Pa. budget impasse nears end as Gov. Josh Shapiro signs main spending bill

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HARRISBURG — More than a month after the state missed its June 30 deadline, Gov. Josh Shapiro has signed Pennsylvania’s main budget bill into law, allowing tens of billions of dollars to flow to school districts, counties, and nonprofits.

However, without any accompanying code bills, which direct how these dollars should be spent, the state will not be able to spend at least $1.1 billion on programs including those for public legal defense, housing, and aid for poorer school districts until further legislative action is taken.

“The people of Pennsylvania have entrusted me with the responsibility to bring people together in a divided legislature and to get things done for them — and with this commonsense budget, that’s exactly what we’ve done,” Shapiro, a Democrat, said in a statement Thursday.

The spending plan passed the Democratic-controlled state House in early July after Shapiro announced he would veto a $100 million private school voucher program.

Shapiro previously expressed support for such a program, and leadership in the Republican-controlled state Senate said the governor negotiated the budget bill that included funding for vouchers.

State Senate President Pro Tempore Kim Ward (R., Westmoreland) claimed that Shapiro reneged on the deal and left the budget deal in limbo without a constitutionally required signature.

The stalemate ended Thursday, when Ward brought the chamber back to Harrisburg after the administration agreed not to spend money on a few small but politically important programs until additional legislation is passed.

In a statement Wednesday night, Ward said that the $45.5 billion appropriations bill “will provide the necessary funding to schools, counties, and organizations” that had sounded the alarm that they’d have to reduce services without state dollars.

Despite last-minute pleas from state Senate Republicans, Shapiro followed through on his promise to reject the voucher program. In a veto message, he said that he still supports the concept, but that he was unwilling to hold up the entire spending plan over the program. He urged compromise between the two chambers.

“Improving and expanding opportunities for children remains a priority for me, and I consider this to be unfinished business all parties must work together on as we move forward,” Shapiro wrote.

What the budget means for education

Lawmakers agreed to boost education funding by over $700 million — a more than 8% increase over last year’s budget.

State Senate Republicans have said it’s a bigger increase than they would have agreed to without the promise of vouchers. State House Democratic leaders have touted the boost, calling it “a plan that further invests in every school district, including extra support for those with the most need and aging infrastructure.”

But not all education advocates are pleased.

Two early childhood programs, Pre-K Counts and the Head Start Supplemental Assistance program, are both flat funded in the plan — a setup that Early Learning Pennsylvania, a group focused on services for children under five, called “a noticeable departure from a decade of growing investment in high-quality pre-k.”

“When nearly 90,000 eligible 3- and 4-year-olds do not have access to these once-in-a-lifetime early learning opportunities, and pre-k and Head Start programs can’t keep teachers in their classrooms because of inadequate reimbursement rates, this budget bill is simply unacceptable,” the group wrote in a statement soon after the package passed the state House.

There’s also less additional money for special education than there was in last year’s budget, and it skips routing additional money into school infrastructure projects — a priority for many lawmakers, particularly those who represent districts with aging schools, as in Philadelphia.

Education has been top of mind for many lawmakers and advocates this budget cycle. This budget is the first since Commonwealth Court ruled that Pennsylvania’s education system is unconstitutionally inequitable and ordered lawmakers to fix it.

The Public Interest Law Center and Education Law Center, which represented petitioners in that long-running court case, say fixing the problem will require more money from the state and that lawmakers should start making investments as soon as possible. This year’s budget, they said in a statement, isn’t enough.

“The increases in this year’s budget, while appreciated, do not fundamentally change the unconstitutional and unacceptable status quo,” spokespeople for the groups wrote. “In every corner of the state, students in public schools continue to be denied the basic resources they need to succeed academically, civically, and socially.”

The full legislature has also yet to finalize bills directing state funding to four universities — Lincoln, Penn State, Pitt, and Temple — that allow the schools to offer discounted tuition to in-state students. Some Republicans in the state House voted against sending money to the schools, except for Lincoln, over concerns about a lack of transparency and the prescribing of puberty blockers to children under the age of 10.

Why do code bills matter?

Shapiro’s signature is not the final word on every element of this year’s budget — particularly for new line items like the first-ever state funding for public defense

Lawmakers still haven’t passed code bills, which typically become law alongside the budget and include specific directions for how money can be spent.

In a Thursday memo, Pennsylvania’s budget secretary, a Shapiro appointee, said the state will not spend money on at least seven programs until the governor signs additional legislation.

That list includes $100 million for Level Up, a program that provides additional dollars to the most underfunded school districts in the commonwealth, and $7.5 million to help defray costs for public defenders.

Also on hold is $50 million in state funding to continue a popular home repairs grant program established last year with federal stimulus dollars.

Treasurer Stacy Garrity, a Republican, has the final word on whether specific spending is allowed. In a statement Thursday, she said she had reviewed the Shapiro administration’s memo and “agreed not to approve any requisitions for those programs until such language is enacted.”

Legislative leaders will continue negotiating the code bills behind closed doors.

The state Senate is scheduled to return on Sept. 18, while the state House is expected back the following week.

In a statement, state House Democratic leadership called the 29-day budget delay “irresponsible and unnecessary,” and said the chamber will return to session “as negotiations are finalized.”

Other notable changes, or lack thereof

The package also includes money — overall, a nearly 11% funding increase — for the Department of Environmental Protection to clear permitting backlogs and add staff for administrative work, a potentially important area as the commonwealth competes for billions of federal dollars to build new hydrogen production infrastructure.

The budget, however, doesn’t include any increases for the Department of Conservation and Natural Resources, which is the agency that would assess whether injection wells for carbon capture can safely be drilled and monitor for leaks.

Amid high inflation, any decision to flat fund a department or line item functionally amounts to a funding cut due to the decreasing value of each dollar.

The budget does give the agency more money than last year out of royalties from oil and gas leases on state lands. Those dollars vary year over year depending on gas prices.

Not included in the budget is $100 million for adult mental health programs. Last year, former Democratic Gov. Tom Wolf and the legislature agreed to create a bipartisan commission to recommend how to use federal stimulus money to offer relief to the overburdened system.

In a report, the commission recommended that the funds go toward a series of grants for services like telemedicine and workforce development programs. But the final budget instead reroutes the money toward school mental health programs — a move that axes the recurring line item that had previously funded those programs.

That money is currently on hold until the code bills are finalized.

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