Legislative Update for March 2026

Local (Philadelphia)

PhillySaves Auto-IRA moves to the May 2026 ballot

Philadelphia’s Auto-IRA retirement savings program, known as PhillySaves, was signed into law earlier this year and now moves to the next step: voter approval.

The program is designed to expand retirement savings access for workers who do not have employer-sponsored retirement plans. If approved by voters in the May 19, 2026 primary election, the City will establish a Retirement Savings Board responsible for overseeing implementation, vendor procurement, investment options, and compliance requirements.

Under the program:

• Eligible employees would be automatically enrolled with a default contribution rate of 3–6% of wages.

• Participation would remain voluntary, with employees able to opt out.

• Employers would not be required to contribute, but would be responsible for facilitating payroll deductions.

If approved, the program is expected to begin phased implementation with a target launch of July 1, 2027.

For contractors and other employers, the key impact will likely be additional payroll administration requirements, particularly for smaller firms that do not currently offer retirement plans.

School District Facilities Master Plan proposes major modernization

Philadelphia City Council recently held hearings on the School District’s proposed $2.8 billion, 10-year Facilities Master Plan, one of the largest potential capital programs affecting public buildings in the city.

The plan aims to address two major challenges:

• Aging infrastructure across the district’s building portfolio

• Declining enrollment leading to underutilized facilities

Currently:

• The average school building is more than 70 years old

• 85 schools are rated in poor or unsatisfactory condition

The proposal would:

• Modernize 159 school buildings

• Reduce unsatisfactory facility ratings to zero

• Close 20 operating school buildings

• Invest $2.8B in capital improvements, including approximately $1B financed through bonds

District leadership has emphasized that modernization could expand access to academic programming such as Advanced Placement courses, arts education, and Career & Technical Education programs.

While the plan has broad support for modernization, councilmembers have raised concerns about the impact of school closures on communities and neighborhoods. The proposal remains in draft form and is expected to continue evolving as discussions progress.

For contractors, however, the modernization component represents a significant potential pipeline of public construction work over the next decade, including building upgrades, mechanical systems, ventilation improvements, and energy efficiency projects.

State (Harrisburg)

Governor Shapiro proposes $53.3B state budget

Governor Josh Shapiro recently unveiled his proposed $53.3 billion budget for FY 2026-27, representing a $2.7 billion (5.4%) increase in spending.

The proposal comes as Pennsylvania faces long-term fiscal pressures, with spending projected to outpace revenue in coming years.

To balance the budget, the proposal relies on:

• $4.6 billion in withdrawals from the state’s Rainy Day Fund

• Approximately $2 billion in new revenue measures

Proposed revenue sources include:

• Legalizing adult-use cannabis

• Regulating and taxing skill games

• Mandatory combined corporate reporting

• A proposed $15 minimum wage

Despite these new revenue proposals, the budget preserves two business-friendly tax reforms already enacted:

• The scheduled reduction of the Corporate Net Income Tax rate to 6.99% by 2027

• The phased increase of the Net Operating Loss deduction limit to 60%

The proposal also includes major investments in:

• Mass transit funding

• Education spending

• Infrastructure and energy projects

• A $100 million “Innovate in PA 2.0” fund supporting life sciences and early-stage companies

Budget hearings in the House and Senate Appropriations Committees are currently underway and will continue through early March as lawmakers review agency spending and policy proposals.

Energy demand and data center growth draw attention in Harrisburg

Energy policy is emerging as a major focus for lawmakers as electricity demand increases across the PJM region.

Several factors are driving the conversation:

• Rapid growth in data center development

• Increased electrification of buildings and transportation

• The retirement of traditional power generation resources

Lawmakers recently held joint hearings examining electricity costs and long-term grid reliability, with testimony indicating that power supply shortfalls could emerge by 2030 without new generation resources.

Legislation under consideration would place certain large data centers under additional regulatory oversight to ensure their electricity demand does not shift costs to other ratepayers.

For the construction industry, the rapid expansion of data centers and digital infrastructure is expected to continue driving significant demand for mechanical systems, HVAC infrastructure, and related building systems.

Special elections maintain House majority

Two recent special elections allowed House Democrats to maintain their 102-98 majority in the Pennsylvania House of Representatives.

While the margin remains narrow, the results ensure that Democrats retain control of the chamber heading into budget negotiations and legislative debates during the spring session.

The House is expected to reconvene later this month following the conclusion of budget hearings.

Federal & Political Landscape

Political shifts could influence future construction policy

While federal legislative activity has been relatively limited in recent weeks, the broader political landscape continues to evolve.

SMACNA is monitoring:

• Redistricting efforts in several states

• 36 gubernatorial races scheduled for 2026

These developments matter for the construction industry because political turnover often influences:

• Infrastructure investment priorities

• Workforce development policy

• Energy and permitting regulations

• Tax and procurement rules

Although these changes may take time to translate into specific legislation, they will likely shape the policy environment affecting construction and infrastructure investment over the next several years.

Actions to Watch

1. Monitor Philadelphia’s school modernization plan.
The Facilities Master Plan could drive significant public construction activity across the city over the next decade.

2. Prepare for potential PhillySaves administrative requirements.
If voters approve the program in May, employers may need to prepare for new payroll-deduction responsibilities beginning in 2027.

3. Follow the state budget process closely.
Spending priorities, infrastructure funding, and tax policy decisions in Harrisburg will influence the construction market statewide.

4. Watch the energy and data center policy debate.
Electricity demand and grid planning will play an increasingly important role in the timeline and scale of major industrial and technology projects.