It is a new year, and that means Pennsylvania needs a new budget.
On Feb. 3, Gov. Josh Shapiro addressed a joint session of the Pennsylvania General Assembly to officially kick off negotiations for the 2026-27 state budget. He presented the state legislature with his plan for where the Pennsylvania government should spend its money next year, and how it should plan to generate revenue for the state. The state Senate and House of Representatives now have until June 30 to finalize a budget for Shapiro to sign into law.
Shapiro’s proposals are likely to be heavily modified by the state legislature in the coming months. This is the case every year when the governor first proposes a budget. Still, Shapiro’s recommendations are a starting point for the legislature. Here are some of the highlights of Shapiro’s budget address.
First, Shapiro has called for a total of $53.2 billion dollars to be spent in 2026-27. This would be a $3 billion increase in spending from the 2025-26 budget passed last year. He wants half of that money to go towards human service programs like food aid and health care for low-income Pennsylvania residents. Another significant chunk of money would go to schools. Shapiro wants $900 million to be invested into public schools, with $565 million of that specifically allocated to underfunded schools that do not serve wealthy areas.
Additionally, Shapiro wants the legislature to increase the state minimum wage to $15 an hour. Pennsylvania’s minimum wage has been $7.25, the federal minimum, for the past sixteen years.
Shapiro talked in his address about having more data centers built in Pennsylvania. He wants Pennsylvania to become a national hub for artificial intelligence infrastructure, and he highlighted a recent $20 billion investment by Amazon Web Services into Pennsylvania for data center campuses. However, Shapiro noted the criticism that data centers often face. Local communities, according to Spotlight PA, often allege data centers use too much electricity and too much water, and do not provide any meaningful contributions to the nearby residents.
To address these data center concerns, Shapiro announced the Governor’s Responsible Infrastructure Development standards, or GRID standards, which would forbid data centers in Pennsylvania from taking too much money and resources away from the communities they are located in.
Shapiro went on in his budget address to talk about increasing funding for mental health research, public transit, energy creation and public safety. Shapiro also offered ways to raise revenue. He highlighted three primary ways the state could make money. First, Shapiro wants to close a tax loophole that allows Pennsylvania-based corporations to avoid paying taxes in the commonwealth by shifting their profits to Delaware-based offshoot companies. Further, Shapiro wants to regulate games of skill, which are casino-like games often found in gas stations and tobacco stores. Finally, Shapiro has called on the legislature to legalize recreational marijuana so the state can tax the profits it will generate. Shapiro’s office predicts these three policy changes would raise nearly $1.7 billion in one year alone.
For Republicans, who control the state Senate, these revenue-raising policies are not enough. “The governor simply wants to spend too much money in this budget, full stop,” Republican Majority Leader of the Senate Joe Pittman said.
Very recent history demonstrates what can happen when a governor and a state Senate of different political parties disagree on the state budget. The 2025-26 budget, which was required by law to be passed by June 30, 2025, did not get signed until Nov. 12, 2025, due to disagreements between Democrats and Republicans in the state over how much money to spend.
Republicans are once again saying that Shapiro’s budget proposal would spend too much money. However, they expressed a willingness to work with what Shapiro has given them. “We’re committed to working together to make sure… the people of Pennsylvania and their needs are addressed in the budget that’s in front of us,” Pittman said.
