Representing the interests of more than 3,000 members across Pennsylvania, the Manufacturer & Business Association's Government Affairs is your voice on local, state and federal issues.

• State Update - Several Notes of Interest to Employers from the 2025-26 Budget Proposals
• Federal - The U.S. Senate GOP Moves First to Advance Trump Priorities in Race with House
• U.S. HOUSE FREEDOM CAUCUS on the MOVE
• DEFINITIONS FOR YOU AND ME
• The PJM Grid in Peril: What Will Keep the Lights On?
• What Are Tariffs and How Do They Work?

Important Dates

2/18/2025 - 3/6/2025 – PA House & Senate Budget Appropriations Committees hold budget hearings with state agencies to examine the Governor’s budget proposal.

6/30/25 – The budget should be passed by this date.

Governor Shapiro’s 2025-26 Budget

On February 4 Governor Josh Shapiro presented his 2025-26 State Budget proposal to the General Assembly calling for $51.474 billion in public expenditures and sizable increases in Education, Human Services to name a few. His proposal, if approved by state lawmakers, would increase state spending by $3.6 billion, an increase of 7.5% compared to the current year’s budget.

To balance the budget the Governor seeks money from the Rainy-Day Fund and $536.5 million in tax revenues. He is counting on new revenue from legalization of adult recreational use of cannabis and the regulation of skill games. Those sources, however, have not been agreed upon by lawmakers in both chambers.  

Some big numbers: Where the money comes from

Income

• Personal Income Tax $19.64 billion (40.6%)
• Sales Tax etc. $16.04 billion (33.2%)
• Corporation Taxes $7.92 billion (16.5%)

 Who gets what? Where the money goes

• Health & Human Service gets 42.2%.
• Educations gets 39.4%

…adapted from LEG REG REVIEW BUDGET ISSUE, 2025, 4th Issue, February119, 2025

Trouble Ahead

“…The Independent Fiscal Office (IFO) is warning that Gov. Josh Shapiro's proposed spending plan could wipe out the state's savings in as little as two years. … if Shapiro's spending is enacted, the general fund surplus would be gone in 2025-26 and the Rainy-Day Fund would run out in early 2027-28… those deficits would be reduced if the state were to regulate and tax skill games and legalize adult recreational use of marijuana. But even if those changes were made, the state would still have a $2.1 billion deficit in 2027-28. …”

… Capitol Wire, 2/12/25

Several Notes of Interest to Employers from the 2025-26 Budget Proposals



MINIMUM WAGE - Increase to $15/hour for non-tipped employees and $9/hour for tipped employees, effective January 1, 2026.

…Editor’s Note: A perennial budget item…..

WORKFORCE - $5.5 million increase for Career and Technical Education (CTE). (Google)

TAXES - Expedite Corporate Net Income Tax rate reduction by two years, reducing the current tax rate each year by 0.75 percent resulting in a 4.99 percent tax rate in tax year 2029.

…Editor’s Note: Unfortunately, in exchange the Governor seeks to eliminate the “Delaware Loophole,” and move to unitary combined reporting, a proposal like the minimum wage increase, opposed by many.

TRANSPORTATION - Shapiro’s budget calls for a 1.75% increase in the amount of funds transferred from Sales and Use Tax receipts to the Public Transportation Trust Fund, which would free up an additional $292.5 million for mass transit in the next fiscal year.

…Editor’s Note: This is a very hot topic with numerous issues and not enough funding.

ENERGY- ELECTRICITY GENERATION - The problem is ever increasing demand and decreasing supply as fossil fuel power generators are pulled offline from the PJM Interconnection. * Shapiro's “Lightning Plan,” is a mix of ideas and several new efforts including a state board created to speed up the buildout of energy-related projects

Pennsylvania Climate Emissions Reduction Act, (PACER) would set caps on carbon emissions from power plants. Power plants would then have to purchase credits from the state to offset their emissions. This is a tax on carbon and is an in-state version of the Regional Greenhouse Gas Initiative (RGGI) strongly opposed by MBA.

The Pennsylvania Reliable Energy Sustainability Standard (PRESS) seeks to build on PA’s Alternative Energy Portfolio Standards Act which requires electricity generators to generate a portion of their power from alternative energy sources.

…Editor’s Note: See the MBA Business Magazine section below to read “The PJM Grid in Peril: What Will Keep the Lights On?

New, Bipartisan Caucus to Focus on Economic Competitiveness

“…State lawmakers recently announced the formation of a new bipartisan, bicameral caucus aimed at advancing policies that spark business growth and enhance the commonwealth’s long-term economic competitiveness.

The Pennsylvania Competitiveness Caucus plans to hold its first meeting later this month and focus on public policies that affect Pennsylvania’s ability to attract and keep businesses.

Co-chairing the caucus are Senators Kristin Phillips-Hill, Lisa Boscola and Representatives Paul Friel and Josh Kail (R-Beaver) …”

…Capitol Wire, 2/5/25

Important Date

3/14/2025 – Deadline to fund the government and avoid a government shutdown

The U.S. Senate GOP Moves First to Advance Trump Priorities in Race with House

“Senate Republicans… advanced a budget resolution focused on immigration and military priorities, …

The resolution unlocks a process called budget reconciliation, which bypasses the Senate filibuster but will require near unanimity among GOP lawmakers in both chambers. * See below - DEFINITIONS FOR YOU AND ME

The resolution would tee up consideration on the first part of its twin-track plan, focused on increasing border and defense spending. It would also give Republicans a key political win in the heart of Trump’s first 100 days while the party looks ahead to a tax fight later in the year…

…the House unveiled a resolution of its own to tee up what Trump has labeled “one big, beautiful bill,” which would combine border security and defense with an extension of Trump’s 2017 tax cuts. Senate Republicans are aiming to put the tax cuts in a more expansive bill later in the year…”

…by Al Weaver, The Hill, 02/12/25

U.S. House GOP Releases Budget that Raises Debt Limit by $4 Trillion, Extends Tax Cuts

“U.S. House Republicans released their budget resolution, laying out a vision for raising the debt limit and drafting a reconciliation package that is significantly different from the Senate Republicans.

The House budget resolution proposes Congress pass one bill that would extend the 2017 tax cuts passed during Donald Trump’s first term and boost spending on border security and defense, while paying for the trillions in an increase to the deficit with cuts to other government programs.

The House’s budget resolution…would also raise the debt limit by $4 trillion. The United States has amassed $36.22 trillion in debt over decades…”

…By: Jennifer Shutt, Pennsylvania Capital-Star, 2/12/25

“WASHINGTON – The right flank of the GOP pulled the House in its direction…locking in commitments for deeper spending cuts and potentially complicating the path forward for some of President Trumps tax priorities.

Party leaders struck a deal with the House Freedom Caucus members that ties the spending cuts and tax cuts together more firmly. The more money that gets pulled from Medicaid, food stamps and other programs, the more space Republicans will make for extending expiring tax cuts and removing taxes on tips, overtime pay and social security benefits…”

…“GOP’s Right Flank Is Winning Battles on Spending Cuts,” By Richard Rubin, The Wall Street Journal, 2/15-16/25

With the Trump administration talking about raising tariffs on U.S. trading partners, there are a lot of questions out there.

…By GUS FAUCHER, senior vice president and chief economist of The PNC Financial Services Group.

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