Pennsylvania’s divided Legislature is on a path to collide over the state’s 2026-2027 budget, just a few months after Gov. Josh Shapiro and legislative leaders cut a deal to resolve a more than four-month budget impasse for the current fiscal year.
What’s heightening the odds for another standoff is this year’s midterm elections. Shapiro will be on the ballot this fall, and voters will pick the winners of 25 state Senate seats and all 203 House seats. As budget talks begin, lawmakers from both parties will be angling for policy wins to tout to their constituents.
For Republicans, that means fighting for cuts. Senate Majority Leader Joe Pittman, R-Indiana, said in an interview that addressing Pennsylvania’s budget deficit will be “front and center” for his caucus this year.
“ Containing the growth of spending is step one,” Pittman said. “Finding areas where we can reduce costs and do it efficiently is step two. Step three is what we focused on in last year’s budget, which is the long-term economic growth of the commonwealth.”
On the other side of the Capitol, House Majority Leader Matt Bradford, D-Montgomery, said his priorities fall more toward increasing funding for public education and transit programs.
House Democrats this year say they’re expecting to approve more money for public schools and transit, and they’re eyeing recreational marijuana legalization as a way to pay for it.
Meanwhile, Senate Republicans say they’re pushing to tighten the state’s belt by making changes to spending on social services like Medicaid and the Supplemental Nutrition Assistance Program.
And Shapiro, a Democrat, will outline his own slate of priorities in a budget address to the Legislature next month.
These colliding agendas foreshadow another budget standoff this year, especially when it comes to the biggest programs comprising the state budget.
To ‘limit utilization’
Pennsylvania often spends more than it earns in tax revenue. And the fact that the current fiscal year’s $50.1 billion spending plan tapped into reserves left the state with only about $500 million in its reserves as of November and $7.8 billion in its Rainy Day Fund, which is intended for public emergencies.
Human services are among the highest expenses for the state. When he’s at the bargaining table with Shapiro and Bradford later this year, Pittman said he’s looking at pushing for further changes to Medicaid and the Supplemental Nutrition Assistance Program
“It’s all about making sure that taxpayer-funded assistance programs are run as efficiently as possible with accountability,” Pittman said, noting the end goal of any reforms would be to “limit utilization” of both programs.
Pittman did not specify what changes he would propose, though he mentioned that preventing SNAP recipients from using their benefits to buy “junk food” could be on the table.
That’s a longstanding idea in Congress and in other states, though it’s potential for generating savings is fiercely debated. For one, there’s the difficulty of classifying a great number of foods and drinks, according to an Associated Press story last year that quoted experts in nutrition programs. And barring recipients from buying certain foods wouldn’t necessarily stop them from spending their monthly allotments on unapproved products.
Pittman touted the Shapiro administration’s restriction of GLP-1 medication from qualifying for Medicaid coverage as a success last year. Pittman also pointed to some oversight changes to the program in this year’s budget as major wins for his caucus.
Among those adjustments are requirements for the Department of Human Services to compare wage records and death certificates with Medicaid and SNAP recipients.
Any further reforms to the two programs could face pushback from many Pennsylvania Democrats, who have been unified in their opposition to Congress’ moves to restrict use of either program.
Medicaid and SNAP recipients must prove they work a minimum of 80 hours per month, which Republicans in the U.S. Congress have argued would help prevent abuse of the programs by individuals who don’t need them. The requirements for SNAP are already in place, and Medicaid adjustments must be implemented by states no later than the beginning of next year.
The impact of those federal changes is yet-to-be-seen, according to Bradford. Predictions from the Shapiro administration show Medicaid and SNAP services would be cut for 310,000 and 144,000 Pennsylvanians, respectively.
“ There is no constituency in this caucus, nor there should be anywhere, for waste, fraud, and abuse,” Bradford said, dismissing the notion that Democrats don’t care about ensuring the programs only benefit truly eligible people.
“Now what I will tell you is if you’re talking about someone’s grandmother’s nursing home, or some child with intellectual disabilities’ ability to access care — if you’re talking about those types of cuts — they will find no one willing to have those kinds of conversations,” Bradford said.
Underfunded schools
Democrats have staunchly supported the “adequacy funding formula” for public schools that was adopted in 2024, in response to a Commonwealth Court ruling that found Pennsylvania unconstitutionally underfunds certain school districts.
Bradford said he would reject any major changes that could harm the formula, and Senate Republicans need to understand the ruling demonstrates lawmakers “have a moral, as well as constitutional obligation to fund children’s education.”
“It’s kind of coldhearted, two years into making some steps towards adequacy funding, to then argue we’re gonna pull back on what we haven’t already done,” Bradford said.
