Greater Reading Chamber Alliance

FY 2026–27 Pennsylvania Budget: Business & Economic Development Key Highlights 

Overview

The balanced $50.84 billion FY 2026–27 budget increases General Fund spending by approximately 3.7% while preserving Pennsylvania’s Rainy Day Fund and avoiding new broad-based taxes. Passed by the House 167–35 and the Senate 44–6, the final plan comes in roughly $1.1 billion below Gov. Josh Shapiro’s original proposal and maintains recent pro-business tax reforms, including the Corporate Net Income Tax phase-down and improved Net Operating Loss deductions. The budget excludes several business community priorities of concern, including mandatory combined reporting, a digital advertising tax, paid leave mandates and a minimum wage increase, while investing in workforce development, career and technical education, childcare, transportation infrastructure, site  readiness and innovation through programs such as Innovate in PA 2.0 to support innovation, life sciences and technology commercialization, PA SITES, Pennsylvania First, Main Street Matters, WEDnetPA and Grow PA Scholarships. While long-term public transit funding and skill games legislation remain unresolved, the budget continues Pennsylvania’s focus on economic competitiveness, employer support and workforce growth. 

Highlights

Total Spend

  • Total General Fund spending of $50.84 billion, a $1.82 billion (3.7%) increase over the revised FY 2025-26 budget.  
  • Approximately $1.1 billion below Gov. Shapiro’s proposed budget.  
  • Preserves the Rainy Day Fund with a balance of approximately $7.74 billion.  
  • Includes no new statewide taxes.  
  • Relies on prior-year funding lapses, fund transfers and delayed Medicaid payments to balance the budget.  
  • Continues to face long-term structural budget challenges.  

 Business Development and Quality of Life 

  • Continues the scheduled reduction of the Corporate Net Income Tax to 6.99% in 2027, remaining on track for 4.99% by 2031.  
  • Maintains improvements to Net Operating Loss deductions enacted in 2024. 
  • Creates Innovate in PA 2.0, utilizing $125 million in insurance premium tax credits to capitalize venture funds and life sciences investments.  
  • Continues strategic investments that prepare sites for business expansion and future private investment: 
    • Increases PA SITES Debt Service to $35.7 million (75% increase).  
    • Provides $38 million for Pennsylvania First.  
  • Maintains $20 million for Main Street Matters.  
  • Provides $17 million for the Ben Franklin Technology Development Authority.  
  • Provides $10.88 million for Partners for Regional Economic Performance (PREP).  
  • Increases Historically Disadvantaged Business Assistance to $23.75 million.  
  • Continues funding for BusinessPA and Foundations in Industry.  
  • Creates additional Keystone Opportunity Expansion Zones. 
    •  Applies to second-class townships in second-class A counties like neighboring Montgomery County. 
    • Additionally, applies to the Philly Navy Yard.  

 Workforce Development 

  • Provides additional funding for WEDnetPA.  
  • Increases Career & Technical Education funding by $10 million to $154 million.  
  • Increases Grow PA Scholarships to $42.5 million.  
  • Expands Grow PA Tuition Waiver eligibility.  
  • Creates a workforce development initiative for veterans.  
  • Expands financial literacy education and recognizes CTE coursework toward graduation requirements.  
  • Allows CTE students to complete programs prior to 12th grade and enter the workforce earlier. 

Child Care

  • Increases Child Care Recruitment and Retention funding by $5 million to $30 million.  
  • Increases recruitment and retention grants to $540 per eligible worker.  
  • Maintains $422.5 million for subsidized child care.  
  • Increases funding for Early Intervention.  
  • Increases Pre-K Counts funding to support higher reimbursement rates.  

Transportation 

  • Creates a Design-Build Best Value procurement option for Pennsylvania Turnpike projects.  
  • Accelerates highway improvements through an additional $775 million from the Motor License Fund over two years.  
  • Increases Highway and Safety Improvement funding to $950 million.  
  • Extends the local match waiver for the Multimodal Transportation Program.  
  • Authorizes administration of additional federal rail freight funding.  
  • Makes no changes to statewide public transit funding allocations.  

Data Centers 

  • Maintains the Sales and Use Tax exemption for qualifying data center equipment.  
  • Requires reporting of water and energy usage.  

Education 

  • Provides $678 million in additional K-12 funding.  
  • Increases Basic Education Funding by $50 million.  
  • Increases Special Education Funding by $50 million.  
  • Provides $565 million toward adequacy funding.  
  • Increases Career & Technical Education funding.  
  • Creates performance-based funding for Penn State University, University of Pittsburgh and Temple University.  
  • Increases PHEAA grants.  
  • Provides additional funding for Grow PA Scholarships.  

Agriculture 

  • Provides $10 million for Fruit Grower Disaster Support.  
  • Maintains $10 million for Agricultural Innovation Development.  
  • Maintains funding for Farmers’ Market Food Coupons.  
  • Maintains funding for the State Food Purchase Program.  
  • Expands Pennsylvania Industrial Development Authority (PIDA) agricultural loans to up to $2 million or 50% of eligible project costs.

Not Included 

  • No Mandatory Unitary Combined Reporting for the Corporate Net Income Tax.  
  • No Digital Advertising Tax.  
  • No repeal of the Sales and Use Tax exemption for qualifying data center equipment.  
  • Senate Bill 1345, addressing temporary municipal moratoriums on data center development, remains under consideration.  
  • No statewide Paid Family and Medical Leave mandate.  
  • No increase to the state minimum wage.  
  • No comprehensive long-term public transit funding solution.  
  • No skill games legislation despite the Pennsylvania Supreme Court’s enforcement deadline in October.  
  • No significant statewide permitting or regulatory reform package.  

Questions or Feedback

If you have questions about how these budget items may impact your business or community, please contact Alex Roché, GRCA’s Director of Advocacy, at ARoche@GreaterReading.org.

Sources

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