HARRISBURG — Pennsylvania’s new $50.8 billion state budget was sprawled across more than 600 pages of legislation and signed into law on Sunday. New data center regulations, new education funding, and more were approved in the wide-ranging spending package.
But some of the most pressing issues facing the General Assembly were noticeably absent from the final deal, as Gov. Josh Shapiro and lawmakers in the split legislature were unable to reach a compromise — or didn’t want to touch the contentious issues until after they are up for election in November, sidelining some of Shapiro’s top budget priorities.
Here’s a look at what’s in — and what was left out — of the 2026-27 Pennsylvania state budget.
» READ MORE: Pa. lawmakers and Gov. Josh Shapiro have approved a $50.8 billion state budget, delaying action on key issues
Pennsylvania took another jump toward filling a multibillion-dollar funding gap between wealthy and poor school districts, after a court found that the state’s old system of funding education was unconstitutional. Since 2024, when the state first implemented new adequacy and tax equity formulas in efforts to fill the state’s $4.5 billion “adequacy gap,” lawmakers have put nearly $1.9 billion toward funding lower-income districts, with plans to fill it by 2032.
“It keeps our promise to our school districts,” said State Rep. Jordan Harris (D., Philadelphia), who serves on the powerful appropriations committee responsible for allocating state dollars, in remarks on the House floor Sunday.
The latest installment of adequacy and tax equity payments — $565 million — will largely go to low-income districts that already have high property taxes. The School District of Philadelphia, Pennsylvania’s largest school district and the only one in the state that is unable to raise its own revenue, will get $136 million of that funding increase.
Shapiro proposed generating new revenue streams to help the state fix its multibillion-dollar structural deficit in his last four budget addresses. But the ways he wants to raise that cash have been met with resistance by Senate Republicans, who argue they aren’t policies that will improve the state’s economic standing — or can’t reach agreement within their caucus on how to address the issues.
Shapiro this year didn’t get the hefty minimum wage increase he asked for, raising the hourly minimum from $7.25 to $15 — and counting on the higher wage for $80 million in higher income tax revenues. Nor was he able to get the split General Assembly, where Democrats control the House and Republicans lead the Senate, to approve adult-use cannabis, which his office estimated would bring in $729.4 million in its first year, largely through licensing. (House Democrats have approved plans for a minimum wage increase and recreational marijuana legalization, but the Senate has not voted on the bills.)
» READ MORE: Could recreational marijuana really bring $1.3 billion in revenue to Pa. over five years? Here’s how other states are faring.
Shapiro, in his February budget proposal, also called on the General Assembly to regulate and tax skill games at the same rate as casinos, a move which he has estimated could generate nearly $800 million in revenue in its first year. But any regulation of skill games — slot-machine lookalikes that the state Supreme Court ruled last month are a form of gambling — was left out of the budget.
Lawmakers still have until October to decide whether skill games will be taxed and regulated, part of a grace period in the high court’s ruling. Otherwise, they will become illegal gambling machines found in many corner stores, gas stations, and bars. The issue has been the target of more than $8 million in lobbying and $9 million in campaign spending in Harrisburg, mostly funded by one company.
» READ MORE: How ‘skill games’ exploded across Pennsylvania — and sparked a multimillion-dollar political fight
“We can act within the 120 days, we can act after the 120 days,” Senate Majority Leader Joe Pittman (R., Indiana) said on Sunday. “But the choice is now quite simple. These machines are illegal, and in less than 120 days, they will be leaving the marketplace.”
Data centers — which are seeing a boom in Pennsylvania as artificial intelligence usage increases and communities are pushing back on where they are being built — will be required to submit information about their energy and water usage.
Beginning next summer, data centers in the state with a peak energy demand greater than 10 megawatts will be required to submit information annually to the Department of Environmental Protection.
Outlined as part of this year’s fiscal code, those reports will be publicly-accessible. Data centers that do not submit information about their resource usage will be fined $10,000 a day.
A data center regulation bill, which would have limited state benefits for data center developers and was championed by Shapiro, was not included in the final budget deal. The governor called for limiting a sales and use tax exemption and expediting permitting to projects that comply with a set of transparency and environmental standards.
And several other data center regulation efforts that have received bipartisan support in recent weeks were also absent from the final spending package.
That included efforts to repeal the existing sales tax exemption afforded to data center developers and attempts to enact a local or statewide moratorium on new data center development.
