by Ian Karbal, Emily Previti and John Cole, Pennsylvania Capital-Star
August 13, 2025
After a flurry of activity at the state Capitol Tuesday, it’s unclear if lawmakers are any closer to ending the budget impasse that has lasted more than six weeks past the constitutionally mandated June 30 deadline.
The state Capitol building in Harrisburg.
(Tim Lambert/Pennsylvania Capital-Star)
With both the Democratic-controlled House and GOP-led Senate holding floor sessions that stretched into the evening, disagreements that had largely been conducted behind closed doors have been dragged into the open.
On Tuesday, the Senate passed a budget bill that would see the commonwealth spend $47.6 billion in the next year, roughly $3 billion less than a proposal passed in the House last month.
The Senate also passed a Republican-backed plan to fund the state’s mass transit agencies for the next two years, providing about $300 million. The bill would also take money from a fund for public transit to spend on roads and bridges.
Both votes fell on party lines.
“I ask my colleagues today, to stand with the taxpayers of this commonwealth, to stand with those that are service providers or educating our children right now who need the money to start flowing, to decide on this side of fiscal stability and not trying to greatly outspend what we’re taking in,” said Senate Appropriations Chair Scott Martin (R-Lancaster)
The move comes only two days before the Southeastern Pennsylvania Transportation Authority (SEPTA)’s stated deadline to receive new funds from the state, or cut services by 20% later this month.
It’s also a response to a proposal that passed the House on Monday that would give transit agencies an additional 1.75% of the state’s total sales tax collected, which Republicans have called irresponsible.
But despite both chambers in the Capitol individually making progress, leaders in the House and Senate seem as divided as ever.
A joint statement provided by House Speaker Joanna McClinton (D-Philadelphia), House Majority Leader Matt Bradford (D-Montgomery) and House Appropriations Chair Jordan Harris (D-Philadelphia), said the Republicans “failed to do their job.”
“This budget does not fulfill our constitutional obligation to adequately and equitably fund our public schools and it fails to support critical programs and services such as mass transit,” they added.
Manuel Bonder, a spokesperson for Shapiro, said, “ this is clearly not a serious, long-term proposal that can pass both chambers. It’s time to get back to the table and keep working at it.”
And following passage of the Senate measure, President Pro Tempore Kim Ward (R-Westmoreland) wrote in a post on the social media platform X, “If Gov. Shapiro and House Democrats reject this proposal, holding up funding is on the governor and the House Democrats and they will have to answer to their constituents.” Riders board a rabbittransit bus in Harrisburg (Capital-Star photo by Ian Karbal)
No free rides
House Bill 257 would transfer $87.5 million in state gaming revenue to both public transportation and highway funding next year and $43 million annually thereafter. That money could come from skill games – a target for regulation by both Democrats and Republicans.
Right now, SEPTA and other transit agencies in rural, suburban and urban areas get money from the Public Transportation Trust Fund earmarked separately for operations (referred to as 1513 funds in the measure) and capital (referred to as 1514 funds) expenses.
The bill would allow transportation entities to transfer a limited amount of those capital funds to operations. And it would require fare increases indexed to inflation in 2026, 2027 and then every other year thereafter (leaving open the possibility to seek a waiver).
But Republicans and Democrats disagree over whether that would mean pulling money from improvement and construction projects. While Democrats said that the trust fund money was earmarked, Republicans said they were never offered proof of more than $1 billion or so being dedicated to projects.
The confusion seems to extend to SEPTA’s leadership. A sign put up by SEPTA in the Fishtown neighborhood of Philadelphia notifying which services may be cut if state funding isn’t approved to fund mass transit. (John Cole/Capital-Star)
“It’s a solution that essentially tells SEPTA and other transit agencies to raid from our capital dollars to put them into our operating budgets,” Scott Sauer, SEPTA’s general manager, told reporters. “That creates a whole slew of problems for us.”
Later in the evening, Sauer said in a statement sent to the Capital-Star, “In subsequent discussions with Senate Republican staff this evening, there may be confusion about the proposed sources of funding to address the crisis we are facing. As a result, we expect to remain in close contact with all parties in this negotiation as we continue to await a solution that will provide adequate, sustainable funding for SEPTA’s future.”
It’s unclear whether SEPTA would proceed with planned service cuts if this proposal should pass the House before the oft-repeated deadline of Thursday, Aug. 14. The board isn’t scheduled to meet until Aug. 28.
It also calls for sentencing enhancements for dealing drugs on or near public property related to transportation and making it a felony to interfere with public transit vehicle operators.
