HARRISBURG — Leaders of Pennsylvania’s split legislature announced a budget agreement Saturday that would set state spending at $50.85 billion for the coming year, sending the plan to both chambers for final votes scheduled Sunday.
What the deal contains
The package, about 1.5% higher than last year’s spending level and roughly $2.4 billion below the plan Gov. Josh Shapiro proposed in February, would boost education funding, update certain retirement benefits and include targeted policy changes on housing and data centers.
- Education: At least a $565 million increase in funding, largely distributed through a newer adequacy formula designed to address a 2023 Pennsylvania Supreme Court ruling that found the previous school funding system unconstitutional.
- Retirements: A cost-of-living adjustment for public school teachers who retired before 2001 and updates to municipal police and fire retirement plans.
- Not included: A $1 billion bond proposal for housing and infrastructure from Gov. Shapiro, and no change to the state minimum wage proposal favored by many Democrats this year.
Policy changes and contentious items
The agreement leaves some high-profile issues unresolved. Lawmakers did not act on the governor’s broad housing bond request, instead including narrower housing policy changes that focus on regulatory adjustments rather than a large new funding stream. The budget also omits a statewide minimum wage increase, a key Democratic priority during the session.
Policy attention is also turning to data center development. The state Senate recently approved a bill allowing local governments to impose an 18-month pause on zoning and planning approvals for data center projects. Lawmakers are also considering eliminating a tax break on internal equipment at data centers as part of final negotiations.
Timing and next steps
The spending plan is 11 days past the statutory June 30 deadline. Both the Democratic-controlled House and the Republican-controlled Senate must pass the measure by simple majority before it reaches the governor’s desk for signature. Lawmakers are scheduled to reconvene at noon Sunday to complete final votes.
| Item | Governor's Proposal | Agreed Budget |
|---|---|---|
| Total spending | About $53.25 billion | $50.85 billion |
| Education increase | Included (higher) | $565 million (via adequacy formula) |
| Housing bond | $1 billion proposal | Not approved |
For county officials and school districts across Pennsylvania, the package alters the landscape for local budgets and planning. The education funding increase and changes to pension benefits could ease pressure in some districts and municipalities, while the absence of a major housing bond leaves certain development and infrastructure projects without the anticipated state-level financing.
The inclusion of retirement adjustments is a notable development for long-retired educators who had been excluded from earlier pension changes enacted under Act 9. Municipal police and fire plans also receive legislative attention, a point of interest for local governments that fund those pensions.
Lawmakers and advocates will be watching the Sunday votes closely. If approved, the bill will go to the governor for final action. Until then, provisions in the deal remain subject to change in the final hours of the session.
