The Pennsylvania State Capitol is seen, Monday, June 30, 2025, in Harrisburg, Pa. (AP Photo/Aimee Dilger)

The opening gambit in 2026-27 budget bill-passing happened Tuesday when the Democratic-controlled state House approved a measure conveying Gov. Josh Shapiro’s $53.3 billion proposal — one that caused Republicans who control the Senate to express “profound concerns.”

Meanwhile, in another signal of party positioning 11 weeks before the June 30 budget deadline, Democrats on the House Education Committee made it clear they may want to shrink or even eliminate the $680 million Educational Improvement Tax Credit program. It has strong support among Republicans.

As budget positions by the parties begin to take shape, two big factors loom in the background. One is the gap of about $5 billion between the amount spent by the state and the amount of revenue it receives, and the other is last year’s fiasco in which the budget was approved 135 days after the June 30 deadline.

That led to billions of dollars in withheld payments, furloughs and program cuts.

This year, Democratic Majority Leader Matt Bradford of Montgomery County said, the House is operating under “admonitions” on both “substance” and “process.” And while Republican Rep. Jesse Topper of Bedford County voted against the Shapiro-driven budget bill on Tuesday, he credited Democrats with putting a budget bill on the table in mid-April, apparently “to show that the process this year will be far better than last year.”

Another Republican, Rep. Brad Roae of Crawford County, ripped into the 6.2% spending increase contained in the Shapiro-driven budget bill.

Roae noted that seniors on Social Security recently got a cost-of-living increase of less than 3%, and that inflation is running at about 3.3%. If the bill became law, Roae said, a massive tax increase would follow.

The vote to approve was 107-94, with five Republicans joining all Democrats in support of the bill. The Republicans were Reps. Joe Hogan, Shelby Labs and Kathleen Tomlinson, all of Bucks County; Rep. Tom Mehaffie of Dauphin County; and Rep. Craig Williams of Delaware County.

Senate Republican leaders — President Pro Tempore Kim Ward of Westmoreland County, Majority Leader Joe Pittman of Indiana County and Appropriations Chairman Scott Martin of Lancaster County — said they had “profound concerns about the level of spending” in the House-passed bill.

“Moving a budget plan forward is an important step in the process, but much work remains to reach a final agreement which respects taxpayers both now and in the future,” they said. “We will continue to fight for a more fiscally responsible spending plan that better positions our Commonwealth to grow and prosper, without placing unreasonable financial burdens on Pennsylvania families and taxpayers.”

EITC scrutinized

Earlier in the day, Democrats at a meeting of the House Education Committee put the Educational Improvement Tax Credit program under scrutiny.

The credits let businesses get tax breaks by paying into scholarship funds that cover some of the costs for students to go to private schools.

This year, the state allocated $680 million for it.

“It’s gross,” said Democratic Rep. Tarah Probst of Monroe County, who portrayed the program as a drain on public education. “I want EITC to go away and go away for good.”

Republican Milou Mackenzie of Northampton County said the state has been dumping more and more money into low-performing or failing public schools for decades.

“No one is investigating why, or doing anything to change that,” Mackenzie said.

Education spending, at $18.5 billion, represents the second-largest slice of the current fiscal year’s $50.1 billion state budget, with the largest being Human Services with $20.2 billion. Nearly half of the education slice — about $8.3 billion — goes to K-12 education.

Just over three years have passed since a landmark Commonwealth Court ruling found Pennsylvania’s system of doling out K-12 money was unconstitutional. There was a subsequent determination that a total extra outlay of $4.5 billion in “adequacy” funding should go to underfunded school districts, and Democrats support incremental year-by-year increases to reach that level of adequacy spending.

One of the biggest blow-ups between the Democratic Shapiro administration and Senate Republicans came in 2023, Shapiro’s first year in office, when the governor line-item vetoed $100 million put in the budget to fund a voucher-style scholarship program. It would have helped children from low-performing public schools attend private ones.

The EITC, which carries out a similar function, has grown in recent years. Independent Fiscal Office information showed tax credits of $180 million in 2020-21; $299 million in 2022-23; and $500 million in 2024-25.