House Appropriations Committee Chairperson Jordan Harris (D-Philadelphia) applauds during Gov. Josh Shapiro’s budget address Feb. 4, 2025, before a joint session of the Pennsylvania General Assembly. (Commonwealth Media Services photo)
The state legislature will have its chance to question Gov. Josh Shapiro’s cabinet secretaries on his $51.5 billion budget proposal in a series of hearing starting Tuesday and continuing over the next three weeks.
During the hearings, state agency heads flesh out details of the governor’s spending priorities, while House and Senate lawmakers grill them on proposed spending hikes or cuts.
Economic and Community Development
First up before the House Appropriations Committee on Tuesday is Department of Community and Economic Development Secretary Rick Siger. DCED is the agency charged with fostering growth and innovation in the state’s economy while promoting Pennsylvania as a good place to do business and visit.
While DCED’s $2.3 billion request is an 11% increase over the current budget, Shapiro’s messaging highlights the agency’s participation in a program to identify areas where state resources are not being used effectively.
To that end, DCED will undergo what Shaprio described as a major reorganization to create the Business PA Team to promote the commonwealth as “the ideal place to do business” and “boost the overall perception of Pennsylvania” as a state highly ranked for its business-friendly environment.
Lawmakers in last year’s DCED budget hearing pressed Siger on the efficacy of the agency’s business development programs. They are likely to have questions about its new SITES program, which centers on $500 million bonded to prospectively develop industrial sites to attract new businesses to the state.
Revenue
Tuesday in the Senate, Revenue Secretary Pat Browne will present Shapiro’s projections for the coming year’s state tax collections and plans for new streams of revenue. They include legalized recreational marijuana and a tax on slot machine-like skill games.
The department is responsible for collecting and distributing state taxes, including personal income tax, business taxes and special levies on items like motor fuel. Its budget request is relatively small at $230 million, but ensures every other part of the state government has the resources it needs to deliver services to Pennsylvanians.
In past budget presentations, lawmakers have questioned the Shapiro administration’s projections and the state’s long-term solvency. Republicans have claimed it’s vulnerable to a structural deficit as each of Shapiro’s budgets has relied on surpluses and reserves to balance spending. The projections also include taxes on products that are currently illegal or untaxed, but that Shapiro would like to see lawmakers regulate.
Levies on cannabis and skill games present a need to balance the benefit of new revenue against potential societal ills. But, Shapiro has stressed that a failure to act on the issues will perpetuate a financial drain on the state as skill games, which have popped up in bars and convenience stores across the state, eat into casino and lottery revenue. He notes people are also spending money in neighboring states where recreational marijuana is legal.
Higher Education
Leaders of two offices responsible for the administration of the state’s higher education system, the Pennsylvania State System of Higher Education (PASSHE), which oversees 10 state universities, and the Pennsylvania Higher Education Assistance Agency (PHEAA) will also appear Tuesday before the Senate.
Last year, Senate Republicans asked questions about Shapiro’s proposed merger of the PASSHE universities and Pennsylvania’s 15 community colleges under a common governance system. Shapiro has requested over $660 million for the state universities, which includes a $40 million boost to allow PASSHE schools, like Millersville and Shippensburg universities, to keep tuition level for the eighth year in a row.
PHEAA oversees state student aid programs. That includes a stipend for student teachers fulfilling their required in-classroom training, which Shapiro is proposing to expand.
The spending plan includes $594 million for higher education assistance programs.
The House Appropriations Committee will conduct a hearing Wednesday on performance-based funding formulas for State-related universities, which include Penn State University, the University of Pittsburgh and Temple University.
Starting last year, the Performance-Based Funding Council, an appointed group of lawmakers and university administrators, has been exploring how to create a formula for funding state-related universities. It will be based on performance metrics like graduation rates and adult education attainment. The budget includes $60 million to be distributed to the universities following the formula.
Transportation
Transportation Secretary Mike Carroll is set to appear Wednesday before the House Appropriations Committee.
With Pennsylvania’s largest public transportation agency facing a fiscal cliff last year, Shapiro called for a $283 million increase in transit funding. But rural lawmakers blocked it, noting highways and other forms of transportation also face a yawning chasm between the funding available and growing needs over the next decade.
Pa.’s roads would get more gas tax money in next budget, but a highway funding gap remains
The legislature’s compromise of $80.5 million each for transit and roads and bridges fell short, forcing Shapiro to divert federal funding for highway projects to keep the Southeastern Pennsylvania Transportation Authority from cutting service late last year.
This year, Shapiro is again proposing a $292.5 million hike in transit funding as part of a $11.6 billion overall budget request for PennDOT. Democratic and Republican lawmakers have said they’re looking for a sustainable transportation plan that includes a steady revenue stream to keep up with the cost of maintaining the state’s road network.