ARTICLE
Governor Shapiro proposed a $48.34 billion budget for FY 2024-25. This is an increase in state appropriations of $3.7 billion, or 8.4 percent, over the prior fiscal year. The plan would spend a total of $15.9 billion of General Fund surplus and Rainy Day Fund balances. Analysis Over the next three years, this budget spends the General Fund to an end balance of more than $8 billion before raiding the money in the Rainy Day Fund to balance future budgets beginning in FY 2026-2027. Tax Rates Continues the scheduled Corporate Net Income Tax (CNIT) rate reduction Current reduction schedule: 8.49 percent in 2024, 7.99 percent in 2025, and an additional reduction each year thereafter until a rate of 4.99 percent is achieved in 2031. Proposes no increases in FY 2024-2025 to either the Personal Income Tax rate or state Sales and Use Tax rate. Economic Development, Job Creation, and Innovation Governor Shapiro proposes $600 million in total new and expanded economic development funding; highlights include: $500 million in PA SITES funding Last year, the Shapiro Administration launched a pilot program called PA SITES to provide $10 million in grant funding to conduct site assessments and prepare them for remediation. DCED received 102 applications, requesting more than $236 in funding. Governor Shapiro proposed a $500 million investment in the program in fiscal year 2024-2025. $25 million for the Main Street Matters program Expands upon the Keystone Communities program with a mission to support small businesses and commercial corridors $20 million to support large-scale innovation Funding would be used to incentivize additional private venture capital, making investments in entrepreneurs who have historically lacked access to venture capital funding $3.5 million to create and launch the Pennsylvania Regional Economic Competitiveness Challenge to help incentivize communities to develop strategic development plans $2 million proposed for “Career Connect,” a program that will connect employers with qualified workers and create internships $18 million increase in funding for tourism and business marketing, implementing a new, “modern” tourism strategy. Workforce Development Career & Technical Education and Vo-Tech – proposed $2.4 million increase and continuing $7 million to support dual enrollment Proposed increased investment in Industry Partnerships by $2.2 million Proposed $2 million in new investment into “Career Pathways,” a digital location for all career, education, and training resources for Pennsylvanians Earmarks $2 million to help businesses to transition to “skills-based hiring practices,” similar to how the commonwealth eliminated the college-degree requirement Raising the minimum wage from $7.25 per hour up to $15 per hour and tipped minimum wage to $9.00 per hour. Recreational Use of Cannabis The governor proposes legalizing adult use cannabis, with sales beginning January 1, 2025. With a 20 percent proposed tax on the wholesale price, the tax is estimated to generate $15.6 million in 2024-25 to be distributed as follows: $3.1 million for the General Fund $5 million for Restorative Justice $5 million for the Department of Agriculture for operations $2 million to the State Police for enforcement; and, $500,000 to the Department of Revenue for administration The proposal is also estimated to generate an additional $11.7 million in sales tax which will be levied on the retail price of the sale of adult use cannabis. When fully implemented, the total amount of revenue to be generated for the General Fund from both the wholesale tax and sales tax is estimated to be more than $250 million. Minimum Wage Governor Shapiro proposes to raise Pennsylvania’s minimum wage to $15.00 per hour. The law currently sets the rate at $7.25, same as the federal minimum wage. The state minimum has not changed since 2009. Last year, the Pennsylvania House passed a bill to raise the state minimum wage to $11.00 at the start of 2024, $13.00 in 2025, and $15.00 in 2026. A similar bill was introduced in the state Senate. Neither passed both chambers.
Governor Shapiro proposed a $48.34 billion budget for FY 2024-25. This is an increase in state appropriations of $3.7 billion, or 8.4 percent, over the prior fiscal year. The plan would spend a total of $15.9 billion of General Fund surplus and Rainy Day Fund balances.
Analysis
Over the next three years, this budget spends the General Fund to an end balance of more than $8 billion before raiding the money in the Rainy Day Fund to balance future budgets beginning in FY 2026-2027.
Tax Rates
Economic Development, Job Creation, and Innovation
Governor Shapiro proposes $600 million in total new and expanded economic development funding; highlights include:
Workforce Development
Recreational Use of Cannabis
The proposal is also estimated to generate an additional $11.7 million in sales tax which will be levied on the retail price of the sale of adult use cannabis. When fully implemented, the total amount of revenue to be generated for the General Fund from both the wholesale tax and sales tax is estimated to be more than $250 million.
Minimum Wage
Governor Shapiro proposes to raise Pennsylvania’s minimum wage to $15.00 per hour. The law currently sets the rate at $7.25, same as the federal minimum wage. The state minimum has not changed since 2009. Last year, the Pennsylvania House passed a bill to raise the state minimum wage to $11.00 at the start of 2024, $13.00 in 2025, and $15.00 in 2026. A similar bill was introduced in the state Senate. Neither passed both chambers.