Two Weeks Late, State Lawmakers Advance $50.8 Billion Spending Plan

By Ian Karbal, Emily Scolnick, Peter Hall & Whitney Downard | Pennsylvania Capital-Star

Roughly a week and a half after the constitutionally mandated deadline, state legislators unveiled a $50.8 billion budget Saturday night that included millions of dollars in new funding for public education, new energy policies and a long-sought increase for the pensions of teachers who retired before 2001. 

The general appropriations bill now set for consideration in the full Senate gives a sense of the compromise on spending between Democrats and Republicans in the Pennsylvania General Assembly.

Several “code bills” set to be considered in the House, meanwhile, highlight some of the agreed-to legislative priorities that will be added to the instructions for state agencies to carry out their duties.

Details continued to be released well after 9:30 p.m. and most fiscal leaders declined to comment. Lawmakers in both chambers are expected to meet Sunday to continue work on the spending proposals.

“At the end of the day, I think what you’re seeing moving forward is an investment plan in the commonwealth that you’ll see a significant amount of bipartisan support (for),” said House Appropriations Chairman Jordan Harris (D-Philadelphia). “Folks are ready to let the people of Pennsylvania know what is important to all of us collectively.” 

The 1.4% increase over last year’s spending is $2.4 billion less than what Gov. Josh Shapiro proposed in February. To fund his priorities, Shapiro proposed $2 billion in taxes on skill games — which have now been declared unlawful by the Pennsylvania Supreme Court — and recreational marijuana. The latter is a non-starter for conservative lawmakers, but the court’s ruling means the legislature must act within the next three months to legalize the gaming devices.

In closed-door negotiations with Republican Senate leaders, many of the more controversial or partisan policy proposals, including recreational marijuana, skill games regulation and an increase to the minimum wage, were stripped out of the bill. 

Lawmakers resisted dipping into the state’s nearly $8 billion rainy day fund, which was a priority for GOP leaders. 

Along with overall spending numbers, the bills that comprise the spending plan also include a number of new policies, many that had been sought by lawmakers from either party and agreed to as part of spending negotiations.

But the budget process is not over, and a number of proposals lawmakers had been debating were absent from bills that moved Saturday night.

Things still in limbo

As it stands, the House Democratic majority and Senate Republican majority had not agreed to alter the commonwealth’s tax code, which would institute changes to the commonwealth’s tax policy. 

That leaves in limbo one of Shapiro’s signature policy pushes, the GRID Standards, which set voluntary benchmarks on sustainability and transparency for data center developers that allow them to claim tax cuts and expedited permitting.

It’s also not clear if lawmakers will be able to come to an agreement on new sentencing guidelines for people convicted of second degree murder, which is what’s charged when someone dies during the commission of a felony.

In March, the state Supreme Court ruled that the mandatory life sentence without parole for people charged with felony murder were unconstitutional. They gave the legislature until July 24 to come to an agreement on how courts should sentence future convicts, and how the 1,100 people currently serving those sentences should be resentenced. 

Saturday night, the Senate advanced a bill that would institute a minimum 35 year sentence in almost all cases — an identical proposal to one previously panned by key Democrats and criminal justice advocates. But it’s unclear if House Democrats will agree to it. 

House Judiciary Chairman Tim Briggs (D-Montgomery) told the Capital-Star that Democrats and Republicans have “not been able to get to an agreement” on second-degree murder sentencing policy.

But, Harris told reporters they may “see more” action on the issue  in the coming days.

Lawmakers also seemed to be unable to reach a deal on skill games legislation, one of Shapiro’s proposed avenues to increase state revenue. 

Shortly before the budget deadline, the Pennsylvania Supreme Court ruled skill games unlawful, giving lawmakers a four-month window to legalize the machines before enforcement of the ruling begins in October. How and if to regulate and tax them became a contentious issue for lawmakers as negotiations unfolded. 

The current spending plan deal does not include skill games legislation. Harris told reporters that a deal could still emerge in the coming months.

Public education spending

Education emerged as an early point of consensus, with all parties agreeing to $565 million earmarked for adequacy funding.

