Gov. Josh Shapiro unveiled his fourth spending plan on February 3, 2026, kicking off next year’s budget negotiations. (Photo courtesy of PAcast)
This story will be updated throughout the day with more details about the governor’s budget plan, as well as reactions from lawmakers, county commissioners, advocates and other groups.
Gov. Josh Shapiro on Tuesday in his fourth budget speech proposed spending $53.2 billion in the 2026-2027 fiscal year, more than the $50.8 billion the state expects to contribute over the same period.
The projected revenues include an estimated $2 billion in up-to-date taxes that would come from legalizing recreational marijuana and electronic arcade games, slot machine-like devices that have spread to corner stores and gas stations in Pennsylvania. However, over the past three years, Shapiro has failed to achieve legislative consensus to implement any of the measures.
Even with the proposed up-to-date revenue, the plan would require tapping into the state’s $7.5 billion rainy day fund. The expenditure will allow for an enhance in funds, among others: for education, health care, economic development and security programs.
The largest would involve the Department of Education and the Department of Social Services. Shapiro’s proposal includes about $665 million in up-to-date funding for elementary and middle schools. The Department of Human Services will also receive about $2.7 billion in up-to-date funding for health initiatives and increased spending on Medicaid.
“I know that government can be a productive force for the good of people,” Shapiro said in his speech. “I know because I’ve seen it over the last three years. Our children are receiving a better education, our workers have more opportunities to chart their own course, our economy is growing and our communities are safer.”
In addition to long-awaited policies legalizing recreational cannabis and arcade games, the budget proposes raising the minimum wage to $15 an hour. Currently, the minimum wage in Pennsylvania is $7.25, lower than all neighboring states.
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Shapiro’s proposal also sets aside $100 million in a “Federal Response Fund” to offset any federal action that could cost the commonwealth. While the fund is not intended to cover the costs of litigation, the fund is intended to be elastic enough to cover the costs of all agencies.
Shapiro’s speech came less than three months after last November’s budget was adopted, well past the June 30 deadline. The Republican majority in the Senate and the Democratic majority in the House struggled to reach agreement on how much deficit spending the commonwealth should bear, and Republicans called for cuts to Democratic priorities such as funding for education and transportation.
Ultimately, the state spent $50.1 billion in this budget, more than $3 billion less than the governor’s proposal on Tuesday
Shapiro is running for re-election. State Treasurer Stacy Garrity, who has already won the endorsement of the state Republican Party in the primary, is the leading candidate to face him on the ballot. Garrity has blasted Shapiro in the past for his willingness to engage in deficit spending.
The proposal includes a 9.4 percent or $117 million raise for the Pennsylvania State Police, including $16.2 million for additional troopers. The agency almost got it Last year, there was a $70 million injection of funds.
Shapiro also wants to eliminate the cap on the number of state troopers – last raised in 2023 at 4,300 and set by law. Calls for taking away the Legislature’s discretion over state police hiring and instead allowing the agency to determine staffing needs as it continues to grapple with retirements and growing demand for workers coverage by municipalities.
It is unclear whether the Office of Refugee Resettlement is included in the budget because proposal documents presented Tuesday do not detail funding and inter-ministerial sources.
