HARRISBURG - In his annual budget address Tuesday, Gov. Josh Shapiro unveiled a $48.3 billion spending plan that proposes to significantly increase funding for public education and legalize recreational marijuana.

The Democrat’s plan draws on the state’s $14 billion in cash reserves, and would use about $2 billion to offset new K-12 and higher education spending.

To raise additional revenue, Shapiro wants to tax legal marijuana, and regulate and tax slots-like machines called skill games that are common in bars and restaurants statewide.

Those new dollars would also help pay for additional spending on public transit, economic development, housing, and health care, among other priorities.

Critics say Shapiro’s plan, a roughly 7% increase over current general fund spending, isn’t sustainable, as it draws on the state’s reserves - a nonrecurring source built up over the past four years due to a mix of federal aid and higher-than-expected tax revenues during the pandemic.

By the administration’s own estimates, those reserves will be almost exhausted by 2029, assuming no new major spending in future budgets.

Serious K-12 education spending

Through a mix of new funding and changes to charter school financing, Shapiro’s plan would provide almost $1.86 billion in new money for preschool and K-12 education - almost doubling his $1 billion education spending pitch from last year.

Education has been a Harrisburg priority since Commonwealth Court ruled early last year that Pennsylvania’s public school funding system was unconstitutionally inequitable and must be fixed.

Shapiro’s budget proposes about $1 billion in new state aid that would flow directly to public K-12 school districts. Of that total, $200 million would be routed through an existing funding formula that distributes money based on factors like district size and poverty, while $872 million would go to districts found to be “inadequately funded.”

Shapiro administration officials said Tuesday that the legislature would define which schools meet that bar.

The concept of “adequacy,” or the amount of money a district needs to educate students at an acceptable level, was central to a report released by a bipartisan group of lawmakers in January after months of hearings around the state.

The final report was approved by the commission’s Democrats, including members of the Shapiro administration.

It recommends at least $5.4 billion in direct aid to K-12 schools over the next seven years, plus billions more for property tax relief, mental health, school building repairs, and other education spending.

Public education advocates emphatically supported the plan. PA Schools Work, a statewide coalition of pro-school-funding groups, called it “a public education budget worth fighting for” in a statement.

The Pennsylvania State Education Association, the state’s largest teachers union, said in a statement that Shapiro’s budget was “a solid beginning to a multiyear process.”

Another $525 million in new education spending would be spread between initiatives big and small, such as funding school mental health programs, enabling districts to fix and upgrade their buildings, increasing special education spending, and giving students access to free period products.

The budget also proposes capping cyber charter tuition at $8,000 per student, which the administration projects would save school districts $262 million each year.

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