2026-27 Pennsylvania Budget: What Nonprofits Need to Know

May 2026 Update: Budget Moving to PA Senate after Passing with Bipartisan Support in PA House

What happened (since our last post on April 7):
The Pennsylvania House passed the General Appropriations Bill on April 14 with bipartisan support, advancing Governor Shapiro’s $53.3 billion 2026-27 budget to the Senate — a 5.4% increase over the current year and the largest proposed budget in state history. Senate Republican leaders — President Pro Tempore Kim Ward, Majority Leader Joe Pittman, and Appropriations Chair Scott Martin — issued a joint statement expressing “profound concerns” about spending levels and pledging to fight for a more fiscally responsible alternative. Budget negotiations between the chambers are ongoing.

PANO is actively engaged on the two bills mentioned in our original post below:

• House Bill 1609, introduced by Rep. Marla Brown (R), would require continuation of payments for essential human services during any budget lapse, protecting critical lines of service for children and other human services — though it currently does not include food insecurity funding.
• House Bill 2382, the Temporary Budget Continuity Act, would provide continuation funding uniformly across all service lines during an impasse. PANO is working with legislators on both proposals and wants to hear their feedback on what may or may not work.

Where things stand (as of May 6, 2026):  Budget negotiations are ongoing with the June 30 deadline approaching. The legislative calendar before June 30 is short. Eleven impasse-related bills are currently tracked in Harrisburg. Nonprofits should contact their state House member and state senator now — before a crisis, not during one — and begin internal scenario planning for what a 30-, 60-, or 90-day funding gap would mean for their cash flow, staff, and the people they serve.

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Original Post: April 7, 2026

What happened:
Governor Shapiro delivered his 2026–27 budget proposal on February 3, 2026, calling for $53.3 billion in spending — a 5.4% increase over the current year and the largest proposed budget in state history. The proposal outpaces projected revenue by roughly $4.3 to $6 billion, depending on whether proposed new revenue streams materialize. Senate Republicans have rejected the proposal as unaffordable. Three weeks of budget hearings in March concluded with deep partisan divisions. Budget negotiations are underway, but a June 30 impasse is widely anticipated.

The core disagreement:
Shapiro’s proposed solutions to close the gap — a 52% tax on skill games projected to generate $766 million, cannabis legalization and taxation projected at $200+ million annually, and closing the Delaware corporate tax loophole — remain contested. Senate Republicans, who hold the majority, have made containing spending growth their top priority and have signaled opposition to most of the governor’s revenue proposals. The growth in spending is driven primarily by the Department of Human Services (DHS), which accounts for nearly $1.4 billion of the proposed increase, largely to cover rising Medicaid obligations due to federal policy changes.

What it means for Pennsylvania nonprofits:
Last year’s 135-day impasse forced schools, counties, and nonprofits to take out loans to stay afloat. In a sample of 228 nonprofits, over 244,000 Pennsylvanians lost or saw reduced services, 1,865 staff were laid off or worked without pay, and organizations collectively paid $2.2 million in interest on emergency financing. And this year’s conditions are, in several respects, more difficult. Federal Medicaid work requirements could cause more than 300,000 Pennsylvanians to lose coverage, shifting service demand onto nonprofits at the same moment state funding is under pressure. The state will absorb a greater share of Supplemental Nutrition Assistance Program (SNAP) administrative costs beginning October 1. Rate-based human service providers — already flat-funded for six of the last ten budget cycles — are entering this budget season with compounding pressure from both federal cuts and state underfunding. A June 30 impasse would mean delayed payments, cash flow strain, and forced borrowing for organizations with state contracts and grants.

The impasse legislation:
PANO is engaged in a working group on statutory protections for nonprofits during budget impasses. ⁠House Bill (HB) 1609⁠, introduced by Rep. Marla Brown, would require continuation of payments for essential human services during any budget lapse. Eleven related bills are being tracked in Harrisburg, ranging from constitutional amendments requiring automatic 80–85% funding continuation to proposals withholding legislators’ pay during an impasse. None have passed. The legislative calendar before June 30 is short.

Where things stand (as of April 6, 2026):
Early budget talks began in February — earlier than in past years — and both parties have expressed interest in avoiding a repeat of last year. However, the structural gap is larger, the federal funding environment is more volatile, and 2026 is an election year, which cuts both ways. PANO will track developments and share updates as the process moves forward.