The formula has funneled more than $1 billion — on top of regular basic and special education dollars — to those school districts identified as underfunded since its adoption (the School District of Lancaster is one of them). Democrats say they want to gradually raise the amount allocated to schools until the funding gap is closed, which may take up to eight more years.
Senate Republicans, especially Appropriations Committee Chairman Scott Martin, R-Lancaster, have criticized the formula, arguing that districts with declining enrollment have received the most money but have little to show for it in terms of student performance on annual assessment exams.
“That, for me, is where the system is failing and why the system truly is inequitable and only gonna get more inequitable,” Martin said.
And Pittman said he’d push to renegotiate education spending “every year.”
“That is the biggest and probably most controversial piece of the budget conversations that we continue to have,” he said, noting Senate Republicans want to increase school choice initiatives for parents of students.
Last year’s budget sent an additional $50 million to the Educational Improvement Tax Credit program, which provides private school scholarships for students. It lacked any funding for private school vouchers.
Public education advocates and school districts involved in the 2023 Commonwealth Court case have repeatedly threatened to sue the state again if lawmakers fail to remedy the underfunding of some schools.
Lee warned Republicans against pushing back against public education. He said his polling shows Democrats “are swimming in the right direction” and fall closer in sync with the voter base’s belief that public schools are underfunded.
‘Real dollars’ for transit
Funding transportation, especially the Southeastern Pennsylvania Transportation Authority, was perhaps the biggest sticking point between Democrats, with a large Philadelphia-area caucus, and Republicans during negotiations last year.
As the impasse drew out, SEPTA announced it would implement service cuts and fare increases, though they were later blocked by the Court of Common Pleas.
In September, the Shapiro administration effectively ended last year’s fight over transit, temporarily, by allowing SEPTA to use $394 million of its capital funds for operating expenses — an action Republicans supported. Democrats have warned that the move was not a long-term solution.
“We need to be putting real dollars into the operation of our transit system, not going the opposite direction,” Bradford said, noting Democrats have wanted to tap the state’s sales tax revenue to offset the costs.
Bradford pointed to a recent string of delays and railcar fires to argue that pulling from the capital budget, which SEPTA officials and Democrats have argued should be limited to infrastructure projects like replacing aging rails and improving stations, is “not only … foolhardy, but it’s potentially dangerous.”
“ I think facts on the ground have overtaken some of the rhetoric from last year,” Bradford said.
Alternatively, Bradford said Senate Republicans have proposed putting some revenue from a potential tax on games of skill, the slot machine-like gambling games often found in bars and convenience stores, toward transit.
Taxing skill games has been a long-running issue in the General Assembly that fell through in the Senate last year. Pittman’s office did not respond to a follow-up question on the status of a skills game bill.
Political pressure
During last year’s budget standoff, Democrats alleged that Senate Republicans were not negotiating in good faith, attempting to stall budget talks so as to paint Shapiro as ineffective at crafting a deal.
Republicans, including Pittman, scoffed at those claims — though the GOP undisputedly led a campaign to blame Shapiro for the delayed budget.
Sen. Vincent Hughes, a Philadelphia Democrat who chairs the Senate Democratic Campaign Committee, said Republicans would be unwise to attempt the same strategy this year.
“People want to see their government working,” Hughes said. “People want to see their government responding to their needs, right? And last cycle from a political perspective did not work in Republicans’ interest.”
But some political analysts predicted the stakes of the 2026 midterms would incentivize both parties to finalize a budget sooner rather than later.
“I would think that many lawmakers would probably want to get the budget behind them before heading out to run for reelection,” said Berwood Yost, the director of the Center for Opinion Research and the director of the Floyd Institute for Public Policy at Franklin & Marshall College.
Yost said policies at the forefront of negotiations, especially if they deal with the “issue of the day” like inflation, will inevitably be intertwined with this year’s campaigns.
Jim Lee, chief executive of Susquehanna Polling & Research, said voters aren’t likely to punish candidates this fall for failing to pass a budget on time, based on polls he’s conducted during past impasses.
“Voters, for the most part, aren’t tuned into the state budget,” Lee said.
And there are a few signs that compromise could carry the day. Growing the economy to help remedy the state’s spending deficit is something Bradford said his caucus wants explore this year.
“This is where I will happily sound like some of my Republican friends,” he said. “We need to grow this economy.”
Pittman said it was too soon to talk about whether the next state budget could be passed before June 30, given that lawmakers haven’t even heard Shapiro’s annual budget address, scheduled for February 3rd.
“ I have a lot of confidence that if our friend’s on the other side of the aisle set the rhetoric aside and focus on figuring out how to have a give and take in this process and focus on the hard realities that are in front of us in terms of our fiscal future,” Pittman said, “that we can get a budget done on time — or very close to on time.”