The week of July 27, 2009, was filled with anticipation, hopefulness and skepticism over the new Budget Conference Committee that was created to end the budget stalemate, according to the Capitol Recap report from Pennsylvania Legislative Services. After four fruitless meetings Monday through Thursday, the committee chairman, Rep. Dwight Evans, recessed the committee and nothing more has been scheduled at this time.

Over the weekend, budget negotiations resumed and yesterday began with anticipation over a vote on a surprise budget proposal crafted by House Republicans and Blue Dog Democrats. On Monday, Rep. Nick Kotik, was sched uled to introduce a $27.5 billion spending plan as an amendment to Senate Bill 850, which Democratic leadership was trying to use as a vehicle to pay state workers.

Unfortunately, Rep. Kotik withdrew his amendment after meeting with House Democratic leadership. The House minority leader Rep. Smith called the $27.5 billion proposal a “one-time” offer, but Senate Majority Leader Dominic Pileggi told the press during an interview that he would be willing to support it again because it would mean spending less than last year while not raising any taxes.

In addition, Senator Pileggi said he would not support any array of tax increases suggested by Democrats, even as a substitute for the income tax increase. Rep. Eachus and McCall said they would consider options such as freezing the Capital Stock and Franchise Tax, eliminating some exemptions to the sales tax, and allowing table games or video lottery machines.

The budget debate is now likely to shift from talk of PIT hikes to an array of smaller tax options. House leadership discussed this with reporters after Monday afternoon’s fireworks, although none will likely engender Republican support. GOP leaders were also skeptical afterward. They believe that the proposed broad-based tax hike won’t return if negotiations continue to stall. However, Gover nor Ed Rendell continues to believe it’s the best way to raise revenue.

The governor renewed his criticism of Republican reluctance for any new taxes, including levies on smokeless tobacco and Marcellus Shale extraction. He contended there has been a refusal by the GOP to compromise on any kind of new recurring revenues, despite many concessions on his part to cut programs. The governor alleged Republican hesitancy on these fronts is due to industry pressure.

Governor Rendell reiterated that with respect to the budget, “we are down to the skeleton,” with “little, if anything,” left to cut. He emphasized that education, and the future of the Commonwealth, are areas in which he will not compromise, so the stalemate continues with no end in sight.

It is possible that the legislature will pass a budget sometime this week in which the governor would then veto most of the items. This would allow the state government to run at a very basic level and its employees to receive paychecks. The education budget is still one of the biggest items of contention in the budget process. We have been warned that the education budget might not be passed until the fall or possibly as late as December.

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