That’s A Wrap: City & State’s Legislative Session Review

The 2023-24 legislative session has come to an end, setting the stage for a new term to begin in earnest next January. But before we set our sights on all that could happen – or not happen – in the upcoming two-year session, it’s worth taking a look at what lawmakers and Gov. Josh Shapiro’s administration got done over the last two years, and what outstanding issues will have to be addressed by the next General Assembly. 

What Got Done

Property tax rent/rebate program expansion: One of the chief accomplishments of Gov. Josh Shapiro’s first two years in office is an expansion of the state’s Property Tax/Rent Rebate Program. The program, which provides financial assistance to older adults and those with disabilities to help with rent and property taxes, was expanded to increase both the dollar amount of rebates and the number of people eligible for the program. 

The legislation passed with overwhelming support in both chambers of the General Assembly in 2023, giving Shapiro a signature win in his first year in office. Upon signing the bill, Shapiro said it “proves we can come together for our seniors and give them the relief they need to improve their quality of life.”

Education funding increases: Another key area where lawmakers came together over the last two years was on education funding increases, an especially crucial issue given the Commonwealth Court’s 2023 ruling that the state’s public education funding system is unconstitutional. 

In the 2024-25 state budget approved over the summer, lawmakers passed a package that featured a 2.9% increase in basic education funding through the state’s Fair Funding Formula, a $100 million increase in special education funding, and new education subsidies in response to the court ruling. The subsidies include a $493 million “adequacy investment” and a $32 million “tax equity” supplement, both distributed through the state’s Ready to Learn Block Grant initiative. In total, K-12 education funding was increased by more than $1 billion in that budget alone. 

That wasn’t the only action lawmakers took on education. While Republicans and school choice advocates didn’t get the state funding for private school vouchers that they’ve been looking for over the last two budget cycles, they did get expansions of two major school choice tax credit programs – the Educational Improvement Tax Credit and the Opportunity Scholarship Tax Credit programs. The programs award tax credits to businesses that help fund scholarships for K-12 students to attend private schools, and lawmakers agreed to expand the cap on the EITC program by $70 million, while also expanding the OSTC program cap by $5 million. 

A new telemedicine law: A big bipartisan win accomplished in 2024 is the enactment of a new law that establishes a telemedicine framework in Pennsylvania. Act 42 of 2024 was signed in July 2024 and requires insurers to cover medically necessary telemedicine services.

Democratic state Rep. Christina Sappey, who sponsored the House version of the legislation, told City & State that the law will have a profound impact on expanding access to health care services, particularly for those who might put off appointments due to work obligations.

“I think it’s going to have a huge impact on access to health care services for many sectors of folks that don’t have access,” Sappey said. “It takes an enormous amount of time, unfortunately, to make an appointment, find transportation, or drive yourself to an appointment, wait, see the doctor … You’re taking a lot of time off of work – for our workforce, that’s problematic.”

Penalties for distracted driving: Another bipartisan achievement in 2024 was the creation of a new law that prohibits the use of cell phones and mobile devices while driving a vehicle – a long-sought goal of GOP state Sen. Rosemary Brown, who championed the effort through several legislative sessions. 

Now known as Paul Miller’s Law – in memory of Paul Miller Jr., who died in a 2010 motor vehicle accident involving a tractor-trailer with a distracted driver – the statute prohibits drivers in the commonwealth from using “interactive mobile devices” while operating a vehicle. Those who violate the law will face a summary offense and a $50 fine upon conviction.

At this year’s bill-signing ceremony, Brown said she had been trying to get the legislation passed for 12 years. “I knew it was absolutely needed to do our best to change the behavior of drivers behind the wheel while using a cell phone to prevent crashes, to build public safety and, of course, to work to save lives,” she said. 

Net Operating Loss changes: The 2024-25 state budget also brought major changes to the state’s net operating loss policies, including new language that will allow businesses to carry forward more of their losses and deduct them from profits into future taxable years. 

Prior to the passage of this year’s budget, Pennsylvania was one of two states – the other being New Hampshire – that capped deductions below the federal limit of 80% of taxable income. Thanks to this year’s state budget, Pennsylvania will gradually increase its limit on net operating loss carryovers from the current limit of 40% – by 10% each year – until the limit is expanded to 80%. 

Over the summer, state Senate Majority Leader Joe Pittman had ample praise for the NOL carry-forward limit changes long sought by Republicans and the state’s business community, including the Pennsylvania Chamber of Business and Industry.

“For years … we have looked for a solution to the issue of net operating loss,” Pittman said. “What we’re talking about is unleashing investment and economic opportunity in every corner of this commonwealth to foster start-up businesses – to develop employers who create jobs.”

What Didn’t Get Done

Mass transit funding: Funding for mass transit systems is quickly becoming one of the most talked-about issues in the state Capitol as the Southeastern Pennsylvania Transportation Authority faces an annual operating deficit of $240 million and a dire financial picture that the agency’s CEO has referred to as a “death spiral.”

SEPTA Chief Operating Officer Scott Sauer has urged state lawmakers in Harrisburg to provide additional state funds to the authority, but absent further legislative action, SEPTA is considering a new fare proposal that will increase fares by nearly 30% beginning in January. 

