Pennsylvania starts 2026 with a familiar focus on economic and fiscal issues, but there is one big difference from 2025.

Statewide voters get their say electing a governor for a four-year term and members of the General Assembly in November.

Democratic Gov. Josh Shapiro is seeking a second term like elected governors before him since two terms were allowed under a state constitutional amendment in the late 1960s.

Treasurer Stacy Garrity is the endorsed Republican candidate for governor. State Sen. Doug Mastriano, R-Franklin, the 2022 gubernatorial nominee, could enter the race.

The questions facing state legislative races are whether a delicate balance of power in the House will continue and Republicans can maintain their longtime hold on the Senate.

All 203 House seats and the 25 even-numbered seats in the 50-member Senate are on the ballot. Republicans control the Senate 27-23.

Democrats control the House with a one-seat majority, but four special elections are on tap in early 2026. They are to fill the remaining months in terms of members resigning their seats to assume local offices.

Both chambers are in session Jan. 6 to handle procedural matters.

Governments run by routine, but state government last year was anything but routine.

The $50.09 billion state budget for Fiscal Year 2025-26 was enacted four months late on Nov. 12 because of a political stalemate between Shapiro and the divided General Assembly.

This made for a difficult legislative schedule as lawmakers waited for word that on-and-off again negotiations between leaders had yielded a breakthrough.

Fewer laws were enacted and fewer public hearings held as a result.

It all means there is a certain weariness about the budget six weeks after passage.

New budget cycle

But a new cycle will start when Shapiro gives his budget address for Fiscal Year 2026-27 on Feb. 3, the first Tuesday of the month. Several weeks of legislative hearings on his proposal will follow.

No one can say whether the next budget will be enacted around the June 30 deadline or another lengthy stalemate will occur.

The 2025 stalemate occurred in an off-election year for the governor and lawmakers. What political risk do they take on if another stalemate occurs when they are on the ballot?

There’s a big event happening July 4 that could influence things. That’s the 250th anniversary of the Declaration of Independence with Philadelphia’s Independence Hall playing a central role.

Parades, fireworks and the burial of a time capsule for America’s 500th anniversary in 2276 are scheduled in Philadelphia.

Civic celebrations, however, aren’t a full antidote for continuing economic gloom about high inflation and job uncertainty.

Economic problems

Pennsylvania’s jobless rate was 4.1% in September, lower than the national rate at 4.4 percent, but higher than one year ago.

The increase in the Consumer Price Index in the Mid-Atlantic region for all items ranged from 2.7% to 3.1% in November, according to the U.S. Department of Labor’s Bureau of Labor Statistics.

But specific drivers pushing up consumer costs are shelter 3.5%, food 3.1% and energy 6.3%, the bureau said.

The mid-year budget briefing by the governor’s Budget Office released earlier this month sees slow economic growth in the months ahead and weak job growth with unemployment holding steady.

The briefing cites uncertainty about the direction of the federal government under President Trump and federal changes to programs like Supplemental Nutrition Assistance Program as budget challenges.

The state Independent Fiscal Office said hard decisions about the state budget need to be made in a post by director Matthew Knittel last week.

Annual budget deficits are higher by $1 billion from last year due to education and health care spending, new tax credits and Washington shifting SNAP costs to the states, Knittel wrote.

At year’s end, Shapiro and Senate Republican leaders spoke about what they achieved in the compromise but delayed 2025-26 budget.

Speaking before the Pennsylvania Society dinner, Shapiro referred to budget provisions to fix the broken state permitting systems.

He also mentioned increasing education funding with more funding for vo-tech schools and career and technical education.

The governor cited ongoing efforts to hire more local police, fix bridges and bring new business investment.

The biggest policy win is ending Pennsylvania’s participation in the Regional Greenhouse Gas Emissions Initiative (RGGI), said Senate Majority Leader Joe Pittman, R-Indiana, and state Sen. Wayne Langerholc, R-Cambria, on instagram.

Not requiring power plants to buy allowances for emissions will spur new business investment that creates new family-sustaining jobs, they said.