With only a few days remaining until the end of the Commonwealth’s fiscal year, it appears that negotiations on the upcoming 2025-26 state budget have reached an impasse with legislative leaders and the governor’s office confirming that a final agreement is unlikely to be reached by the July 1 deadline.
One major stumbling block holding up negotiations is the funding for the state’s Medicaid programs. These programs have been growing in recent years as the Commonwealth’s aging and sick populations have increased. In February, Gov. Josh Shapiro proposed a $51.5 billion budget for the 2025-26 fiscal year. In that proposal, he requested a $2 billion funding increase for the state Department of Human Services. If enacted, this would increase the department’s funding to $21 billion from the current $19 billion. Department officials have said this increase is necessary to just maintain the current programs. The Department of Human Services makes up a lions share of the state budget and is one of the leading cost drivers in state spending.
Further complicating the state’s fiscal situation is the fact that the state is slated to spend more than it generated in revenues to the tune of $5.5 billion. That deficit will need to be calculated into the upcoming fiscal year’s spending plan.
A deeper dive into the current status of the Commonwealth’s budget negotiations can be found in this Philadelphia Inquirer article. As always, you can count on PCCJR to be on top of any threats posed by legislation that legislators might try to push through during the unpredictable weeks leading to the budget agreement.