After nearly two weeks of negotiations beyond the June 30 constitutional deadline, Governor Josh Shapiro signed Pennsylvania's Fiscal Year 2026-27 budget into law. The $50.8 billion spending plan increases state spending by approximately $1.8 billion, or 3.7%, over the current fiscal year while remaining about $1.1 billion below the Governor's original proposal. The budget includes no new broad-based taxes or revenue sources, does not rely on recreational marijuana legalization or skill games, and preserves the Commonwealth's nearly $8 billion Rainy Day Fund.

From PMTA's perspective, the budget presents a mixed picture. It advances several priorities important to the trucking industry, including accelerated highway investment, continued business tax reform, and expanded Career and Technical Education funding. At the same time, it increases the transfer of Motor License Fund dollars to the Pennsylvania State Police—a longstanding concern for the trucking industry, which believes those revenues should be invested in roads and bridges.

Transportation

Not surprisingly, the budget's most significant provisions for PMTA members involve transportation funding and infrastructure.

The Fiscal Code authorizes PennDOT to accelerate the deployment of $775 million in highway improvements over the next two fiscal years, including $500 million during Fiscal Year 2026-27. By advancing funding for shovel-ready projects, the budget is intended to move more highway improvements into the current construction seasons rather than delaying them into future years.

The budget also authorizes the Pennsylvania Turnpike Commission to use Design-Build Best Value procurement for highway and bridge projects. Unlike traditional low-bid procurement, this approach allows projects to be awarded based on qualifications, technical expertise, schedule, and cost—not price alone. Supporters believe the change will help accelerate delivery of complex infrastructure projects while improving long-term value.

Additional transportation provisions include:

• Setting aside $5 million from the Motor License Fund for grants to municipalities to modernize traffic signal technology and improve traffic flow.
• Extending the waiver of local matching fund requirements for PennDOT's Multimodal Transportation Program, allowing eligible transportation projects to continue moving forward.
• Requiring the Secretary of Transportation to appear quarterly before the House and Senate Appropriations Committees to report on the financial status of both the Motor License Fund and the Public Transportation Trust Fund. By providing lawmakers with regular updates on revenues, expenditures, and commitments, the new reporting requirement should help inform future discussions about Pennsylvania's transportation funding needs.

A Continuing Concern: Motor License Fund Diversion

While PMTA welcomes the additional highway investment, one budget provision represents a disappointment for the trucking industry.

The budget increases the amount transferred from the Motor License Fund to support the Pennsylvania State Police from $250 million to $375 million. The increase reverses the planned schedule that had been gradually reducing the State Police's reliance on Motor License Fund revenues.

While supporting funding overall for partners in law enforcement, PMTA has long maintained that Motor License Fund dollars—paid by Pennsylvania motorists and trucking companies through fuel taxes and vehicle registration fees—should be dedicated to their intended purpose: maintaining and improving the Commonwealth's roads, bridges, and transportation infrastructure. Every dollar diverted from the Motor License Fund is a dollar unavailable for transportation improvements that benefit the traveling public and Pennsylvania's economy.

Supporting Pennsylvania's Business Climate

The budget preserves several policies that help maintain Pennsylvania's competitiveness and encourage business investment.

The Corporate Net Income Tax (CNIT) reduction schedule remains on track, with the tax rate scheduled to decline from 7.49% to 6.99% in 2027 as Pennsylvania continues toward its planned 4.99% rate by 2031. The budget also preserves the scheduled expansion of Pennsylvania's Net Operating Loss (NOL) deduction. Businesses may currently offset up to 60% of taxable income using prior-year losses, with that limit increasing to 70% next year and 80% by 2029—bringing Pennsylvania's treatment more in line with the federal standard.

Just as importantly, lawmakers did not include several proposals discussed during budget negotiations, including recreational marijuana legalization, taxation of skill games, a state minimum wage increase, mandatory combined corporate reporting, or a digital advertising tax.

Investing in Workforce Development

While much of the budget's education funding is directed toward K-12 schools, one provision of particular interest to employers is a $10 million increase for Career and Technical Education (CTE) programs. The budget also allows CTE students to complete their programs before 12th grade, enabling students to earn industry-recognized credentials and enter the workforce sooner.

For industries like trucking that depend on a strong pipeline of skilled workers, continued investment in career and technical education helps prepare the next generation for careers in transportation, diesel technology, logistics, and other in-demand occupations.

Balancing the Budget

The enacted budget avoids broad-based tax increases and preserves the Commonwealth's Rainy Day Fund. To balance the spending plan, lawmakers relied on a combination of prior-year funding lapses, transfers from special funds, and timing adjustments that delay certain Medicaid managed care payments into future fiscal years rather than eliminating those costs altogether. While these measures allowed the budget to be balanced without raising taxes or drawing from reserve funds, they do not address Pennsylvania's long-term structural deficit and may increase pressure on future budgets.

Looking Ahead

Like most budgets enacted under divided government, Pennsylvania's 2026-27 spending plan reflects compromise. For the trucking industry, it contains several positive developments, including accelerated highway investment, continued business tax reform, expanded Career and Technical Education funding, and several transportation policy improvements contained in the Fiscal Code.

At the same time, PMTA remains concerned that increasing the diversion of Motor License Fund revenues to the Pennsylvania State Police moves the Commonwealth in the wrong direction. Ensuring that transportation dollars are invested in transportation infrastructure will remain a priority as the Association continues working with lawmakers and state officials to strengthen Pennsylvania's economy and transportation network.