HARRISBURG — Gov. Ed Rendell on Thursday said legislative leaders should be working harder to negotiate a spending plan by the end of the month and reiterated his position that declining revenues this year have made tax increases a necessary evil.

He defended the 16 percent increase in the personal income tax he proposed two days earlier and said the $2 billion in cuts he has identified are real, even if his bottom-line number for total state spending he is proposing has barely budged.

"There are times when we don't work and we should be working," Rendell said. "And we should have been working on this a long time ago."

He also said he would consider signing a stopgap budget bill that would prevent state employees from having to work without being paid until a budget passes. Similar tactics were employed in 1977 and 1988; in 2003, Rendell vetoed the education portion of the budget, and it took months to reach agreement on it.

Senate Majority Leader Dominic Pileggi, R-Delaware, said any such interim plan would have to take a bare-bones approach and not simply continue at 2008-09 spending levels.

"The concern is that simply delays the time for making these hard decisions," Pileggi said. "On the other hand, the benefit is that critical and essential governmental functions continue without interruption."

Pennsylvania is facing a projected $3.2 billion revenue shortfall for the current year, and Rendell is proposing a mix of spending cuts and tax increases to address it.

"We have to have increased revenues," said Rendell, who this year also has floated proposals for higher taxes — or new taxes — on health insurance premiums, retail sales, tobacco, natural gas extraction and video poker. "When you look at the numbers, the numbers drive the discussion."

Rendell said no lawmakers who voted for the last state income tax increase, in 2003, lost re-election the following year. This year, he said, the decline in tax revenues and other factors have left them little choice. Rendell wants to increase the state's personal income tax rate from 3.07 percent to 3.57 percent, so someone making $50,000 a year would typically pay an additional $250 in taxes. It would raise $1.5 billion annually for three years, then expire.

"I know that recommending a tax increase is not going to do much for my popularity," Rendell said. "If there was a way to avoid it, believe me, I would have avoided it."

Legislative Republicans are broadly opposed to any tax increases and want the 2009-10 budget to be balanced by reducing expenditures. A no-new-taxes budget bill passed the Republican-controlled Senate on a party-line vote more than a month ago before House Democrats killed it.

The Senate GOP plan did not draw from the state's "rainy day" contingency fund, but kept it intact as a buffer for when federal stimulus money dries up. But Pileggi softened that position Thursday.