Pennsylvania Passes 2026-27 Budget
Last Updated
Jul 15, 2026, 13:17 PM
Following a 12-day impasse, Governor Josh Shapiro signed a bipartisan compromise $50.85 billion state budget for FY 2026-27. The spending plan, passed by the Pennsylvania General Assembly and signed into law on Sunday July 12, increases overall spending by about 3.7% without taking any of the state’s $8 billion Rainy Day Fund and avoiding any new or increased broad-based taxes. To balance the budget without new sources of revenue or transferring Rainy Day Funds lawmakers shifted $500 million from off-budget special funds and deferred $1.3 billion in recurring Medicaid managed care costs into the next fiscal year.
One element of significance to PAMED is the Primary Health Care Practitioner line-item administered by the Department of Health. This line-item provides the funding for the physician loan repayment program and the state-funded residency program, and this budget continues the increased level of funding achieved over the past several budget cycles. Some additional significant elements include:
Health and Human Services – Mental health services see an increase of $41 million, including $10 million for the 988 network and $5 million for walk-in crisis stabilization clinics. Rape crisis centers receive a $12 million increase over last year.
Education - Education receives $678 million in new funding, including $565 million for underfunded schools, $58 million for basic education and $55 million for special education.
Infrastructure – A new Rapid Bridge and Road Deployment Program receives $775 million to fast-track shovel-ready transit projects.
Taxpayer Relief – Provides $216.7 million for low- and middle-income workers via The Working Pennsylvanians Tax Credit.
Corporate Tax Reductions – Maintains the scheduled phase-down of the Corporate Net Income Tax leading to a target 4.99% by 20231.
Biotechnology and Innovation – Establishes the “Innovate in PA 2.0” initiative, providing $125 million in capital to support biotechnology startups and fund clinical trials for the life sciences.
Childcare Support – Provides $30 million for childcare worker retention and recruitment bonuses.
You may recall that in 2017, the General Assembly passed legislation requiring the Joint Underwriting Authority (JUA) to transfer $200 million in surplus funds to the General Fund. The JUA is Pennsylvania’s legislatively established malpractice insurer of last resort and provides a way for physicians to buy malpractice insurance who are unable to do so through regular insurance providers. The JUA filed litigation opposing this legislation, with PAMED and the AMA submitting briefs in support. After years of litigation, the U.S. Third Circuit Court of Appeals ruled that the JUA is a public entity and the Commonwealth has broad authority to oversee the JUA and transfer funds as it deems appropriate. After the U.S. Supreme Court denied review, in August 2025 the Commonwealth of Pennsylvania transferred the $200 million from JUA to the General Fund.
With that legal question settled, in November 2025, as part of the 2025-26 PA Budget’s Fiscal Code legislation, the General Assembly transferred another $100 million from the JUA to the General Fund to help close the funding gap for medical assistance payments. As part of that legislation the JUA was also restructured, and now each June the Commissioner of the Department of Insurance is required to report to the General Assembly on the amount of funds in excess of the minimum operational reserves needed for that year. That amount is then available to be transferred to the General Fund.
In June the Commissioner reported that the JUA had $14.3 million available to transfer to the General Fund. As part of the 2026-27 PA Budget enacted on July 12th, the Fiscal Code bill, SB 146, included a transfer of $14.3 million from the JUA to the General Fund. PAMED has in the past and continues to oppose any transfers of funds from the JUA. However, it is important to note that the only funds the JUA has come from premiums paid by physicians using the JUA and from earnings on investments made by the JUA. No MCARE Fund monies are involved.
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