Pennsylvania Perspective Special Edition: 2026 Budget Address Recap

Governor Shapiro Gives 2026 Budget Address

On Tuesday, February 3, Governor Josh Shapiro delivered his fourth annual Budget Address to a joint session of the General Assembly, where he unveiled his $53.26 billion FY27 Executive Budget, a 5.38% increase from the previous fiscal year. The state projects $48.3 billion in tax revenue, with the remainder covered by the Budget Stabilization Reserve Fund. Pennsylvania faces a structural deficit, with spending outpacing revenue.

For more information, please see Governor Shapiro’s full budget address and press release about the address. Below are some of the highlights of the governor’s budget proposal.

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Public Safety & Community Support

Governor Shapiro highlighted the importance of safety in Pennsylvania’s communities through continued investments in law enforcement, first responders, and proven prevention programs. He also emphasized the need for Pennsylvania to be prepared for federal uncertainty and disruptions:

• $100 million from the Budget Stabilization Reserve Fund to a new Federal Response Fund.
• $68.3 million for the Pennsylvania Commission on Crime and Delinquency’s (PCCD) Violence Intervention and Prevention (VIP) Program, a $5.2 million increase.
• $16.2 million investment for four additional cadet classes and fully eliminates the statutory cap on the number of troopers.
• $30 million investment in competitive grants through the Office of the State Fire Commissioner (OSFC), doubling annual funding.

Economic Development

Governor Shapiro emphasized making Pennsylvania more competitive by investing in long-term economic growth and ensuring communities across the Commonwealth can compete:

• The budget proposal aims to raise the minimum wage from $7.25 to $15 per hour by 2027 to reduce expenditures and generate revenue.
• Public Transportation Trust Fund to provide over $300 million annually for local transit agencies by adding an additional 1.75 percent of Sales and Use Tax revenues.
• $100 million to the Innovate in PA 2.0 program, focusing on investments toward life sciences, robotics, technology, energy, manufacturing, and agriculture.
• $10 million for the PA First Program, totaling $38 million, to further support the Commonwealth’s economic development strategy.
• $19 million total funding for Pennsylvania agricultural innovation.
• $10 million, bringing total investment to $35 million, for child care workers at licensed providers in the federal Child Care Works Program.

Education

Governor Shapiro emphasized the importance of education in growing Pennsylvania’s economy and creating opportunities for future generations. The Governor highlighted his administration’s work in providing funding for education during his tenure and the need to continue investment in the classrooms:

• The budget directs an additional $565 million in adequacy and tax equity supplements.
• $111 million for school safety and mental health support.
• $50 million increase for Basic Education Funding, totaling $8.31 billion.
• $50 million increase for Special Education Funding.
• Cyber charter reforms to align cyber charter funding to actual costs.
• $30 million investment in performance-based funding to state-related universities.
• $5 million increase for student teacher stipends and a $2.5 million increase for teacher professional development.
• The Bell-to-Bell Cell Phone Ban calls for the General Assembly to prohibit mobile devices during school hours to improve student focus.

Energy & Data Centers

Governor Shapiro focused on data centers, artificial intelligence (AI), and energy for Pennsylvania’s economic growth. The Governor highlighted the need to balance data center development with community impacts:

• The Governor’s Responsible Infrastructure Development standard, or GRID, focuses on protecting energy and water resources, transparency and community engagement, delivering local jobs and community benefits, and responsible growth with accountability. 
• The budget also advances the Governor’s Lightning Plan introduced last year.

Infrastructure & Housing

Governor Shapiro proposed a comprehensive set of housing reforms to expand housing supply and lower costs, and a massive capital investment strategy.

• $1 billion Critical Infrastructure Investment supported by general obligation bonds for transformative projects in energy, housing, and municipal upgrades.
• The Governor’s proposed housing reforms range from capping rental application fees to authorizing transfer-on-death deeds.

Regulation & Revenue

Governor Shapiro’s budget proposal plans to regulate skill games and legalize adult-use cannabis to generate approximately $2 billion annually.

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