135 days late Pennsylvania’s $50.1 billion budget gains bipartisan support

Gov. Josh Shapiro shows the signed state budget on November 12, 2025. (Photo by Ian Karbal/The Pennsylvania Capital-Star)

The last state in the nation without a budget for fiscal year 2025-26 finally has a spending plan in place.

Gov. Josh Shapiro signed the state’s $50.1 billion budget on Wednesday after intense meetings between Republican and Democratic lawmakers in recent weeks. They have been deadlocked for almost five months since the June 30 deadline.

The budget, Shapiro’s third, increases overall spending by 4.7% from a year ago but represents a $1.4 billion reduction from February’s proposal.

Before signing the bills that make up the spending plan, Shapiro noted that House and Senate leaders worked throughout the summer and fall and rejected calls from some Republicans to cut spending on health care and other critical programs.

“We stayed at the table. We refused to be passive,” Shapiro said. “Because my highest priority was to secure a budget that would make a significant impact on the good people of Pennsylvania.”

Shapiro emphasized that the spending plan is sustainable, lowers taxes and preserves the state’s roughly $7 billion rainy day fund.

Continues to gradually reduce the state net corporate income tax to 7.49% and provides a state Earned Income Tax Credit for low- and moderate-income families that would provide a tax credit of $193 million. It also projects that the state will end this fiscal year with $8 billion in its rainy day fund.

In a major concession to some Democrats, Republican lawmakers achieved a long-sought policy goal by urging Shapiro to withdraw from a regional greenhouse gas reduction program that they likened to an energy tax and a drag on economic growth in the commonwealth. It also includes environmental permitting reforms that supporters say will make Pennsylvania more business-friendly.

“This budget took much longer than expected, but ultimately Senate Republicans kept their word to Pennsylvanians by not raising taxes and ensuring that our state savings account – our rainy day fund – was not attacked,” said Senate President Pro Tempore Kim Ward. “It is important for Pennsylvanians to know that this budget is the direct result of divided government and two very different approaches to the way we govern our state and work with the federal government.”

Ward added that Republican senators compromised by agreeing to spend more than the $47.6 billion they proposed in August.

House Appropriations Committee Chairman Jordan Harris (R-Philadelphia) said before the vote that while the budget is late, it reflects the shared interests of rural, urban and suburban Pennsylvanians.

“This budget represents us coming together and recognizing that while we may not all have accomplished everything, we can work together … to have a document that we can be proud of and that delivers on the promises that many of us have made to the people,” Harris said.

It passed the House by a 156-47 vote and a 40-9 vote in the Senate.

“This budget builds on the progress we’ve made to provide better schools and more opportunities for our children because I believe every child deserves the freedom to chart their own course and the opportunity to succeed,” Shapiro said.

Continues to enhance funding to ensure that the commonwealth’s most underfunded schools have equal rights while enacting reforms to control taxpayer spending on cybersecurity for private charter schools. The state’s 500 school districts will receive $785 million, a 7.5% enhance over the 2024-2025 budget.

This includes an additional $565 million in matching funding to address a state court finding that relying on property taxes to fund education disadvantages students in less affluent communities. The program will be expanded to give each district at least $50,000, although most will receive more to make up for decades of funding disparities.

“This budget demonstrates bipartisan consensus that the march to constitutional school funding is not optional. It has taken too long, but we are one year closer to a life-changing system,” said Dan Urevick-Ackelsberg, senior staff attorney at the Public Interest Law Center, which helped win the education funding lawsuit.

School districts will also be able to deduct a larger amount from the per-pupil tuition they must pay for students who attend online charter schools. The changes are estimated to reduce costs statewide by about $178 million.

Other charter school reforms include requiring teachers to see and communicate with students at least once a week to lend a hand ensure the well-being of students in the wake of several child molestation cases that went undetected because the children were not attending school in person.

Susan Spicka, executive director of Education Voters PA, said the reforms represent a “significant step toward reducing wasteful spending by the cybersecurity services industry and creating accountability for cyber operators to ensure students are supported, safe and actually learning in school.”

Republican leaders said Wednesday after passing the budget bills that enacting policies that support economic and job growth, such as withdrawing from the Regional Greenhouse Gas Initiative (RGGI), is critical to the stability of state government.

“In a few years, we would be in a situation where we simply would not have the resources to finance a budget anywhere close to what we have today, let alone increase it in the future,” House Minority Leader Jesse (*135*) (R-Bedford) said at a news conference.

RGGI aims to reduce climate-warming carbon dioxide emissions from power plants by requiring their owners to invest in tidy energy projects. The multi-state program has been in place in more than a dozen Mid-Atlantic and Northeastern states for more than a decade.

But (*135*) and other Republicans say the program, which former Democratic Gov. Tom Wolf joined in 2019 through an executive order, limits the state’s ability to tap its immense natural gas resources. Pennsylvania’s participation in the program was put on hold as state courts resolved issues challenging its constitutionality.

Last week, environmentalists spoke out against abandoning RGGI as it became clear that the program was a bargaining chip in ongoing negotiations. Amanda Leland, managing director of EDF Action, said on Wednesday that the compromise unnecessarily abandoned a promising tool for lowering energy costs and reducing pollution.

“Pennsylvanians are calling for cleaner air, lower energy bills and a responsible state budget, not for their governor to lock the state into the dirty, expensive energy sources of the past,” Leland said.

Shapiro said he still plans to pursue an alternative plan that would keep energy investments by carbon dioxide emitters in the commonwealth and position the state as an energy exporter. However, (*135*) told the Capital-Star that no program similar to RGGI would be considered by the General Assembly.

“We’re trying to address the costs,” he said. “I don’t think natural gas extraction poses an environmental threat. So no, I don’t think anything needs to happen to replace it,” (*135*) said.

Senate Majority Leader Joe Pittman (D-Indiana) said authorizing the reforms included in the budget package are also necessary for Pennsylvania to improve its competitiveness. They would streamline the Department of Environmental Protection’s review process for air and water quality impacts and require the agency to meet deadlines or permits would be approved automatically.

Pittman pointed to Wednesday’s announcement by Pittsburgh-based US Steel that it plans to build a modern plant in Arkansas.

“The governor of Arkansas then commented that we were putting shovels in the ground faster than Pennsylvania permits,” Pittman said. “This type of bureaucracy is unacceptable. That’s why what we did here completely changed the paradigm.”

Capital-Star reporter Ian Karbal contributed to this story.