In early February Governor Shapiro presented his 2025-26 state budget before a joint session of the state House and Senate. In it, the governor proposed a roughly eight percent increase in state spending for the upcoming year, with additional funding going to education, the state’s public transportation entities, and a broad-ranging energy plan, among other areas. The new spending would be paid for in part by the legalization of recreational marijuana, taxation and regulation of skill games, and drawing down from the state’s current $3 billion surplus and its $7 billion rainy day fund.
With the Governor’s proposal now out in the wild, its provisions are already being broken down and analyzed by stakeholders across the political spectrum. State budget hearings will take place in both chambers from February 18 until March 6, as department heads defend their funding requests and field questions from lawmakers. Following that, negotiations between legislative leaders and the governor’s office will begin in earnest. During this time, PFMA and other organizations will weigh in with their vision of what a final agreement should include. The state’s budget deadline is June 30.
Highlights of the Governor’s proposed budget are outlined below, including association priorities and other items relevant to PFMA members:
Corporate Net Income Tax (CNIT) Reduction – Speeds up tax cuts to reach 4.99% by 2029, two years earlier than planned. PFMA supports this acceleration. PFMA supports accelerating the ongoing CNIT decrease.
Organized Retail Crime Task Force – $2.6 million to sustain efforts. PFMA supports continued funding for the ORC Task Force established under its reform legislation from 2023.
Fresh Food Financing Initiative (FFFI) – $2 million allocated. PFMA supports as a budget item and standalone legislation. PFMA supports FFFI both as a budget item and separate, standalone legislation.
Adult-Use Cannabis Legalization – Proposes legalization with sales begin January 1, 2026. PFMA’s focus is on ensuring a level playing field for businesses that choose to compete in the new marketplace, as well as highlighting the need for regulatory frameworks governing the safe sale of marijuana and related products such as Delta-8.
Skill Games Regulation – Brings skill games under the PA Gaming Control Board, capping machines at 40,000 by 2029-30, with 5 per establishment and a 52% tax on gross revenues. PFMA advocates for a level playing field for member businesses. PFMA’s priority in this context is ensuring member businesses have the opportunity to participate on a level playing field if they choose to enter the marketplace.
Eliminating the “Delaware Loophole” – Ends tax avoidance via out-of-state subsidiaries.
Economic Development Reorganization – Creates the BusinessPA Team within DCED to streamline business growth efforts.
Tax Credit Reform – Merges multiple credits into AdvancePA Tax Credit ($10 million) to drive job creation.
Business Attraction & Retention –
$3 million increase for business
marketing and site selection.
$5 million boost for the Pennsylvania
First program.
Workforce & Economic Development –
$55 million for childcare workforce grants.
$12.5 million for workforce training.
$2 million for Career Connect internships.
Agriculture & Sustainability –
Milk Processing Tax Credit for
large dairy projects.
$2 million for digesters to convert
waste to energy.
Food Assistance – Increases State
Food Purchase Program by $4 million.
House Republican Leader joins
PFMA Legislative Committee for
first meeting of 2025
Rep. Jesse Topper (R-Bedford), House Republican Leader, joined PFMA’s Legislative Committee for its first meeting of the year in January.
Speaking to committee members, Leader Topper outlined the priorities for House Republicans this year. Top of mind for the caucus, he said, are energy costs. In addition he said the long-term sustainability of the state’s fiscal health is an issue, with economic growth crucial as the state’s demographics continue to shift. A growing senior population and a decreasing workforce is a particular challenge.
Acknowledging that predictability is key for businesses, Rep. Topper said he supports a streamlined regulatory environment and pointed to changes at the federal level already being implemented under the new administration. On the issues of skill games and transportation funding, Rep. Topper said he does not see them as tied together but a five-party agreement – the four legislative caucuses and the governor – will be necessary to regulating the skill game industry. Transportation funding will also require governance reforms in order to move ahead, he said.
The PFMA Legislative Committee meets on a monthly basis via Teams, with periodic special guests including legislative leaders and other elected officials. Meetings are supplemented by weekly email updates. If you are interested in becoming a member of the committee please email [email protected] or sign up at
pfma.org/advocacy/committees
