Gov. Shapiro Proposes $44.4 Billion Budget In First Address

By Marley Parish, Peter Hall & Cassie Miller | Pennsylvania Capital-Star

In his first budget address, Democratic Gov. Josh Shapiro urged lawmakers in the General Assembly to work together to pass a commonsense spending plan, proposing increased funding for Pennsylvania schools, investments in economic development, and community-based health and safety initiatives.

Speaking to a joint session of the now-divided Legislature on Tuesday, Shapiro lauded Pennsylvania’s financial position, saying his fiscal blueprint uses conservative estimates that are $3 billion lower than those projected by a state forecasting office over the next five years. 

The administration said the $44.4 billion budget proposal aims to preserve the state’s flush coffers while still making investments to promote growth and continue funding pandemic-era relief programs.

He outlined investments focused on the three themes of his gubernatorial campaign — improving the economy and employment opportunities, bolstering public safety, and building a stronger public education system — that led to his election by historic margins in November.

“Government can and should be a force for good in our lives,” the 49-year-old Democrat told lawmakers during a more than hour-long speech. “We can do big things again — if we work together.”

Joined by special guests — police cadets, an educator, a school counselor, the Allentown mayor, a first-year apprentice, and a senior participating in the state’s property tax rebate program — Shapiro described his spending proposal as “a set of commonsense solutions” that cuts through red tape, invests in communities and businesses, supports law enforcement, and serves as a “down payment” on the future of education funding.

“We’re prepared to weather a storm should it come. And we can afford to make critical investments for the people of Pennsylvania right now,” Shapiro said. “Investments to build an economy that works for everyone, to create safe and healthy communities, to ensure every child receives a quality education, and to protect real freedoms.”

Shapiro said his budget starts by helping Pennsylvanians “being crushed under a mountain of rising prices” by eliminating the state cell phone tax and expanding the property tax rebate program for seniors.

He said the proposal would also help businesses by accelerating tax cuts that started last year with former Democratic Gov. Tom Wolf’s final budget.

“If we want the next scientific breakthrough to happen here, if we want our workers to build their own future, if we want to plant a flag and say we are going to be a leader, then we need to keep lowering the corporate net income tax,” Shapiro said. “It’s my view that we need to speed up those cuts.”

Pennsylvania can leverage its ongoing investments in higher education and health care that have spawned innovations in fields such as gene therapy and robotics by cutting through red tape and moving at “the speed of business,” he said.

“The one thing I hope you can all agree on is I am competitive as hell, and I’m sick and tired of losing to other states,” Shapiro said. “It’s time to compete again here in Pennsylvania.”

Touting his Inauguration Day order eliminating the requirement to hold a college degree for the vast majority of state jobs, Shapiro announced more support for Pennsylvania’s workforce. Calling the state’s $7.25 per hour minimum wage unlivable and a barrier to competition, Shapiro urged lawmakers to raise it to $15 an hour.

“Let’s treat workers with the respect they deserve and finally raise the minimum wage,” Shapiro said.

Here are some highlights of the spending plan:

Education

The governor’s proposed budget includes a $567.4 million increase — or 7.8% — for basic education funding, which will go through the Fair Funding Formula, and a $103.8 million spending increase for special education funding.

Shapiro, referencing a Commonwealth Court order telling the governor, lawmakers, and educators to reform how the state funds its K-12 public schools, urged the General Assembly to come to the bargaining table and “come up with a solution that ensures every child has access to a thorough and efficient education.”

Though there’s still time to file an appeal in the court case, Shapiro predicted the initial order will stand.

“We must approach this responsibility with hope and ambition — because this is a once-in-a-lifetime opportunity for us to do right by our kids, to fund our schools, and to empower parents to put their kids in the best position for them to succeed,” he said.

The proposal also suggests allocating $38.5 million to continue the universal free breakfast program for all Pennsylvania students, regardless of their income. Wolf used $21.5 million to offer universal free breakfasts in Pennsylvania schools. That program, however, ends this school year.

He also proposed using $10.4 million for early intervention services for kids aged 3 to 5 and allocating $4.2 million to provide capital improvements at small rural libraries.

Shapiro’s budget would also allocate $100 million for school safety and security grants through the Pennsylvania Commission on Crime and Delinquency’s School Safety and Security Committee. Another $100 million would go toward reducing and remediating environmental hazards in schools.

Shapiro also proposed a more than $60 million increase in funding for postsecondary institutions, $1.6 million to support parenting postsecondary students, and $29.8 million for state-related universities.

The budget also suggests using $250,000 in new funding for the It’s On Us initiative, which aims to prevent sexual assault.

Community safety

The governor’s budget would allocate $16.4 million for four new Pennsylvania State Police trooper cadet classes in 2023-24, training an estimated 384 new state troopers.