And it would make the role of SEPTA special prosecutor with jurisdiction over crimes committed “within” the transit system – on track to expire in 2026 – more permanent with four-year terms.
Transit systems serving at least 600,000 people also would have new performance criteria. The only two that meet that requirement are SEPTA and Pittsburgh Regional Transit.
For highways, funding would be allocated to counties based on eligible mileage and road conditions – and require the work to be completed within five years.
The 37-page transportation funding bill passed Tuesday night started out as a two-page piece of legislation that would ensure the state driver’s license test and education materials cover driving safely in work zones. Those components remain in the legislation.
The bill also takes money from the Public Transportation Trust Fund for road and bridge repair.
“It sounds like it’s a pretty good day for rural Pennsylvania,” Senate Majority Leader Joe Pittman (R-Indiana) said.
Pittman and other Republicans on multiple occasions referenced Gov. Josh Shapiro’s decision to flex $153 million of federal highway funds in November to SEPTA to avoid immediate service cuts and fare increases.
“Now you know how we felt back in November when the governor absconded $153 million from road projects and put it into transit,” Pittman said. “Now you know how we felt 15 years ago when Governor Rendell took road money and put it in the transit.”
“Doesn’t feel so good, does it?” he added.
A divide over education
Another area where the two proposed budgets diverge is on K-12 education spending.
Last year, both chambers agreed to a new adequacy funding formula, based on factors like poverty in a school district, in response to a 2023 Commonwealth Court ruling that found the state’s public school funding was unconstitutionally inequitable. The result was more than $500 million distributed through the formula explicitly to benefit underfunded school districts.
This year, both Shapiro and House Democrats proposed increasing the amount of education funding by $526 million. The Senate’s proposed budget would keep education funding at the same rate it was set last year. Students in Christine Persun’s classroom in Mechanicsburg Middle School. (Submitted by Christine Persun)
Sen. Kristin Phillips-Hill (R-York), called the proposal “a way forward to ensure that our children returning to their classrooms in a few weeks have the resources that they need in their classrooms.”
She added, “Our students, teachers, administrators and nonprofit staff can know that instead of a fictional world that the Governor thinks that we live in where budgets do not need to balance exist,”
Democrats, however, argued that failing to increase education funding could amount to the state failing to meet the requirements of the Commonwealth Court ruling.
While the ruling called on lawmakers to solve the problem, they pointed to a report from a commission that determined the state would need to spend roughly $5.4 billion to adequately fund all of the state’s schools, and recommended doing so over a seven-year period.
According to Senate Minority Leader Jay Costa (D-Allegheny), the Republican proposal falls far short, and fails to live up to promises made by lawmakers last year to increase spending to meet that target.
Sen. Sharif Street (D-Philadelphia) also said, “it does not fund our schools, it does not address the increases in education funding that have been mandated by the courts. … It is not a real solution.”
PA Schools Work, a coalition of education-focused nonprofits, including some involved in the lawsuit that led to the Commonwealth Court ruling, opposed the flat funding proposal.
“Senate Republicans’ budget proposal isn’t just inadequate – it amounts to a massive education cut that betrays Pennsylvania students and leaves them holding the bag,” said Dan Urevick-Ackelsberg, Senior Attorney at the Public Interest Law Center, which was a part of the lawsuit, and is a PA Schools Work partner. “Schools can’t meet rising costs with stagnant, unconstitutional funding, and students are entitled to investment, not teacher layoffs. This bill is a gut punch that shortchanges students and abandons lawmakers’ constitutional duty to ensure a thorough and efficient system of public education for all kids in the Commonwealth.”
However, Sen. Scott Martin, rejected the idea that it was failing to meet requirements, noting with declining public school enrollment, a flat budget would still meet schools’ needs.
“We’re seeing a tremendous decline in our public K-12 enrollment, and part of that’s our demographic decline,” Martin told reporters after the vote. “Where does that balance out? That’s the never-ending tug of war … to me, we need a much fairer system. It’s going to be changing because our demographics change.”
Budget talks have now reached a potential fork in the road.
Ultimately, the House will either have to agree to what the Senate passed, or the two parties will have to resume negotiations with Shapiro.
“It’s now incumbent upon us to reject what we have in front of us and get back to the table and put together a strong negotiating team that’s going to allow us the opportunity to find that common ground,” said Costa, pushing for a budget that ultimately spends somewhere between what Senate Republicans and House Democrats have proposed.
Pennsylvania Capital-Star is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact Editor Tim Lambert for questions: info@penncapital-star.com.
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