Pa. lawmakers react to Shapiro’s $44.4B budget proposal, marking the beginning of negotiations

Pennsylvania Gov. Josh Shapiro’s budget address — his first as the state’s chief executive — marks the beginning of negotiations between lawmakers and the legislative branch to reach an agreement on a spending plan.

After hearing about the Democratic governor’s proposed $44.4 billion budget during a joint session of the General Assembly on Tuesday, lawmakers in the now-divided Legislature had mixed reactions to the spending plan, with Republicans criticizing certain aspects of the proposal’s allocations and Democrats wanting to embrace bipartisan bargaining.

While both sides of the aisle recognized positive investments included in the spending plan, some lawmakers hinted at areas of disagreement, including Republican opposition to education policies they think abandon children in failing schools, and a climate initiative they worry will create increased costs for energy consumers that they called a hidden tax on every electricity user, .

Democrats, however, urged their GOP colleagues to embrace bipartisan bargaining — embracing proposed investments in education, workforce recruitment and retention, and relief for those in need.

House and Senate appropriations committee hearings are set to begin this month, and a signed spending plan must be in place by the start of the fiscal year on July 1.

‘A path for financial failure’

Legislative Republicans called Shapiro’s proposal to draw down the state’s surplus and Rainy Day Fund by $11 billion over the next five years a return to deficit spending in full force following the end of federal pandemic-era aid.

“This puts the Commonwealth of Pennsylvania on a path for financial failure,” Rep. Seth Grove, R-York, said, noting that some economists predict a recession and that Pennsylvania residents are struggling with the effects of inflation. 

In his floor remarks, Grove, who is the ranking Republican member of the House Appropriations Committee, said he hoped to see a plan that addressed the structural deficit and offered a “sensible plan” to deal with surplus funds.

Senate Appropriations Committee Chairperson Scott Martin, R-Lancaster, said the budget proposal conflicts with the Senate GOP’s plan to “right Pennsylvania’s fiscal ship” to improve the commonwealth’s overall prosperity.

“This budget is actually outspending revenues,” Martin said, noting that the Independent Fiscal Office has forecast revenues to decline $300 million in the next year. Looking ahead, future budgets would begin to deplete the Rainy Day Fund within two years and exhaust it within four.

“That’s not fiscal stability, and that’s not good for the fiscal health of the commonwealth,” Martin said. 

GOP leaders in both chambers said they were encouraged to see many areas in which they could work to find consensus, including investments in career development and retention, a decrease in the corporate net income tax, and added spending for the Pennsylvania State Police.

“The governor said a lot of things that we can all get on board with,” Senate President Pro Tempore Kim Ward, R-Westmoreland, said. “We just need to find out how we’re going to pay for those things.”

Ward said members of her caucus were pleased to see that the governor’s spending proposal builds on work GOP lawmakers have already done to create a child care tax credit and make child care more accessible to working parents.

But Ward was disappointed the proposal did not include “lifeline scholarships,” which Shapiro said during his campaign that he supported to give parents in the state’s poorest districts the ability to send their children to better-performing schools.

Grove applauded Shapiro for refraining from attacks on charter schools, setting a reasonable level of public school funding, focusing on career education and workforce development, and expanding the state police.

“We stand ready to work with him, our House Democratic colleagues and the Senate to move Pennsylvania forward and adopt a reasonable, fiscally responsible budget,” Grove said.  

Senate Majority Leader Joe Pittman, R-Indiana, said that the inclusion of $633 million from the Regional Greenhouse Gas Initiative amounts to a tax on every electricity consumer in Pennsylvania. RGGI is a multi-state compact to reduce carbon emissions from electricity generation in which producers bid on carbon allotments, a cost that critics say will be passed to ratepayers.

Lawmakers and representatives from energy and labor groups have challenged former Democratic Gov. Tom Wolf’s unilateral entry into the agreement in cases now before Commonwealth Court.

State Rep. Jim Struzzi, R-Indiana, said that while he agrees with Shapiro’s plan on lowering the corporate net income tax and adopting more business-friendly approaches that could create jobs and stimulate the economy, he is concerned about the “shadow” of the Regional Greenhouse Gas Initiative.

“During the prior administration, then-Attorney General Shapiro played coy with his opinion,” Struzzi said in a statement. “He’s now shown his hand.”

Struzzi accused Shapiro of having “no plan” to address possible job losses or increased energy prices.

‘This is not the time for more partisan pugilism’

Democrats — who now narrowly control the state House but hold the minority in the state Senate — celebrated the proposed budget, saying it’s a start to fixing how Pennsylvania funds its K-12 public schools and makes investments in economic development by focusing on cutting through red tape and attracting people to work in Pennsylvania.

“This is not the time for more partisan pugilism,” House Majority Leader Matthew Bradford, D-Montgomery, said. “This is the time to get to work.”

Philadelphia Sen. Vincent Hughes, the ranking Democrat on the Senate Appropriations Committee, said there’s a “natural tendency” to be “politically combative” after a governor’s budget address. 

But Hughes, referencing Shapiro’s calls for bipartisan collaboration during his budget address, urged lawmakers on both sides of the aisle to use the  proposal as a foundation to develop a finalized spending plan.

Hughes did say he wants the finalized plan, due at the end of June, to include more funding for education funding. But Democrats noted that the governor’s proposal is a step toward fulfilling a court order to fix the state’s school funding system.

Sen. Judy Schwank, D-Berks, celebrated the spending plan’s investments in early childhood education and work toward ensuring childcare workers stay in the profession. She said that if Pennsylvania doesn’t take steps to address burnout and challenges now, they’ll pay for it in the future.

She also noted Shapiro’s proposal to mitigate maternal mortality and morbidity rates in Pennsylvania.

“We’re a long way from the finish line. This is a budget proposal, and over the next couple of weeks, the Senate and House members will meet, and we’ll go through our budget process to share more of our priorities,” House Appropriations Committee Chair Jordan Harris, D-Philadelphia, said. “But I can tell you that this new Democratic majority, we will put people first every single step of the way.”

Capital-Star Associate Editor Cassie Miller contributed to this story.