Governor Shapiro Unveils 2024-2025 Budget Proposal

Governor Shapiro presented his state budget proposal to the General Assembly last week, beginning the annual debate on the priorities and levels of funding will ultimately be approved through the legislative process. The Governor’s spending plan would total approximately $48.3 billion which is a 7.1% increase ($3.2 billion) over last year. The priorities outlined in the address include:

  • Over a $1 billion increase in basic education (K-12).
  • A significant increase in higher education funding, including a revamping of the State Higher Education System and integrating cooperation between it and community colleges.
  • Dramatic increases in funding for mass transit in SE and SW PA counties, and rural transit systems across the state.
  • Create an economic development plan to focus revenue on programs to attract new businesses into the Commonwealth.

The budget would also provide $50 million to the Whole Home Repair program, which has in provided funds for low and moderate homeowners make energy efficiencies in their homes (including “climate friendly heat pumps.”) This program is popular with Democrats and had been established in the budget two years ago but was cut in budget negotiations last year.

In addition, the budget proposal calls for an increase in funding of a myriad of human service programs, as well as the establishment of a $15 minimum wage.

Although the plan does not call for an increase for personal or business taxes, the proposal would rely significantly on taking monies from the state’s Rainy Fund built up with surpluses in previous years to address future downturns in the economy. This has particularly raised the ire of legislative Republicans who point to that funding source and the lack of details on many other programs in characterizing the budget as fiscally irresponsible.

Two proposals the Governor did float as new revenue sources include taxes that could be derived from legalizing recreational marijuana, and also through the statutory legalization of skill games. The skill game piece would be of particular interest to PPA member companies who have been operating skill games in convenience store, but whose legality has been challenged in the court system. The Governor proposes a 42 percent tax on the daily gross gaming revenue from skill game machines which generate an estimated $150 million in the first year, annualizing to $315 million.

The budget address is just the first shot in the process that will now be subject of legislative hearings and months of negotiation leading up to June 30.

It is key to note that inn December 2023, the Pennsylvania House Democratic leaders announced a suspension of in-session voting days for three months due to a leaky ceiling in the House chamber. As of a week ago, the House was split at a 101-101 tie due to a resignation by Rep. John Galloway (D-Bucks) in December. A special election is scheduled tomorrow (February 13) to fill that seat which presumably will remain Democrat ensure a minor majority when the House returns to Harrisburg on March 18 for its next scheduled session (voting) day. At the end of last week, another House member, Rep. Joe Adams (R-Pike), announced a resignation for medical reasons. This will ultimately provide House Democrats with a 102 – 100 majority until a special election is scheduled this spring to fill the seat.