HARRISBURG — Pennsylvania Gov. Ed Rendell today outlined a $29 billion state budget that would expand spending on education, prisons and health coverage while drawing from federal aid and state surpluses, increasing some taxes and cutting other programs.

The plan, a 2.5 percent increase from what was originally approved for the 2008-09 budget, also would draw hundreds of millions of dollars from the state's "rainy day" contingency fund without draining it completely.

It does not call for increasing any broad-based tax.

Many key proposals have trickled out in recent days, from adding a dime per pack to the cigarette tax to legalizing video poker machines and using the money generated to help thousands of college students pay tuition.

But in one previously undisclosed proposal sure to ignite debate, Rendell said he wants to eliminate 400 of the state's 500 school districts to make public education more efficient. The state's basic education subsidy to schools would increase $300 million for the fiscal year that starts July 1.