What to expect from Pa. Gov. Josh Shapiro’s first budget proposal

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Update, March 7: Shapiro’s $44.4B budget pitch keeps Pa. spending relatively flat, preserves some pandemic benefits

Original story

HARRISBURG — As Gov. Josh Shapiro prepares to pitch his first state budget, he’s doling out a few hints about what will be in it.

The Democrat wants more money for community development programs, child care, and tech research; he’s planning a tax break for teachers, police officers, and nurses; and he may take a stab at making school funding more equitable.

And in perhaps his toughest aspiration, he wants to make a plan that can pass the divided Pennsylvania legislature.

Shapiro will lay out his full budget plan Tuesday in Harrisburg. After that, the heads of state departments will begin sitting for hearings with lawmakers on budget priorities, while legislative leaders and the administration will hash out spending and revenue agreements ahead of the June 30 deadline.

“Governor Shapiro is focused on working with Democrats, Republicans, and Independents,” Shapiro spokesperson Manuel Bonder said of the governor’s approach to collaborating with the legislature. “On Tuesday, he will lay out a series of common sense solutions to the issues facing our communities.”

Shapiro entered office in a time of relatively flush coffers.

Thanks to pandemic-era federal aid and a year of strong revenues, the commonwealth is reporting an expected surplus this year of nearly $7 billion. The state also has $5 billion in its rainy day fund — a far cry from the nearly barren reserves of Democratic Gov. Tom Wolf’s first years in office.

Democrats, Republicans, and independent budget analysts generally agree on these numbers. As for how that money should be managed, though, there’s less consensus.

Democrats have pushed to significantly increase education spending, citing a recent Commonwealth Court ruling that found Pennsylvania’s school funding formula to be unconstitutionally inequitable.

Vincent Hughes (D., Philadelphia), minority chair of the state Senate Appropriations Committee, pointed to Pennsylvania’s current fiscal situation as a reason for optimism that the ruling could be addressed sooner rather than later.

“When you drive dollars into this sector, it’s always a positive outcome,” he told Spotlight PA.

The debate, he predicted, will center on how to best use the education money: whether it should go toward reducing class sizes, increasing teacher pay, or rebuilding aging school buildings that in some cases are full of lead and asbestos.

“It starts with the funding,” Hughes added, “but then we have to drill down into where is the best place to put it.”

As in years past, Republicans in the state legislature have questioned spending increases, and noted that part of the commonwealth’s current surplus comes from pandemic-era federal payments that will not recur in coming years.

Though overall state revenues are on track to exceed this fiscal year’s initial projections, GOP leaders are entering negotiations with possible economic downturns in mind.

“I think most people would say that there’s an uneasiness right now and uncertainty of where this economy is going to go,” said state Sen. Scott Martin (R., Lancaster), who is in his first session as head of the upper chamber’s Appropriations Committee.

Martin thinks Shapiro is well aware of those concerns given the obstacles his predecessor faced.

Wolf entered his first year in office with a budget that proposed tax increases and was roundly rejected by the then-GOP-controlled legislature. Martin’s impression is that Shapiro has “been very engaged in talking with our various leaders, and reaching out in preparation.”

The legislature has changed from Wolf’s administration. Democrats narrowly control the state House, and are no longer a super-minority in the state Senate.

“There were a lot of hard lines that were drawn over the last eight years,” Martin said. “It’s kind of a new day.”

Along with a potential court mandate to overhaul the way the commonwealth funds education, the Shapiro administration must also deal with this year’s rollbacks to two big pandemic-era federal benefits: increased Supplemental Nutrition Assistance Program benefits, and continuous enrollment in Medicaid.

Those cuts will leave more than two million Pennsylvanians with less money for food than they’ve had in recent years, and hundreds of thousands without health insurance.

Aside from those looming logistical puzzles, Shapiro is focusing much of his messaging on bolstering the economy.

He said recently that his proposed funding increases for research on manufacturing modernization and for computer science and STEM education are aimed at “spurring on job creation right here in Pennsylvania.”

Likewise, Shapiro has pitched putting more state dollars into a program that funds public-private partnerships between towns and real estate developers, nonprofits, and other businesses to improve housing and infrastructure in downtown areas.

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