Gov. Josh Shapiro unveiled a proposed a record $51.5 million state budget Tuesday that would sharply increase funding for public schools, day care, mass transit and job training.
Shapiro proposes paying for the higher spending by regulating and taxing 40,000 skill-game terminals and legalizing recreational marijuana use.
Over five years, taxing skill games would raise an estimated $8 billion, and taxing marijuana would raise another $1.3 billion, according to a budget summary.
Shapiro also again proposed gradually raising the state’s $7.25 an hour minimum wage to $15 an hour, a proposal that Republican legislators have always rejected.
And he proposed speeding up the reduction of the state's corporate net income to 4.99% by 2029, two years faster than now, and eliminating a loophole that allows companies to shift revenues to states with no or lower income taxes. The loophole elimination, first proposed by Gov. Ed Rendell almost two decades ago, has never gained traction among Republicans either.
The state General Assembly must pass, and Shapiro must sign a 2025-2026 budget to go into effect July 1.
The governor, often discussed as a potential Democratic presidential candidate, sought to portray a state thriving under his leadership. About 170,000 more Pennsylvanians have jobs and the state has trained about 12,000 new apprentices for jobs since he became governor in January 2023, he said.
“Today, I can report that Pennsylvania is on the rise,” he said in the prepared text of his budget address. “We’ve attracted over 3 billion in private sector dollars and become the top state in the Northeast for regional economic competitiveness.”
Faced again with a politically divided General Assembly, Shapiro reminded legislators they accomplished business permitting reform, boosts in funding for tourism, economic development and vocational-technical training and pharmacy benefit manager reform.
“Because despite our agreements, we worked together to get stuff done,” he said, using a phrase he often repeats. “We solved problems that languished for decades.”
The last two years, he said, Democrats and Republicans voted for “commonsense budgets that solve real problems.”
“We’ve moved the ball down the field and put points on the board and we should celebrate that,” he said. “But we should be hungry for more.”
With the state required to comply with a Commonwealth Court ruling that declared small public school districts underfunded, Shapiro proposed another $601 million in basic education spending and another $40 million for special education.
The Hanover Area School District would receive an additional $1.9 million under Shapiro’s proposal. During the Commonwealth Court case, advocates said the Luzerne County district had one of the largest funding shortfalls.
“Before you would have to try to balance between programming and doing something with the facilities to keep them warm,” said Barrett, a state Board of Education member who attended the budget address. “I really feel like so much pressure relief off of myself and our business administrator to try to triage what needs to be funded.”
The governor’s office invited Barrett to view the address in person and highlighted the district’s mental health programs for students.
The governor also aimed to slash funding for cyber charter schools by capping their base state tuition reimbursement at $8,000 per student. The reform would save public school districts $378 million a year, the administration estimates. Conservative Republican lawmakers rebuffed at charter school reform and favor school choice are likely to do it again.
Shapiro also wants to:
- Limit skill and video-gaming terminals to 30,000 for the year starting July 1. That would gradually increase to 40,000 in the year starting July 1, 2029.
- No establishment could have more than five terminals with the tax set at 52% on its gross revenues. The state’s general fund would get all but 5 percentage points of that revenue. The rest would go to shore up the Lottery Fund, which benefits senior citizens.
- Legalize adult use of marijuana starting July 1 with legal marijuana sales beginning July 1, 2026.
- The state would set aside $10 million for “restorative justice initiatives” and expunge the criminal records of people jailed only for marijuana possession.
- Another $25 million would go toward helping small and diverse businesses enter the marijuana-sales market.
- Provide another $5.5 million for vocational-technical. The budget proposes creating $12.5 million dedicated to workforce and economic development networks, using $10 million in existing money with $2.5 million in new funding to train workers.
- Another $2 million would go toward a statewide program that funds internships at businesses.
- Boost mass-transit funding by $292.5 million. The amount would rise to $330 million by July 1, 2029. He would shift more sales tax revenues to accomplish that.
- Reduce by $50 million more a year funding from motor vehicle license fees that goes to pay for state police. by July 1, 2029, state police would be funded entirely by other money.
- That should produce another $750 million to repair and replace roads and bridges over the next five years, the administration estimates.
- Spend $14.5 million for four state police cadet training classes and eliminate the cap on “troopers on the streets.”
- He also wants $10 million more for violence intervention and prevention programs and $10 million more for after-school programs aimed at reducing root causes of violence.
- Create a new $30 million competitive program for firefighting companies to buy equipment and recruit and retain firefighters.
- Add $13 million to a fund that encourages farming innovations; $2 million more for animal testing to keep livestock healthy; $4 million to help the hungry get food from a farming surplus program; $2 million more for emergency food aid for low-income residents.
- Spend $6 million to boost the state’s 54 adult literacy centers. The administration sees this as a way of helping about 650,000 Pennsylvanians get a high school graduate-equivalency diploma. About 7,500 people are on literacy center wait lists, according to the administration.
- Spend $5 million more on job training and related services for people with physical or intellectual disabilities. About 50,000 Pennsylvanians receive aid from the Office of Vocational Rehabilitation programs.
- Spend $80 million on bonuses to attract and retain child-care staff, increase reimbursement to child-care centers and raise staff wages. The administration estimates the state has 3,000 unfilled child-care jobs.
- Spend $21 million more for workers who directly care for people with intellectual disabilities, including autism. The spending would increase staff wages, create paid time off and increase access to affordable health insurance.
- Spend $20 million for local area agencies on aging to care for senior citizens and $2 million to increase oversight of the agencies.
- Address rural health-care worker shortages by adding $5 million to recruit and train more nurses; $20 million more to counties to recruit staff for behavioral health services; and $10 million to repay school loans for behavioral health-care workers willing to work in rural areas facing care shortages.
Shapiro said he wants to block private equity firms from Pennsylvania’s healthcare system.
“In many cases, they skip town, leaving taxpayers holding the bag and communities without the care and services they need,” he said. “I’m done letting private equity treat Pennsylvania hospitals like a piggy bank they can empty out and smash on the floor.”
The statement seemed to refer to a private equity firm dropping its plan to buy two Scranton hospitals, Moses Taylor and Regional, from Commonwealth Health Systems.
“Let’s require pre-transaction notifications for all sales, mergers, acquisitions, and bankruptcy claims by empowering the Office of the Attorney General to review these intentions carefully, comprehensively, and with the community’s best,” he said.
Education reporter Sarah Hofius Hall and health care reporter Lydia McFarlane contributed to this report.