2026 PA State Budget News

Governor Josh Shapiro delivered his annual budget address today, his fourth since taking office and one delivered as he campaigns for reelection. As expected, the address focused on rising energy demands and escalating housing costs, as well as priorities he characterized as unfinished business from last year’s budget agreement. The speech was delivered against the backdrop of a looming structural deficit, as the state faces increasing calls for comprehensive transit funding, expanded investments in public education and mental health services, and pressure to respond to potential federal funding cuts.

 

Shapiro proposed generating more than $2 billion in new revenue through a three-part plan. First, he called for the legalization and regulation of skill games, subject to a 52 percent tax rate. Second, he again advocated for the legalization of adult-use cannabis, with revenues dedicated to restorative justice initiatives and support for small and diverse businesses entering the market. Third, Shapiro proposed continuing the Resource Evaluation and Mission Alignment Project (REMAP), which reviews state programs for effectiveness and mission alignment and generated $100 million in savings over the past year by right-sizing state facilities. In addition, the budget proposal includes eliminating the “Delaware Loophole,” which allows large corporations to shift Pennsylvania-based income to out-of-state subsidiaries.

 

As part of the address, Shapiro also unveiled the Governor’s Responsible Infrastructure Development (GRID) Standards, a framework outlining criteria for data center developers to qualify for state resources intended to encourage and accelerate construction. He urged the legislature to codify the standards into law. The criteria require developers to pay for their own power, hire locally, maintain transparency with Pennsylvania communities, and adhere to stringent water conservation standards, in exchange for expedited permitting and eligibility for available tax credits.

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The 2026-27 budget proposal prioritizes:

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• Public Safety

• Creating a Federal Response Fund

• First Responders

• New Recurring Mass Transit Funding

• Spurring Innovation and Economic Development

• Investing in Public Education

• Expanding Workforce, Investing in Programs

• Raising the Minimum Wage

• False Claims Act

• Energy Reliability and Affordability

• Housing Action Plan

• Cutting Corporate Taxes, Closing Tax Loopholes

 

The 2026-27 budget proposal further prioritizes:

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• Holding Developers of Data Centers Accountable

• Reforming the Older Adult Protective Services Act

• Protecting Our Kids from Pitfalls of A.I. & Banning Cell Phones in Schools

• Updating the Child Protective Services Act

• Enhancing ChildLine Services