The Zero-Based Budgeting Act establishes a new framework for budget development within the Commonwealth of Pennsylvania, moving away from the traditional incremental budgeting approach. The Act mandates that every program in State government undergo a zero-based budget review at least once every five years, starting in 2026. In that year, the Governor is required to submit a zero-based budget for agencies whose cumulative expenditures account for at least 20% of the General Fund budget. This approach aims to ensure that government activities are subject to thorough fiscal scrutiny, addressing outdated programs and reallocating funds more effectively.

To facilitate this zero-based budgeting process, the Secretary of the Budget will require state agencies to prepare and submit a detailed zero-based budget plan. This plan must include a description and justification for each agency activity, estimates of potential adverse impacts from discontinuation, and itemized accounts of necessary expenditures to maintain services at both minimum and current levels. Additionally, agencies must rank their activities based on their contributions to overall goals, ensuring a more transparent and accountable budgeting process. The Act will take effect 60 days after its passage.