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HARRISBURG — This November, Pennsylvania voters will decide who should be the next governor of Pennsylvania — a position that plays a key role in setting budget priorities and deciding how the state spends billions in taxpayer dollars.
Since taking office in 2023, Democrat Josh Shapiro has overseen an increase in state budget spending, mainly to keep up with rising human services costs — much of it federally mandated — and send more money to public schools after a major court ruling.
He’s pitched several ideas to raise new revenue, including legalizing recreational marijuana, but none have gotten over the finish line. Without new revenue or major spending cuts, the budgets he’s signed have dipped into cash reserves built up during the pandemic.
His opponent, Republican state Treasurer Stacy Garrity, thinks the commonwealth is spending too much money. She wants to make cuts like eliminating the inheritance tax, but hasn’t fully explained how she’d pay for them beyond saying she’d look for fraud. She opposes some revenue ideas, like legalizing marijuana.
Both have argued that lower taxes and less red tape inspire economic growth that produces more state tax revenue.
The governor does not have unilateral power over the state budget. Each winter, they deliver a budget address that lays out their fiscal and policy priorities. The speech kicks off months of public hearings and closed-door talks ahead of a June 30 deadline for the General Assembly to pass a plan that funds everything from public safety to substance use treatment to subsidies for horse racing and zoos.
The outcome affects fundamental economic realities for Pennsylvanians. The budget dictates the tax rates people and businesses pay on purchases and income, and determines funding levels for services like public education, transportation, and Medicaid.
Other key issues are routinely considered and debated alongside the state budget, like the minimum wage and permitting reform.
How to juggle competing priorities and grow Pennsylvania’s economy will be a key issue in Harrisburg in the years to come. Here’s a look at where Shapiro and Garrity stand:
Taxes and spending
Shapiro has signed budget deals that increased state spending by billions of dollars, mostly on human services and K-12 education.
The rise in education spending came after Commonwealth Court ruled that Pennsylvania’s system for funding public schools was so inequitable it violated the state constitution; judges ordered a fix, though they didn’t specify what kind.
The climbing human services budget stems from Pennsylvania’s aging population and increasing healthcare costs across the board. Those human services payments are mostly federally mandated under Medicaid, for low-income individuals. (Due to pending federal cuts, the state will likely either need to increase its spending or reduce its benefits in the coming years.)
Shapiro has not proposed broad spending cuts, instead proposing to raise new revenue by legalizing and taxing skill games and marijuana. The divided legislature hasn’t approved either idea despite bipartisan support.
He’s also routed money into economic development initiatives that, combined with regulatory reforms, his administration says help attract private investment to the commonwealth.
“Governor Josh Shapiro is working hard to make Pennsylvania a place where families can get ahead, businesses can grow, and good-paying jobs are within reach,” Shapiro campaign spokesperson Sam Reposa said in a statement.
The governor has also signed legislation that expanded the state’s property tax rent rebate and child care tax credit, and created a state tax deduction modeled on the federal Earned Income Tax Credit.
Shapiro has rejected the notion that his spending plans will “require a broad-based tax increase today, tomorrow, or at any point in the next five years,” as he said in his most recent budget address.
When asked amid the 2025 budget impasse about Pennsylvania’s structural deficit — meaning that costs consistently exceed annual tax revenue — Shapiro pointed to the billions of dollars the state had in reserves. That money gives policymakers “the ability to both cut taxes and make investments and continue to have billions of dollars in reserves,” he said in August that year.
Garrity wants the state to spend less money overall, and opposed the last two budget deals. She’s also backed major tax cuts that would leave the state and local governments with less revenue, without identifying how she would make up the shortfall.
“We need to unleash the private sector and rein in the public sector,” Garrity said at a 2025 forum.
She has also said the commonwealth’s increased spending on education doesn’t have “a good return on investment.”
Garrity has called for Pennsylvania to repeal its inheritance tax and cut the state’s 3.07% personal income tax by an unspecified amount.
“And we will deliver meaningful property tax reform by immediately capping school property taxes, require voter approval for any increase above one-half of 1%, reduce local property taxes by one-third through expanded tax rebates, and lead the fight to pass a constitutional amendment eliminating property taxes for residents age 65 or older who live on fixed incomes and Veterans and public-safety personnel who live on fixed incomes,” wrote Matt Beynon, a spokesperson for Garrity’s campaign.
He did not name any specific cuts Garrity would pursue to counteract the proposed revenue reductions. He did say she’d hunt for fraud within the state’s human services budget, including in Medicaid, citing a 2019 grand jury report released by then-Attorney General Shapiro.
Beynon argued Garrity’s proposed tax cuts, alongside regulatory reforms, would spark economic growth. He specifically highlighted the agricultural and natural gas sectors as industries that would thrive under Garrity, arguing this would lead to more jobs and state tax revenue.
“Voters have a clear choice: continue down the path of reckless spending, or restore fiscal sanity to Harrisburg,” Beynon said in a statement.
