Here’s what’s still outstanding in Pennsylvania’s budget

By Peter Hall – Capital-Star

HARRISBURG, PA – Gov. Josh Shapiro signed legislation on Thursday to unlock state funding for hospitals, emergency medical services, and nursing homes, marking the first progress since August in clearing Pennsylvania’s budget impasse.

However, the Republican-controlled Senate and Democratic-controlled House must still agree on the largest outstanding part of the $45.5 billion budget and several budget priorities for both sides.

The final passage and signing of House Bill 1351 happened on the last day that both chambers of the General Assembly were in session until November.

The bill makes $63.3 million in new revenue available for EMS providers through increased reimbursements, reauthorizes a tax on hospital services to aid health systems and sets Medicaid reimbursement rates for nursing homes.

House Republicans praised their colleagues in the upper chamber for a bipartisan and narrowly focused approach to resolving the budget issues.

“I think it was very smart and astute of their caucus and their leadership to start shrinking the discussions including the important things that we need to get done,” state Rep. Seth Grove (R-York) said in a meeting with reporters Wednesday.

A spokesperson for House Majority Leader Matt Bradford (D-Montgomery) said Democrats had earlier asked Senate Republicans to take that approach, focusing on bipartisan, non-controversial issues first but had been unsuccessful since the House passed the spending plan back in July.

“While those conversations have not been as successful as we may have hoped, we appreciate them setting aside our differences and moving these vitally important, non-controversial and bipartisan policies forward,” spokesperson Beth Rementer said, adding that the health care funding streams “are all a great example of things we can rally behind.”

Money for most state agencies and programs became available in August after the Senate returned from summer recess for a day to take the final step to send the general appropriations bill, which the House passed in July, to the governor’s desk.

At the time, the code bills had not been finalized and Budget Secretary Uri Monson said he would not release funding for certain programs, estimated to be about $1.1 billion, without the code bills.

Earlier this month, the House passed three code bills that would release some of that money. Those bills are now awaiting consideration in the Senate, but leaders in each chamber have been tight-lipped about how far apart they are.

A spokesperson for Majority Leader Joe Pittman has said only that discussions are ongoing regarding the omnibus fiscal code bill and school code bill. Spokesperson Kate Flessner also said the Senate is considering the House tax code, which he called intriguing earlier this month.

“We look forward to continued dialogue with our colleagues in the Senate as we await their response regarding the legislation,” House Appropriations Chairperson Jordan Harris said.

The process is also still overshadowed by the fallout over a deal between Shaprio and Senate Republicans to create a school voucher program to help low-income families in poorly performing school districts pay private school tuition with taxpayer dollars.

House Democrats said they would not agree to a voucher program and Shapiro followed through with a promise to line-item veto the $100 million program when he signed the budget to avoid an extended impasse.

The school code would provide $100 million in Level Up funding for the state’s 100 poorest school districts, $261.6 million for community college funding, increase the amount available for educational tax credits by $150 million to $555 million, and establish a school environmental repair program.

It would also establish an educator pipeline support program to provide stipends for student teachers, make a number of changes to the administration of statewide school safety programs and provide $100 million for school mental health grants.

The tax code bill would accelerate a phased reduction in the corporate net income tax rate started in Gov. Tom Wolf’s last budget to reach its final level of 4.99% five years earlier in 2026. It would also increase the share of operating losses companies can use to offset income taxes from 40% to 80% over the next four years. And it would implement new reporting requirements to make it more difficult for large companies to shift profits out of state to reduce their corporate income tax liability.

Although the corporate tax reform measures have bipartisan support, GOP leaders criticized Democrats, who control the state House, for amending the bill in a committee meeting hours before its final consideration to include “a special interests smorgasbord” that Republicans said would doom it to fail in the state Senate.

Among the provisions with which GOP lawmakers found fault are a corporate net income tax reduction for medical marijuana producers and a $50 million boost in the state’s film production tax credit.

The omnibus fiscal code bill would reauthorize the whole home repair program that started in the previous budget using pandemic-era federal aid, and increase the authorized complement of state police troopers to 4,410.

It would also provide $100 million for adult mental health programs, $24 million for increased medical assistance dental reimbursements, $75 million for school repairs, $7.5 million for the first-ever state contribution to the cost of public defenders, and $10 million to bolster Philadelphia’s bid to attract the FIFA World Cup in 2026.