HARRISBURG, Pa. — Gov. Josh Shapiro signed a nearly $50.1 billion state spending plan on Wednesday, part of a breakthrough deal approved by the General Assembly that officially ended the state’s bitter, four-month-long budget stalemate.

The budget deal approved by the legislature Wednesday marks the first time Pennsylvania’s state budget has topped $50 billion, as state spending and revenue has skyrocketed in the post-COVID years due to federal cash infusions. The spending plan is a 4.7% increase over the previous fiscal year.

The $50.1 billion budget passed the House with a 156-47 vote and the Senate by a 40-9 vote, moving through both chambers with bipartisan support. The overall budget deal, which was made public Wednesday, addresses significant priorities for both Democrats and Republicans — while leaving some long-sought efforts behind.

Shapiro, a lead negotiator on the budget deal, signed the budget Wednesday afternoon to formally approve the 2025-26 fiscal year spending plan and end the budget impasse that had for months stalled payments to counties, schools, and nonprofits.

“Today is a good day,” Shapiro said, opening his remarks before signing the budget bills into law.

“I would have loved to have stood here in this room with all of you on June 30, but as you know, Pennsylvania is just one of only three states in the country with a divided legislature,” Shapiro said. “It requires all of us to compromise, to have tough conversations, and ultimately, to find common ground.”

An exit from RGGI

Among the top wins for Senate Republicans is the state’s impending exit from the Regional Greenhouse Gas Initiative, which former Democratic Gov. Tom Wolf joined without legislative approval in 2019. The program has been the ire of Republicans ever since, which House Minority Leader Jesse Topper, R-Bedford, called in floor remarks Wednesday the “No. 1 issue holding Pennsylvania back from economic growth.” The 12-state program, known as RGGI, is an interstate cap-and-trade initiative that charges power plants for how much carbon emissions they release into the air.

House Majority Leader Matt Bradford, D-Montgomery, a top negotiator of the budget deal, told The Inquirer on Wednesday that Democrats’ agreement to leave RGGI was part of a broader compromise to end the impasse.

“I’m one who believes there should be a price on carbon, but I recognize the reality of the situation and compromise is required,” Bradford added.

Shapiro and Democratic leaders were able to convince Republicans, in turn, to spend more than they had wanted to this fiscal year. That additional spending allowed Democrats to invest more in public education, school building rehabilitation investments, a new earned-income tax credit targeted toward “working Pennsylvanians,” and more.

“It’s much more money than we want to spend, and it took a lot longer than we wanted, but I think it was worth the wait,” said Senate President Pro Tempore Kim Ward, R-Westmoreland, in floor remarks on Wednesday. “I am actually excited to vote for this budget.”

New funding for schools, but not mass transit

The state budget deal includes more than $665 million in new funding for public schools, approximately $562 million of which would be funneled through the state’s adequacy and tax equity formulas as part of the state’s effort to close what experts call a $4 billion “adequacy gap.“ These formulas were created last year in response to a 2023 court ruling that found Pennsylvania’s public education funding system unconstitutionally deprives students from poorer districts from an adequate and equitable education.

Senate Minority Appropriations Chair Vince Hughes, D-Philadelphia, applauded the budget agreement for its investments in public school funding, gun violence prevention, the student-teacher stipend, among others.

“We have a document in front of us that is, I believe, worthy of the full support of this entire body on the major issues of our times, the major issues of this moment,” Hughes said in remarks on the Senate floor. “This budget has good work in it that helps address those issues, and on the issue of affordability, which sang loud and clear in the most recent election as a predominant issue that Pennsylvanians want us to address.”

In addition, there are long-sought changes expected for cyber charter schools and how they are paid by local districts by approximately $178 million. Leaders from 10 of the state’s 14 cyber charter schools warned legislators in a letter Tuesday night that the funding cuts to the popular online alternative would be greater than the state’s estimate, and could result in 2,000 teacher and staff layoffs and the closure of several cyber charter schools.

The deal, however, does not include any additional funding for mass transit, another major Democratic priority. Democrats removed mass transit from the table in September, after a lawsuit required SEPTA to undo its service cuts and Senate Republicans appeared unwilling to make a long-term investment in mass transit. Instead, Shapiro approved that SEPTA use its capital funds to help fill the state’s largest mass transit agency’s budget deficit for the next two years.

Negotiations over the budget had been stalled for months until the end of October, when Shapiro convened top legislative leaders to return to talks. The renewed budget negotiations included House Speaker Joanna McClinton, D-Philadelphia, and Ward, who are the highest-ranking officials in their respective chambers but usually stay out of the budget talks led by Bradford and Senate Majority Leader Joe Pittman, R-Indiana.

Unlike the federal government, Pennsylvania’s state government does not entirely shut down when a budget has not been approved. Lawmakers and state employees have not seen paychecks stop despite the impasse lasting 135 days, as of Wednesday. But the late budget has had significant impacts on school districts, counties, and social service providers — all of which have not received their billions in expected state payments. The lack of state funding has required schools, counties and service providers to cut jobs, take out expensive loans, or stop services all together.

Kristyn DiDominick, executive director of Bucks-Mont Collaborative which works with nonprofit agencies across Bucks and Montgomery Counties, said nonprofits in the region had been stretched thin as federal and state dollars dried up. Her members had scheduled a news conference Wednesday to demand the state pass a budget, which was canceled as a budget deal came to light.

Several, she said, had to delay payments, reduce hours and cut staff and services. Nearly all the nonprofits the organization worked with reported burnout.

As the General Assembly passes a final budget, she said, it will not immediately restore agencies to the levels they were prior to the impasse. And some of the damage has already been done in the form of people going unserved.

“The damage isn’t in just the delay, it’s in the cost of the repair,” she said.

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