Rendell optimistic on budget; others less so

HARRISBURG - Gov. Rendell said yesterday that he was hopeful a solution to the state budget impasse could be reached as early as next week.

Top legislative leaders continued to meet behind closed doors on the budget yesterday and are expected to do so today as well, Rendell said. He added that he intended to join the talks this weekend.

"It may not happen - and I stress that - but I'm hopeful the meetings" will lead to an agreement, Rendell said at a Capitol news conference yesterday.

If a deal is struck, he said, a joint conference committee of top lawmakers could vote on it early next week and send it to the House and Senate for approval.

Tim Nyquist, spokesman for Senate President Pro Tempore Joe Scarnati (R., Jefferson), called Rendell's comments "overly optimistic."

Unless the governor is willing to pull the plug on his proposal to raise the state personal income tax, among other demands, "there is no chance to complete a budget this weekend," Nyquist said.

Rendell said yesterday that he could envision signing a budget that did not contain his proposal for a 16 percent increase in the income tax.

But he stressed that he continued to believe the income-tax increase was the fairest way to raise new revenue to help plug a $3.3 billion deficit.

"I think the PIT [personal income tax] is much fairer," Rendell said, "but I've said I'm not wedded to it at all."

His proposal to raise the tax from 3.07 percent to 3.57 percent has been one of the major sticking points in budget negotiations this year, leading to the almost four-week impasse. The fiscal year began July 1.

Republicans who control the Senate have unequivocally said they will not support such a broad-based tax increase during a recession because they believe it would hit working families the hardest. Instead, GOP senators have pushed a plan that would tightly rein in spending and implement steep cuts but not raise any taxes.

In the interim, the budget deadlock is endangering paychecks for tens of thousands of state employees and timely payments to state vendors.