The Senate then sent the amended version back to the House where the House voted to non-concur, with even some Republicans not approving the amendment.

Since then, informal budget talks have been going on between all the sides, and Rendell says he hopes to join these talks this weekend.  On Monday, a conference committee will be created to work out the differences.  The committee will have three members from each chamber, with two from the majority and one from the minority.   This means the committee will be an even 3 Republicans and 3 Democrats.

According to the Philadelphia Inquirer, Rendell said yesterday that he was optimistic that these informal talks would bring about an agreeement, perhaps as early as this weekend.  That way the conference committee would only need to approve the proposal when they meet on Monday.  However, a spokesman for Senate President Pro Tempore Joe Scarnati was not so confident, saying if Rendell refuses to take his income tax hike off the table there’s no way a budget will get done anytime this coming week.

Rendell said he could envision a budget without the income tax hike, but he still believes it is the fairest way to fill the 3.1 billion deficit.  So I guess we will all have to wait until Monday to see what talks bring about this weekend…

The committee will be composed of three members of the House and the Senate, two members from the majority and one from the minority.  Since the Democrats have the majority in the House and the Republicans in the Senate this comes out to an even 3 and 3 on the committee.

Between now and Monday informal talks between the two sides will continue.

The Senate’s budget bill restores $1.3 billion for higher education that the House Democrats had left unfunded and uses many of the one-time revenue sources the House Republicans had to balance their plan without raising broad-based taxes. 

Those one-time sources include cash from oil and natural gas drilling leases, a hefty withdrawal from the state’s Rainy Day Fund savings account, a dip into the surplus from a fund that provides state-subsidized malpractice insurance for physicians and a transfer from the Senate’s own surplus accounts.

The House has three options when it comes to dealing with the Senate-amended bill: It can approve it, amend it, or reject it.

”Our strategy is dependent on what’s in the [Senate] amendment,” said Brett Marcy, a spokesman for House Majority Leader Todd Eachus, D-Luzerne, whose office sets the voting calendar.

During floor debate, Senate Democrats accused their Republican colleagues of ”taking a meat ax” to valued social programs.

Boscola, in a fiery speech, railed against what she described as excessive state spending, even as Pennsylvanians learned to make do with less.

***

With the House having the next move, the Senate has now recessed and is on 6-hour call.

If you’re interested in seeing how the Senate’s new proposal (HB 1416 amendment) stacks up to their original plan (SB 850) check out the comparison chart.

Read more about the Senate’s budget plan in the Philadelphia Inquirer and the Pittsburgh Post-Gazette.

If the Senate introduces this amendment and passes it on the floor today the budget will return back to the House, where it is likely to get voted down.  This will force more direct negotiation talks.

Meanwhile, Rendell’s top negotiator Steve Crawford says that the Administration is troubled by Senate Leaders unresponsiveness and unwillingness to negotiate.

“The response was: ‘It’s too early,’” Crawford said. He added, “I think they look at this more as a political opportunity than as a fiscal crisis.”

Pileggi’s spokesman Erik Arneson said in an e-mail Sunday that his boss has never refused to negotiate.

“However, we are not willing to discuss the massive tax hike which would be necessary to fund the governor’s proposed spending plan. … I suspect that is the real source of frustration,” Arneson said.

3 of the 4 caucuses have offered up their own budget plans in addition to Gov. Rendell’s proposal, with the exception being the Senate Dems.  Here is where all four plans stand:

Senate R’s: $27.3 billion, no new taxes and is now over 1.5 billion out of balance.  Passed the Senate in May.

House R’s: $27.3 billion, recently introduced — uses tax amenesty and revenue from expanded oil and gas drilling to   help close deficit. 

Governor’s: $28.6 billion, would like to raise the personal income tax rate to fill the deficit

House D’s: $29.1 billion, no new taxes but currently leaves higher education unfunded

***

The House has suspended their rules so they can start debating both the House R and House D plan today, according to The Morning Call.  Read more about the House Democrats’ plan in the Philadelphia Inquirer.

And, with everything else they can’t agree on House members are now at odds on how to fund higher education.

Meanwhile, the House Dems plan has made colleges in the Harrisburg-area a little nervous.

Finally, many Capitol insiders disagree over whether former state Senator Vince Fumo would have been able to negotiate a faster budget deal this year.

Republicans dismissed the proposal as theatrics intended to force a tax increase, as House Appropriations Chairman Dwight Evans said he was open to any legislative proposals to fund the higher education account, including an income tax increase or legalization of video poker at bars.

The Appropriations Committee also voted the Senate Republicans $27.3 billion budget out of committee, but gave it a “negative recommendation”

The two sides finished Monday much as they began it: more than $1 billion apart in their respective budget proposals, and with four days remaining before tens of thousands of state employees begin receiving partial paychecks.

