Shapiro, top Pa. lawmakers reach $50.1B budget deal that could end impasse

• By Stephen Caruso and Kate Huangpu/Spotlight PA

HARRISBURG — Pennsylvania’s top legislative leaders have sent their members a $50.1 billion budget deal after weeks of negotiations between themselves and Democratic Gov. Josh Shapiro.

If adopted by the state House and Senate, the deal would end the state’s four-month budget impasse. The chambers are expected to vote on Wednesday.

The proposed plan includes priorities for both Democrats and Republicans, a mix of compromises designed to thread the divided General Assembly and win enough support to reach Shapiro’s desk.

It would reduce public school districts’ reimbursements to cyber charter schools and send more than $500 million to the poorest schools to help close an “adequacy gap.”

It would also formally end Pennsylvania’s participation in a program to cap carbon pollution, four legislative sources said.

The impasse has primarily been driven by deep, partisan disagreements about state spending. While Pennsylvania is flush with cash built up during the pandemic, its annual bills for services like Medicaid and education regularly outstrip the state’s annual revenues.

Republicans argue that those increases should be halted in this budget to forestall future fiscal pain. Democrats have meanwhile pushed back that the state is legally obligated to increase spending because of a combination of court rulings and rising needs.

Neither side has been able to agree on new revenue sources. So-called “sin taxes” on marijuana or gaming tend to be the most popular options, but even passing those proposals requires navigating major ideological differences within the General Assembly and powerful special interests.

Other options, like new or increased taxes on businesses, personal income, or sales, could raise more revenue but have few champions in the legislature.

Both sides have traded private proposals — all of which require using some of the state’s reserves — and increasingly harsh rhetorical broadsides as the months of closed-door talks have ebbed and flowed with no results.

Democrats at one point agreed to shave $1 billion in spending off Shapiro’s opening budget offer, and also pulled new recurring funding for transit agencies — a longstanding roadblock — off the table. They’ve argued the continued delay is just petty politicking aimed at hurting Shapiro, who is up for reelection next year.

Republicans have countered that Democrats need to consider some of their priorities, like school vouchers, regulatory reform, or pulling Pennsylvania out of the long-debated interstate cap-and-trade program.

All the while, the consequences of the impasse have continued mounting.

Public schools across the commonwealth are cutting programs, spending down their reserves, or taking out loans (or some combination of the three).

Safety net programs like rape crisis centers, and county-administered services like foster care and homeless assistance programs are in the same boat, as are a wide range of nonprofits, like those that run early childhood intervention programs.

Legislative leaders pitched the deal to their respective caucuses Tuesday evening. It quickly raised concerns among some conservatives.

“If we were just going to spend $50 billion,” state Sen. Dawn Keefer (R., York) told reporters, “why didn’t we do it four months ago?”

To kickstart discussions after months of silence, Democratic leadership offered up the Regional Greenhouse Gas Initiative as a bargaining chip to bring state Senate Republicans back to the table.

Republican lawmakers have been pushing the state to leave the program since the state first began the process of joining it in 2019.

The interstate program caps the amount of carbon that companies are allowed to emit. Then-Gov. Tom Wolf directed the state to join the initiative through an executive order, though lawsuits from Republican lawmakers and energy producers prevented the state from participating in the program.

A coalition of environmental advocates warned lawmakers in an email Tuesday night that they would “score” the votes of legislators.