The budget impasse continues in Pennsylvania as the state tomorrow will enter its third week of operating without an approved spending plan for fiscal 2010.

Gov. Edward Rendell, a Democrat, yesterday stated that while a budget proposal that House Republicans unveiled last week is a "significant breakthrough" in the budget standoff, he would not endorse a spending plan that includes additional cuts in education and children's programs.

In addition, the governor believes the state needs to boost its revenues through a tax increase. Last month, Rendell proposed increasing the 3.07% personal income tax by 16% to 3.57% for three years to help the state during the recession.

"It's good to use one-timers, and if you look at our budget we use some one-timers ourselves," the governor said. "But unless you have recurring revenue, you're back here again either next year or the following year. And my goal is to get a fair and balanced budget that makes the necessary cuts that we have to make but produces enough revenue that we continue to support the things that are so important to our state's future, and those are the two principles that are going to guide me in this, and what the House Republicans proposed does not do that job."

Conversely, Senate and House GOP members have spoken out against an increase in the PIT and favor additional cuts to the budget to match expenditures with sluggish revenues. In Pennsylvania, Democrats control the lower chamber while the GOP has a majority in the Senate.

The second-term governor said the House GOP plan cuts children's programs by an additional $143 million on top of an earlier Senate Republican budget plan that the upper chamber passed in early May, a spending reduction that he said he would not accept.

"I'm optimistic in a sense with what the House Republicans did," Rendell said during a press conference on the budget impasse. "But they have to come to grips with the fact that educating our children, caring for our children, should and is, in my book, the single-most important thing that we have to discuss."

House GOP members on Friday released a $27.2 billion fiscal 2010 budget plan, which is roughly the same size as the upper chamber's budget, SB 850. The House minority budget bill does not include tax increases but raises additional revenue through rainy-day funds, a tax amnesty program, and leasing state-owned lands in the Marcellus Shale region for natural gas drilling.

While Rendell approves of tapping into rainy-day funds to help close a $3.2 billion deficit, he said the amnesty program would not generate sufficient revenue and the land-lease proposal would not bring in needed revenue fast enough.

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