But some of the most pressing issues facing the General Assembly were noticeably absent from the final deal<\/a>, as Gov. Josh Shapiro<\/a> and lawmakers in the split legislature were unable to reach a compromise \u2014 or didn\u2019t want to touch the contentious issues until after they are up for election in November, sidelining some of Shapiro\u2019s top budget priorities.<\/p>\n Here\u2019s a look at what\u2019s in \u2014 and what was left out \u2014 of the 2026-27 Pennsylvania state budget.<\/p>\n \u00bb READ MORE: Pa. lawmakers and Gov. Josh Shapiro have approved a $50.8 billion state budget, delaying action on key issues<\/a><\/p>\n Pennsylvania took another jump toward filling a multibillion-dollar funding gap between wealthy and poor school districts, after a court found that the state\u2019s old system of funding education was unconstitutional. Since 2024, when the state first implemented new adequacy and tax equity formulas in efforts to fill the state\u2019s $4.5 billion \u201cadequacy gap,\u201d lawmakers have put nearly $1.9 billion toward funding lower-income districts, with plans to fill it by 2032.<\/p>\n \u201cIt keeps our promise to our school districts,\u201d said State Rep. Jordan Harris (D., Philadelphia), who serves on the powerful appropriations committee responsible for allocating state dollars, in remarks on the House floor Sunday.<\/p>\n The latest installment of adequacy and tax equity payments \u2014 $565 million \u2014 will largely go to low-income districts that already have high property taxes. The School District of Philadelphia<\/a>, Pennsylvania\u2019s largest school district and the only one in the state that is unable to raise its own revenue, will get $136 million of that funding increase.<\/p>\n Shapiro proposed generating new revenue streams to help the state fix its multibillion-dollar structural deficit in his last four budget addresses. But the ways he wants to raise that cash have been met with resistance by Senate Republicans<\/a>, who argue they aren\u2019t policies that will improve the state\u2019s economic standing \u2014 or can\u2019t reach agreement within their caucus on how to address the issues.<\/p>\n Shapiro this year didn\u2019t get the hefty minimum wage increase he asked for, raising the hourly minimum from $7.25 to $15<\/a> \u2014 and counting on the higher wage for $80 million in higher income tax revenues. Nor was he able to get the split General Assembly, where Democrats<\/a> control the House and Republicans lead the Senate, to approve adult-use cannabis, which his office estimated would bring in $729.4 million in its first year, largely through licensing. (House Democrats have approved plans for a minimum wage increase and recreational marijuana legalization, but the Senate has not voted on the bills.)<\/p>\n \u00bb READ MORE: Could recreational marijuana really bring $1.3 billion in revenue to Pa. over five years? Here\u2019s how other states are faring.<\/a><\/p>\n Shapiro, in his February budget proposal, also called on the General Assembly to regulate and tax skill games at the same rate as casinos, a move which he has estimated could generate nearly $800 million in revenue in its first year. But any regulation of skill games \u2014 slot-machine lookalikes<\/a> that the state Supreme Court ruled last month are a form of gambling \u2014 was left out of the budget.<\/p>\n Lawmakers still have until October to decide whether skill games will be taxed and regulated, part of a grace period in the high court\u2019s ruling. Otherwise, they will become illegal gambling machines found in many corner stores, gas stations, and bars. The issue has been the target of more than $8 million in lobbying and $9 million in campaign spending in Harrisburg, mostly funded by one company.<\/p>\n \u00bb READ MORE: How \u2018skill games\u2019 exploded across Pennsylvania \u2014 and sparked a multimillion-dollar political fight<\/a><\/p>\n \u201cWe can act within the 120 days, we can act after the 120 days,\u201d Senate Majority Leader Joe Pittman (R., Indiana) said on Sunday. \u201cBut the choice is now quite simple. These machines are illegal, and in less than 120 days, they will be leaving the marketplace.\u201d<\/p>\n Data centers \u2014 which are seeing a boom in Pennsylvania as artificial intelligence usage increases and communities are pushing back on where they are being built \u2014 will be required to submit information about their energy and water usage. <\/p>\n Beginning next summer, data centers in the state with a peak energy demand greater than 10 megawatts will be required to submit information annually to the Department of Environmental Protection. <\/p>\n Outlined as part of this year\u2019s fiscal code, those reports will be publicly-accessible. Data centers that do not submit information about their resource usage will be fined $10,000 a day.<\/p>\n A data center regulation bill, which would have limited state benefits for data center developers and was championed by Shapiro, was not included in the final budget deal. The governor called<\/a> for limiting a sales and use tax exemption and expediting permitting to projects that comply with a set of transparency and environmental standards.<\/p>\n And several other data center regulation efforts that have received bipartisan support in recent weeks were also absent from the final spending package.<\/p>\n That included efforts<\/a> to repeal the existing sales tax exemption afforded to data center developers and attempts to enact a local or statewide moratorium on new data center development. <\/p>\n Both chambers passed language repealing the tax exemption and advanced differing bills to freeze development. One Democratic-sponsored bill<\/a> would have given municipalities the option to implement a 180-day moratorium on new centers. The other, a Republican-sponsored measure<\/a>, would allow for local moratoriums up to 18 months. <\/p>\n \u201cCompromise\u201d was the word of the day around the Pennsylvania Capitol on Sunday, when the legislature swiftly passed the more than 600-page budget deal hashed out behind closed doors between Shapiro, Pittman, and House Majority Leader Matt Bradford (D., Montgomery) and passed with bipartisan support in both chambers.