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Dems abandon budget deal, pass new tax package

HARRISBURG — Pennsylvania's long trek toward a state budget took another sharp turn Friday, as House Democrats passed their own tax package just two weeks after their leaders made a different deal with the state Senate and Gov. Ed Rendell.

The largely party-line vote doomed a Sunday deadline for full budget passage that Rendell had asked for earlier in the week, and it irritated Senate Republicans who thought they had already negotiated an end to the months-old stalemate.

Democrats replaced proposals to tax small games of chance that veterans' clubs, fire companies and similar groups conduct as fundraisers and tickets to staged arts events, museums and other cultural institutions with a natural gas severance tax and expanded tobacco-products taxes.

Their leaders said the taxes on small games and the arts did not have enough support among their members to pass.

The natural gas levy is projected to bring in only about $60 million in the current fiscal year, but hundreds of millions in the years to come.

"This is a potentially $1 trillion operation in this state," said Majority Whip Bill DeWeese, D-Greene. "When's the last time that your townships and your boroughs in these rural settings has a guaranteed financial resource coming into this commonwealth?"

But House Republicans insisted during the five-hour debate that the budget could be balanced by cutting spending, warned the higher taxes would exacerbate the economic downturn and tried to shield the natural gas boom from taxes they predicted could stifle it.

"The bill that is in front of each of us today is a $1 billion-plus tax increase on the citizens of Pennsylvania," said Minority Whip Mike Turzai, R-Allegheny. "And here we are ... trying to justify a tax increase on our citizens, money that will come out of their pockets in a time of recession."

Rep. Daryl Metcalfe, R-12th, called the taxes "a violation of the economic liberty" of Pennsylvanians that would "force individuals to subsidize their neighbor's health care, welfare and bus fare."

One Republican voted for the tax bill, Rep. Dennis O'Brien of Philadelphia. Two Westmoreland County Democrats broke ranks with "no" votes — Reps. John Pallone and Joe Petrarca.

The Democrats' decision to abandon the Sept. 18 deal will delay the budget process, said Senate Republican spokesman Erik Arneson.

"It is extremely disappointing that House leaders were unable to live up to the bipartisan agreement ... and chose instead to push legislation which does not have sufficient support to pass in the Senate," Arneson said late Friday. He said the Senate GOP was reviewing the tax bill and considering its options, possibly to include weekend voting sessions.

Speaker Keith McCall, D-Carbon, said the previous deal assumed Republicans would contribute 10 to 20 votes in the House, and when they did not materialize, the leaders felt compelled to work up a package that could pass without them.

Rendell press secretary Gary Tuma declined to comment on the House vote.

Some House Democrats said they did not relish voting for higher taxes but the circumstances demanded it. They spoke of the need to fund various governmental programs and their desire to avoid trickle-down pressure that could lead to higher local school property taxes.

"We shouldn't be worried about the next election," said Rep. Tony DeLuca, D-Allegheny. "We should be worried about what's best for the 12 million Pennsylvanians out there."

Both the Sept. 18 agreement and the Democrats' new plan would legalize and tax table games such as poker at casinos, expand natural gas drilling on state-owned land and offer a period of tax amnesty. They also would both increase cigarette taxes by a quarter a pack and the capital stock and franchise tax that some businesses pay, and drain hundreds of millions from the rainy day fund and an account that helps doctors pay malpractice premiums.

They are also the same size, nearly $28 billion, slightly lower than last year.

That the budget debate continues may surprise state residents who have twice recently heard lawmakers announce breakthrough deals to end the budget impasse. Pennsylvania is more than three months into its fiscal year without a full budget in place.

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