With a Republican Senate and Democratic House of Representatives, budget negotiations in Pennsylvania had to involve compromise.
While Gov. Josh Shapiro called the budget a “big win” and ultimately passed a budget that would cost the state only $700 million less than his proposed $48 billion, both Democrats and Republicans had to sacrifice some of their priorities.
Here are some of the issues that did not pass negotiation.
SEPTA Financing
Philadelphia lawmakers in particular had hoped the budget would include more funding for the Southeastern Pennsylvania Transit Authority (SEPTA), which operates trains and buses in the Philadelphia region.
Shapiro proposed $161 million for SEPTA alone, which would be part of a broader initiative to fund public transit across the state.
But much of that funding was left on the floor during budget negotiations. Ultimately, only $80 million will be allocated to statewide public transit, with the bulk, $53 million, going to SEPTA.
For months, SEPTA officials warn that without a significant raise in funding, the public transport agency may be forced to reduce the number of services it provides or raise ticket prices.
Cannabis and arcade games
Shapiro’s original budget proposal included a call to legalize marijuana and tax the revenue that would come from marijuana sales. And after a House committee held multiple hearings on what a legalization bill might look like and supporters repeatedly took to Capitol Hill, There was a lot of support for this measure.
The same thing happened with taxation of so-called skill games. Skill games exist in a kind of legal gray area. They usually look and work exactly like slot machines, which are heavily regulated and taxed in casinos. But the skill games you see in bars, restaurants or corner stores argue that they don’t fall under the legal definition of gambling because they have some mechanic that requires at least a modicum of skill on the player’s part — no matter how diminutive or subtle.
Shapiro has supported regulating such games, and several lawmakers have also considered the idea, including Sen. Joe Pittman (R-Indiana). But the skill games and gambling lobby strongly opposed the recent regulationsand on top of that he threw away a lot of funds.
At a late-night news conference after the budget passed Thursday, interim Senate President Kim Ward (R-Westmoreland) said Shapiro’s support for both measures was timid.
“He talked about it in his budget speech. We never heard about it again,” Ward said.
School vouchers
Pennsylvania Republicans have long pushed for a voucher program that would send state funds to families who send their children to private schools. And they have an odd bedfellow in Shapiro, who has also backed some kind of voucher program.
But a enormous majority of Democratic lawmakers have staunchly opposed such a program. Last year, a proposal to create a $100 million voucher program contributed to a months-long delay in passing any budget. Although it passed the Republican-controlled Senate, Shapiro vetoed it to secure support from House Democrats.
Although Republicans continued to push for voucher funding this year, no such proposal made it into the final budget.
However, this year’s budget includes a $75 raise in two existing programs that provide tax breaks to corporations that fund scholarships for private school students.
The bulk of the recent funding, $70 million, will go toward strengthening the Educational Improvement Tax Credit. That program provides a tax break to companies that fund scholarships for students attending private schools, some public school programs or pre-K scholarships. The Opportunity Scholarship Tax Credit is similar but is targeted at students in low-performing school districts who seek an education elsewhere. It will receive $5 million in recent funding.
Income tax cuts
The question of what to do with Pennsylvania’s $15 billion fiscal surplus has always been a point of contention between Shapiro, House Democrats and Senate Republicans.
In May, Republican senators unveiled a plan to cut the state’s personal income tax from 3.07% to 2.8% and eliminate the so-called “gross receipts tax” on electricity for households and businesses.
The $3 billion plan was essentially a counterproposal to Shapiro’s proposal to raise spending on public education, public transportation and other government services.
Although the tax cut bill passed the Senate, it was never considered by the Democratic-controlled House of Representatives and was ultimately not included in the budget.
The final budget, however, includes a number of recent tax breaks for businesses, including some for companies that assist workers pay for childcare or save for college. It also allows companies to carry forward a larger share of operating losses from previous years when determining their tax liability.
Whole House Repairs
The budget also lacks a Democratic-backed program to assist Pennsylvanians repair their homes.
Sen. Nikil Saval (D-Philadelphia) has been a leading advocate for the program since its inception in 2022. At that time, the state used $120 million in federal funds to provide grants to eligible homeowners and landowners across the state to finance repairs and waterproofing on their properties.
Shapiro had proposed investing $50 million in state funding this year for the entire home improvement program. However, the funds were ultimately not included in this year’s budget.
