Pro-Growth 2025-26 State Budget Now Complete
The Senate approved a bipartisan final state budget plan that will help grow Pennsylvania’s economy and make key improvements to the spending plan Gov. Josh Shapiro proposed earlier this year.
The $50.1 billion budget approved by the Senate and the House cuts nearly $1.4 billion in spending from Shapiro’s proposal, utilizes billions in lapsed funding in state agencies and special funds in the best interests of taxpayers, protects Pennsylvanians from the devastating consequences of Shapiro’s proposed electricity tax, and incentivizes job growth across the commonwealth by implementing key reforms to the permitting process and maintaining important tax cuts.
Senate President Pro Tempore Kim Ward:
Senate Majority Leader Joe Pittman:
Protecting Pennsylvanians from the RGGI Electricity Tax
As part of the budget agreement, the illegal regulation mandating Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI) – a multi-state pact that would have added more than a billion dollars in new electricity taxes on Pennsylvania families and job creators – was eliminated.
Preventing Pennsylvania from entering RGGI and stopping this tax protects consumers from dealing with even more severe consequences, including the closure of Pennsylvania power plants, job losses, and the threat of rolling blackouts in the years ahead.
Preserving Our Rainy Day Fund and Saving Taxpayer Dollars
The $50.1 billion budget slashes $1.4 billion from the governor’s original proposal, while restoring approximately half a billion dollars in key programs and services he cut from his original plan.
Senate Republicans closely examined the state’s finances with a fine-toothed comb to review every state agency and special fund, identifying prior-year funding lapses and excessive special fund balances in state agencies totaling $3 billion. Using these funds in the 2025-26 budget protects against draining the state’s emergency reserves in the Rainy Day Fund, while leaving more than $200 million in the state’s fund balance.
Making PA Competitive Through Sweeping Permitting Process Reform
Critical reforms to Pennsylvania’s permitting process will make our state more competitive economically by requiring a wide variety of environmental permits to be deemed approved after a certain period of time, ensuring applicants know the time frame for consideration of their application and can appeal any permits that are denied.
This provides certainty to the process and ends the current practice of dragging out the permitting process for many months without resolution.
Growing the Economy to Create Family Sustaining Jobs
The budget continues policies championed by Senate Republicans to make Pennsylvania more competitive for business development and job growth, including continuing the phase-down of the Corporate Net Income Tax and preserving the increase to the Net Operating Loss deduction.
As a result of these pro-growth policies, Pennsylvania job-creators will pay approximately $1.4 billion less in taxes than they would have paid under the previous rate in 2023.
Funding Publics Schools, School Choice and Higher Education
The budget includes new money to promote student achievement and empower families, including a $50 million expansion of the state’s popular Educational Improvement Tax Credit program to support more school choice opportunities for families in disadvantaged schools.
Additional funding is also included for the Ready to Learn Block Grant program ($562 million increase), Basic Education ($105 million increase), Special Education ($40 million increase) and Pre-K Counts ($9.5 million increase).
An additional $7.5 million will support the Grow PA Scholarship Grant program created by Senate Republicans last year to provide grants of up to $5,000 to students pursuing higher education for in-demand fields, provided they agree to stay and work in Pennsylvania after graduation.
A $15 million cut proposed by Shapiro to workforce development programs was restored, ensuring these programs can continue to help train Pennsylvanians for high-quality, family-sustaining jobs.
Serving Seniors and Supporting Farmers
The budget protects programs designed to benefit older Pennsylvanians by providing a $100 million transfer to the Lottery Fund, as well as $90 million in recurring funding from i-gaming. An additional $10 million was also provided to Area Agencies on Aging.
The plan also protects and promotes Pennsylvania’s farmers by including key provisions to ensure the Pennsylvania Animal Diagnostic Laboratory System can continue to identify potential outbreaks and providing additional funding for Farmer’s Market Food Coupons ($7 million increase) and the State Food Purchase program ($4 million increase).