Pennsylvania Senate Republicans are claiming victory after Gov. Josh Shapiro signed the state’s $50.85 billion budget for fiscal year 2026-27 on Sunday, saying they reshaped the governor’s original spending proposal into a plan that protects taxpayers while preserving the commonwealth’s financial reserves.
The budget, which increases state spending by 3.7 percent over last year, contains no tax increases or new revenue sources, and leaves the state’s $8 billion Rainy Day Fund untouched.
“The Senate Republican Caucus worked hard to protect the wallets of Pennsylvanians by avoiding tax hikes, strengthening our commonwealth’s financial position, and identifying more than $4.5 billion in unused funds to repurpose,” said State Senate President Pro Tempore Kim Ward (R-39).
“Senate Republicans fought for investments for our most vulnerable by increasing funding for nursing homes and childcare recruitment and delivering a long-overdue cost-of-living adjustment for police officers, firefighters, and teachers who retired prior to July 2, 2001,” she said.
Shapiro touted bipartisanship in producing the new budget, which was signed into law nearly two weeks after the state’s July 1 budget deadline.
“This is the fourth year in a row where — despite working with one of the only divided legislatures in the country, where we have some really profound differences — we stayed at the table and brought Democrats and Republicans together to get stuff done, again,” Shapiro said during Sunday’s budget signing ceremony, noting 252 members voted on the budget.
“Two hundred eleven voted yes. Only 41 voted no. That shows we found consensus,” said the governor.
According to the governor’s office, the spending plan invests in workforce development, education, transportation and economic development while continuing scheduled business tax reductions and authorizing a new $125 million Innovate in PA 2.0 program to support startups and life sciences.
Republican leaders said the final agreement reflects significant changes from Shapiro’s initial proposal, which they said would have increased spending by $2.7 billion and required drawing billions of dollars from the Rainy Day Fund.
And Ward also criticized the budget initially advanced by Pennsylvania House Democrats.
“It is important for Pennsylvanians to understand House Democrats’ rubber-stamping Gov. Josh Shapiro’s budget all but guaranteed a $2,000 tax increase for Pennsylvania families as the Democrat budget didn’t balance,” said Ward. “We are pleased Gov. Shapiro and House Democrats ultimately understood affordability meant respecting the taxpayers who pay our bills by returning the money to hard-working Pennsylvanians.”
Senate Majority Leader Joe Pittman (R-41) said Republicans reduced the governor’s spending proposal by more than $1.1 billion while preserving the state’s emergency reserves.
“The 2026-27 state budget is an imperfectly good plan that will keep Pennsylvania on a promising path for the future,” Pittman said. “Our Senate Republican Caucus protected taxpayers of the commonwealth and kept the Rainy Day Fund fully intact. Through tremendous hard work we identified and pulled $1.5 billion out of the couch cushions of bureaucracy to balance this budget.”
Pittman also said that the long-term solution to the state’s fiscal challenges is economic growth, adding that the budget includes policies intended to support families, local communities, and business expansion.
State Senate Appropriations Committee Chairman Scott Martin (R-13) said Republican negotiators focused on maintaining fiscal stability while avoiding future tax increases.
“Going into this year’s budget negotiations, our top priorities were protecting our fiscal stability, setting up the state to avoid devastating tax increases on Pennsylvania families and positioning our commonwealth for growth,” said Martin. “Senate Republicans achieved all these goals in this budget.”
Martin added that lawmakers also identified more than $1 billion in proposed overspending within the Pennsylvania Department of Human Services over two years and more than $100 million in proposed spending reductions within the state’s Department of Corrections.
The budget includes increases for basic and special education, career and technical education, the Ready to Learn Block Grant, workforce development, long-term care providers, and nursing homes.
It also preserves the Educational Improvement Tax Credit scholarship program, provides an additional $10 million for the Grow PA workforce initiative, and directs $775 million over two years toward state road projects.
The Pennsylvania Chamber of Business and Industry welcomed several provisions aimed at improving the state’s business climate while urging lawmakers to maintain fiscal discipline in future budgets.
“State budgets are an opportunity to make Pennsylvania more competitive, and we appreciate elements of this budget that continue the commonwealth’s commitment to improving its business climate,” Pennsylvania Chamber President and CEO Luke Bernstein said.
Bernstein specifically cited the continued reduction of the Corporate Net Income Tax rate and higher Net Operating Loss deduction limits as reforms that “send the right message to employers making long-term investment decisions.”
“Our improved tax climate, bipartisan permitting reform, and other pro-growth measures passed in recent years have catalyzed billions in new private-sector investment across the commonwealth and we must continue advancing a competitiveness agenda for Pennsylvania to reach its full potential,” said Bernstein. “At the same time, Pennsylvania’s long-term competitiveness depends on maintaining a strong fiscal foundation.”
As policymakers look ahead, he added, the chamber encourages a focus on responsible state spending and continued support for pro-growth policies that expand the economy, attract investment, and create opportunities across the state.
“Economic growth remains the most effective path to strengthening both Pennsylvania’s fiscal health and its future competitiveness,” Bernstein said.
According to Shapiro’s office, the budget also continues tax relief programs for working families, maintains funding for Main Street Matters and minority-owned business initiatives, and expands workforce development investments while authorizing the new Innovate in PA 2.0 program to support entrepreneurship and economic growth.