When the Commonwealth Court ruled the state’s system of funding public education was unconstitutionally inequitable in 2023, lawmakers came up with what they called an adequacy formula to increase funding by $4.5 billion over nine years, primarily for the state’s poorest school districts.

While a number of Republicans have pushed to overhaul the formula, Democrats have fought to hold closely to the 2024 agreement.

Democrats secured long-sought funding to increase pensions for public school teachers who retired before 2001. That was the year the legislature passed a bill enhancing pensions for public school teachers who retired from that point on. 

Retired police officers and fire fighters, who do not automatically receive such adjustments, also got a cost-of-living adjustment for pensions. The retirees will receive monthly pension adjustments between $75 and $300, depending on how long they’ve been retired.

Leaders also came to an agreement on higher education, advancing spending plans in separate pieces of legislation. Those bills keep the University of Pennsylvania’s funding flat at just over $33 million, while increasing the dollars devoted to state-related universities — which include Penn State, the University of Pittsburgh, Temple University and Lincoln University — by 0.3%, to $615 million. 

The State System of Higher Education, which consists of 10 state-owned universities, voted to increase its tuition for the 2026-27 academic year earlier this week, committing to lowering the rate depending on how much state funding it received. But its initial appropriations request was over $650 million.

Energy and environment

Concern among policymakers and constituents about the impact of hyperscale data centers on the environment and energy supplies produced a fleet of measures to manage their growth and effects on the environment.

Only a handful are included in the fiscal code bill. Those provisions would give regulators greater oversight of electricity demand forecasts, require data center owners to report annually on energy and water use and require utilities to assess the use of advanced transmission technologies before building new power lines. 

The code bill doesn’t include any of a handful of proposals to allow municipalities to declare moratoriums on new applications to build data centers. Those measures were intended to give local officials time to develop and adopt zoning amendments to govern data center construction.

Late on Saturday night, however, the Senate Rules Committee amended and approved Sen. Jarett Coleman’s (R-Lehigh) bill that would give municipalities the option to declare an 18-month moratorium on new land use applications for data centers. The amendment adds an exception for data center projects that will be co-located at the site of a power plant with an agreement to supply electricity to the center. 

Developing better methods for forecasting electricity demand was identified as a priority for the commonwealth’s electric utilities and PJM Interconnection, which operates the grid Pennsylvania shares with 12 other states and Washington, D.C. Some experts have questioned whether the soaring demand forecast in the next decade was being driven by speculative or duplicative proposals for data centers. 

Language in the code would require PJM to share its forecasting information with the Pennsylvania Public Utilities Commission and the Office of the Consumer Advocate, an independent office within the state Attorney General’s Office, focusing on utility issues.

It also would require data centers with a maximum energy use of more than 10 megawatts to report their electricity and water use to the DEP, which would be published on the agency’s website. The provision carries a $10,000 penalty for each day a data center fails to comply.

Another spending plan add-on would require utilities to consider the use of advanced transmission technologies, which can provide long-term savings by reducing the amount of energy lost, when applying to approve new power lines. They can also help utilities wring the most life out of existing infrastructure, the tech’s promoters say.

House Energy Committee Chairperson Elizabeth Fiedler (D-Philadelphia), who was the prime sponsor of the legislation, said it would give state regulators power to require utilities to assess the technologies when applying for approval to build new power lines.

The fiscal code bill includes new provisions for natural gas well drilling and plugging.

It includes language introduced by Sen. Gene Yaw (R-Lycoming) requiring gas producers to obtain permits from the Pennsylvania Department of Environmental Protection to drill wells intended to access gas from the Utica Shale formation, which is deeper than the Marcellus formation.

Yaw said in a news release that the legislation would update a 65-year-old regulatory framework that didn’t account for modern drilling techniques. The updates would reduce delays in permit review, improve well placement and limit unnecessary surface impacts.

It also includes another Yaw bill that directs the DEP to ensure decommissioned wells are fully plugged with cement from the deepest reachable point to the surface. 

Separate from the fiscal code bill, the House Appropriations Committee passed Yaw’s Senate Bill 349, which requires owners of solar energy facilities larger than two megawatts to have a plan and provide financial assurance to decommission the facility.

Pennsylvania Capital-Star is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact Editor Tim Lambert for questions: info@penncapital-star.com.