Pennsylvania lawmakers and Gov. Josh Shapiro approved a $50.8 billion state budget Sunday, ending weeks of negotiations and avoiding the prolonged stalemate that delayed last year’s spending plan, while postponing action on several major policy issues until later this year.
The 2026-27 budget, signed by Shapiro after winning bipartisan approval in both the House and Senate, increases state spending by about 1.4% over the previous fiscal year. The agreement contains no broad-based tax increases and relies in part on accounting changes and the use of underutilized dedicated funds to balance the budget rather than tapping the state’s emergency reserves.
Among the largest investments is more than $565 million in new public school funding under Pennsylvania’s adequacy and tax equity formulas, continuing an effort launched in 2024 to address inequities identified in a landmark court ruling. Since then, the state has committed nearly $2 billion toward closing funding gaps, including an additional $136 million for the Philadelphia School District this year.
The budget also provides an estimated $168 million annually for long-awaited cost-of-living adjustments for certain retired teachers, police officers and firefighters, many of whom have not received pension increases in decades.
Lawmakers added new transparency requirements for data centers, requiring annual reports detailing water and energy consumption. Companies that fail to comply could face fines of $10,000 per day. The budget also closes a sales tax loophole affecting online purchases delivered within Philadelphia, a change expected to generate additional local revenue.
Several high-profile issues were left unresolved, including repealing a sales tax exemption for data center construction, allowing municipalities to impose temporary moratoriums on new data centers, banning student cell phone use in K-12 schools, regulating and taxing skill games, and establishing a long-term funding solution for public transit. Legislative leaders indicated those topics could return during the fall session.
Shapiro’s original $53.3 billion proposal also included raising the minimum wage, legalizing recreational marijuana, and creating a $1 billion infrastructure fund to support housing and energy projects, but those initiatives were not included in the final agreement.
Source: Phila Inquirer