HARRISBURG — Billions of dollars for Pennsylvania’s public schools and social services could soon start flowing after four-plus months of delay, as lawmakers on Wednesday approved key elements of a roughly $50 billion spending plan to break the state’s budget impasse.

A concession to help seal the deal meant Democrats agreed to Republican demands to undo a regulation aimed at making Pennsylvania the only major fossil fuel-producing state to force power plant owners to pay for their planet-warming greenhouse gas emissions.

Democratic Gov. Josh Shapiro signed several key budget bills shortly after they passed, approving hundreds of pages of budget legislation that had barely been public for a few hours.

In a Capitol news conference, Shapiro called it a “great budget” that came from weeks of closed-door negotiations with leaders of a politically divided Legislature where “we stayed at the table and we all stood up for the things that mattered most.”

Locally, lawmakers also commented on the budget’s passing.

State Sen. Nick Miller, D-Lehigh/Northampton, said, “Today, we passed a $50.09 billion dollar budget that makes significant investments in Pennsylvanians, include historic basic education funding, home care for seniors and individuals with disabilities, and community safety. This moment is long-awaited for Pennsylvanians.

“Residents of the Lehigh Valley will benefit from these strategic investments, and most importantly, providing opportunities for tax cuts for hardworking PA families, not increases.”

Miller, who served on the 2023 Basic Education Funding Commission, a bipartisan effort to construct a formula to properly fund the state’s public education system, advocated for another historic investment.

“As a former local school board member and member of the BEFC, investing in our education system to adequately serve all students remains my top priority,” said Miller. “This budget includes $125 million for school facilities improvements, cyber charter school funding reform resulting in $175 million in costs saved annually, and a $40 million increase in special education funding.

“This budget delivers on making Pennsylvania a great place to live, work, and explore. In the coming weeks, I am excited to share more budget wins that strengthen our communities and deliver for Lehigh Valley residents.”

Sen. David Argall, R-Carbon/Schuylkill, echoed his colleague’s thoughts.

“This bipartisan budget is a win for Pennsylvania taxpayers,” said Argall. “It protects local families from crushing new energy taxes and makes critical investments in local students from pre-school to grad school.”

As part of the budget agreement, the governor’s regulation mandating Pennsylvania’s participation in the Regional Greenhouse Gas Initiative was eliminated.

“Eliminating the governor’s RGGI energy tax is a major victory for Pennsylvania families and job creators. This harmful regulation would have added more than a billion dollars in new electricity costs while threatening power plant closures, job losses and even rolling blackouts. Preventing Pennsylvania from staying in RGGI protects our consumers, workers and energy independence,” Argall said.

State Rep. Doyle Heffley, R-Carbon, called the delay by the governor and Democrats “unacceptable,” but noted that at least it is finally passed.

“This budget bill isn’t perfect, but it does deliver critical, and immediate, funding to schools, counties and human service providers,” Heffley said. “Here is what I believe are some key takeaways from this budget and the overall agreement:

• We can unleash Pennsylvania energy because the budget calls for us to exit the job-killing, overly burdensome Regional Greenhouse Gas Initiative (RGGI). It also prevents a $2.5 billion energy tax, lowering utility costs and boosting job growth.

• We are ensuring benefit integrity to make sure taxpayer dollars go to individuals who truly need them. The measures include creating a more accountable and secure process to reduce failures in the Supplemental Nutrition Assistance Program (SNAP), such as transitioning to chip-enabled benefit cards and reviewing how benefits are distributed.

• We are investing in our schools to ensure all students have access to a high-quality education through expanded school choice, scholarships for students in underperforming schools and funding for the SHINE After School program.

• We are making progress on permitting reform, including streamlined processes that support both environmental protection and economic development, while keeping zoning and planning decisions under local control.

“I am concerned with the overall spending in the budget, but this is the best deal we were going to get for now.”

Some highlights

Under the $50.1 billion no-new-taxes budget deal, new authorized spending would rise by about $2.4 billion, or 5%, including some cash going onto last year’s books.

