently aligned with the federal minimum of $7.25 an hour. )

Shapiro also repeated his call to increase funding for transit agencies. Last year’s impasse ended with major systems such as SEPTA in the Philadelphia region and Pittsburgh Regional Transit using funds allocated to long-term projects to plug their day-to-day operational budgets. Smaller transit agencies across the state were not all able to do the same.

His plan would increase the annual share of the state’s tax revenue that goes to public transit funding by 1.75%, which would provide another $300 million each year.

Shapiro’s ideas for raising new revenue are similar to past budget proposals, though the estimated amount of money they could generate has risen.

If Pennsylvania legalized recreational marijuana, Shapiro’s budget estimates the state would rake in $729.4 million in the first year from taxes and one-time licensing fees. That’s up from last year’s prediction of $536.5 million.

The annual revenue estimates from regulating skills games and closing the corporate tax loophole increased by roughly $300 million and $60 million, respectively.

All told, Shapiro estimates these three changes would bring in roughly $1.7 billion in year one.

Closing the

‘adequacy gap’

Intense conversations over school funding began in 2023, when a state court ruled that Pennsylvania’s spending on public education was inequitable — so much so that it violated the state constitution. Specifically, the judge found that students in poorer districts, which don’t have the resources to raise as much money through property taxes, weren’t serving students well enough.

The following year, lawmakers passed a budget that acknowledged a roughly $4.5 billion “adequacy gap” to properly fund these districts, and pledged to fill it using state dollars.

They’ve spent more than $1 billion so far toward that goal, and Shapiro is proposing another $565 million in this budget.

He also wants to increase basic education and special education funding by $50 million each.

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