Shapiro has proposed eliminating the GRT cell phone tax and adding a small surcharge increase — from $1.65 to $2.09 when the existing surcharge expires in January 2024 — to 911 services. His budget also suggests a $3 million spending increase for emergency medical services and fire services.

Under Shapiro’s spending plan, the Violence Intervention and Prevention Program, which assesses the incidence of injury to prevent death and disability and develop programs to reduce injury risks, would receive $105 million.

He also proposed reducing reliance on the Motor License Fund by $100 million per year until $0 in 2027-28 and upgrading Pennsylvania State Police equipment and implementing a standardized replacement cycle.

Under the plan, public defenders would see a $10 million investment.

“Pennsylvania is one of only two states in the nation that provides zero state dollars for indigent defense,” Shapiro said. “That’s not a list we want to be on.”

Economic development

To address workforce shortages, Shapiro suggested using $24.7 million in job retention and recruitment efforts.

He also proposed a refundable tax credit that gives up to $2,500 back to those who earn a new license or certification in nursing, law enforcement, or education and move to Pennsylvania for employment. The tax credit would last every year for up to three years.

The spending plan also proposes up to a $66.7 million investment in childcare services for low-income families and a $30 million increase for the Pre-K Counts program. It would also allocate $2.7 million in funding for the Head Start Supplemental Program to address staffing shortages in early childhood education programs.

Shapiro also wants to allocate $23.8 million to workforce training and apprenticeship programs, something legislative Republicans have listed as a priority during the current session.

The spending plan continues a planned decrease in the corporate net income tax rate to 8.49% during tax year 2024, mapping a path to 4.99%.

Shapiro also called for raising the minimum wage in Pennsylvania to $15 per hour.

Mental health

Shapiro’s proposal outlines $500 million over five years to increase mental health support for students across the commonwealth through $100 million block grants for school-based mental health resources. 

The administration said the grants will give school districts flexibility when choosing the best way to provide mental health services to students, noting that the funds can be used to hire counselors and partner with a local nonprofit or telehealth care services.

In 2022, Pennsylvania launched the 988 mental health hotline. Shapiro said that the current 13 call centers are in need of more support. The proposed budget allocates one-time funding of $5 million to further develop the program. 

“This budget creates a sustainable funding source to ensure those centers are always staffed, and that when people need help, there’s someone there to answer the phone,” Shapiro said.

The plan also includes $200,000 to bolster existing federal support of mental health services for farmers and agricultural producers.

Environment

To mitigate and address human-induced climate disruptions, the spending plan proposes $5.75 million for the state Department of Environmental Protection for air and water quality testing and increased dam inspections. 

Shapiro also directed the DEP to take advantage of federal dollars to cap the thousands of orphaned and abandoned oil and gas wells across the commonwealth.

The proposed spending plan also allocates $2.8 million to the Department of Conservation and Natural Resources for infrastructure repairs and facility updates, as well as the development of a new Office of Outdoor Recreation. 

In 2022, DCNR announced that it had hired its first-ever Director of Outdoor Recreation Nathan Reigner to facilitate relationships between DCNR, other intergovernmental agencies and outside partners, and help DCNR invest in the growing need for outdoor recreation. Pennsylvania has the sixth largest outdoor recreation economy in the country, contributing more than $13.6 billion to Pennsylvania’s economy in 2021. 

Supporting vulnerable populations

Shapiro proposed expanding the state Property Tax Rent Rebate Program, raising the maximum for seniors from $650 to $1,000. He also wants to increase the income cap for renters and homeowners to $45,000 a year.

“Finally, I want to tie that cap to increases in the cost of living, so that this commonwealth never has to say: ‘Sorry, you’re out of luck,’ because their Social Security payment went up, and we didn’t act,” Shapiro said, estimating that nearly 175,000 more Pennsylvanians will quality and existing program participants will see their rebates nearly double.

He wants to allocate $10 million to reduce the waiting list for the OPTIONS program, which helps those 60 and older, and retain Area Agencies on Aging network staff. Shapiro also proposed investing $1 million in additional grants to senior centers and $1.48 million to help those with disabilities.

Under the plan, $1.25 million would offer home and community-based services for individuals currently residing in state hospitals and use $3.4 million to expand Lifesharing service rates to increase participation.

Shapiro also proposed a $16 million increase in the minimum Supplemental Nutrition Assistance Program and $1.4 million to promise quality care for residents in skilled nursing facilities. His spending plan would allocate $7.81 million to support county and municipal health departments and $2.2 million for the Department of Human Services to improve the licensing process.

The budget proposal also aims to reduce maternal mortality and morbidity rates by allocating $2.3 million to implement prevention strategies.

Tuesday’s speech marked the beginning of weeks of budget hearings and negotiations between the governor and lawmakers in the now-divided General Assembly. Democrats have razor-sharp control of the state House, and Republicans have a comfortable margin in the state Senate.

A signed spending plan must be in place by the start of the fiscal year on July 1.