<\/p>\n The legislative leaders and Shapiro emphasized that they didn\u2019t get exactly what they want in the budget, as a symptom of dealing with divided government. And leaders were proud to have reached the deal less than two weeks after their July 1 deadline<\/a>, rather than the nearly five months that it took to hash out an agreement last year.<\/p>\n Lawmakers also agreed to work over the weekend to hurriedly approve the budget deal, with members of the Senate coming in on Saturday night to begin advancing parts of the budget deal and the House joining them Sunday afternoon. By 6:15 p.m. on Sunday, Shapiro had signed it.<\/p>\n Among the inspirations for the weekend of productivity: Making it to the MLB All-Star Game<\/a> in Philadelphia, Bradford said, for which he has tickets.<\/p>\n Leaders returned to some old accounting maneuvers to address the state\u2019s multibillion-dollar structural deficit and avoid pulling from the state\u2019s emergency savings account.<\/p>\n They spent down unused and underused dedicated funds, and rolled some of the state\u2019s Medicaid payments totaling $1.3 billion to the next fiscal year, a move lawmakers typically resorted to before the state saw an influx of federal dollars during the COVID pandemic.<\/p>\n Without those delayed payments, the state budget would total closer to $52.1 billion, and several GOP members criticized the total as being disingenuous. <\/p>\n More than 80,000 retired public-sector employees will receive a cost-of-living adjustment to their pensions<\/a>, something advocates have sought for years.<\/p>\n \u00bb READ MORE: More than 80,000 Pa. retired teachers, police officers, and firefighters will get a pension bump \u2014 some for the first time in decades<\/a><\/p>\n Public school teachers and other state employees who retired before July 1, 2002 will receive a tiered monthly payment based on the date of their retirement. Similarly, police officers and firefighters who retired more than five years ago will receive monthly payments ranging from $50 to $300 dollars, depending on how long they have been retired.<\/p>\n Lawmakers from both parties had called for the cost-of-living increase.<\/p>\n Legislators also agreed to close a loophole that allowed online sellers to avoid paying Philadelphia\u2019s local 2% sales tax<\/a> on purchases made in the city. <\/p>\n Mayor Cherelle L. Parker<\/a> had asked the General Assembly to close it as part of her own city budget pitch in a move estimated to bring an additional $1.5 million to Philadelphia.<\/p>\n Twenty-nine states have bell-to-bell cell phone bans. This year, Pennsylvania will not join them<\/a>, despite the passage of two separate phone ban bills \u2014 one in each chamber of the legislature. <\/p>\n In: Mandatory recess for students K-5<\/p>\n Recess is now law in Pennsylvania. <\/p>\n Another education policy change championed by Shapiro, a mandatory, 30-minute recess for students in grades kindergarten through fifth was established in this year\u2019s budget as a way to improve learning outcomes.<\/p>\n Several Pennsylvania funding issues that have gone years without being addressed were left out of the latest budget, some with more pressing deadlines than others.<\/p>\n Lawmakers did not address a need for mass transit funding \u2014 which led to last year\u2019s bitter budget stalemate among legislators \u2014 but are expected to identify a long-term funding stream for the transit agencies next year when a two-year fail-safe runs out.<\/p>\n \u00bb READ MORE: Public transit is in trouble all across Pennsylvania, including in GOP districts<\/a><\/p>\n Other local governments and service providers said their needs are more urgent.<\/p>\n The County Commissioners Association of Pennsylvania released an urgent plea after the state budget was signed that counties still have not received the critical mental health funding they need, or a surcharge increase used to fund 911 call systems. Home-health service providers also continued their calls for increased state funding they say is needed, as the industry faces serious staffing issues due to low state reimbursement rates.<\/p>\n![\"Screen](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/07\/5WPJJWJQPNDGXL5TAGVOR3KYUE.jpg\")
Screen shows skill games and cannabis regulation and reform as Gov. Josh Shapiro makes his annual budget proposal in the state House chamber in Harrisburg Tuesday, Feb. 3, 2026.Read more<\/a>Tom Gralish \/ Staff Photographer<\/p>\n![\"State](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/07\/XLEEL3CAAJC43C4VIGNHT3VLHE.jpg\")
State Senate Majority Leader Joe Pittman (R., Indiana) during a press conference at the Capitol in Harrisburg Feb. 3, 2026.Read more<\/a>Tom Gralish \/ Staff Photographer<\/p>\n![\"A](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/07\/ZVYCSEORWFCE7IULMNMOCEQ2AI.jpg\")
A yard sign protests the proposed data center on New Elm Street near the Closed Cleveland-Cliffs steel mill photographed on Thursday, June 4, 2026 in Conshohocken, Pa.Read more<\/a>Monica Herndon \/ Staff Photographer<\/p>\n![\"House](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/07\/XLPPF7B7BBB2NLF7CAEY7JBFKE.jpg\")
House Majority Leader Matt Bradford (D., Montgomery) speaks on Tuesday, Jan. 7, 2025.Read more<\/a>Tom Gralish \/ Staff Photographer<\/p>\n![\"Philadelphia](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/07\/W4G3TAHYUFGSFGCSX62RPKBD6Y.jpg\")
Philadelphia Mayor Cherelle L. Parker is cheered by members of Philadelphia City Council at conclusion of her budget address, Thursday, March 12, 2026.Read more<\/a>Alejandro A. Alvarez \/ Staff Photographer<\/p>\n![\"Senator](\"https:\/\/www.newsbeep.com\/us-pa\/wp-content\/uploads\/2026\/07\/O2UFBF3OHREWBOPOC7ECYXRAFU.jpg\")
Senator Nikil Saval, speaks at a press conference calling for more SEPTA funding from the state at Independence Hall in Philadelphia, Pa., on Friday, June 26, 2026.Read more<\/a>Tyger Williams \/ Staff Photographer<\/p>\n