After more than four months of deadlock, Gov. Josh Shapiro on Wednesday signed the 2025-2026 General Appropriations Act into law, ending a 135-day budget stalemate in Harrisburg thanks to bipartisan compromises.
“Let me be clear: this is a balanced budget that cuts taxes, that makes critical investments, that protects 100 percent of Pennsylvania’s Rainy Day Fund and still leaves us with $8 billion in reserves,” Shapiro said during a press conference this afternoon before signing the bill.
Prior to the budget’s enactment, both the Democrat-led Pennsylvania House and GOP-led Senate advanced five budget-related bills. Republican leaders ultimately joined Democrats to approve the spending plan, which allocates $50.1 billion to the state’s General Fund, marking a 4.7-percent increase over the previous fiscal year.
“This budget took much longer than expected but ultimately Senate Republicans held the line to keep our promise to the people of Pennsylvania by not raising taxes and ensuring our state savings account — the Rainy Day Fund — was not attacked,” Senate President Pro Tempore Kim Ward (R-39) said. “It is important for Pennsylvanians to know this budget is the direct result of a divided government and two very different approaches to how we govern our state and partner with the federal government.”
“This has been a long, stressful process, but this budget reflects compromise and responsible decision-making for the people of Pennsylvania,” added State Rep. Jonathan Fritz (R-111). “We worked to deliver a budget that protects taxpayers and prioritizes the needs of our communities without depleting the state’s reserves.”
While Senate Republicans had to spend more than they wanted, Ward said they did achieve some significant policy wins.
For instance, the final budget reduces Shapiro’s initial proposal by $1.4 billion and formally withdraws Pennsylvania from the Regional Greenhouse Gas Initiative (RGGI) — a move Republicans hailed as a victory for energy independence.
The RGGI exit, they argued, will lower energy costs and attract investment after years of uncertainty in the state’s energy industry.
State House Republican Leader Bryan Cutler (R-100) called the state’s withdrawal from RGGI a major win.
“RGGI has been a bad deal since day one … responsible for nearly $8 billion lost in economic development and the loss of 22,000 jobs related to energy for Pennsylvania,” he said. “Leaving RGGI will see Pennsylvanians’ energy bills decrease and avoid a 30-percent increase on energy prices that would have occurred if Pennsylvania stayed in RGGI. Pennsylvania will also be able to export more energy to surrounding states, leading to more investment that will come directly into Pennsylvania.”
Some of the other positives in the plan cited by GOP members are those that will:
- Expand the list of fast-track permits and create two new permits that will be automatically deemed approved if not acted upon in time.
- Continue the phase-down of the Corporate Net Income Tax and preserve the increase to the Net Operating Loss deduction, resulting in Pennsylvania job-creators paying roughly $1.4 billion less in taxes than they would have paid under the previous rate in 2023.
- Provide the new Working Pennsylvanians Tax Credit, a state-level earned income tax credit.
- Implement new safeguards to reduce Medical Assistance and SNAP (Supplemental Nutrition Assistance Program) error rates, aligning state policy with federal standards.
- Allocate funding for mass transit in Philadelphia and Pittsburgh from special funds rather than general reserves.
- Introduce evidence-based literacy programs in schools to strengthen student outcomes.
“The closing of the 2025-26 state budget process marks a new beginning for this commonwealth, filled with economic growth and opportunity,” said PA Senate Majority Leader Joe Pittman (R-41). “This is a pro-family and pro-job creator plan.”
The plan excludes proposals to legalize marijuana, tax skill games, or draw from the state’s Rainy Day Fund.
“You will certainly hear mixed opinions within both political parties,” Fritz pointed out. “With 156 Republicans and Democrats voting yes and 47 Republicans and Democrats voting no in the House, this is not a perfect budget, especially when you are in the minority, but it represents a true compromise in the final product.”
PA Republican Leader Jesse Topper (R-78) was credited by colleagues for keeping the caucus unified during negotiations.
Additionally, Cutler pointed to reforms requiring state agencies to implement permit tracking systems and faster response times for environmental reviews. On education, he highlighted new career and technical teacher certification rules, as well as the establishment of a $5-million Neurological Disease Program to fund research into Alzheimer’s, dementia, and ALS.
“I do not love everything in this budget,” said Cutler, “but the wins outweigh the losses, and this budget will move Pennsylvania forward in a positive direction.”
State Rep. Jim Struzzi (R-62), chairman of the PA House Republican Appropriations Committee, said the GOP focus was on boosting the state’s energy economy by getting out of RGGI, increasing school choice opportunities, and improving government efficiency.
“The number one issue that was holding back passage of our state budget was finding sustainable revenues to meet our spending needs without placing additional burdens on taxpayers,” Struzzi said. “This budget deal ends Pennsylvania’s involvement in RGGI, as well as instituting long-needed permitting reform, to unleash our energy industry and provide the growing revenues through economic growth that will enable sustainable budgets in the future.”
Struzzi also noted that while the budget spends more than he would have liked, it doesn’t require any drawdown from the Rainy Day Fund and requires agencies to use more than $1.5 billion in unused funds from prior fiscal years to balance the budget.
“We are also adding $50 million to the Economically Disadvantaged School (EDS) scholarship program, making reasonable changes to cyber charter school reimbursements — saving school districts money while ensuring cyber charters remain open — and implementing reasonable program integrity measures, including running death certificate data against the list of SNAP recipients.”
The Marcellus Shale Coalition (MSC) praised the budget’s passage and regulatory changes.
“We are extremely pleased to see the General Assembly take meaningful and historic action on permit reform,” said MSC President Jim Welty. “The enactment of deemed approved permits, coupled with an expansion of the successful third-party permit review initiative known as SPEED, sends a powerful message that Pennsylvania is serious about ensuring government moves at the speed of business.”
Welty also said that ending the RGGI saga hopefully marks a positive shift for the state. “For too many years, Pennsylvania has lost billions of dollars of investment and the related jobs for our allies in the building trades due to the threat of a carbon tax on electric bills,” he said.
Shapiro added: “It is time now to look forward, and I’m looking forward to aggressively pushing for policies that create more jobs in the energy sector, bring more clean energy onto our grid, and reduce the cost of energy for all Pennsylvanians.”
Meanwhile, PA Senate Democratic Leader Jay Costa (D-43) expressed optimism about the final product, stating that Democrats “have long fought for a budget that makes life more affordable for every Pennsylvanian” and were pleased to see a plan that “delivers on this critical priority.”