Top Pennsylvania leaders have reached a $50.8 billion state budget deal, sources say

Key Points:

• Pennsylvania's top legislative leaders and Gov. Josh Shapiro have reached a $50.8 billion budget deal, over a week after the fiscal year began, marking a significant improvement from last year's nearly five-month impasse.
• The budget deal, crafted largely in secret, includes a 1.4% increase over last year's spending and is expected to feature increased funding for public education to address a $4 billion adequacy gap, but excludes proposed new revenue sources like taxing skill games or legalizing recreational marijuana.
• Several contentious issues, such as taxation of skill games, school choice programs, and mass transit funding, were deferred to future legislative sessions or next year's budget talks, as many lawmakers face reelection this year.
• The deal includes policy changes, notably a bill allowing municipalities to impose an 18-month moratorium on data center development, and the budget is expected to be finalized and sent to the governor by early next week.
• Pennsylvania faces a structural deficit of $1.2 billion, and it remains unclear how the budget will be balanced without new revenue streams or tapping into the $7.7 billion Rainy Day Fund, which requires a two-thirds legislative majority to access.