Pa. state budget impasse ends as Gov. Josh Shapiro signs $45.5 billion budget into law

HARRISBURG — Gov. Josh Shapiro signed a $45.5 billion budget into law Thursday, effectively ending the monthlong state budget impasse after reaching an agreement with Republican Senate leaders.

Shapiro, a Democrat negotiating his first budget deal with a slim Democratic majority in the House and a GOP-controlled Senate, avoided an extended standoff and salvaged his relationship with Republican lawmakers by assuring them that some of his budget priorities would still be subject to further negotiation.

Both the Senate and House previously approved the spending plan for the fiscal year that began July 1, but negotiations fell apart amid disagreement over a private-school voucher program that Shapiro vetoed Thursday. Republicans and dark money groups spent the last month pressuring Shapiro not to veto the voucher program that he helped create, but which lacked support among Democrats.

Unable to talk him out of the line-item veto, Senate Republicans ultimately agreed to send the budget to Shapiro’s desk Thursday, allowing critical funding to flow to school districts, counties, and state programs. But the governor assured them that $1.1 billion of the spending plan would sit untouched for now.

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Shapiro faced criticism from both parties when the negotiations broke down in July, marking the end of his honeymoon phase and threatening his reputation as a governor willing to work across the aisle to make deals. But on Thursday, he touted the budget as a bipartisan achievement.

”The people of Pennsylvania have entrusted me with the responsibility to bring people together in a divided legislature and to get things done for them — and with this commonsense budget, that’s exactly what we’ve done,” Shapiro said in a statement.

Republican leaders, for their part, signaled a willingness to move past the acrimony over the voucher program — which they said he had promised and then backtracked. Senate Majority Leader Joe Pitman (R., Indiana) said the budget process was part of a “learning curve” for Shapiro as a new governor.

“We’re eager to hit the reset button and work with him going forward to improve this entire commonwealth,” Pittman said during a news conference Thursday. “We’re committed to the notion that divided government does not have to translate into dysfunctional government.”

The Senate on Thursday completed the typically routine task of signing the approved budget bill and sending it to the governor’s office. Senate President Pro Tempore Kim Ward (R., Westmoreland) had held up that task after Shapiro announced he’d veto the voucher program because House Democrats opposed it. Senators left Harrisburg on June 30 with no plans to return until September, but Ward announced the change in plans Wednesday night.

Each state budget includes a spending bill — the one Shapiro signed Thursday — and a number of code bills that dictate how state money should be spent. A majority of state dollars can be distributed without the code bills, but some of Shapiro’s new initiatives will require further legislative approval.

Approximately $1.1 billion is held up until lawmakers negotiate the omnibus code bills. Senate leaders said Shapiro’s reassurance on that point convinced them to return to Harrisburg to finalize the budget.

The initiatives that are on hold pending further legislative action, according to a memo from Shapiro’s budget secretary, Uri Monson, include:

“This is a significant day for the taxpayer, because now we’re actually spending less than what we voted on on June 30,” Pittman said. “Until we have other pieces of the budget in place, we will have those dollars sequestered in the state Treasury.”

It is possible that all or some of that $1.1 billion won’t be approved by the legislature. In that case, the money would remain in the state’s coffers.

Still, the state is now able to write checks for almost all of its spending obligations. The budget includes an additional $700 million for K-12 schools, $112 million for a new Office of Outdoor Recreation to improve state parks and forests, more than $66 million in subsidized child-care services, and more.

County governments, nonprofits, health providers, and school districts had been preparing for a drawn-out budget impasse. Many school districts and government programs were expecting their first payments in early July. Those checks will now begin going out.

Students at Pennsylvania’s four state-related universities — University of Pittsburgh, Penn State, Temple University and Lincoln University — will also remain in limbo, until both chambers pass separate legislation approving their more than $600 million in state appropriations.