BETHLEHEM, Pa. – Some of Pennsylvania's thorniest challenges remained unaddressed after Gov. Josh Shapiro signed the 2026-2027 budget into law Sunday following a rare weekend session of the General Assembly.
The $50.8 billion spending plan dedicated new money for some lawmakers' top priorities, including boosting education funding by $920 million, securing funding to train and hire more state police, and raising pensions for teachers who retired before 2001. The deal also avoided spending down the state's $8 billion rainy day fund.
Perhaps most importantly, the budget didn't take months to negotiate, as last year's did.
While lawmakers still missed the constitutionally mandated June 30 deadline, the delay was brief enough that it didn't cause Pennsylvania to miss payments to school districts, nonprofits, county governments and other groups that rely on state funding to pay their bills.
"We’ve proven that here in Pennsylvania we can bring people together to solve problems, get stuff done, and build on the foundation we’ve laid," Shapiro said at the budget-signing ceremony Sunday.
But some of the state's most divisive topics – rising energy costs, data center regulation, minimum wage, public transit funding levels and legalized marijuana – remained unaddressed. Lawmakers haven't closed the state's long-lingering structural deficit, either.
They still have time to tackle those topics in the months ahead, but each passing day makes it more likely that questions will remain unresolved before the November election.
With the Senate, House and governor's residence all on the ballot, a strong showing by one party could grant it greater control over key policies in 2027.
Christopher Borick, a political science professor at Lehigh University, described the final spending plan as a patchwork budget. The Republican-controlled Senate and a Democratic-controlled House rallied around this as a compromise bill that could cut through the gridlock.
"Many of the broader fiscal questions will have to be answered next year. What happens come November will say a lot about how those bigger questions get answered," he said.
Future unclear for skill games, budget deficit
The budget package passed with bipartisan support, though holdouts from both parties opposed the final deal. Among them was state Sen. Jarrett Coleman, R-Bucks/Lehigh, who criticized a plan to reschedule $2.6 million in Medicaid payments until next year.
“Saying we are saving money by not paying our bills is not an honest plan for Pennsylvania. Pennsylvanians deserve an honest conversation about our finances, not accounting gimmicks," Coleman said in a news release Sunday.
The Medicaid maneuver masks Pennsylvania's structural deficit, which has lingered for several years.
Since taking office, Shapiro has proposed closing it with new revenues by legalizing and taxing marijuana and raising the minimum wage. That would increase earned income tax revenues. Neither proposal was included in the 2026-27 budget.
Coleman also took to the floor to rail against $20.3 million in new adequacy and equity funding for the Allentown School District, which he represents. A 2023 Superior Court ruling determined that previous funding formulas violated the state constitution by underfunding some districts. The adequacy funding, which has passed with bipartisan support, is intended to counteract that historic underfunding.
Coleman, however, urged the senate not to pass the funding, saying the Allentown School District has continued to underperform despite receiving the increased funding over the past three years. Taxpayers in the East Penn, Parkland and other school districts shouldn't have to foot the bill for those poor results in other communities, he said.
"Their taxpayers are being punished while their tax dollars are being disproportionately sent to the Allentown School District," Coleman said.
Sen. Nick Miller, D-Lehigh/Northampton and a former Allentown School Board director, admonished Coleman. Miller said it was inappropriate for him to work against a district he's supposed to represent.
Past funding challenges have forced the district to hold class in buildings lacking basic amenities, which has negatively affected student outcomes.
"These kids deserve this investment. They deserve that opportunity to be successful with programs that prepare them for the workforce of tomorrow," Miller said.
The budget also neglected to regulate skill games, video devices similar to slot machines. Shapiro has proposed for years to tax 52% of their revenues, the same rate as slot machines, but the Republican-controlled Senate has been unable to reach a consensus.
Last month, the state Supreme Court ruled that Pennsylvania's gambling laws applied to skill games. The high court gave the General Assembly until October to pass new legislation regulating the devices, but no deal has emerged as of yet.
Eyes on the Lehigh Valley
The Lehigh Valley may have an oversized say on how lingering policy questions are addressed in 2027. Political observers already recognize the region as a national bellwether, and the same could hold true this year at the state level.
State Rep. Joe Emrick, R-Northampton, is seeking re-election for the 137th House seat, one of the biggest battleground districts in Pennsylvania. He faces Northampton County Commissioner Jeff Warren is the Democratic candidate.
State records show near equal numbers of registered Democrats and Republicans, putting the district's 10,560 unaffiliated voters in the driver's seat.
Data shows that Coleman's 16th Senate District favors Republican voters, but Democratic Party leaders are optimistic they can flip his seat.
Democrats in Lehigh County won by historic margins in 2025; if voter turnout mirrors last year, that may be enough to propel Democratic candidate Mark Pinsley to victory.
Democrats currently hold a one-seat majority in the state House, while Republicans protect a three-seat majority in the Senate. All 203 House seats and half of the 50 Senate seats are on the ballot this year.