On July 5th, the PA House voted to concur on a state budget bill the Senate passed the week before. The House vote came after Gov. Shapiro released a statement vowing to line-item veto a $100 million educational scholarship program negotiated by Senate Republicans and his administration.

As of this writing, however, the path to a finalized budget agreement remains unclear:

• The budget bill cannot be sent to the Governor for his approval until it is signed in the Senate, which isn’t scheduled to return to session until Sept. 18;
• The House and Senate must still reach an agreement on various code bills that are passed in conjunction with the budget and dictate how funding is allocated;
• Additionally, other budget-related bills, like funding for Pitt, Penn State, Lincoln, and Temple remain unresolved.

Below, find key highlights from the budget bill and elements important to the business community:

Total Spend

• Total General Fund spending of $45.5 billion for Fiscal Year 2023-24, representing a 6 percent increase in state spending over last year.
• Spends nearly $400 million less than what Gov. Shapiro proposed in March, and $1.5 billion less than what the House passed in early June.
• Makes a $500 million deposit into the Rainy-Day Fund, bringing the fund to over $5.6 billion.

Tax Changes

• Maintains the current phase-down schedule of the Corporate Net Income Tax (CNI), from 8.99 percent to 8.49 percent in 2024.
• The Department of Revenue will receive an increase of more than $17 million for Technology and Process Modernization to complete system upgrades.
• Expands eligibility and maximum rebates under the Property Tax Rent Rebate Program for seniors and persons with disabilities.

Education Funding

• Adds roughly $800 million in new K-12 public education funding. This includes:
  • $567 million more for basic education subsidies.
  • $100 million more for “Level Up” supplements for low-income school districts.
  • $50 million more for special education

• Includes $125 million for school safety grants and $100 million for student mental health.
• As previously noted, the budget as passed by the Senate contained $100 million for Pennsylvania Awards for Student Success (PASS) scholarships – providing students in the lowest 15 percent performing schools with financial assistance to attend a private or parochial school. Gov. Shapiro reversed course and announced his intention to line-item veto this funding.
• Senate Republicans say the budget also includes a $150 million increase for the Education Improvement Tax Credit (EITC), however this will need to be enacted in subsequent legislation.

Infrastructure

• Continues the phase-out of State Police funding from the Motor License Fund with a goal to fully phase down by 2026-27. The reduction this year will be $125 million.
• Provides $1.7 million within the Department of Environmental Protection (DEP) to support improvements to the permitting process.
• Allocates $112 million in royalties from oil and gas drilling on state game lands for State Park and Forest Infrastructure Projects, double the amount that was allocated last year.

Workforce

• Increases the Department of State’s operating budget by $3.2 million, which includes funding for occupational boards dedicating funds to licensure system modernization and upgrades.
• A nearly 50 percent increase in Child Care Services to help low-income families afford childcare.
• Includes increases for existing workforce development programs, including a $14 million, or 13.3 percent, increase for career and technical education and a $3 million increase to the apprenticeship training program through the Department of Labor and Industry (L&I).
• A $3 million appropriation to the Foundations in Industry program through the Department of Community and Economic Development (DCED) will increase apprenticeship and pre-apprenticeship programs.
• A $3.5 million appropriation to the Schools-to-Work program through L&I will support partnerships between career and technical education students and employers.

What’s Not In

• Governor Shapiro had proposed a $15/hour minimum wage, which is not included in the budget.
• The governor also proposed legalizing recreational marijuana, which is not included either.