PA House and Senate Pass 2026-2027 Budget Bills

To the Membership of Life Sciences Pennsylvania:

The Pennsylvania House and Senate earlier today passed the General Appropriations Act (HB 2400), Fiscal Code (SB 146), School Code (HB 1505), and Capital Budget (HB 2401). These pieces comprise the commonwealth’s budget for fiscal year 2026-2027. Governor Shapiro is expected to sign the bills.

The final overarching agreement includes approximately $50.85 billion in General Fund expenditures. This represents an increase of approximately $1.82 billion, or 3.7 percent, over last year’s General Fund expenditure of $49.03 billion. The spending total for the 2026-27 state fiscal year is well below Governor Shapiro's proposed budget of $53.3 billion. Additionally, the prior 2025-26 fiscal year sees a dramatic reduction in general fund spend due to a negative supplemental of $1.13 billion. This was not accomplished through utilization of the “Rainy Day Fund,” but rather by leveraging several fiscal maneuvers. Most notably, the budget includes a retroactive, one-month payment delay for Managed Care Organizations reimbursed through capitated Medical Assistance programs in the prior fiscal year as well as an additional month of payment delay in the 2026-27 fiscal year. Combined, these offset $2.6 billion in state General Fund spending.

Based on preliminary reviews of the legislation, I am pleased to report this year’s budget includes Governor Shapiro’s proposed ‘Innovate in PA 2.0’ program. Through this program the Pennsylvania Department of Community and Economic Development (DCED) will sell $125 million in insurance premium tax credits. Beginning in the 2028-2029 budget year, DCED will then be able to use proceeds from the sale of those credits to invest in several initiatives designed to bolster the commonwealth’s life sciences and innovation ecosystem. Life Sciences PA will monitor and closely work with DCED on the implementation of these initiatives. They include:

Grants to address regional and statewide gaps in the life sciences and biotechnology communities for startup and small to mid-size businesses;
Supporting partnerships between biotechnology and life sciences companies, training providers and educational institutions to prepare students for careers in those sectors;
Leveraging federal funding with state grants (e.g. SBIR/STTR-matching);
Seeding and scaling regional “venture studios” to de-risk technology and company formation;
Recapitalizing the Ben Franklin Technology Development Authority venture funds.

This is the most significant investment in the life sciences and innovation sectors in the state in more than two decades. Moreover, it is the culmination of ongoing dialogue between Life Sciences PA, our Members, Governor Shapiro, DCED Secretary Rick Siger, Secretary of Policy & Planning Akbar Hossain, Chief Transformation Officer Ben Kirshner, and many others over the past three years.

As important, it acknowledges the critical work of our Member organizations and is a clear result of your advocacy over the past several years. In what is (and was expected to be) a challenging budget year, this investment is especially important as it one of only a handful of new funding initiatives included in this budget. It should be noted the following funding is also included in the budget:

The Research & Development Tax Credit is funded at its current level of $60 million;
The Ben Franklin Technology Partners maintain total funding of $17 million;
The budget continues to provide $3 million to the three Life Sciences Greenhouses ($1 million each) to fund early-stage, innovative life sciences companies;
Consistent with past years, the budget provides for up to $15,000,000 in Keystone Innovation Zone (KIZ) tax credits worth up to $100,000 for qualified firms;
The biotechnology research line item increased to $12.35 million;
Maintains the Neurodegenerative Disease Research program at $5 million;
13.6 percent of the state’s annual tobacco settlement payments are directed to the Commonwealth Universal Research Enhancement (CURE) Program in the Department of Health to fund research projects conducted by Pennsylvania-based researchers, universities, medical schools and other institutions. This year’s budget continues allocations from the CURE dollars specifically for spinal injury research, pediatric cancer research and equipment grants for biotechnology research.

As this year’s budget process concludes, it is important to acknowledge the work of the Life Sciences Caucus and its Co-Chairs – Senators Frank Farry and Art Haywood, and Representatives Tim Briggs, Valerie Gaydos, Bridget Kosierowski, and David Zimmerman. They work tirelessly on many issues affecting the industry and work to protect incentives for the life sciences community. Additionally, we thank Pennsylvania House and Senate leadership for their support throughout difficult budget discussions. Finally, a special thank you to the Life Sciences PA State Policy Committee for its engagement on these issues and their continued support of our legislative agenda.

If you have any questions about our legislative priorities in Harrisburg or any of the programs listed above, please contact our Senior Vice President, Policy & Public Affairs, Kurt Imhof (kimhof@lifesciencespa.org) or me.

All the best,

Chris Molineaux

Christopher P. Molineaux

President and CEO