Republicans said scrapping the power plant emissions rule was a major policy victory for the energy economy in the nation’s No. 2 natural gas-producing state.

Democrats won’t get the amount of money that Shapiro originally sought in his initial budget proposal, but the deal delivers substantial new sums to public schools, as Democrats had sought, and an earned income tax credit for lower earners.

It will also bring relief that the stalemate is over. Senate Majority Leader Joe Pittman, R-Indiana, called it an “imperfect product” that reflected the difficult compromises of a politically divided government.

“While it may have taken time, more time than any of us would have preferred, we have brought a divided government together and proved that it is not dysfunctional government,” Pittman said during remarks on the Senate floor.

The state lost some of its spending authority on July 1 without a signed state budget in force. School districts, counties and social service agencies scraped by, warning of mounting layoffs, borrowing costs and growing damage to the state’s safety net. Vendors went unpaid, some of them unable to pay workers

The County Commissioners Association of Pennsylvania said Wednesday the stalemate had “pushed counties and their providers to the brink of disaster on several fronts.”

The Carbon County commissioners, last week, said that without state money coming in, the county fund balance would be drained by mid-December, leaving question marks on how to fund necessary services.

End of emission regulations

The agreement to end the power plant emissions regulation comes six years after then-Gov. Tom Wolf made joining the Regional Greenhouse Gas Initiative the centerpiece of his plan to fight climate change.

Ending it is “one of biggest policy wins in the past 10 years,” Sen. Wayne Langerholc, R-Cambria, said.

Wolf’s regulatory plan had sidestepped resistant Republican lawmakers in a bid to make Pennsylvania the only major fossil fuel-producing state to undertake a carbon dioxide cap-and-trade program.

It had yet to take effect while the state’s highest court considers a legal challenge that questions whether the carbon-pricing plan amounts to a tax, and is thus unconstitutional without legislative approval.

Backers of the regulation included environmental advocates as well as solar, wind and nuclear power producers who had called it the biggest step ever taken in Pennsylvania to fight climate change. The Sierra Club called the loss of the regulation a “major setback for Pennsylvania’s environment, economy and public health.”

It was opposed by Republicans, fossil fuel interests and the labor unions that work on pipelines, refineries and power plants who warned that the cost was sending energy companies to other states to build new gas-fired power plants.

Shapiro had also expressed misgivings about it, and an alternative plan that he proposed has yet to receive traction in the Legislature amid Republican opposition.

Wins and losses

Almost all of the overall spending increase will go toward Medicaid and public schools.

“The passage of Pennsylvania’s budget after a four-month impasse is an important step toward stability. While the delay created real challenges, this outcome demonstrates that even in a divided government, compromise is possible when the focus remains on serving students and families,” said Pennsylvania School Boards Association CEO Nathan Mains.

The 2025-26 state budget directs additional resources toward public education, continuing efforts to address core needs across Pennsylvania schools. Funding adjustments include increases for basic and special education, along with continued support for early learning programs and initiatives aimed at improving classroom readiness.

The plan also allocates money for school safety and mental health services, as well as upgrades to school facilities, including projects focused on sustainability.

“After months of uncertainty, districts can now move forward with confidence and focus on delivering the high-quality education students deserve,” Mains said.

Meanwhile, the budget didn’t deliver what Shapiro had sought in higher public transit aid, what counties had sought for mental health services or what providers such as nursing homes, insurers and home-care providers had sought in Medicaid reimbursements.

The budget holds the line on taxes and fees, lawmakers say. But it uses well over $4 billion in surplus cash to achieve balance, the second straight year that Pennsylvania is running a multibillion-dollar budget deficit, reflecting a slow-growing economy and a shrinking workforce that delivers relatively meager gains in tax collections.

The agreement also includes Pennsylvania’s first refundable earned income tax credit, which reduces or wipes out the state income tax for people who make less than a certain amount of money, depending on how many children they have. It’s something most other states have on their books.

Pennsylvania’s plan is projected to cost nearly $200 million a year. Had it been in effect this year, the average eligible family would have gotten a $650 break, lawmakers say.