Expanding gambling through skill games
One straightforward but politically complicated option to raise revenue is regulating and taxing skill games, devices that the state Supreme Court ruled are slot machines earlier this year.
An estimated 70,000 machines have popped up in bars, taverns, restaurants, social clubs, and other establishments over the past decade, operating in a legal gray area. If the legislature fails to act by Oct. 13, they will be subject to seizure by law enforcement.
Shapiro has repeatedly called for the devices to be regulated and taxed, hoping to use the money to buttress the state’s finances. His proposed budget this year would have set the rate at 52% to more closely align with the state’s existing 55% tax on electronic games and casino slot machines.
“We’re putting our communities at risk and losing out on billions of dollars in revenue by doing nothing,” Shapiro said in his most recent budget address. “Everyone knows we need to get this done.”
Garrity also supports regulation and taxation of skill games. Beynon, her campaign spokesperson, said the tax rate should be lower than what Shapiro has proposed but did not offer a number. Alternatively, “each machine should be taxed $500 per month per machine, capped at 50,000 machines statewide,” he said — an idea supported by the skill games industry.
“This debate is not just about skill games manufacturers and distributors or added tax revenue to fill the gaping hole in Josh Shapiro’s budget,” Beynon said, “it’s also about the VFW halls, civic and fraternal organizations, and local restaurants that depend on the revenue these games generate.”
Spotlight PA also asked both candidates where they believe the machines should be located and if there should be rules to protect individuals with gambling addiction. Neither campaign responded to these questions.
Transportation funding
One expensive issue that’s dominated the discourse in the capitol in recent years is transportation funding, particularly for public transit.
Two laws, Act 44 of 2007 and Act 89 of 2013, established Pennsylvania’s current transportation funding model.
Act 89 is why Pennsylvania has the 5th highest gas tax in the country. However, gasoline revenue has fallen alongside the rise of electric and fuel-efficient vehicles. The state also siphons some of this revenue away from its intended targets — mainly road and bridge repair — to fund Pennsylvania State Police.
As for public transit, Pennsylvania primarily funds agencies, from rural van services to city subways and buses, through the sales and use tax and other fees. Many agencies say they are facing a fiscal cliff due to changing commuting patterns post-pandemic and have threatened service cuts.
In his first budget proposal, Shapiro asked the legislature to end the transfer of gas tax revenue to State Police within five years. His first two budgets that passed included a spending step-down, but the transfer increased again this year.
His administration says it has “reduced the number of poor-condition bridges in Pennsylvania by 304,” calling the effort “the second-largest reduction of poor bridges in the nation,” and noting it has awarded “over $11 billion in state and federal funding to repair roads and bridges.”
To help mass transit, Shapiro proposed increasing the share of state sales tax revenue that goes to these agencies. However, he failed to reach a deal with the Republican-controlled state Senate to do that during the 2025 budget impasse.
Instead, the Shapiro administration allowed SEPTA and Pittsburgh Regional Transit to use long-term capital funding from a special account to cover daily operating costs like salaries and fuel. Smaller agencies did not receive any additional aid.
A Shapiro spokesperson did not say how he’d address transportation in a second term.
Asked about transportation, Garrity spokesperson Beynon told Spotlight PA that she would veto any legislation intended to raise the gas tax. Garrity previously said a total moratorium on the gas tax would be “wildly popular.”
Beynon also said Garrity would give licensed Pennsylvania motorists 18 and older a maximum $750 annual gas tax rebate. This echoes a proposal Shapiro, as a candidate in 2022, proposed but never followed through on.
To fix the commonwealth’s infrastructure without higher taxes, Beynon said a Garrity administration would “fully leverage all federal transportation dollars,” prioritize rural roads, and “use technology to manage road repairs, maintenance and construction.” He did not provide additional details.
As for public transit, Beynon said Garrity would require every agency that seeks additional state funding to demonstrate that it is taking steps to improve service and reduce costs.
“This includes state funding for training to ensure employees are adequately cross trained to minimize staffing shortages, overtime costs, and disruptions in service to public transportation,” Beynon said.
Spotlight PA also asked both campaigns if local governments should be given the ability to raise additional taxes to fund local transportation priorities. Neither addressed the question.
Minimum wage
Pennsylvania’s minimum wage is currently $7.25 an hour, the federal standard. The legislature last approved an increase in 2005.
Shapiro supports raising the minimum wage to $15 an hour, which a bill advanced by the Democratic-controlled state House earlier this year would do. However, the GOP-controlled state Senate has not taken up the legislation.
The governor has argued that raising the minimum wage would have multiple benefits, including saving the commonwealth money by reducing the number of people eligible for Medicaid.
Garrity opposes increasing the minimum wage, arguing that natural economic growth will do a better job of increasing workers’ pay.
“Pennsylvanians don’t need a handout or government-subsidized wage rates,” Beynon said. “They need a Governor who will renew our promise, unleash our potential, and generate prosperity.”
Neither candidate answered specific questions about whether they’d support incorporating an automatic cost-of-living adjustment into the minimum wage, or allowing local governments to set a higher minimum.
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