This is the annual start of the budget process.

The House and Senate will now begin appropriations hearings, review spending details agency-by-agency, and negotiate changes. The budget must be enacted by June 30, before the new fiscal year begins July 1.

The proposed spending level has already sparked debate in Harrisburg, including concerns raised by lawmakers about overall spending growth and whether the budget is sustainable long-term.

A key issue for employers is whether Pennsylvania’s spending plan is fiscally responsible and aligned with long-term revenues. In fact, the Commonwealth is already facing a projected budget gap — with analysts warning that the 2025–26 budget is expected to be approximately $4.8 billion short, based on current revenue and spending trends. This structural imbalance increases pressure for future spending cuts, use of reserves, or tax increases, all of which could affect Pennsylvania’s business climate and long-term competitiveness.

Many observers have also noted that the proposal includes non-recurring funding strategies and/or new revenue proposals, including revenue assumptions tied to policy changes that are not currently enacted.

In particular, the Governor’s proposal relies in part on a mix of one-time or non-recurring funding sources and new revenue assumptions that would require legislative approval, including proposals to generate revenue through legalizing and taxing recreational marijuana and regulating/taxing certain forms of gaming (including “skill games”). If those proposals do not advance, lawmakers will likely face difficult choices in the months ahead about whether to reduce spending, identify alternative recurring revenue sources, or use reserves.

For PMTA members, the concern is straightforward: unsustainable spending can lead to higher taxes or additional employer costs in future years, which would negatively impact Pennsylvania’s business climate.

Infrastructure and Mass Transit

At this stage, there do not appear to be major new investments proposed specifically for statewide roads and bridges, and this may once again become a focal point of negotiations.

Transportation-related funding became a significant source of debate during last year’s budget process, contributing to statewide uncertainty and prolonged negotiations.

The budget proposes a new Pennsylvania Program for Critical Infrastructure Investment, supported by $1 billion in state bond borrowing.

However, despite its name, this program is not primarily targeted at roads and bridges. Instead, it would support other large-scale statewide needs, such as energy grid projects, housing, and upgrading local government buildings.

Mass transit remains a major focus of the Governor’s budget, particularly for large systems like SEPTA and Pittsburgh Regional Transit (PRT).

The Administration proposes shifting an additional 1.75% of Pennsylvania Sales and Use Tax revenues to transit beginning July 1, 2027, generating more than $300 million annually for public transportation support.

This type of recurring funding shift was also proposed as part of last year’s budget debate. Ultimately, the mass transit funding dispute ended in an agreement that used capital funding to close the immediate transit budget gap, rather than creating a permanent recurring General Fund shift.

PMTA members recognize the importance of mobility and workforce access across Pennsylvania. At the same time, PMTA emphasizes the need for:

• accountability and transparency
• long-term sustainability
• a balanced approach that ensures road and bridge investment keeps pace with economic needs statewide

Workforce Development

Workforce development remains essential for trucking, especially for hard-to-fill positions like diesel technicians and fleet maintenance professionals. The Governor’s budget includes additional investment tied to career and technical education (CTE), workforce pipelines, and skills training.

For PMTA members, a strong workforce development strategy includes support for trade schools and vo-tech programs that are aligned with industry needs. PMTA supports training investments that directly improve Pennsylvania’s ability to build a strong transportation workforce.

Energy

Pennsylvania’s energy costs and reliability affect every part of the trucking economy—from warehouse operations to manufacturing output, freight demand, and fleet operating costs.

PMTA members will be watching closely to see whether the budget supports an energy strategy that improves affordability, reliability, and competitiveness for energy and infrastructure projects.

Importantly, last year’s budget agreement included a key win for Pennsylvania energy competitiveness: removing Pennsylvania from RGGI (Regional Greenhouse Gas Initiative). PMTA supported that decision as a practical step toward protecting employers from added energy costs and regulatory uncertainty.

PMTA recently joined a coalition letter urging the Administration to recognize the central role Pennsylvania’s energy industry plays in the Commonwealth’s economy — and warning against new energy-sector taxes that could undermine investment, affordability, and competitiveness. The letter notes Pennsylvania’s significant projected budget challenges, and argues that targeting energy with new taxes (such as a severance tax layered on top of the existing impact fee) could discourage development and ultimately reduce long-term economic benefit.

Taxes and Pennsylvania’s Business Climate

PMTA members consistently raise concerns about tax stability and competitiveness, especially for small and mid-sized employers that operate on narrow margins.

Pennsylvania’s Corporate Net Income Tax (CNIT) rate for 2026 is 7.49%, continuing the gradual phase-down enacted in prior budgets.

A strong business climate leads to job creation and freight growth—meaning more work for carriers, suppliers, and the broader transportation industry. PMTA will also watch closely for any proposals—direct or indirect—that could raise business costs or create new long-term fiscal obligations that increase pressure for future tax increases and business climate decline.

The budget debate now moves to the General Assembly, where lawmakers will evaluate the proposal through hearings and negotiations. With the statutory deadline of June 30, PMTA will be tracking developments closely and keeping members updated on changes.

While the budget will dominate the headlines, PMTA continues to advance important policy priorities during the 2025-26 legislative session, including:

• legislation to strengthen CDL safety and licensing integrity
• ongoing work to address towing abuses and improve consumer and carrier protections
• modernizing Pennsylvania’s auto insurance minimums
• advancing a truck parking tax credit as part of a broader strategy to increase parking capacity and improve safety
• bipartisan proposals to create a near-zero emission truck incentive program to support fleets investing in cleaner, more advanced equipment
• opportunities to fight lawsuit abuse

PMTA will continue advocating for these priorities in parallel with the budget process—because the strength of Pennsylvania’s trucking industry depends not only on appropriations, but on smart policy reforms that improve safety, stability, and business competitiveness.