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Stalled talks put state budget deal on ropes

HARRISBURG — The Pennsylvania state budget deal could be unraveling after talks among Legislative leaders broke down late Thursday over the authorization of an independent fiscal office.

House Democratic leaders blamed Senate Republicans for what they said was a last-minute addition to the budget talks, and an unwillingness to continue negotiations.

The main budget bill passed the General Assembly on Wednesday, but Democratic Gov. Ed Rendell has said he will not sign it without companion legislation. Those other elements of the budget package were the topic of the talks that seemed to hit a brick wall on Thursday.

"From their behavior, I don't believe the Senate Republicans want to finish it," said House Majority Leader Todd Eachus, D-Luzerne.

Eachus and a spokesman for the House Republicans both said the fiscal-office issue was raised only recently by the Senate GOP, and both parties in the House believe it should be dealt with on its own, not as part of the budget.

Senate Republican spokesman Erik Arneson said the fiscal office was the topic of discussions a year ago — it was created in last year's budget but only in concept — and had been studied by lawmakers from both chambers and both parties since then.

"It's a change in the status quo, and Pennsylvania traditionally is not a state that likes to make fundamental changes," Arneson said. "But our budget process is clearly dysfunctional and needs to be improved."

Eachus said leaders met for three hours to try to finish the budget in the afternoon, but that senators did not show up for a planned evening session. Arneson said no such appointment had been made, and that Senate Republican leaders were surprised when they got a call during their caucus that a group had showed up at their offices to talk.

The tone is a marked change from a day earlier, when lawmakers passed a $28 billion spending plan for 2010-11 that increased basic education funding without raising taxes, on the final day of the fiscal year.

The budget includes $250 million more in basic education spending but scatters cuts throughout state government. It does not include any tax increases, although negotiators have agreed to take up a tax on natural gas extraction from the Marcellus Shale formation in the fall.

Rendell said earlier Thursday he hoped to sign the budget on Tuesday, but expressed concern about the dispute over the companion bills. He has 10 days to sign the budget, and an aide said if it comes to that he would likely exercise his line-item veto authority.

Rendell said he will not sign the appropriations bill — the main budget bill — until they also send him the fiscal code and a hospital assessment bill that together provide about $1 billion in revenue.

"I have a responsibility to make sure that it's a budget that is balanced and paid for," Rendell said at a news conference where he announced June revenue collections exceeded estimates by $58 million.

Senate Republicans want the fiscal office authorization put into the fiscal code, and its leading proponent, Finance Chairman Pat Browne, R-Lehigh, is holding up a $600 million capital projects borrowing bill as leverage.

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