“We were hopeful a solution would come this fall, but it has not materialized. We now have no choice but to move forward with a proposal for major fare increases and service cuts. This is going to be painful for all of our riders and will have major economic and social impacts on our city, region and the Commonwealth as a whole,” Sauer said on Nov. 12.

House lawmakers advanced legislation – House Bill 2625 – which, if signed into law, would increase the percentage of Sales and Use Tax collections transferred to the Public Transportation Trust Fund from 4.4% to 6.15%, which would result in an influx of hundreds of millions of dollars for mass transit in fiscal years 2024-25 and 2025-26. However, the bill was not considered by the state Senate this session. 

Asked about SEPTA funding on Nov. 13, Senate Republican leaders expressed a desire to address mass transit funding along with other infrastructure needs. “We have always worked with transportation infrastructure and transit collaboratively. I don’t believe there’s any way to have a conversation where those two issues are not linked. Most importantly, as (Senate Appropriations Committee Chair) Scott Martin will tell you, revenue streams, as they exist right now, are not (able) to support what the governor proposed through the SEPTA network. I think what SEPTA is doing in terms of bringing more dollars to the table through ridership and making sure they’re running efficiently is something we absolutely need to see continue in the months ahead,” said Pittman.

However, Shapiro appeared to provide a short-term solution to SEPTA when he announced that his administration would redirect federal funds meant for highway projects to the struggling transit system. 

Regulating games of skill: One potential revenue stream that could be used for mass transit (or a variety of other uses) is revenue from so-called games of skill, which are untaxed, unregulated video gaming machines that have surfaced at locations throughout the state. 

The machines currently are not regulated by law – but Pennsylvania courts have found that the games are legal and fall outside of the state’s Gaming Act, and are thus not subject to the same regulations and taxes as slot machines. 

Shapiro proposed regulating the gaming machines in his 2024-25 budget proposal, but lawmakers have been unable to reach an agreement on how to handle the issue. 

In an interview with City & State earlier this year, Pittman said skill games could be a realistic revenue stream to address needs for mass transit and infrastructure needs. “I have made it clear that if we’re having a transit discussion, that discussion cannot occur without infrastructure as well. We have never addressed transit or infrastructure without dealing with both of them and so I don’t see a pathway to deal with just transit. If we’re going to deal with both issues, I don’t see where we find revenue through existing streams to meet those interests,” he said. “So I have suggested that the only potential revenue stream that I see out there of any magnitude is games of skill – and if a portion of that could be used for transit and infrastructure, I think it’s at least worth considering.”

Cannabis legalization: Another issue that has gone unaddressed in Pennsylvania is legalizing recreational cannabis for adult use in the commonwealth. All of Pennsylvania’s neighbors, with the exception of West Virginia, have legalized the drug for recreational use, and proponents have said legalization could provide another new stream of revenue for a state that is grappling with a structural budget deficit. 

Shapiro’s first budget proposal included revenue estimates for an adult-use cannabis market in Pennsylvania, suggesting that a 20% tax on the wholesale price of marijuana products would result in approximately $16 million in tax revenue in 2025, $64 million in 2026, $132 million in 2027, and more than $188 million in 2028. However, the General Assembly has yet to implement such an idea. 

Speaking to reporters in November, House Speaker Joanna McClinton suggested that cannabis legalization is something that commonwealth residents want. “We look forward to our friends in the Senate in this next session working with us on these issues that people have been demanding,” she said. “People have been demanding for the opportunity to have legalized marijuana.”

Affordable Care Act protections: A bipartisan group of lawmakers in the Pennsylvania House voted this fall to enshrine protections in the Affordable Care Act into state law, an effort that could receive renewed attention with President-elect Donald Trump set to return to the White House. 

With Trump in the Oval Office and GOP majorities in the U.S. Senate and U.S. House (where Speaker Mike Johnson has stated “No Obamacare” in response to questions about health care reform), lawmakers could be motivated to codify several protections at the state level to make sure that Pennsylvanians don’t lose access to insurance. 

Lawmakers passed three bills in October that would enshrine several of these protections into Pennsylvania law. The bill package would prohibit insurers from setting annual or lifetime limits on the cost of care, allow adult children to remain on a parent’s private health plan up to age 26 and prohibit insurers from denying or excluding coverage due to preexisting conditions. Legislators will have to start from scratch on this issue in the 2025-26 legislative session, as the bills failed to advance in the Senate, and it remains to be seen how a new administration in Washington will affect the appetite to reconsider these bills in Harrisburg. 

Private school vouchers: Could next year be the year that Harrisburg devotes state funding to private school scholarships? The issue now seems to be an annual budget cycle question after derailing budget talks in 2023. 

Republican lawmakers and some Democrats have expressed a desire to devote taxpayer dollars to scholarships that would allow students in low-performing public schools to attend a private school of their choice, but amid pushback from teachers unions and public education advocates, the issue has yet to make it into a finalized budget or state law. 

A discussion of private school vouchers also surfaced over the summer as Shapiro was being considered as a vice presidential pick for Democratic presidential nominee Kamala Harris, but to date, no school voucher proposal has been signed by the Democratic governor.