What to Watch: Pennsylvania budget talks near deadline, and get contentious

HARRISBURG — Democratic Gov. Josh Shapiro is trying to wrap up his first budget by the start of the new fiscal year, as he works to balance Pennsylvania’s politically divided Legislature in perhaps the biggest test yet of his political skills under the Capitol dome.

The last few days have become particularly contentious, as a constellation of public school advocates have organized to oppose an emerging agreement between Shapiro and Republicans who control the Senate majority.

The contention is primarily around what Republicans call “lifeline scholarships,” using taxpayer dollars to pay for schoolchildren to go to private schools. Shapiro supports it.

But top Democratic lawmakers have long opposed what they call “private school vouchers” — including this program — and that has sowed doubts about whether Shapiro can secure a deal in the coming days.

The budget is being negotiated against the backdrop of two forces: billions of dollars in reserve and a landmark court decision that found that Pennsylvania’s system of funding public schools violates the constitutional rights of students in poorer districts.

The massive reserves are easing spending decisions, while the court decision has emboldened Democratic lawmakers to demand far more money for public schools out of this year’s spending plan.

Republicans, meanwhile, warn of the possibility of a recession and long-term deficits to argue that the state must restrain spending.

Here’s what to watch for in the coming days:

What we know

Shapiro is holding private meetings with lawmakers at the governor’s official residence, including with leaders of the Senate’s Republican majority and the House’s Democratic majority.

No final draft of an agreement has become public and top lawmakers are saying little about the discussions.

Senate President Pro Tempore Kim Ward, R-Westmoreland, said there is still jockeying around certain elements, but hoped work will wrap up in a few days.

“We’re not too, too far apart on some of the big things,” Ward said in an interview Wednesday.

Spending

Budget negotiators expect the final spending figure to be slightly lower than what Shapiro proposed in March for the 2023-24 fiscal year that starts July 1.

Shapiro proposed a $45.3 billion spending plan, or a 6% increase over the approved budget for the almost-ended fiscal year. It would require perhaps $1 billion in surplus cash to balance, and leave roughly $13 billion in reserve.

That spending level is well below what House Democrats passed in their budget plan in early June.

The plan envisions no increases in income or sales taxes — the state’s two main revenue sources — and most of the new money in it would go to education, health care and social services.

Republicans have sought to tamp down spending in Shapiro’s plan and to include more money for private schools, including $100 million for the “lifeline scholarships.”

Shapiro had sought roughly $1 billion in new or one-time cash for public schools — well below what public school advocates had sought.

Lifeline scholarships

This legislation is a top Republican priority and is the latest iteration of a long-standing drive by Republicans to expand taxpayer-funded alternatives to public schools.

Public school boards and teachers’ unions oppose it, saying it is a voucher program that will siphon taxpayer dollars from public schools and send it to private schools, with no oversight or accountability.

Top Democrats oppose it, too. But Shapiro upended the discussion when, as a candidate for governor last fall, he came out in support of the concept. He did not include it in his budget proposal, but now supports including it in a final negotiated plan.

Higher education

Republicans are holding up hundreds of millions of dollars in aid to Penn State, Temple University and the University of Pittsburgh.

Sending aid to the schools requires a two-thirds approval, and enough House Republicans voted “no” to block passage of aid for Pitt and Temple on Monday. A bill for Penn State’s funding has yet to be brought up yet for a floor vote.

Republicans attacked tuition increases at the three state-related universities, and called for systemic reform. Other no-votes come from members of the state’s hard-right Freedom Caucus, who took issue with Penn State’s funding due to its health care system offering gender affirming care for youth.