”This caucus is not going to raise the personal income tax,” said Rep. Mario Civera, R- Delaware, the committee’s ranking Republican. ”This was a sham. All of it was the biggest sham in Pennsylvania.”

Other rank-and-file Republicans groused that they were given the Democrats’ budget plan just minutes before they were to vote on it in the Appropriations Committee.

The general fund budget, which operates the rest of state government, would be funded without a tax increase. It would rely instead on a mix of existing revenue streams, including the draining of the state’s $750 million Rainy Day Fund savings account and federal stimulus money.

Pennsylvania ended the 2008-09 fiscal year with a $3.25 billion shortfall. Under House rules, a vote on the budget that breaks off higher education may not come for at least two weeks, due to to house rules.

Read more about the House Dems budget in the Pittsburgh Tribune-Review.

Governor Rendell and House Democrats continued to remind everyone that even the Senate Republicans “bare-bones budget” is more than $1 billion out of balance, because it was passed before state revenues came in much less than expected in May and June.

Later in the week, House Republicans gleefully announced the Gov’s proposed personal income tax increase was dead, as House Democrats admitted they did not have enough votes to pass the broad-based increase.  The House Democrats then said they would give the Republicans exactly what they want and pass SB 850.   

The bill may then be passed onto the governor, who through a line-item veto can eliminate another $1.5 billion to put the bill in balance to create a stop-gap budget.  This means a supplemental appropriations bill would have to be negotiated later.

The other line of thinking is that Democrats will cut the $1.5 billion out of the budget bill to show how “draconian” the cuts will be, which will spur a public outcry.  This will force then force Senate Republicans back to the negotiation table.

Meanwhile, the House Republicans have posted their own amendment to SB 850.  SB 850 can be considered as early as today in the House Appropriations Committee.  However, unless the House rules are suspended it can not be considered on the floor until 14 days later on July 27.

This means that the gap between Rendell’s and the Senate Republican’s budget has narrowed by $200 million, but still remains $1.3 billion apart.  Still a long way to go…

“We are looking at other budget lines for savings and I hope we can cut another $50 million,” Mr. Rendell said. The cost savings could entail up to 800 state workers being laid off, he added.

In addition, he is looking for the General Assembly to save $50 million to $70 million in personal and budget reserve costs. The Legislature has what is sometimes called a “slush fund” of $200 million left over from previous years.

But the bottom line on Mr. Rendell’s budget, even with another $200 million in reductions, would still be about $28.6 billion, while the Republican-controlled Senate is sticking with its $27.3 billion budget approved in early May.

Mr. Rendell said that budget could, however, be at least $1 billion out of balance because state revenues declined more than expected in May and June. He urged Senate leaders to tell him how they would get their budget back in balance. Senate leaders are firmly opposing any tax increases.

Mr. Rendell said he is firm in adding $418 million to basic education costs this year, a point that is opposed by GOP leaders. Mr. Rendell said that without sufficient state aid for education, local and school property taxes would simply rise, hurting local homeowners.

 Read more about the slow progress in the Philadelphia Inquirer.

When the new budget year begins Wednesday, the state will have a curtailed authority to spend money, and both chambers of the Legislature will be in session, rather than on the two-month break from Harrisburg that had been traditional before Rendell took office.

This year’s stalemate, however, may be the most entrenched of Rendell’s six-plus years in office, as the recession-wracked economy caused a $3 billion budget deficit. The governor met with senior lawmakers to review the budget at his residence late Monday, hoping for a breakthrough in budget talks, but no agreement was reached.

Democratic leaders in the General Assembly back Rendell, but they and the leaders of the GOP-controlled Senate are billions of dollars apart on their budget proposals and are squaring off over Rendell’s request for a three-year income tax increase of 16.3 percent. The increase would mean a Pennsylvania resident making $40,000 a year would pay an extra $200 in income taxes.

“It has to go off the table,” Senate President Joe Scarnati, R-Jefferson, said Monday. “That’s an onerous, large tax. … Members of the governor’s own party are publicly and privately telling us that they’re not voting for a tax increase.”

Rendell has traveled the state warning about the local property tax increases and state service cuts that he says will result if the state cuts spending on crucial programs, including school subsidies and services for the sick and disabled.

Currently the Senate Republicans and Rendell are still far from an agreement, as Republicans are opposed to Rendell’s proposed tax increase and Rendell and Democrats think the Senate GOP’s program cuts are too deep.

Legislative leaders met Wednesday and then met with Rendell on Thursday. The meetings were most notable for the fact that all sides were talking and got a clear idea of how much they hate one another’s proposals.

On Friday, Rendell followed up with his long-awaited list of $500 million in cuts to his original $29 billion budget proposal, giving legislative leaders and their staff the weekend to review before today’s meeting. Most of the cuts were offset by what the governor called mandatory increases in welfare programs caused by the recession.