Pennsylvania Misses Budget Deadline Amid Medicaid, Gaming Disputes

Pennsylvania Governor Josh Shapiro and the state's politically divided Legislature have missed the legal deadline to pass the 2025-2026 fiscal year budget, marking the third consecutive year this has occurred. The absence of a signed spending plan restricts the state's ability to make discretionary payments to vendors, counties, public schools, and grant applicants, with impacts expected to be felt by August. Key issues in the budget negotiations include managing a sharp rise in Medicaid costs and a Republican initiative to regulate and tax numerous slot machine-like "skill" games, while Shapiro prioritizes increased funding for public schools and transit agencies. Shapiro proposed a $51.5 billion budget that would raise state operations spending by 9%, including a $230 million increase for the current year. Despite the stalemate, the state remains legally obligated to cover debt payments, Medicaid, unemployment benefits, prison operations, and police services, and state employees continue to work and receive pay as usual. The governor expressed optimism that a budget agreement will be reached very soon as negotiations continue behind closed doors.