(The Center Square) – Pennsylvania government has a $5.7 billion problem, and close observers of those running the state don’t anticipate seeing a full solution 46 days from now when the 2026-27 budget deadline arrives.
The latest projection from the state Independent Fiscal Office is for a budget deficit of $5.7 billion next fiscal year. There has been no public indication by Gov. Josh Shapiro or any of the 253 lawmakers of any agreement yet to significantly reduce it. The budget deadline is June 30.
Last year, politically divided leaders went 135 days past the deadline before adopting a budget, triggering billions of dollars in missed payments, furloughs, and program cutbacks across the state. The top Republican on the House Appropriations Committee, Rep. Jim Struzzi of Indiana County, thinks a “lesson was learned” and things will be different this year.
“I believe the energy is a little different this time,” Struzzi said. His own belief, he said, is that “we cannot burden taxpayers with this continuing deficit, year after year.
But Marc Stier, former executive director of the Pennsylvania Policy Center, said the enormity of the deficit means “we are going to have a crisis, one way or the other.” Stier believes that during the upcoming budget negotiations “we are going to see a lot of hot air and another evasion of the fiscal problem we face.”
Elizabeth Stelle, vice president of policy analysis for the Commonwealth Foundation, said continuing inaction on major money issues – like the potential regulation of skill games, the possible legalization of adult-use marijuana, and a tax system change known as “combined reporting” – indicates “we are not close to a serious budget moving forward.”
The governor and most lawmakers are up for election this year, a fact that some believe will prompt a quick – if not responsible – budget deal.
In February, the Democratic governor proposed a budget for 2026-27 with spending of $53.3 billion, with the structural budget deficit to be masked by a withdrawal of $4.6 billion in one-time money from the state’s so-called “Rainy Day Fund.” That fund, as of this week, contained $7.7 billion.
Both chambers of the state Legislature – the Democratic-controlled House and the Republican-controlled Senate – must approve budget bills.
By Friday, the only approval of a major budget-related initiative came with mid-April House passage of an appropriations bill that mirrored Shapiro’s budget proposal.
Republican leaders in the Senate said they had “profound concerns” about the spending in that bill.
Since then, though, their chamber has not passed any major appropriations bill.
In fact, the Senate had only three scheduled voting session days in Harrisburg this month, May 4, 5, and 6. The May 5 session ended around 8:45 a.m., after which senators made the roughly two-hour trip from Harrisburg to downtown Philadelphia.
The visit was for a “ceremonial meeting” – with no votes – celebrating the 250th anniversary of the Declaration of Independence. Senators had a group picture taken with Independence Hall in the background.
Sen. Jay Costa of Allegheny County, the top Democrat in the Senate, said the three-day string of session days this month was wasted in “shameful” fashion with a heavy emphasis on “culture war bills” that will not reduce costs for Pennsylvanians. The squandering of time, he said, came as “Pennsylvanians are paying skyrocketing utility bills, dropping healthcare coverage, and struggling to put food on their tables.”
On Friday, Senate Majority Leader Joe Pittman of Indiana County said Costa “is entitled to his own opinion, but not his own facts. And the facts demonstrate otherwise.”
Both parties are responsible for the massive budget deficit, according to Stier. Both, he said, have continued to endorse a tax system that favors lower taxes on corporations and goes easy on the wealthy. It is, he said, the “biggest cause of our stressful deficit.”
Stelle said her organization believes the cost of the Shapiro-proposed set of appropriations for 2026-27, coupled with the existing deficit, points to tax increases of $2,100 per household in Pennsylvania. This budget year, she said, the foundation would like to see an agreement to dial back the size of any spending increase in order to reduce the deficit.
Republican state Rep. Jeremy Shaffer of Allegheny County thinks the problem is larger than that. He backs bills to reduce the size of the Legislature, impose term limits, and suspend legislative pay raises during a budget impasse.
Shaffer sees two possible scenarios in the next few months.
In one, top leaders of both parties agree to a fairly quick budget deal that will “kick the can down the road” by drawing billions out of the Rainy Day Fund. In the other, there is an actual effort to resolve the major deficit issue.
In the latter case, he said, “It is going to take a long time.”
