Pennsylvania to begin new fiscal year without budget plan in place

Republicans who control Pennsylvania’s Senate plan to pass spending legislation ahead of Saturday’s start of a new fiscal year, but they lack agreement with the Democratic-controlled House of Representatives to keep state government’s full spending authority intact.

The legislation unveiled Friday envisions a roughly $45 billion spending plan, about a 5% increase from the last approved budget. But about $620 million of that in aid sought by Democrats for Penn State, Temple University and the University of Pittsburgh is being held up by a House Republican bloc.

The total spending figure is several hundred million less than what Democratic Gov. Josh Shapiro proposed in March and about $1.7 billion less than what the Democratic-controlled House passed in early June. It also includes $100 million for private schools under a new program backed by Republican lawmakers and Shapiro, but opposed by Democratic lawmakers.

The plan envisions no increases in income or sales taxes — the state’s two main revenue sources — and most of the new money in it would go to education, health care and social services. To balance, the plan will require about $1 billion from reserves, as tax collections are projected to dip.

In addition to opposing the new $100 million private school subsidy, Democratic lawmakers have pushed for far more funding for public schools in light of February’s landmark court decision that found Pennsylvania’s system of funding public schools violates the constitutional rights of students in poorer districts.

The Senate’s budget bill, like Shapiro’s plan, includes about another $1 billion for public schools.

For Shapiro, getting his first budget across the finish line is perhaps the biggest test yet of his political skills under the Capitol dome.

The 2023-24 fiscal year begins Saturday, and Shapiro’s signature on a new budget bill is required to maintain full spending authority.

Without new spending authority in place by Saturday, the state will be legally barred from making some payments, although a stalemate must typically last weeks before an effect on services is felt.

In a long-term stalemate, the state is legally bound to make debt payments, cover Medicaid costs for millions of Pennsylvanians, issue unemployment compensation payments, keep prisons open and ensure state police are on patrol.

All state employees under Shapiro’s jurisdiction will continue to report to work and be paid as scheduled, an administration spokesperson said.

The state’s massive reserves — built up by inflation-juiced tax collections and federal pandemic subsidies — have eased spending decisions.

But the past few days have become particularly contentious, as a constellation of public school advocates, including school boards and labor unions, have organized to oppose the $100 million program to pay for children to attend private or religious schools.