Allocating Funding to Higher Education, Public Transit, and Underfunded Schools
Shapiro Aims for Increased Investment and Revisiting Controversial Proposals
Governor Josh Shapiro is gearing up to present his second budget proposal to Pennsylvania lawmakers, with a focus on bold and impactful priorities. Shapiro intends to allocate more funding towards higher education, public transit, and potentially underfunded public schools in an effort to address crucial areas of need. Additionally, he seeks increased investment to attract major companies and may revisit proposals such as creating a private school voucher program.
Shapiro’s first budget proposal received criticism from allies who felt it lacked boldness. This year, he is determined to return with bigger proposals based on recommendations from his task forces and appointees. However, Shapiro also faces cost pressures in areas like healthcare for the poor and county-run mental health services.
One notable change this year is that Shapiro is expected to deliver his budget address to a joint session of the House and Senate in the Capitol Rotunda. Traditionally, governors deliver the speech in the House chamber, but due to repairs from a water leak, the location has been shifted.
Shapiro’s proposals will require passage from both the Democratic-controlled House of Representatives and the Republican-controlled Senate. Appropriations Committee hearings are set to begin on February 20.
Key Highlights to Watch Out For
The Budget Basics
Shapiro is likely to propose an operating budget that exceeds this year’s approved plan of $45 billion. The end of an extra federal pandemic-era Medicaid subsidy, worth approximately $1 billion annually, is contributing to the need for increased spending. Shapiro aims to allocate nearly $300 million more for public transit agencies, a significant 25% increase, as well as a substantial increase for state-owned universities. He also intends to allocate substantial funds to attract major industrial facilities, such as a microchip factory.
Responding to last year’s court decision that found Pennsylvania’s funding system for public schools to be unconstitutional, Shapiro’s appointees recommended sending an additional $1.3 billion to public schools, including subsidies for high-tax districts and school construction. It remains to be seen whether his budget proposal will reflect this recommendation.
The Fiscal Situation
Tax collections are meeting expectations, and Shapiro currently has a strong cash cushion. The state is projected to have $13 billion in cash by the end of the fiscal year on June 30, thanks to federal COVID-19 aid and robust tax collections. Pennsylvania experienced a credit rating upgrade in November, the first since a series of downgrades between 2012 and 2017. However, the state is running deficits once again, using $1 billion in surplus cash to support this year’s spending. The slow-growing economy and demographic trends, such as a shrinking working-age population and a growing retirement-age population, pose additional challenges.
Shapiro has identified several items as unfinished business, including raising the minimum wage to $15 an hour and creating a new $100 million private school voucher program. Republican opposition has blocked the minimum wage increase in the Senate, while Democrats in the House have blocked the voucher program. Shapiro’s support for the voucher program sets him apart from other Democratic governors across the country. Pennsylvania’s minimum wage remains at the federal minimum of $7.25.
Shapiro has indicated that he will propose a budget that cuts taxes, although further details have not been provided. In December, Shapiro and lawmakers approved an increase in the monthly fee on phone bills to raise an additional $60 million for county 911 emergency response services.
Other Cost Pressures
School boards argue that they are paying excessive amounts to charter schools, while Democratic lawmakers are pushing to revive a dormant program that subsidizes school construction projects. Providers of services for the intellectually disabled and autistic also claim that the system is underfunded and suffers from staffing shortages. Furthermore, counties are in dire need of additional funding for safety-net services, including the creation of more beds and the recruitment of more counselors to address waiting lists for those in need of help.