Cannabis, school vouchers and skill games: Here’s what didn’t make the Pa. budget

The Capitol building in Harrisburg on July 6, 2024 (Capital-Star photo by Ian Karbal)

With a Republican Senate and a Democratic House, Pennsylvania’s budget negotiations were always going to involve compromise.

While Gov. Josh Shapiro characterized the budget as a “major victory” and ended up with a budget that would cost the state only $700 million less than the $48 billion he proposed, both Democrats and Republicans had to sacrifice some of their priorities.

Here is some of what didn’t make it through negotiations.

SEPTA funding

Philadelphia lawmakers in particular had hoped the budget would include more funds for the Southeastern Pennsylvania Transit Authority (SEPTA), that operates trains and buses around the Philly region.

And Shapiro had proposed $161 million for SEPTA alone as part of a larger push to fund public transit around the state.

However, many of those funds were left on the floor during budget negotiations. Ultimately, only $80 million will go towards public transit around the state, with the majority, $53 million, going to SEPTA.

For months, SEPTA officials have been warning that without a large increase in funds, the transit agency may have to cut services or raise fares.

Cannabis and skill games

Shapiro’s initial budget proposal included a call to legalize cannabis and tax the revenue that would have come from cannabis sales. And as a House committee held multiple hearings on what a legalization bill might look like and advocates repeatedly took to the capitol, momentum for the measure was high.

The same was true of taxing so-called skill games. Skill games exist in a sort of legal gray area. Usually, they look and function exactly like slot machines, which are heavily regulated and taxed in casinos. But the sort of skill games that you may see in bars or restaurants or corner stores claim they don’t fall under the legal definition of gambling because they have some mechanic that requires at least a modicum of skill on behalf of the player — no matter how small or unnoticeable.

Shapiro supported regulating such games, and a number of lawmakers entertained the idea as well, notably including Sen. Majority Leader Joe Pittman (R- Indiana). But the skill game and gambling lobbies came out hard against new regulation , and threw plenty of funds around to boot.

In a  late night press conference following the budget’s passage Thursday, Senate President Pro Tempore Kim Ward (R-Westmoreland) said that Shapiro’s support of both measures was half-hearted,.

“ He talked about it in his budget address. We never heard another word about it,” Ward said.

School vouchers

Pennsylvania Republicans have long sought a school voucher program that would send state funds to families who put their kids in private schools. And they have an odd bedfellow in Shapiro, who has also endorsed some sort of voucher program.

However, a large majority of Democratic lawmakers have fiercely opposed any such program. Last year, a proposal to create a $100 million voucher program contributed to a months-long delay in any budget passing at all. Though it passed the Republican-controlled Senate, Shapiro vetoed the item in order to get the support of House Democrats.

While Republicans continued to push for voucher funding this year, no such proposal made it into the final budget.

However, this year’s budget does include a $75 increase in two existing programs that provide tax breaks to corporations that fund scholarships for students to attend private schools.

The majority of the new funding, $70 million, will bolster the Educational Improvement Tax Credit. That program provides a tax break to businesses that fund scholarships for students to attend private schools, certain public school programs or pre-k scholarships. The Opportunity Scholarship Tax Credit is similar, but is targeted at aid to students in low-performing school districts seeking education elsewhere. It will receive $5 million in new funds.

Income tax cuts

What to do with Pennsylvania’s $15 billion in surplus funds was always a source of contention between Shapiro, House Democrats and Senate Republicans.

In May, Senate Republicans unveiled a plan to cut the state’s personal income tax from 3.07% to 2.8% and eliminate what’s called a “gross receipts tax” on electricity for homes and businesses.

The $3 billion plan was, effectively, a counter-proposal to Shapiro’s pitch to increase spending on public education, public transit and other state services.

While a bill to cut the taxes passed the Senate, it was never taken up in the Democrat-controlled House and was ultimately not included in the budget.

The final budget does include numerous new tax credits for businesses, however, including some for businesses that help employees pay for child care or college savings. It also allows businesses to carry forward a greater share of their operating losses from previous years when determining their tax liability.

Whole Home Repairs

Also missing from the budget was a Democrat-supported policy that would help Pennsylvanians fix their homes.

Sen. Nikil Saval (D-Philadelphia) was a leading advocate for the program from its beginnings in 2022. Back then, the state used $120 million in federal funds to provide grants for qualifying homeowners and landowners across the state to fund repairs and weatherization of their properties.

Shapiro proposed investing $50 million in state dollars this year for the whole home repairs program. However, the funds were ultimately not included in this year’s budget.

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