Both chambers passed language repealing the tax exemption and advanced differing bills to freeze development. One Democratic-sponsored bill would have given municipalities the option to implement a 180-day moratorium on new centers. The other, a Republican-sponsored measure, would allow for local moratoriums up to 18 months.
“Compromise” was the word of the day around the Pennsylvania Capitol on Sunday, when the legislature swiftly passed the more than 600-page budget deal hashed out behind closed doors between Shapiro, Pittman, and House Majority Leader Matt Bradford (D., Montgomery) and passed with bipartisan support in both chambers.
The legislative leaders and Shapiro emphasized that they didn’t get exactly what they wanted in the budget, as a symptom of dealing with divided government. And leaders were proud to have reached the deal less than two weeks after their July 1 deadline, rather than the nearly five months that it took to hash out an agreement last year.
Lawmakers also agreed to work over the weekend to hurriedly approve the budget deal, with members of the Senate coming in on Saturday night to begin advancing parts of the budget deal and the House joining them Sunday afternoon. By 6:15 p.m. on Sunday, Shapiro had signed it.
Among the inspirations for the weekend of productivity: Making it to the MLB All-Star Game in Philadelphia, Bradford said, for which he has tickets.
Leaders returned to some old accounting maneuvers to address the state’s multibillion-dollar structural deficit and avoid pulling from the state’s emergency savings account.
They spent down unused and underused dedicated funds, and rolled some of the state’s Medicaid payments totaling $1.3 billion to the next fiscal year, a move lawmakers typically resorted to before the state saw an influx of federal dollars during the COVID pandemic.
Without those delayed payments, the state budget would total closer to $52.1 billion, and several GOP members criticized the total as being disingenuous.
More than 80,000 retired public-sector employees will receive a cost-of-living adjustment to their pensions, something advocates have sought for years.
» READ MORE: More than 80,000 Pa. retired teachers, police officers, and firefighters will get a pension bump — some for the first time in decades
Public school teachers and other state employees who retired before July 1, 2002 will receive a tiered monthly payment based on the date of their retirement. Similarly, police officers and firefighters who retired more than five years ago will receive monthly payments ranging from $50 to $300 dollars, depending on how long they have been retired.
Lawmakers from both parties had called for the cost-of-living increase.
Legislators also agreed to close a loophole that allowed online sellers to avoid paying Philadelphia’s local 2% sales tax on purchases made in the city.
Mayor Cherelle L. Parker had asked the General Assembly to close it as part of her own city budget pitch in a move estimated to bring an additional $1.5 million to Philadelphia.
Twenty-nine states have bell-to-bell cell phone bans. This year, Pennsylvania will not join them, despite the passage of two separate phone ban bills — one in each chamber of the legislature.
In: Mandatory recess for students K-5
Recess is now law in Pennsylvania.
Another education policy change championed by Shapiro, a mandatory, 30-minute recess for students in grades kindergarten through fifth was established in this year’s budget as a way to improve learning outcomes.
Several Pennsylvania funding issues that have gone years without being addressed were left out of the latest budget, some with more pressing deadlines than others.
Lawmakers did not address a need for mass transit funding — which led to last year’s bitter budget stalemate among legislators — but are expected to identify a long-term funding stream for the transit agencies next year when a two-year fail-safe runs out.
» READ MORE: Public transit is in trouble all across Pennsylvania, including in GOP districts
Other local governments and service providers said their needs are more urgent.
The County Commissioners Association of Pennsylvania released an urgent plea after the state budget was signed that counties still have not received the critical mental health funding they need, or a surcharge increase used to fund 911 call systems. Home-health service providers also continued their calls for increased state funding they say is needed, as the industry faces serious staffing issues due to low state reimbursement rates.
» READ MORE: Pennsylvania’s home care industry is in crisis, with low pay and unfilled shifts driving it toward collapse
Rape crisis centers got a much-needed funding increase, doubling how much the centers receive from $12 million to just over $24 million.
Philadelphia’s only rape crisis center had to lay off its employees and rely on volunteer work during last year’s monthslong state budget impasse.
Republican and Democratic lawmakers championed the organizations in this budget, making the largest single-year increase for the critical services in state history, according to the Pennsylvania Coalition to Advance Respect.
“Today marks a turning point for survivors and rape crisis centers across Pennsylvania,” said Joyce Lukima, the organization’s coalition director, in a news release.
Ethan Young is an intern with the Pennsylvania Legislative Correspondents’ Association.
