(The Center Square) – How to build a financial bridge across the huge gap between potential spending and Pennsylvania’s revenue figures – estimated at around $5 billion or more – will be a major challenge as budget negotiators prepare to work on the 2026-2027 spending plan.
That much was clear at the state Capitol on Thursday as lawmakers wrapped up their hearings Governor Josh Shapiro A spending proposal of $53.3 billion, setting the stage for negotiations aimed at reaching an agreement before the June 30 constitutional deadline. There were guerrilla shootings, indicating that the upcoming trial might not go smoothly.
Shapiro, a fourth-year Democrat who is running for re-election, wants to generate up-to-date revenue by having the Legislature legalize marijuana for adult utilize; regulate and tax the so-called arcade games; modernize the tax system; and escalate sales and personal income tax collections by raising the minimum wage. on Thursday, Budget Secretary Zachary Reber he testified that “we left about $3 billion on the table” by not introducing these items earlier when Shapiro first proposed them.
Reber acknowledged that quantifying revenue sources that have not yet been approved is “speculative.” But he said: “At one point, all sources of revenue in the commonwealth were non-existent and speculative.”
Republican Representative Jim Struzzi of Indiana County, the minority chairman of the House Appropriations Committee, called it an abuse.
“We know the sources of revenue that are currently in front of us, and in my opinion, dealing with hypothetical outcomes is irresponsible to taxpayers,” he said.
Democrats control the House and Republicans control the Senate, and last year’s budget process was a partisan mess. Start-and-stop negotiations involving leaders of both chambers and the Shapiro administration missed the deadline by 135 days. The budget act was adopted and signed on November 12.
Billions of dollars worth of payments to schools, counties and social service agencies have been suspended. There were statewide furloughs, program cuts, and a slew of loans and lost interest income.
On Thursday, the bitter experience seemed to remain fresh. Reber said more than 100,000 state payments were withheld during the impasse.
Nevertheless, each side has already accused the other of hypocrisy or alleged questionable practices.
“Bad faith numbers” are the Republican type Rep. Josh Kail of Beaver County provided Shapiro’s financial projections for years beyond 2026-2027. Projections for each year show projected spending growth of less than 1% per year, while Kail has reported much larger actual growth numbers in some recent years, including 5.7%, 5.3% and 5.8%.
Kail said that for planning purposes, it is extremely significant to have reasonable projects for next year. Reber told him the projections “are based on what we know for sure we will pay.”
Another sore point for Republicans is Shapiro’s proposal to get a one-time financial aid payment of $4.5 billion from the so-called Rainy Day Fund, as the state’s de facto emergency savings account is called. Republican Representative Marla Brown of Lawrence County, said the more than $7 billion currently in the fund would be enough to run the state for 56 days, but the proposed disbursement would last “only 23 days.”
Reber said the national average between states is a 46-day supply, but there are differing opinions on what the appropriate level should be.
Republicans were called to the carpet by Democrats Representative Jordan Harris of Philadelphia, chairman of the Appropriations Committee, who conducted the hearing.
“We have a gap to fill, and if you don’t want to take money from the Rainy Day Fund, that’s fine. But you need to show us how to balance this budget without cutting services and programs for our constituents,” Harris said. “It’s easy to criticize without providing a solution.”
