PA Missed Its Budget Deadline. What’s Next?

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By Stephen Caruso | Spotlight PA

For the third straight year, Pennsylvania’s budget is late, although top lawmakers say they’re hoping for a quick deal after a weekend of closed-door talks.

“I am encouraged by the progress that has been made over the past several days,” state Senate Majority Leader Joe Pittman (R., Indiana) said in remarks Thursday as lawmakers filed out of the chamber. The Senate adjourned soon after, while the state House adjourned Friday just after noon.

“We hope business can be concluded several days past June 30,” Pittman added in reference to Pennsylvania’s statutory budget deadline.

The state government will still function without a spending deal. The commonwealth is obligated to keep paying its employees, make debt payments, and pay for federal programs like Medicaid, among other obligations. Schools, mental health and addiction treatment, and libraries will face a crunch only if the delay stretches into a weeks-long impasse.

Still, “the deadline didn’t sneak up on anybody,” state House Minority Leader Bryan Cutler (R., Lancaster) told reporters last week. “We all know it was there.”

Lawmakers’ current optimism that a deal is near sharply contrasts the sometimes caustic environment that overtook budget negotiations last year and ultimately led to a monthslong standoff before the final pieces of that budget were passed.

This year, disagreements over spending on K-12 education have dominated talks.

A state court last year ruled that Pennsylvania’s funding scheme for public education is unconstitutionally inequitable and tasked lawmakers with fixing it. That mandate, along with disagreements over how much of the commonwealth’s $15 billion surplus to spend, have shaped talks more than any other factor.

Democrats argue the court ruling calls for sharp education funding increases, while Republicans say that spending too much could undermine the commonwealth’s financial standing.

In a string of late-night talks throughout last week and over the weekend, negotiators inched closer to a spending amount that Democratic Gov. Josh Shapiro, state Senate Republicans, and state House Democrats can agree to.

“I believe the fundamentals and the foundation of a budget is there,” state House Appropriations Chair Jordan Harris (D., Philadelphia) told Spotlight PA last week.

Alongside the new spending plan, policymakers will also have to agree on code bills, key pieces of legislation that specify how money is spent can include dozens of policy tweaks. Other law changes may also be dragged into talks in order to secure a deal; possibilities include updating liquor laws or adding new crimes to the books.

Shapiro has declined to weigh in on the specifics of a deal, but has repeatedly said talks have gone well.

“We have had very productive, very honest dialogue — a dialogue where every party involved understands that the only way we get this done is to compromise, and that is what we’re working towards now,” Shapiro said at a news conference Thursday.

The sprint to the budget deadline began with Shapiro’s February budget address, which was delivered 53 days after he signed the final parts of last year’s budget nearly six months behind schedule.

The address called for a $48.3 billion spending plan that would increase aid for public transit, health care, and housing.

Shapiro also pitched two new revenue sources: recreational marijuana and skill games. He projected that taxing these would bring in a combined $165 million in the coming fiscal year, with additional growth afterward.

But despite bipartisan backing, both efforts have stalled due to pushback from lobbyists and disagreements among lawmakers.

A handful of Shapiro’s other budget pitches have seen legislative action, most notably higher education.

Last week, state House Democrats advanced the governor’s proposal to create a 15-member state board of higher education. The new board would be charged with coordinating credit transfers, issuing policy recommendations, and collecting data from the nearly 300 public and private colleges, universities, and technical schools in the commonwealth. Another Shapiro proposal to unify the governance of the state’s community colleges and state-owned schools was not included in the bill.

The measure would also cap tuition and fees to attend state universities at $1,000 per semester for any student from a family at or below the state’s median income — currently about $73,000 — and increase the maximum size of state grants available to students at the same income level by $1,000 if they attend a private or state-related school.

The bill also tied in some state House Democratic demands, such as encouraging dual enrollment of high-school students in college classes.

“We know we’re not at a final deal yet, we’re not going to pretend to be,” state Rep. Peter Schweyer (D., Lehigh) said Wednesday as the House Education Committee — which he chairs — considered Shapiro’s higher education proposal. “I’m actually cautiously optimistic that we’ll be able to get to a deal that will ultimately reduce costs for students and make the entire system a little bit stronger than it is today.”

State Senate Republicans have said they don’t want to create any new bureaucracies, but they also introduced a scholarship program. Recipients would be required to work in an in-demand field in Pennsylvania after graduation. Their bill passed the upper chamber unanimously last month.

The chamber also overwhelmingly passed a bill that would strip state dollars from any institution of higher learning that divests from Israel or aims to financially penalize Israel with wide bipartisan support. Shapiro backs the measure, but Harris told Spotlight PA it hasn’t come up in the lower chamber during budget talks.

State Rep. Chris Rabb (D., Philadelphia), a senior House progressive, told the Center Square that if the Israel proposal came up in the state House, it would cause a “s— show of epic proportions that no Democrat wants to see.”

Another key Shapiro budget priority is money for economic development. He called for $500 million in bonds to fund grants or loans for infrastructure, demolition, or other costs associated with preparing land for new construction projects.

Established as a pilot program in last year’s budget, the proposed expansion passed the state House by a 137-65 vote Friday.

Pittman didn’t directly comment on the funding in a conversation with reporters earlier this month, but was skeptical of issuing debt and wanted to see the state quicken its issuing of permits.

“There’s, in my mind, no value in putting significant dollars in building sites for economic development if we can’t get the shovels in the ground to make the work happen,” Pittman said.

Both chambers have voting sessions scheduled through Wednesday. The Senate has also added voting days from Friday, after Independence Day, through Sunday.

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