HARRISBURG — Gov. Josh Shapiro and Pennsylvania's politically divided legislature will miss Pennsylvania's legal deadline to pass a budget for the new fiscal year, amid closed-door talks to try to produce a compromise on a spending plan.
Without the Democratic governor's signature on a new spending plan, the state loses some of its spending authority starting Tuesday, particularly on discretionary payments, such as those to vendors, counties, public schools, and grant applicants.
>>READ MORE: Fights over transit, skill games, and overall spending mean the Pa. budget will again be late
The impact of such missed payments generally takes until August to be felt by schools and counties.
The biggest issues swirling around budget talks are absorbing a massive increase in Medicaid costs and a push to regulate and tax tens of thousands of slot machine-like "skill" games that are popping up everywhere.
Shapiro said at a news conference Monday that talks between top lawmakers went through the weekend and that he anticipates negotiators will agree on a plan "very soon."
His optimism wasn’t shared by many in the state Capitol, however. Legislators passed a handful of non-budgetary bills Monday, including one to lift the state’s ban on Sunday hunting, but otherwise, most pieces of budget legislation remained parked in committee.
The state Senate adjourned Monday, while the state House has two more days of votes scheduled for this week. Neither are scheduled to return until this fall, though top lawmakers can add more voting days at any time.
"We will not have members here without productive activity occurring,” state Senate Majority Leader Joe Pittman (R., Indiana) told reporters. “I don't think it behooves any of us to have members here just for the sake of being here."
Shapiro proposed a $51.5 billion plan for the 2025-2026 fiscal year beginning July 1. It would increase total authorized spending by 9% for state operations, or by about $3.8 billion, including a $230 million request for the current year's spending.
Pennsylvania has historically run a structural deficit, spending more than it brings in; it’s driven by rising health care costs and an aging population. However, the state has roughly $11 billion in budgetary reserves built up because of federal aid during the pandemic. To pay for this year’s plan, Shapiro would use roughly half of those reserves.
However, such a plan is opposed by the Republicans who control the state Senate. In a joint statement Monday afternoon, GOP leadership said that the commonwealth “is facing a multi-billion-dollar structural deficit that we must address this year to prevent a financial crisis and tax increases in the future.”
They added that talks would continue “on a spending plan that respects taxpayers, while allowing Pennsylvania to grow.”
In a budget stalemate, the state is still legally bound to make debt payments, cover Medicaid costs for millions of Pennsylvanians, issue unemployment compensation payments, keep prisons open, and ensure state police are on patrol.
All state employees under a governor's jurisdiction are typically expected to report to work and be paid as scheduled during a budget stalemate.
Under the state constitution, the budget must be balanced. For Shapiro, it will be his third straight budget that failed to get across the finish line by the legal deadline of July 1.