House approves bill, Pa. budget deal is off

HARRISBURG - On Day 94 of the nation's longest state budget impasse, Democrats who control the state House tore up key compromises their leaders had struck two weeks earlier and set the stage for yet another round of negotiations on a final spending plan.

In a 103-98 vote, mostly on party lines, the House approved an alternative revenue plan that would slap new taxes on natural-gas drillers, smokeless tobacco, and cigars as a replacement for proposed levies on tickets to performing arts, museums, and zoos, and on raffles run by fraternal groups.

The package now goes back to the Senate, where many of its elements are anathema to the Republican majority. A top aide promptly condemned the plan but said leaders would work through the weekend in hopes of working out a new agreement.

The House vote did not come until 10:10 p.m. In populist speeches that dragged deep into the night, Democrats framed this latest chapter in the budget stalemate as a choice between the common man and corporate profit.

"Don't tax working Pennsylvanians. Don't tax arts and charity and culture," said Rep. David Levdansky (D., Allegheny). "Tax the big oil and the big tobacco interests that have such a huge advantage in Pennsylvania."

House Republicans retorted that the recession was no time to be "taking more money out of people's pockets," as Minority Leader Sam Smith said.

The Democratic-backed plan, approved after six hours of debate, has sparked enough Republican resistance to extend the budget impasse - now in its fourth month - for days, if not weeks.

Senate Republicans who control the upper chamber have said the plan would negate an agreement struck two weeks ago with Democratic leaders in the House and Senate and with Gov. Rendell.

Erik Arneson, spokesman for Senate Majority Leader Dominic Pileggi (R., Delaware), said it was "extremely disappointing that House leaders were unable to live up to the bipartisan agreement." Instead, he said, they chose to "push legislation which does not have sufficient support to pass in the Senate." But he said the Senate would be kept on call all weekend in hopes of getting closer to a budget deal.

Rendell has said he still supports the Sept. 18 accord and was working to see it through, though he has acknowledged that changes might need to be made.

The governor spent much of yesterday in talks with legislative leaders, in person and over the phone, in an effort to see that "cooler heads prevail," said Steve Crawford, Rendell's chief of staff.

"He was hoping that all the sides take a deep breath," Crawford said. "We are doing the best we can to hold this thing together. But sooner or later, hopefully sooner, everybody is going to have to give on this."

The House package reverses several pivotal points of agreement in the Sept. 18 handshake deal.

It would impose an excise tax on smokeless tobacco and cigars. Pennsylvania is the only state without such a tax; only one other state, Florida, doesn't tax cigars.

It also would place a so-called wellhead tax on natural gas extraction in the state.

Essentially, under the House plan those two taxes would be swapped for two in the earlier agreement - a sales tax on tickets to plays, concerts, museums, and zoos, as well as a new 20-percent tax on raffles and other small games of chance run by volunteer fire companies and VFWs.

Majority Leader Todd Eachus (D., Luzerne) argued yesterday that the Democratic caucus was living up to the "confines of the agreement" because the package still calls for $1.2 billion in new revenue that will recur from one year to the next, and would spend $27.9 billion, less than last year.

"We hope that the answer from the Republican Party isn't just 'no,' " he said.

Both plans call for increasing business and cigarette taxes, legalizing table games at casinos, and instituting a tax-amnesty program for those owing back taxes.

The tax bill debated last night is one of more than a dozen pieces of legislation that are part of the state budget for the fiscal year that started July 1.

Earlier in the day, a House committee voted on party lines to support a Democratic plan for a 34 percent tax on table games at slot parlors, far higher than the figure backed by Republicans.

House Appropriations Committee Chairman Dwight Evans (D., Phila.) said he hoped passage of the Democrats' overall tax proposal would help bring an end to "a nightmare that all Pennsylvanians have been sharing in."

"This has not been something we can be proud of," Evans said of the nation's longest-running state budget stalemate.

House Republicans - who did not join in the earlier budget accord - argued last night for a third way: their proposal to cut spending to $27.5 billion and raise no taxes.

"This economy is horrible, and taking more money out of people's pockets is not the right way to go," Smith (R., Jefferson) said.

The debate got lively when Eachus and Smith, the floor leaders, traded words.

Eachus accused Smith of abdicating responsibility for the budget process by not being at the negotiating table with the three other caucuses.

He said Smith, who hails from Punxsutawney, had just "poked his head out of the gopher hole, and we are going to have six more weeks without a budget."

Eachus quickly apologized for his outburst, and "for getting the species of the mammal wrong, too."

To which Smith said, "I tell you, what's offensive is that he didn't even know it was a groundhog."