Pennsylvania’s current budget

Governor Josh Shapiro released his FY 2026 budget proposal and gave the state of state address in February 2025.

Pennsylvania enacted its FY 2025 budget in July 2024. The budget reported $47.6 billion in general fund spending, an increase of 6 percent over the previously enacted budget. Pennsylvania approved a property tax cut in calendar year 2023. This followed tax cuts in 2022.

Under the American Rescue Plan, Pennsylvania received $7.3 billion in direct state fiscal aid and $5.2 billion in local government aid from the federal government. As of January 2025, Pennsylvania had allocated over 75 percent of its state ARP. States must spend the funds by Dec. 31, 2026.

According to the National Association of State Budget Officers (NASBO), Pennsylvania’s total expenditures in fiscal year FY 2025 were $113.6 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2025 were $2.9 trillion, ranging from $5.4 billion in Wyoming to $413.8 billion in California.

According to NASBO, Pennsylvania’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:

• FY 2025: $47.9 billion/$128.6 billion
• FY 2024: $44.9 billion/$119.0 billion
• FY 2023: $40.8 billion/$113.6 billion
• FY 2022: $39.4 billion/$121.3 billion
• FY 2021: $34.0 billion/$100.6 billion
• FY 2020: $34.1 billion/$96.6 billion
• FY 2019: $36.3 billion/$89.6 billion

For more on Pennsylvania’s budget, see

• the Pennsylvania Office of the Budget,
  
• the Pennsylvania Independent Fiscal Office, and
  
• the Pennsylvania Treasury.

Pennsylvania’s budget institutions, rules, and constraints

Pennsylvania uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit over into the following year. Pennsylvania does not have any other tax or expenditure limits. The state does limit total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Overview of Pennsylvania’s state and local expenditure and revenue sources

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Pennsylvania’s combined state and local direct general expenditures were $158.7 billion in FY 2022 (the most recent year census data were available), or $12,237 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $12,083.

Pennsylvania’s largest spending areas per capita were public welfare ($3,540) and elementary and secondary education ($2,739). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Pennsylvania’s combined state and local general revenues were $166.1 billion in FY 2022, or $12,805 per capita. National per capita general revenues were $13,619. Pennsylvania uses all major state and local taxes. After federal transfers, Pennsylvania’s largest sources of per capita revenue were individual income taxes ($1,794) and charges ($1,785), such as state university tuition and highway tolls.

Pennsylvania’s economic trends

Pennsylvania’s per capita income (per the Bureau of Economic Analysis) was $71,148 in 2024, ranking 17th among the states. It was below both the national average of $72,425 and the Mideast regional average of $76,018. The state’s median household income (five-year estimate) was $77,971 in 2024, ranking 23rd among the states and below the national average of $80,734. Pennsylvania’s poverty rate was 11.7 percent in 2024 (five-year estimate), below the national rate of 12.5 percent.

Although Pennsylvania’s averages tell a story about the entire state, Pennsylvania is composed of diverse localities. For example, the city of Chester’s median household income was $41,342, and its poverty rate was 29 percent; the city of Murrysville’s median household income was $121,823, and its poverty rate was 2.5 percent.

Pennsylvania’s unemployment rate historically tracks the national average. The state’s rate was slightly below the national average following the Great Recession, but it has again paralleled the US rate for the past few years.

Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Pennsylvania, the average unemployment rate in 2024 was 3.4 percent for white residents, 5.4 percent for Black residents, and 7.9 percent for Hispanic or Latino residents.

The major industries that contributed the most to Pennsylvania’s gross domestic product (GDP) in 2024 were finance, professional services, social services (i.e. health and education), manufacturing, and government. Social services contributed more to Pennsylvania’s GDP than it did to the nation’s and region’s GDP, while finance and government were less important to Pennsylvania than they were to the nation and region in 2024.

Looking at more specific industries, among those that accounted for at least 1 percent of Pennsylvania’s GDP in 2023, management of companies produced far more for the state than for the nation, contributing 3.2 percent to Pennsylvania’s GDP and 1.8 percent to the nation’s. Other industries that overperformed in Pennsylvania relative to national averages in 2023 were education, ambulatory health care services, chemical manufacturing, and broadcasting and telecommunications.

Pennsylvania’s politics

Governor Josh Shapiro, a Democrat, was elected in 2022 with 55 percent of the vote. The next gubernatorial election is in 2026.

Pennsylvania has a split House of Representatives (101 Republicans to 102 Democrats). Republicans control the Senate (28 Republicans to 22 Democrats). All Pennsylvania House seats are on the ballot in 2026 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2026, and the other half will be up for election in 2028.

Pennsylvania’s demographics

As of July 2024, Pennsylvania’s population was 13,078,751. That was up 2.9 percent from 2010. The state’s population growth rate was slower than than the nation’s 9.9 percent growth over the same period. The Urban Institute estimates the state’s population will increase 7.1 percent between 2010 and 2030, less than the nation’s estimated growth rate of 16 percent.

Additional resources

• The State and Local Finance Initiative’s Backgrounders explain the tax and spending issues highlighted in these briefs.
  
• The State Economic Monitor presents updated data and customized visualizations of state economic indicators.
  
• State and Local Finance Data: Exploring the Census of Governments allow users to sort, customize, and download the Census of Governments State and Local Finance series data featured in these summaries.
  
• The State Tax and Economic Review series provides quarterly reports on state tax collections and underlying economic trends in all 50 states.
  
• The Urban Institute’s State Tax Data Subscriptions provide access to up-to-date revenue data in all 50 states.