As Pa. state budget deadline nears, here's where negotiations stand among the divided General Assembly

With just a handful of days left before Pennsylvania's current budget expires, negotiations appear to be headed in the right direction as lawmakers try to prevent another impasse like last year's, which saw the state government operating without a budget for more than four months.

Lawmakers say closed-door meetings have continued among Shapiro and General Assembly caucus leaders. Talk in the Capitol, according to Spotlight PA, suggests the budget is unlikely to be ready by the June 30 deadline but is shaping up to be approved in early July.

So far, the only complete spending plan on the table is Gov. Josh Shapiro's $53.3 billion proposal that prioritizes more money for public education, including an additional $565 million for school districts the state has identified as underfunded.

The governor also proposed setting aside $300 million for public transportation agencies, a hot-button issue that contributed to the budget's passage four months late last year. He also asked the General Assembly to approve creating a $100 million pot of flexible funds to go toward Pennsylvanians impacted by federal funding cuts to programs like Medicaid.

Democrats in the General Assembly have stood behind Shapiro's budget. The state House advanced his plan in April with Republicans largely opposed, including all of Lancaster County's GOP lawmakers, many of whom echoed their leadership's characterization of Shapiro's spending plan as "reckless."

Shapiro's budget projects the state would bring in $3.4 billion less than the budget would spend. The deficit would be higher if the General Assembly doesn't enact Shapiro's proposal to legalize and tax skill games to make up the difference. Shapiro's plan estimated that a 52% tax on skill game revenue would bring in around $2 billion annually.

According to Pennsylvania's Independent Fiscal Office, skill games revenue would likely only generate $487 million for the 2026-27 budget year before increasing to $1.1 billion annually. The estimates are based on a phased-in rollout of new regulations and the systems that would track game revenue.

Shapiro has also called for using $4.6 billion from the state's rainy day fund - a pool of money that's intended for emergency use. It currently holds about $8.1 billion, according to the Pennsylvania Treasurer.

Senate Republicans have been highly critical of Shapiro's spending plan. Tapping the rainy day fund, they said, will hurt the state's ability to borrow money in the future. While they have not introduced their own detailed funding plan for the entire state government, caucus leaders appear ready to act on a skill games tax.

After the Pennsylvania Supreme Court's June 15 ruling, Senate Republicans called gambling reform a "critical piece of resolving this year's budget."

Still, the conservative Commonwealth Foundation said lawmakers can't balance the budget by taking skill games. "(A)ny revenue they generate would be just a drop in the bucket, not coming close to covering the state's budget deficit. Gov. Shapiro has proposed spending more than $6 billion beyond available revenue. The math doesn't lie: that deficit would ultimately require sales or income tax hikes totaling more than $2,100 per Pennsylvania family-skill games' revenue or not."

Gov's office

Shapiro seemed optimistic that a budget deal was near in early June after signing several bills into law that funded several state departments and offices, including the Pennsylvania State Police.

"This is the first step toward a final budget, and we will continue to have productive conversations with the House and Senate to deliver for the Commonwealth," Shapiro said in June 12 a statement.

One week earlier, Lt. Gov. Austin Davis at an event in Elizabethtown said he felt "really good" about the spending negotiations but urged Republican senators to vote on the governor's plan. .

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"I know that the House passed a budget and sent it to the Senate," Davis said. "The Senate has not acted. We're hopeful that they do their jobs and act in the next few weeks."

Senate GOP

Senate Republicans have echoed the Democrats' bullish comments on the budget talks, describing the negotiations as productive.

"While divided government naturally brings differing perspectives and objectives, it also creates an opportunity to find common ground and puts the needs of Pennsylvanians first," GOP Senate leaders said in a statement Monday.

"Our Senate Republican Caucus priorities for this year continue to be that the final budget plan must be fiscally responsible, respect taxpayers, and position the Commonwealth for sustained growth. We are encouraged by the progress made to date and believe a budget agreement can come to fruition in the near future."

Joe Pittman, Senate GOP caucus leader, in February, said a court ruling on skill games would be "extraordinarily helpful" when it comes to deciding whether to tax the machines. For years, skill games machines, which its distributors say rely on a player's skill rather than chance to win money, grew in popularity but were unregulated under state law.

Pittman, of Indiana County, has already backed a proposal by Sen. Chris Gebhard, a Lebanon County Republican who represents part of northern Lancaster County, to tax skill games machines at 35%.

Sen. Scott Martin, a Martic Township Republican, also in February said he would be open to discussion on skill game regulation and taxation. Martin chairs the Senate's Appropriations Committee, which oversees any budget-related legislation before it moves to the Senate floor.

House Democrats

Democrats have been major supporters of Shapiro's push to further support public education. Lancaster County lawmakers have also praised the governor's plan to set aside $1 billion to partially fund the rehabilitation and construction of affordable housing.

Jordan Harris, House Appropriations Committee Chair, pushed the Senate to keep the process moving during a May committee meeting.

"The State Senate does not have to agree with what we sent, that's fine. They could send us their own proposal. Our main focus remains clear: delivering a responsible, balanced and on time budget that invests in Pennsylvania's education, supports our law enforcement and strengthens Pennsylvania's economy and returns money back into the pockets of our working families," Harris said.

One area Lancaster County Republican legislators agree with Shapiro is on the need to boost spending for career and technical schools. The governor's budget would add $18 million to state support for the schools.

"We've got hundreds, if not thousands, of kids waiting to get into some (career and technical) programs," Peach Bottom Republican Bryan Cutler said. "While we're increasing funding on the traditional education side, which the governor likes to tout, the truth is the demand is actually on the CTC side."

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